Welfare bought at the expense of environment. China makes a case for green GDPs.

       

One of the concerns about the economical development, and especially the tremendous growth in China, has been if it is bought at the expense of environmental degradation. Now China has published an estimate that at least 5% of the GDP is wasted. Some 3 % was pollution losses and another 2% was spent on pollution treatment. According to the Chinese this is the first official figures on green GDP and will set a standard, though the material is still incomplete. In the comments they assume that there should be further reductions made and that the real welfare growth probably is drastically lower.

There is a UN-manual for green GDP calculation but both definitions and practice are scarce, which makes the Chinese example so much more important as a basis for further development of the methods. One alternative is to calculate a Genuine Progress Indicator, GPI, that takes into account also social costs. An attempt to do so for the San Francisco Bay Area shows that these may be even bigger than the environmental costs.

On the blog-spot for Environmental Economics there are links to further studies that go more into depth and details on how green GDP is viewed, e.g. by economist like Nordhaus and Tobin.