GREEN GDP

Subject: Environment

Context: In the post COVID World, we should make efforts to ensure that the ‘G’ in GDP is not ‘Gross’ but ‘Green’.

Concept:

• Green GDP is a term used for expressing GDP after adjusting for environment degradations.
• Green GDP is an attempt to measure the growth of an economy by subtracting the costs of environmental damages and ecological degradations from the GDP
• The concept was first initiated through a System of National Accounts.
• The System of National Accounts (SNA) is an accounting framework for measuring the economic activities of production, consumption and accumulation of wealth in an economy during a period of time. When information on economy’s use of the natural environment is integrated into the system of national accounts, it becomes green national accounts or environmental accounting.
• The process of environmental accounting involves three steps viz. Physical accounting; Monetary valuation; and integration with national Income/wealth Accounts.
• Physical accounting determines the state of the resources, types, and extent (qualitative and quantitative) in spatial and temporal terms.
• Monetary valuation is done to determine its tangible and intangible components.
• Thereafter, the net change in natural resources in monetary terms is integrated into the Gross Domestic Product in order to reach the value of Green GDP.