Green GDP

• The Green Gross Domestic Product (Green GDP) is an economic indicator that takes into account the environmental impacts associated with economic growth. It seeks to provide a more comprehensive assessment of economic progress by factoring in the costs of ecological degradation.
• The calculation of Green GDP involves deducting the expenses related to environmental harm from the final value of goods and services produced. This adjustment aims to reflect the true costs and benefits of economic activities, considering both economic gains and environmental losses.
• For example, if a country's GDP is $100 million but it incurs $20 million in environmental damage due to pollution and resource depletion, the Green GDP would be $80 million.
• China made a significant move in 2004 by announcing its intention to replace the conventional GDP index with the Green GDP index. However, this effort was eventually abandoned. One of the reasons for this decision was that the Green GDP figures tended to reduce the size of the GDP, resulting in less impressive growth statistics. This illustrates the complexities and challenges associated with integrating environmental considerations into economic metrics like GDP.

Natural Resources Accounting and Green GDP

• Natural resources, including biodiversity, soil, water, and air, form the foundation of natural capital. These resources are interdependent and collectively support various aspects of life. There is a growing consensus that the value of natural capital should be considered just as significant as man-made capital when it comes to economic accounting. This perspective emphasizes the importance of sustainably managing natural resources to ensure the ability to generate income in the future.
• Conventional measures of national income often fall short in accurately representing economic growth because they don't account for the depletion of natural resources. As a result, they may not provide a true reflection of a nation's economic progress.
• The National Biodiversity Action Plan, published by the Government of India's Ministry of Environment, Forests, and Climate Change in 2008, emphasized the importance of recognizing the value of goods and services provided by biodiversity. The goal of this plan is to assign appropriate market value to these ecosystem services and work towards integrating these costs into national accounting.
• It's worth noting that the nominal Gross Domestic Product (GDP) of the United States is valued higher by market exchange rates compared to purchasing power parity (PPP) rates. This reflects the global confidence in the US dollar, which sometimes exceeds its actual economic strength. In contrast, the Chinese Yuan's value by PPP may be higher, indicating its purchasing power relative to its domestic economy.