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GREEN GDP: AN ANALYSIS FOR DEVELOPING COUNTRIES BY: VEDANT PRATAP SINGH
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GREEN GDP: AN ANALYSIS FOR DEVELOPING COUNTRIES
AUTHORED BY: VEDANT PRATAP SINGH
vedantpratapsingh26@gmail
ABSTRACT
Green GDP is a measure of economic
growth that takes into account environmental factors in addition to traditional
GDP. It takes into account both the positive and negative effects of economic
activity, such as resource depletion. Establishing a reliable, faultless, and
scientifically based green GDP accounting system is an essential long-term
goal, notwithstanding the difficulties that currently exist. Combining
qualitative research with quantitative analysis and implementing best practices
from both local and global contexts are necessary to achieve this goal. The
development and improvement of systems for monitoring, early warning, and
assessment need immediate attention. Whatever the degree of accuracy or type of
relationship, the important thing is to draw a comparison between the costs of
resource and environmental degradation and the advancement of social and
economic development. The government may find this information to be extremely
useful. When deciding on development, production, and consumption, businesses
and individuals.
1.
Introduction:
Green national accounts
are being called for as a result of growing environmental consciousness. They
are intended to provide the inventory of environmental resources and their use
and depletion in traditional national accounts. Considering their societal
worth, green GDP should include both environmentally harmful and beneficial
items. The recommendation calls for classifying items based on how they affect
the environment and using the Ministry of Statistics and Programme
Implementation's Supply and Use tables as a source of data for data collection
and analysis (MoSPI).
It is necessary to define
output, consumption, and wealth more broadly in order to incorporate green
accounting into the traditional GDP. This entails including into the national account
goods with both favourable and unfavourable environmental effects. Furthermore,
related economic operations should take these items' societal worth into
account. There are several reasons for this situation. From an economic
perspective, the GDP is viewed as dangerously insufficient since it ignores
social costs, environmental effects, and income inequalities in favour of
production and consumption. The public's worry over depleting natural
resources, pollution in the environment, and other ecological issues is rising.
From a philosophical
standpoint, when contrasted to society's material quality of living, human
cravings and population expansion pose obstacles to non-market metrics of
well-being. Political reactions to the idea of "green growth" vary;
they can be enthusiastic or cautious depending on the opportunity and danger
that it brings, as it may put certain nations at a disadvantage
internationally. Moreover, methodological issues are brought up by the absence
of well-established guidelines for trustworthy statistical data, hindering the
development of an accurate accounting and valuation system for economic growth
and development.
2.
What is Green GDP
The Green GDP, which
stands for Green Gross Domestic Product, is a measure of economic growth that
adds environmental factors to a country's traditional GDP. It takes into
consideration things like the loss of biodiversity and the costs related to
climate change. Indicators such as the "Sustainable Development
Index" may be created by combining physical measures like "waste per
capita" and "carbon dioxide emissions per year."
2.1.
Rationale Behind Green GDP
The traditional GDP
measures are limited because they capture economic expansion and desired levels
of life more than anything else. It only measures the total amount of economic
output; it cannot identify the assets and riches that are produced as a
consequence of this output.Moreover, the conventional GDP is unable to evaluate
the sustainability of the revenue produced in a nation. This disadvantage is
addressed by the pursuit of the "green GDP" idea.
The reason why the GDP
does not adequately describe national capital is because it is excluded since
it is considered unimportant. Future environmental preservation initiatives
have potential advantages that policymakers and economic planners typically
miss when evaluating their costs. For example, the benefits of agricultural or
forest land are not taken into account, mostly because it is difficult to
measure and evaluate these types of assets with accuracy. Furthermore, the
impact of declining natural resources that are necessary for maintaining the
economy is not taken into consideration by typical GDP calculations.
Because it is disregarded
because it is deemed irrelevant, national capital is not sufficiently
represented by the GDP. Policymakers and economic planners often overlook the
potential benefits of future environmental preservation programmes when
assessing their costs. For instance, the advantages of land used for
agriculture or forests are not included, mostly due to the difficulty of
accurately measuring and assessing these kinds of assets. Furthermore, standard
GDP figures do not account for the impact of depleting natural resources, which
are essential to sustaining the economy.
2.2.
How is Green GDP Calculated?
The depletion of net
natural capital, which includes resource depletion, environmental degradation,
and protective environmental actions, is subtracted from the conventional GDP
to arrive at the green GDP. Alternatively, one may also apply similar
calculations to the net domestic product (NDP), as GDP takes capital
depreciation into account. Resource extraction operations must always be
translated into monetary values since that is how national accounts represent
them.
2.3.
GDP vs Green GDP?
Some of the results,
according to some who oppose using environmental elements in computations, are
difficult to measure, particularly when non-tradable goods like ecosystem
services are involved. When valuation is carried out indirectly and may rely on
speculative or hypothetical assumptions, problems might occur.
There are two ways that
proponents of modified aggregates might address this criticism. First, they
contend that as technology advances, more precise valuation techniques will
eventually be able to be developed. Second, they argue that adjustments are
still a better choice than traditional GDP, even if measures for non-market
natural assets are not perfect.
3.
What is the Significance of Green GDP
Green GDP is a measure of
economic growth that takes into account the environmental cost of economic
activity. It is calculated by subtracting the cost of natural resource
depletion and environmental degradation from the conventional GDP of a country.
Green GDP can help countries to make better decisions about economic growth and
development. By accounting for the environmental costs of economic activity,
GGDP can help countries identify sectors and activities that have a significant
negative impact on the environment. This information can then be used to design
policies and regulations that encourage sustainable economic growth and
development.
Some of the specific
benefits of using GGDP include:
·
It provides a more comprehensive measure of economic well-being: GGDP takes into account the
environmental costs of economic activity, which conventional GDP does not. This
means that GGDP can provide a better indication of how economic growth is
affecting the well-being of people and the planet.
·
It can help to identify and address environmental problems.9 GGDP can be used to identify sectors and activities that
have a significant negative impact on the environment. This information
can then be used to design policies and regulations that encourage sustainable
economic growth and development.
·
It can help to promote
sustainable economic growth. GGDP can be used to
track the progress of countries towards achieving sustainable economic
growth. This information can be used to identify areas where further
action is needed to ensure that economic growth is sustainable in the long term
4.
What are the Challenges in Implementing Green GDP[1]
·
Data Availability and Reliability: The ambiguity surrounding statistics on environmental
costs, benefits, and the value of natural resources makes calculating the green
GDP difficult. The dependability and comparability of the outcomes are impacted
by estimates since they are based on subjective evaluations and assumptions.
·
Value Assignment: There is debate when environmental products and services are given a
monetary value. Some who oppose it argue that some aspects, such as cultural
heritage or biodiversity, have inherent worth that goes beyond economic
assessment techniques. They contend that the practice oversimplifies and
commodifies nature by attributing economic values to the environment.
·
Complexity and Indicators: The process of calculating Green GDP is intricate since it
takes into account social, economic, and environmental factors. To make matters
harder, there isn't a single, widely accepted way to combine these variables,
and choosing the right indications is hard.
5.
Policy Implementation and Trade-offs:
Green GDP is helpful, but
implementing it as policy can be challenging. We need to overcome challenges,
get political support, and work together to make policies work. Furthermore,
since striking a balance between environmental preservation and economic growth
is difficult and situation-specific, universal policies based solely on Green
GDP are being considered. Green Growth: Why it matter for developing
countries?
For two main reasons,
developing countries are essential to the advancement of green development
worldwide. First of all, the economic and social fallout from environmental deterioration
is a major concern for many nations. Compared to more developed countries, they
are more vulnerable to the effects of climate change and frequently depend more
largely on the exploitation of natural resources for economic growth. In
addition, a lot of developing countries face significant ecological, social,
and economic difficulties, such as the effects of climate change and extreme
weather events as well as the insecurity of food, water, and energy. A number
of issues, including as pollution, low water quality, and illnesses linked to
climate change, impede their ability to flourish further.
Second, there is a chance
for higher emissions if developing nations follow traditional economic growth
methods, even if their present shares of global greenhouse gas (GHG) emissions
are still relatively small when compared to the OECD and large emerging
economies. These countries are contributing more and more to the expansion of
the global economy, which is driving up emissions and, in turn, the more intense
use of natural resources. This dual function emphasises how vital emerging
nations are to determining the course of global green growth.
The concept of
"green growth" has emerged as a novel approach to addressing the
growth and development difficulties previously discussed while preserving goals
for future growth and poverty reduction. In order to accomplish these
objectives, this strategy looks to reinterpret the conventional growth model
and reevaluate different investment options. The OECD defines "green growth" as seeking
to advance economic development and expansion while guaranteeing the continuous
availability of resources and environmental services from natural assets that
enhance our quality of life (OECD, 2011b). However, different developing countries
would understand the notion of "green growth" in different ways,
resulting in differing viewpoints, and the concept has raised some concerns.
5.1.
What are the concerns of developing countries
about the concept of green growth?
Diverse political
positions, from zeal to prudence, are being sparked by the idea of "green
growth," which suggests a combination of insufficient knowledge and
limited experience. This variability results from worries that particular
countries may be negatively impacted by global green growth strategies as well
as variations in how opportunities are viewed in different countries. Emerging
economies, for example, are very excited about the potential that green growth
presents, and they benefit from having access to the necessary funding and
technology to make these opportunities a reality. With 1.4% of its GDP invested
in clean technology as of 2008, China was the world's top producer of this
technology (ADB, 2012). However, a lot of low-income countries (LICs) take a
cautious approach to the idea. LICs are just beginning to assess the
advantages, disadvantages, and ramifications of pursuing a green economic path.
They encounter difficulties, though, because the technology and policy concepts
may not be completely in line with their country's development requirements and
are not always readily available. There is a noticeable negative political
response to the green growth idea in a few nations.
Developing countries are
similarly hesitant about the details of "green growth," with worries
ranging to global issues such as the dangers of "green protectionism"
and the application of "green" requirements to official development
assistance. Other important things to think about are:
·
Will poverty and other development concerns be adequately addressed by
green growth?
The existing policy
suggestions for green growth, which prioritise high-tech and low-carbon
solutions, do not specifically address concerns of fairness at the national or
international levels. This
involves the difficulty of including people working in the informal economy
from many developing nations into the mechanisms that determine economic policy
and the possibility of large-scale economic growth. The possible advantages of
making better use of natural capital are not given enough
consideration.Furthermore, there are states that fear the Rio Principles,
particularly the one about shared but distinct duties, may be compromised by
the focus on green growth.
·
The
substantial upfront costs associated with promoting green growth might be a
hindrance for many developing countries in particular. For example, some
nations might not be able to afford the price of implementing green practises,
such as installing solar electricity in rural regions. Most developing regions
still lack basic technology in critical sectors including integrated water
resource management, wastewater treatment, waste management, and energy
efficiency. Furthermore,
there's concern that these countries' own technology, as well as indigenous methods,
could not be able to compete, forcing other countries' innovations to be
imported. In order to really allow the transfer of green technology between
developed and developing nations, it is imperative to eliminate barriers such
as intellectual property rights and promote the sharing of scientific and
technological information.
These developments are
influenced by a number of global variables, such as the development of
internationally interconnected supply chains and the notable expansion of the
global labour pool. Furthermore, there has been a discernible increase in the
demand for commodities, particularly industrial metals and fossil fuels. As a
result, emerging nations may be divided into three primary categories: those
that primarily depend on the sale of fuel, those that export non-fuel goods,
and those that prioritise manufacturing. High carbon emissions and extensive
use of natural resources are commonplace in emerging countries experiencing
economic expansion, especially in the industrial and extractive industries.
Moreover, these nations are especially vulnerable to the negative effects of
resource depletion and climate change. Significant negative effects on the
economy, society, and health are predicted from these trends, including
decreased agricultural production, difficulties obtaining freshwater, severe
weather-related incidents and early mortality brought on by unchecked
pollution.
In order to promote
sustainable development and equitable economic growth, emerging nations need to
implement policies that result in observable and quantifiable progress. Over
the next forty years, the OECD expects developing countries and rising
economies to grow significantly. Therefore, in order to significantly
contribute to global green development and promote environmental
sustainability, these countries must make the transition towards
environmentally friendly growth.
There are opportunities
to balance economic and environmental sustainability, especially for emerging
countries that may include environmental factors into their infrastructure
investment choices. Additionally, by advancing the development of agriculture
and other natural resources, there is potential to improve livelihoods, create
jobs, and reduce poverty. Developing nations and rising markets may avoid
unsustainable and inefficient production and consumption patterns by adopting
green growth strategies. In contrast to developed economies that are
constrained by route dependency and sunk capital, emerging economies have the
ability to create the networks and infrastructure required for sustainable
growth if they have access to enough funding.
7.
A policy framework for greening growth in developing
countries
The integration of
inclusive economic development that takes into account, produces, and maintains
social and environmental values is known as "green growth" in many
nations. This entails improving the efficacy and efficiency of the government
as well as customers and formal and informal economic players. Green growth
requires reforming mainstream policies and governance structures in a
methodical way. To put it simply, it means making sure that economic governance
is in line with sustainable development ideals.
Three important factors
should be taken into account by a national government when developing and
executing a green growth strategy:
i) creating a
national strategy for green growth to create favourable circumstances.
ii) putting in
place systems for mainstreaming green growth in order to look for possibilities
inside already-existing industries.
iii) using green
growth policy tools to take advantage of particular opportunities in resource
and spatial systems.
8.
Countries use Green GDP?
In terms of the creation
and implementation of policies pertaining to green GDP (GGDP), China has taken
the lead. The nation started experimenting with GDP in the early 2000s, and in
2006 it formally released its first estimate of GDP. China has since continuously
enhanced its GGDP technique and used it to inform its economic strategies.
China has set its own standards for Green Gross Domestic Product (GGDP) in
light of the particular environmental problems it faces. China thinks that the
environmental effects of economic activity are significant based on its gross
domestic product (GGDP). For example, in 2017 China's conventional GDP (gross
domestic product) was estimated to represent 6.96% of the environmental costs
of economic activity. This suggests that $6.96 of every $100 in conventional
GDP was devoted to resource depletion and environmental remediation.
Estimates of China's
Green Gross Domestic Product (GGDP) have influenced the development of several
environmental laws. Among these are campaigns to:
a) Encourage the development of greener
energy sources, such as wind and solar energy.
b) Promote policies aimed at improving
energy efficiency.
c) Put policies in place to reduce
pollution from industrial sources.
d) Protect the environment by taking
steps to preserve forests and waterways, among other things.
ii)
United States of America
The United States has
implemented a comprehensive system of environmental-economic accounting that
provides a range of indicators emphasising the interaction between the
environment and the economy. These accounts include data on environmental
spending, environmental taxes, and several facets of the interaction between
economic activity and the environment. It's crucial to remember, though, that
the United States does not provide a single indicator of green GDP.
iii)
Europe
Although
environmental-economic accounting are in existence in the US, there is no
official way to estimate green GDP. By way of comparison, the European Union
requires its member states to compile reports covering emissions, taxes,
materials, and spending on waste management. The adjusted domestic product or
green GDP may then be computed using these accounts.
iv)
Sweden
According to the Global
Green Economy Index, which evaluates the performance of 130 nations in four
important areas—markets and investment, environment and natural capital,
leadership and climate change, and efficiency sectors—Sweden stands out as a
high-performing country. Furthermore, Sweden has developed a dashboard with a
series of metrics to monitor its progress in attaining green growth.
9.
India’s Status as a Green Economy[4]
Countries throughout the
world are ranked according to the 2020 Environmental Performance Index based on
factors including waste management, air quality, fisheries, ecosystem services,
and climate change. India ranks 169th out of 180 nations among the six major
economies, indicating a lack of green growth. Based on particular metrics,
India's standings are as follows: Fisheries (36), Biodiversity & Habitat
(149), Waste Management (103), Sanitation & Drinking Water (139), Air
Quality (179), and Climate Change (106). India's poor performance should worry
us since it poses serious hazards to the environmental health of around 1.3
billion people.
India's ability to reduce
its dependency on resources necessary to maintain economic growth will
determine how far it can go towards achieving green growth, which would improve
social fairness and create jobs. Finding a balance between both agendas is
essential, and green growth is a key component. However, the main barriers to
national policymaking—public debt and fiscal deficits—may make it difficult to
make the technology advancements required for green growth. In addition,
macroeconomic policy heavily considers the trade balance. Understanding and maximising
the developmental benefits of green growth efforts is therefore crucial in
important areas like energy, trade, and income.
9.1.
Government Initiative towards
Green Energy
The Ministry of Finance
has proposed several initiatives for the environment:
i) Hydrogen Energy Mission- The project's goal is to produce hydrogen using sustainable
energy sources, which has the potential to transform the transportation
industry and promote the use of clean fuels in India. The budget's emphasis on
green hydrogen is in line with both the goal of scientific advancement and the
overall mission of lowering long-term reliance on rare earth elements and
mineral batteries for energy storage.
ii) Public transport-
The government has made a ground-breaking decision by designating INR
18,000 crores (USD 2.43 billion) in private finance for the purchase of 20,000
buses. This programme, when paired with creative funding via public-private
partnerships, has the potential to completely transform how India's public
transportation system operates. The initiative's objective is to reduce
dependency on individual automobiles, which will reduce the nation's total
carbon impact.
iii) Deep Ocean Mission-
As part of the plan, extensive deepwater surveys and exploration will be
carried out, and projects designed to protect deepwater biodiversity will be
put into action. Over a period of five years, a budget surpassing INR 4,000
crore would be set aside for the implementation of this programme.
iv) Urban Swachh Bharat Mission 2.0-
The government wants to clean up all of the current landfills and
effectively manage the garbage from building and demolition projects. The
emphasis is on reducing air pollution, classifying waste sources, minimising
disposable plastics, and managing manure, sludge, and sewage treatment
combined.
CONCLUSION
Green GDP is a measure of
economic growth that takes into account how economic activities affect the
environment. This helps countries make more informed decisions about how to
develop their economies. However, there are a number of challenges associated with
putting the Green GDP into practise, including finding reliable and accessible
data, setting values, managing complexity and indicators, and handling
trade-offs and policy implementation. Developing nations play a crucial role in
the global green development process. Nevertheless, there are concerns
regarding the concept of green growth's ability to effectively address poverty
and other developmental issues, as well as the substantial upfront costs
involved in advancing green growth The government can put measures in place to
promote the growth of green GDP, such as designating particular leaders for
each department and creating a coordination agency for green development. In
order to establish coordination mechanisms and carry out related management measures,
this coordination agency would promote conversations among relevant business
departments. Relevant departments should also actively participate in worldwide
environmental cooperation and economic exchanges. They ought to aid in the
restructuring of the global environmental governance system as well as the
international economic order. The goal is to take advantage of the chances that
arise from the political and economic environment's changing regulations. Given
its inherent benefits, creating a uniform, faultless, and scientifically sound
green GDP accounting system is undoubtedly a long-term development goal, even
though it remains difficult in the short term. In order to accomplish this, it
is crucial to combine qualitative research with quantitative analysis and learn
from cutting-edge practises both locally and globally. Systems for assessment,
early warning, and monitoring must be developed and improved right away. The
important thing is to create a comparison between the costs of environmental and
resource degradation and social and economic development, regardless of whether
the relationship is exact or imprecise, qualitative or quantitative. When
making decisions about development, production, and consumption, the
government, corporations, and people can all benefit from having this
information as a valuable resource.
[1] Gaikar, V., et al., eds. "FMET
2022." Advances in Engineering, Business and Management Research, vol. 227,
Springer, 2023, pp. 503-508
[2] OECD,
Green Growth and Developing Countries: A Summary for Policy Makers (2012).
[Green Growth and Developing Countries: A Summary for Policy Makers. OECD]
[3] Hu J, Lyu J, Zhang X. Evaluating
Agricultural Sustainability and Green GDP in China: An Emergy Analysis. Int J
Environ Res Public Health. 2022 Dec 13
[4] Verma,
Shreya, and Pragita Gupta. "India as a Green Economy." Aranca
Research, 25 Oct. 2021. Web. 27 Oct. 2023.
Article Information
GREEN GDP: AN ANALYSIS FOR DEVELOPING COUNTRIES BY: VEDANT PRATAP SINGH
Authors: VEDANT PRATAP SINGH
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/02/12
- Issue 7
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International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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