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The green national product is an economic metric that seeks to include environmental features such as environmental degradation and resource depletion with a country's national product.
The gross national product (GNP) measures the welfare of a nation's economy through the aggregate of products and services produced in that nation. Although GNP is a proficient measurement of the magnitude of the economy, many economists, environmentalists and citizens have been arguing the validity of the GNP in respect to measuring welfare. Joseph Stiglitz, Nobel Prize–winning economist, states that this standard measurement for any national economy has become deficient as a measure of long-term economic health in the recently resource-driven and globalizing world. [1] Critics suggest that GNP often includes the environment on the wrong side of the balance sheet because if someone first pollutes and then another person cleans the pollution, both activities add to GNP making environmental degradation frequently look good for the economy. [2] Critics of mainstream economics complain that GNP compiles spending that makes us worse off, spending that allows us to stay in the same place, and spending that makes us better off all in a single measure, giving a nation no clue if they are making progress or not. [3] Manfred Max-Neef, Chilean economist, explains that politicians feel that it is irrelevant whether the spending is productive, unproductive, or destructive. [3] In this sense, it is common to see political policies that call to depredate a natural resource in order to increase the GNP. To take into account the environmental depredation and resource depletion, there is a call to shift away from the traditional GNP and construct an assessment of national product that takes into account environmental effects.
Ever since the Industrial Revolution, scientists and economists have warned of an inflection point for the United States economy where expansion is inevitably limited by the steadily decreasing availability of natural resources. In 1973, William D. Nordhaus and James Tobin, Yale economists, were the first to question the GNP in "Is growth obsolete?". Nordhaus and Tobin developed a Measure of Economic Welfare (MEW) and stated that welfare must be sustainable, in the sense that nations that devour their stock of capital are not as "well" as the national income would suggest. [4]
However, in "The Green National Product", Clifford Cobb and John Cobb argue that the Measure of Economic Welfare failed to encompass the depletion of natural capital. [5] In 1989, Herman Daly, John Cobb, and Clifford Cobb created what is known as the Index of Sustainable Economic Welfare (ISEW). This new measurement of welfare was created in the hopes that it would replace the flawed GNP. Herman Daly stated that the key flaw of the traditional GNP was that it ignored core accounting principles of business where all revenues and expenses are allocated to income. [6] ISEW called for ecological and economic sustainability to coincide since the economy is ultimately dependent on the natural resources that the earth provides. [7] Rather than the original GNP, ISEW takes into account costs that are naturally unsustainable. By creating ISEW, they wanted to expand the current national product so that individuals, businesses, and governments could take actions that will generally enhance welfare, rather than merely enhancing the traditional GNP. [8]
In 1995, Redefining Progress created the genuine progress indicator (GPI) as an alternative to the traditional GNP. This new measurement of national income would allow policymakers to gauge how well citizens are, economically and socially. [9] Unlike welfare adjustments in the past like MEW and ISEW, GPI adjusts not only for environmental depredation, but also for income distribution, housework, volunteering, crime, changes in leisure time, and life-span of consumer durables and public infrastructure. [10] This was one of the first alternatives to the traditional GNP to be used by the scientific community and governmental organizations globally.
In 1992, the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce initiated intensive work to create an environmental accounting system. [11] The BEA began by creating satellite accounts with easily measurable commodities such as petroleum and coal. The first BEA publication was the U.S. Integrated Environmental and Economic Satellite Accounts (IEESA) in 1994. [11] The initial results were quite significant, and showed how GNP was overestimating the impact of mining industries in respect to the nations economic wealth. [6] Mining companies didn't care for the initial publications, for obvious reasons, and soon Alan Mollohan, a Democratic House Representative from West Virginia's coal country, sponsored an amendment to the 1995 Appropriation Bill. In response, Congress directed the BEA to suspend further work in environmental accounting, and to obtain an external review on their findings. [11]
Many people are calling for a green national product that would indicate if activities benefit or harm the economy and well-being. This green national product would revolve around the social and economic issues on which many green movements have focused: care for the earth and all that sustain it. [2] This new national product would differ from the traditional GNP by addressing both the sustainability and well-being of the planet and its inhabitants. [7] It is essential that this system takes into account natural capital, which is currently hidden from our traditional measurement.
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold in a specific time period by a country or countries, generally "without double counting the intermediate goods and services used up to produce them". GDP is most often used by the government of a single country to measure its economic health. Due to its complex and subjective nature, this measure is often revised before being considered a reliable indicator. GDP (nominal) per capita does not, however, reflect differences in the cost of living and the inflation rates of the countries; therefore, using a basis of GDP per capita at purchasing power parity (PPP) may be more useful when comparing living standards between nations, while nominal GDP is more useful comparing national economies on the international market. Total GDP can also be broken down into the contribution of each industry or sector of the economy. The ratio of GDP to the total population of the region is the per capita GDP.
A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), gross national product (GNP), net national income (NNI), and adjusted national income. All are specially concerned with counting the total amount of goods and services produced within the economy and by various sectors. The boundary is usually defined by geography or citizenship, and it is also defined as the total income of the nation and also restrict the goods and services that are counted. For instance, some measures count only goods & services that are exchanged for money, excluding bartered goods, while other measures may attempt to include bartered goods by imputing monetary values to them.
Uneconomic growth is economic growth that reflects or creates a decline in the quality of life. The concept is used in human development theory, welfare theory, and ecological economics. It is usually attributed to ecological economist Herman Daly, though other theorists may also be credited for the incipient idea, According to Daly, "uneconomic growth occurs when increases in production come at an expense in resources and well-being that is worth more than the items made." The cost, or decline in well-being, associated with extended economic growth is argued to arise as a result of "the social and environmental sacrifices made necessary by that growing encroachment on the eco-system."
The green gross domestic product is an index of economic growth with the environmental consequences of that growth factored into a country's conventional GDP. Green GDP monetizes the loss of biodiversity, and accounts for costs caused by climate change. Some environmental experts prefer physical indicators, which may be aggregated to indices such as the "Sustainable Development Index".
Eco-capitalism, also known as environmental capitalism or (sometimes) green capitalism, is the view that capital exists in nature as "natural capital" on which all wealth depends. Therefore, governments should use market-based policy-instruments to resolve environmental problems.
Genuine progress indicator (GPI) is a metric that has been suggested to replace, or supplement, gross domestic product (GDP). The GPI is designed to take fuller account of the well-being of a nation, only a part of which pertains to the size of the nation's economy, by incorporating environmental and social factors which are not measured by GDP. For instance, some models of GPI decrease in value when the poverty rate increases. The GPI separates the concept of societal progress from economic growth.
A green economy is an economy that aims at reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment. It is closely related with ecological economics, but has a more politically applied focus. The 2011 UNEP Green Economy Report argues "that to be green, an economy must not only be efficient, but also fair. Fairness implies recognizing global and country level equity dimensions, particularly in assuring a Just Transition to an economy that is low-carbon, resource efficient, and socially inclusive."
The Index of Sustainable Economic Welfare (ISEW) is an economic indicator intended to replace the gross domestic product (GDP), which is the main macroeconomic indicator of System of National Accounts (SNA). Rather than simply adding together all expenditures like the GDP, consumer spending is balanced by such factors as income distribution and cost associated with pollution and other unsustainable costs. The calculation excludes defence expenditures and considers a wider range of harmful effects of economic growth. It is similar to the genuine progress indicator (GPI).
The Sum of Our Discontent is a nonfiction book by David Boyle. It was published by Texere in 2001. The tagline and theme of the book is "Why numbers make us irrational".
Herman Edward Daly was an American ecological and Georgist economist and professor at the School of Public Policy of University of Maryland, College Park in the United States, best known for his time as a senior economist at the World Bank from 1988 to 1994. In 1996, he was awarded the Right Livelihood Award for "defining a path of ecological economics that integrates the key elements of ethics, quality of life, environment and community."
Net national product (NNP) refers to gross national product (GNP), i.e. the total market value of all final goods and services produced by the factors of production of a country or other polity during a given time period, minus depreciation. Similarly, net domestic product (NDP) corresponds to gross domestic product (GDP) minus depreciation. Depreciation describes the devaluation of fixed capital through wear and tear associated with its use in productive activities.
In economics, gross output (GO) is the measure of total economic activity in the production of new goods and services in an accounting period. It is a much broader measure of the economy than gross domestic product (GDP), which is limited mainly to final output. As of first-quarter 2019, the Bureau of Economic Analysis estimated gross output in the United States to be $37.2 trillion, compared to $21.1 trillion for GDP.
The Human Poverty Index (HPI) was an indication of the poverty of community in a country, developed by the United Nations to complement the Human Development Index (HDI) and was first reported as part of the Human Deprivation Report in 1997. It is developed by United Nations Development Program which also publishes indexes like HDI It was considered to better reflect the extent of deprivation in deprived countries compared to the HDI. In 2010, it was supplanted by the UN's Multidimensional Poverty Index.
The Gender Development Index (GDI) is an index designed to measure gender equality.
The Economist Intelligence Unit’s where-to-be-born index attempts to measure which country will provide the best opportunities for a healthy, safe and prosperous life in the years ahead.
Sustainability metrics and indices are measures of sustainability, and attempt to quantify beyond the generic concept. Though there are disagreements among those from different disciplines, these disciplines and international organizations have each offered measures or indicators of how to measure the concept.
The Gender Parity Index (GPI) is a socioeconomic index usually designed to measure the relative access to education of males and females. This index is released by UNESCO. In its simplest form, it is calculated as the quotient of the number of females by the number of males enrolled in a given stage of education. A GPI equal to one signifies equality between males and females. A GPI less than one is an indication that gender parity favors males while a GPI greater than one indicates gender parity that favors females. The closer a GPI is to one, the closer a country is to achieving equality of access between males and females. It is used by international organizations, particularly in measuring the progress of developing countries. The Institute for Statistics of UNESCO also uses a more general definition of GPI: for any development indicator one can define the GPI relative to this indicator by dividing its value for females by its value for males. For example, some UNESCO documents consider gender parity in literacy.
Wikiprogress is a defunct online platform for sharing information on the measurement of social, economic and environmental progress. It is thought to facilitate sharing on ideas, initiatives and knowledge on "measuring the progress of societies". Like Wikipedia, it was open to all members and communities for contribution – anyone interested in "progress" could register.
Although for many decades, it was customary to focus on GDP and other measures of national income, there has been growing interest in developing broad measures of economic well-being. National and international approaches include the Beyond GDP programme developed by the European Union, the Better Lives Compendium of Indicators developed by the OECD, as well as many alternative metrics of wellbeing or happiness. One of the earliest attempts to develop such an index at national level was Bhutan's Gross National Happiness Index and there are a now a number of similar projects ongoing around the world, including a project to develop for the UK an assessment of national well-being, commissioned by the Prime Minister David Cameron and led by the Office for National Statistics.
Natural capital accounting is the process of calculating the total stocks and flows of natural resources and services in a given ecosystem or region. Accounting for such goods may occur in physical or monetary terms. This process can subsequently inform government, corporate and consumer decision making as each relates to the use or consumption of natural resources and land, and sustainable behaviour.