Forum > General > "Green Accounting"

Posted by Susan Sharma on June 24, 2011

 

"Part of the problem arises from the fact that we do not have a system of “green accounting”. Economists estimate GDP which is gross domestic product as a broad measure of national income and also estimate NDP which is net domestic product which accounts for the use of physical capital. But as yet, we have no generally accepted system to convert Gross Domestic Product into Green Domestic Product that would reflect the use up of precious depletable natural resources in the process of generating national income. Many years ago, the noted Indian environmentalist Anil Agarwal had advocated the concept of a Gross Nature Product to replace the usually estimated Gross National Product................

 .........Economists all over the world have been at work for quite some time on developing a robust system of green national accounting but we are not there as yet. Ideally, if we can report both Gross Domestic Product and Green Domestic Product, we will get a better picture of the trade-offs involved in the process of economic growth. Alternatively, as some economist have argued, we need alternative indicators to measure true welfare improvement, as Green GDP is not be the best indicator of sustainability or future increases in consumption or welfare – indicators such as “Genuine Savings/Investment”, and “Genuine Wealth Per Capita” are being developed as alternatives. We don’t need precise numbers. Even a broad-brush estimate will be a huge step forward to give practical meaning to the concept of “sustainable development” which all of us swear by in theory.

Professor Sir Partha Dasgupta at Cambridge University has calculated that the “genuine” domestic investment rate in India is around 2.3 percentage points lower than the normally reckoned domestic investment rate for the period 1970-2001 after taking into account environmental costs and both calculated as a proportion of GDP. He goes on to show that as against the estimated growth rate of India’s per capita GDP of 2.96% per year during this period, the growth rate of per capita genuine wealth after taking into account environmental costs works out to 0.31% per year."


Read full speech by Jairam Ramesh,
Minister of State (Independent Charge), Environment and Forests, Government of India at the link

http://tinyurl.com/5vg8ykg

[Open in new window]
http://www.sanctuaryasia.com/index.php?option=com_content&view=article&id=3232:jairam-ramesh-on-environment-and-development&catid=110:home-page

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