Green GDP plan still needs much work
By Xiao Xin (China Daily)
Updated: 2004-04-30 09:43

"Green GDP" has become a buzz word lately. The adjusted gross domestic product (GDP) calculation method signals a new way of looking at the relationship between economic growth and environment. But it will take strenuous efforts to carry it out.

"The task of establishing this new calculation system is a complicated process; the data collection is dauntingly challenging," said Li Chengrui, former director of the National Bureau of Statistics.

He made the comment at the 2004 World Earth Day Forum at Peking University last week, which was sponsored by the Centre of China Earth Day under the Chinese Academy of Social Sciences (CASS) and other environmental protection institutions.

With fostering a scientific way of development as its theme, the forum focused on how to achieve a sustainable development mode on our resource-limited planet.

The conventional GDP-oriented national accounts as indicators of economic performance have failed to take into account the scarcity of natural resources. This oversight in turn threatens sustained economic growth and has often led to environmental degradation, which will prove catastrophic to mankind in the long run.

To cope with these shortcomings, the United Nations (UN) and the World Bank have developed alternative macro-indicators for environmentally adjusted and sustainable national revenue and products.

In 1993, the UN provided, in an official document, a conceptual basis for the implementation of a System for Integrated Environmental and Economic Accounting (SEEA) and environmentally adjusted GDP (Green GDP).

Since it is on a "conceptual" basis, the system has yet to provide applicable methods to direct world economies to calculate their respective green GDP statistics.

In China, the calculation of resource consumption in economic activities, a prerequisite for establishing a green GDP system, started in the early 1980s.

"Many provinces and regions have their task teams to calculate the consumption of water, forest, land and other resources as a result of economic growth in the 1980s, which provide a basis for creating a comprehensive framework to incorporate environmental criteria in economic analysis," said Han Meng, secretary-general of the Centre of China Earth Day under the CASS Institute of Economics.

In 1994, the State Council put forward the idea of green accounting of economic activities, according to Li.

"By now, however, there has not been a national implementation plan or formal experiment project. More has been said than done," he said.

"There are many reasons for this pitiful drag," said Han. "One is that people have not taken it seriously as the full-blown impact of environmental degradation does not surface from the start."

The central authorities have put forward the idea of "a scientific way of development," calling for co-ordinated development between mankind and the nature.

The first quarter of this year saw China's GDP growth register a sizzling 9.7 per cent on the basis of last year's overall 9.1 per cent.

Fixed asset investment also grew at a stunning 43 per cent year on year in the first quarter, sparking concerns that the nation may not be able to sustain such a high-rate economic growth over the long term.

Those concerns are justifiable.

For example, China's per capita fresh water is only 18.5 per cent of the average world level while consumption is more than twice that in European countries. To produce US$1 GDP, the consumption of steel in China is about 5 times that of developed countries, according to Zhong Zhaoxiu, a researcher with the National Bureau of Statistics (NBS).

Last April, a high-ranking official from the Ministry of Land and Resources warned that two-thirds of the country's mines have reached their middle or old age, which means many will be closed due to depletion of resources.

The severe situation has prompted relevant departments, such as the NBS, the State Environmental Protection Administration, and the State Forestry Bureau, to quicken their pace in this aspect.

The project involves complicated calculation. First, the current prices of the mineral, water and forestry resources have been calculated in the market on the presumption that they are inexhaustible, which means they are significantly undervalued, said Ye Wenhu, a researcher with Peking University. New accounts need to deduct the undervalued part from the GDP.

Second, environmental degradation needs to be quantified to reflect the real green GDP figures.

Third, the costs needed to redress environmental degradation should also be taken into account.

All those tasks lack the support of a comprehensive and globally recognized indicator framework.

No matter how long it will take to draft such a framework, however, we must start the work. Otherwise, we are paying a heavy price each and every day.