China taking a serious look at "Green GDP".

• Author: Assadourian, Erik
• Position: ENVIRONMENTAL Intelligence

Early in 2004, the Chinese government declared that it would implement a new indicator of economic output--one that, unlike Gross Domestic Product (GDP), would incorporate the environmental impacts associated with economic development. Specifically, this "Green GDP" indicator would subtract out the costs of resource depletion and pollution from GDP. If this measure had already been instituted in China, GDP growth would have fallen from an average of 8.7 percent between 1985 and 2000 to 6.5 percent, according to research by the Chinese Academy of Sciences.

The developers of the Green GDP have three goals. First, the new measures would distinguish between beneficial and detrimental economic output, helping to stimulate growth that does not come at the expense of environmental quality. For example, desertification--in large part triggered by deforestation and unsustainable agricultural practices--now costs China $6.5 billion per year, according to the United Nations Convention to Combat Desertification. Calculating the Green GDP would help incorporate these hidden costs of forestry and agriculture.

Second, measuring Green GDP could increase economic efficiency, in terms of output per unit of energy and materials. Currently, China consumes three times more mineral and energy resources per unit of output than the world average, according to the Chinese Academy of Social Sciences. Subtracting costs of resource depletion would discourage such waste--an important development, considering that two-thirds of mines are more than half depleted, according to the Chinese Ministry of Land and Resources.

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The third goal is to help local officials (who are currently promoted primarily by how much they increase local economic growth, even at the expense of the environment) adopt a more...