GNP calculation to have a green base
The government is working on a methodology that will add the value of things such as clean environment as part of natural resources for calculating the GNP.
By Neha Kohli, TNN |
NEW DELHI: Think before throwing that plastic bag into the river. You might actually be lowering the country’s gross national product (GNP). The government is working on a methodology that will add the value of things such as clean environment as part of natural resources for calculating the GNP.
Looking beyond the current national capital stock that includes man-made and human capital, the Central Statistical Organisation is considering inclusion of natural capital such as forests and clean rivers in calculating GNP.
In such a calculation, the worth of the resource that has been degraded or polluted will act as a depreciation factor. “India’s GDP that stands today at 9% could actually translate into 6% if green GDP were to be the indicator,” said Institute of Economic Growth’s (IEG) MN Murthy.
The first step in achieving such an international standard of green GDP is for every country to have a national database of natural resource accounting. The second step is to calculate the cost of recovery of polluted resources. While many European countries have already prepared such databases, India made a beginning in 2003. However, incorporating the data into a green GDP figure has acquired momentum only now.
According to a government source, eight pilot projects have been undertaken in the country.
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Each project focuses on different parameters in different states. For example, while in Himachal Pradesh and West Bengal the cost of recovery of polluted air and water is being estimated, in Karnataka and Madhya Pradesh, estimates of forests are being calculated.The government has roped in various research institutions for collating data from various states. Teri, IEG, Jadavpur University and Madras School of Economics have been identified as the core players. Once a model for determining one resource in a state is established, environmental economics of all natural resources will be derived for each state and finally for the country. It will take 10-15 years for completion of such a database.
So far, any economy’s economic development indicator, namely gross domestic product, a subsidiary of GNP, does not taken into consideration the stock and flow of natural resources. Environmental economists believe that keeping with the fact that industries can grow at the cost of degrading a natural resource, a more sustainable development indicator is needed. For guiding such sustainable models, in 2003, the United Nations had presented a general framework of integration of environmental and economic accounting that can be used for macroplanning of a country.
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