Green gross domestic product
Green Gross Domestic Product (Green GDP) is an alternative economic metric that incorporates environmental considerations into the assessment of a country's economic performance. It builds on traditional GDP by factoring in the economic costs of natural resource depletion and environmental degradation. This approach emerged from the growing awareness of the negative impacts of industrial growth on the ecosystem, prompting economists and environmentalists to seek a more accurate representation of economic health that includes sustainability.
Historically, the concept gained traction in the late 20th century, with significant developments occurring in the 1980s and 1990s when various organizations, including the United Nations, began advocating for environmental accounting. China was the first nation to adopt Green GDP as an official index in 2004; however, it later discontinued its use due to challenges in global competitiveness and criticism over its market valuation approach. Other nations, like India, attempted to implement similar measures but faced obstacles that stalled progress.
Despite its limited application, Green GDP highlighted the importance of integrating environmental health into economic planning, paving the way for subsequent initiatives such as the Sustainable Development Goals (SDGs). The ongoing discourse around Green GDP emphasizes the need for robust methods to account for environmental value, as critics of traditional GDP call for alternatives that also consider social equity and environmental sustainability.
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Green gross domestic product
Green gross domestic product is a method of measuring a country's economic status over a given period, with special emphasis on its use of natural resources and impact on the environment. It is a modification of the traditional gross domestic product (GDP) index. Since the mid-twentieth century, GDP has been one of the primary methods of determining a country's economic growth.
As people became more aware of humanity's impact on the environment, economists began trying to quantify that impact. They believed that while traditional GDP may indicate economic growth, many industries, businesses, and practices responsible for that growth were depleting natural resources and permanently altering the ecosystem. Environmentalists and economists believed these actions had consequences that were not immediately obvious and could hinder future opportunities for growth. Green GDP was suggested as a method to account for the environment in a country's economics and to help encourage more environmentally conscious business practices.
Brief History
GDP dates back centuries, but its first use resembling its modern form was in 1934, when it was included in a report from the United States Congress. The use of GDP spread across the globe, and by 1944, it became the primary method for measuring the economy on a national scale. Eventually, several organizations, including the United Nations, European Union, International Money Fund, and World Bank, developed a standard for GDP that all nations could use to keep a global perspective on their respective economies.
The idea of conserving nature was not new even then. For instance, the US National Park Service was established in 1916 to protect natural land. By the mid-twentieth century, however, the growing population and new technological developments threatened the environment to a far greater degree than in prior generations. As scientists came to understand the consequences of pollution, natural resource depletion, and deforestation, interest in protecting the environment grew dramatically.
For generations, people had gathered resources without any understanding or concern that some were not renewable. Now understanding that certain environmental damage was not reversible, economists William Nordhaus and James Tobin created the Measure of Economic Welfare in 1972. It was the first method for measuring economic activity that accounted for environmental impact.
In the following years, more economists and scientists pointed out that environmental damage could have serious long-term effects on the economy and that it should be measured to help prepare for and prevent future problems. By the 1980s, it was clear that the current methods of tracking the economy were lacking several important factors. In 1990, the United Nations (UN) set the Millennium Development Goals (MDGs). This was a commitment to improve conditions around the world. Points of emphasis included poverty, social inequality, education, and environmental conservation. It was followed by the 2030 Agenda for Sustainable Development, set in 2015, which outlined seventeen sustainable development goals to be reached within the next fifteen years.
Attempting to better define environmental impact, the UN developed the System of Environmental-Economic Accounting, or SEEA, in 1993. This detailed five ways to account for natural resources and pollution. UN member nations began incorporating elements of SEEA into their accounting. With more economists than ever factoring the environment into calculations, the idea of including it in GDP developed.
Impact
In 2004, China became the first nation to adopt green GDP as its official government economic index. A Chinese government report in that year revealed that pollution accounted for about $64 billion in losses. These losses had a far more drastic impact on China's reported economic growth than its government had anticipated. The government decided that it would not be globally competitive if it was alone in basing its economic decisions on green GDP, so China discontinued its use of green GDP before a report for 2005 was published. In response to global pressure to further emphasize environmental responsibility, Chinese officials pointed out that nations such as the United States and the United Kingdom had benefited from vast industrial growth before environmental conservation was a major global topic. They argued that China was undergoing the same type of transformation and did not have the resources to regulate to the degree that the more advanced United States and United Kingdom could.
Green GDP saw limited use elsewhere. In 2009, for example, India announced plans to incorporate green GDP into its economic reports. The nation planned to make full use of the method by 2015, but the project stalled. Ultimately, green GDP failed to catch on and generated considerable criticism. A common complaint, which even some conservation supporters agreed with, was that measuring the environment in terms of market value was simply not reliable enough for a standardized, international system. The measure was also criticized for only punishing nations and not providing any insight toward solving the problem.
Although green GDP largely fell out of favor, its brief use inspired further attempts to accomplish its objectives. With the end of the UN's Millennium Development Goals timeline in 2015, the organization decided to move forward and established the Sustainable Development Goals (SDGs). This initiative built off the findings of the MDGs, while considering new developments such as the greater understanding of climate change. While green GDP was criticized because it made users appear less economically competitive, the SDGs emphasized cooperation, calling for member nations to pool resources and data to improve collectively. Meanwhile, traditional GDP continued to come under fire not only from environmentalists but also from economists and human rights activists. Critics said that since GDP only highlighted a country's production, it allowed nations to ignore or exploit large portions of its population and justify it with the assurance that the country was economically thriving. These critiques led to further desire for alternative economic measures that took social and environmental factors into account. One example was SEAA's Ecosystem Accounting (SEEA EA) system, which took a dashboard approach, offering multiple indicators.
Ultimately, though green GDP has seen very limited use, it demonstrated that the environment was valuable even when viewed within an economic framework. It also showed the need to have a measurement of that value. Economists and conservationists continue to call for a more precise method of accounting that fulfills what green GDP was intended to achieve.
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