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    Green GDP(Gross Domestic Product)

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    Posts : 28
    Join date : 2011-09-05
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    Green GDP(Gross Domestic Product)

    Post  Admin on Tue Sep 06, 2011 5:22 pm

    Minister Jairam Ramesh made a statement previously on providing a Green GDP alternative, opening a new front in the Copenhagen discussions. If taken seriously Green GDP can bring significant changes in our behavior as a society.



    What is Green GDP?
    Green GDP has been used by economists and policy advocates as a national accounting measure that takes into account ecological and human welfare considerations. a way of better understanding the implications of economic activity for environmental integrity and human well-being.



    Crudely defined, Green GDP = GDP accounting + natural resources accounting



    However, placing a monetary value on pollution and resource extraction is controversial and presents methodological difficulties.



    Need for a Green GDP: defining metrics to get the right behavior

    For years, economists and politicians have wrestled with the concept of rising Gross Domestic Product (GDP) as a measure of progress. Even the father of national income accounting, Nobel laureate Simon Kuznets, warned that "The welfare of a nation can scarcely be inferred from a measurement of national income.”



    Because GDP is measure purely on an income basis, societies in the last century have focused purely on GDP enhancement.



    Since the early 1990s there have been several attempts to develop national income accounting systems which recognize the negative impacts of environmental degradation and income inequalities on economic welfare. China attempted to use a Green GDP measure and it conducted a study in 2004 (results released in 2006). It showed a financial loss caused by pollution was 511.8 billion yuan ($66.3 billion), or 3.05 percent of the country's economy. A year later in 2007, China abandoned its Green GDP effort, when it became clear that the adjustment for environmental damage had reduced the growth rate to politically unacceptable levels, nearly zero in some provinces.



    India Green GDP alternatives by 2015?

    Minister Ramesh is no stranger to policy and economics having formally studied technology policy, economics, engineering and management; and having extensive experience in implementing policy. So we feel he knows what he is talking about.



    In his statement in New Delhi today he stated that India aims to factor the use of natural resources in its economic growth estimates by 2015. "I think certainly by 2015 or thereabouts India should be in a position to provide alternative GDP (Gross Domestic Product) estimates which account for the consumption of natural resources as well," he said.



    This is a bold statement. It definitely strengthens India’s position during negotiation. And it is an extremely bold position if it is followed through because it could mean a very different India in terms of the metrics the government ministries and agencies will start tracking. It is well known that metrics influence behavior! (And what if other nations follow suit?!). Minister Ramesh definitely knows his economic multiplier effects.

    The ministry plans to introduce a bill for a National Environemnt Protection Authority, and there is chatter about sops for renewable and cleantech enery sources.


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