Environment and

Development
 What do we want to accomplish today?
1. Dispelling Myths
2. What is sustainablity?
3. GDP – what is it? Why is it important?
4. NDP – What is it? How is it useful?
5. Income – Hicksian concept of Income
6. Natural Capital - what is it? Why is it
important?
7. Green GDP – what, why and how???
 Green GDP:
The Importance of
Valuing the
Environment
Land Economics 1997
Environment and Development 2000

Environmental Science&Technology2000

UNEP/World Bank 2000

 GDP

The market value of all final goods and services

produced inside a nation within a given period of
time.
 NDP

NDP = GDP – Dm
NDP = Income
 INCOME

Hicksian Income – The amount that can be

consumed during a week and still leave the
individual as well off at the end of the week.

The main objective is to keep capital intact.

NATURAL CAPITAL
Forests, minerals, Marine Ecosystems, fossil fuels

1) Natural Capital

2)Environmental Services
 Forests
Natural Capital

Fiber
Fuel
 Forests
Environmental Capital

Water quality
Biodiversity
Carbon storage
Aesthetics
 GREEN GDP
The goal of Green GDP is to properly treat changes
in Natural Capital so that Green GDP is truly a
measure of the maximum amount that could be
consumed now without reducing consumption in
the future (Horan et al, 2000)

“The national income accounts of developing

countries often include large credits for resource
extraction, with no offsetting depletion charge. The
result can be a GDP that reflects a false sense of
relative income and economic prosperity” (Davis
and Moore 2000).

GGDP = NDP – Dn
 GREEN GDP
NDP - Dn
 Zimbabwe 1980 – 1989 (2%
reduction)
 Brazil 1978 1993 – GDP (.7%)
GDP – Dn = .3%
 Indonesia 1980s GDP (7.1%)
GDP – Dn = 4%
 WHY NOT MORE?
The very nature of ecosystems – their
complexity in structure and function –
makes understanding the consequences of
ecosystem damage a daunting task even
for ecologists.” (V.K. Smith 2000)
Theoretical
Difficulties
Methodological Difficulties
Theoretical
difficulties

What do we count?
What is value?
 Methodological
difficulties

How do we count it?

Contingent valuation
Conjoint analysis

Technological innovation /
uncertainty
 CASE STUDY
British Columbia,
CA
Qualityof timber (down)
Landslides (up)

Restoration of watersheds ($1b)

Salmon extinction

743 plants and animals threatened

or endangered
 GGDP

1997 – 30% is income

70% depletion of capital
 Policies for
maintaining Natural
Capital in British
Columbia
Stop fragmentation
Protect old growth

Maintain soils

Maintain species, genetic and

habitat diversity