Green GDP

Subject :Economy

Section: National Income

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.