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GreennationalproductWikipedia,thefreeencyclopedia

Greennationalproduct
FromWikipedia,thefreeencyclopedia

Thereisacriticismofthegrossnationalproduct.Thecriticismstemsfromthefactthatthismeasurementof
nationalproductdoesnotaccountforenvironmentaldegradationandresourcedepletion.Anewapproachtothe
situationofallocatingtheseomittedenvironmentalfeaturesinthenationalproducthasbeentheadventofthe
greennationalproduct.

Contents
1 Criticismofgrossnationalproduct
2 History
2.1 Measureofeconomicwelfare
2.2 Indexofsustainableeconomicwelfare
2.3 Genuineprogressindicator
2.4 IntheUnitedStates
3 Need
4 Seealso
5 References

Criticismofgrossnationalproduct
Thegrossnationalproduct(GNP)measuresthewelfareofanation'seconomythroughtheaggregateof
productsandservicesproducedinthatnation.AlthoughGNPisaproficientmeasurementofthemagnitudeof
theeconomy,manyeconomists,environmentalistsandcitizenshavebeenarguingthevalidityoftheGNPin
respecttomeasuringwelfare.JosephStiglitz,NobelPrizewinningeconomist,statesthatthisstandard
measurementforanynationaleconomyhasbecomedeficientasameasureoflongtermeconomichealthinour
recentlyresourcedrivenandglobalizingworld.[1]CriticssuggestthatGNPoftenincludestheenvironmenton
thewrongsideofthebalancesheetbecauseifsomeonefirstpollutesandthenanotherpersoncleansthe
pollution,bothactivitiesaddtoGNPmakingenvironmentaldegradationfrequentlylookgoodforthe
economy.[2]CriticsofmainstreameconomicscomplainthatGNPcompilesspendingthatmakesusworseoff,
spendingthatallowsustostayinthesameplace,andspendingthatmakesusbetteroffallinasinglemeasure,
givinganationnoclueiftheyaremakingprogressornot.[3]ManfredMaxNeef,Chileaneconomist,explains
thatpoliticiansfeelthatitisirrelevantwhetherthespendingisproductive,unproductive,ordestructive.[3]In
thissense,itiscommontoseepoliticalpoliciesthatcalltodepredateanaturalresourceinordertoincreasethe
GNP.Totakeintoaccounttheenvironmentaldepredationandresourcedepletionthereisacalltoshiftaway
fromthetraditionalGNPandconstructanassessmentofnationalproductthattakesintoaccountenvironmental
effects.

History
Measureofeconomicwelfare
EversincetheIndustrialRevolution,scientistsandeconomistshavewarnedofaninflectionpointforthe
UnitedStateseconomywhereexpansionisinevitablylimitedbythesteadilydecreasingavailabilityofnatural
resources.In1973,WilliamD.NordhausandJamesTobin,Yaleeconomists,werethefirsttoquestiontheGNP
in"isgrowthobsolete?"NordhausandTobindevelopedaMeasureofEconomicWelfare(MEW)andstated
thatwelfaremustbesustainableinthesensethatnationsthatdevourtheirstockofcapitalarenotaswellasthe
nationalincomewouldsuggest.[4]
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Indexofsustainableeconomicwelfare
However,in"TheGreenNationalProduct,"CliffordCobbandJohnCobbarguethattheMeasureofEconomic
Welfarefailedtoencompassthedepletionofnaturalcapital.[5]In1989,HermanDaly,JohnCobb,andClifford
CobbcreatedwhatisknownastheIndexofSustainableEconomicWelfare(ISEW).Thisnewmeasurementof
welfarewascreatedinthehopesthatitwouldreplacetheflawedGNP.HermanDalystatedthatthekeyflawof
thetraditionalGNPwasthatitignoredcoreaccountingprinciplesofbusinesswhereallrevenuesandexpenses
areallocatedtoincome.[6]ISEWcalledforecologicalandeconomicsustainabilitytocoincidesincethe
economyisultimatelydependentonthenaturalresourcesthattheearthprovides.[7]Ratherthantheoriginal
GNP,ISEWtakesintoaccountcoststhatarenaturallyunsustainable.BycreatingISEW,theywantedtoexpand
thecurrentnationalproductsothatindividuals,businesses,andgovernmentscouldtakeactionsthatwill
generallyenhancewelfareinsteadofjustthetraditionalGNP.[8]

Genuineprogressindicator
In1995,RedefiningProgresscreatedthegenuineprogressindicator(GPI)asanalternativetothetraditional
GNP.Thisnewmeasurementofnationalincomewouldallowpolicymakerstogaugehowwellcitizensare
economicallyandsocially.[9]UnlikewelfareadjustmentsinthepastlikeMEWandISEW,GPIadjustsnotonly
forenvironmentaldepredation,butalsoincomedistribution,housework,volunteering,crime,changesinleisure
time,andlifespanofconsumerdurablesandpublicinfrastructures.[10]Thiswasoneofthefirstalternativesto
thetraditionalGNPtobeusedbythescientificcommunityandgovernmentalorganizationsglobally.

IntheUnitedStates
In1992,theBureauofEconomicAnalysis(BEA)oftheU.S.DepartmentofCommercebegantoexecute
intensiveworktocreateanenvironmentalaccountingsystem.[11]TheBEAbeganbycreatingsatelliteaccounts
witheasilymeasurablecommoditiessuchaspetroleumandcoal.ThefirstpublicationoftheU.S.Integrated
EnvironmentalandEconomicSatelliteAccounts(IEESA)in1994.[11]Theinitialresultswerequitesignificant
andshowedhowGNPwasoverestimatingtheimpactofminingindustriesinrespecttothenationseconomic
wealth.[6]Miningcompaniesdidn'tcarefortheinitialpublicationsforobviousreasonsandinamatteroftime
untilAlanMollohan,aDemocraticHouseRepresentativefromWestVirginia'scoalcountry,sponsoredan
amendmenttothe1995AppropriationBill.InresponseCongressdirectedtheBEAtosuspendfurtherworkin
environmentalaccountingandtoobtainanexternalreviewontheirfindings.[11]

Need
Manypeoplearecallingforagreennationalproductthatwouldindicateifactivitiesbenefitorharmthe
economyandwellbeing.Thisgreennationalproductwouldrevolvearoundthesocialandeconomicissueson
whichmanygreenmovementshavefocused:carefortheearthandallthatsustainit.[2]Thisnewnational
productwoulddifferfromthetraditionalGNPbyaddressingboththesustainabilityandwellbeingoftheplanet
anditsinhabitants.[7]Itisessentialthatthissystemtakesintoaccountnaturalcapital,whichiscurrentlyhidden
fromourtraditionalmeasurement.

Seealso
BhutanGNHIndex
Genuineprogressindicator
Greengrossdomesticproduct
GrossNationalHappiness
Happinesseconomics
IndexofSustainableEconomicWelfare
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References
1.Stiglitz,Joseph(20061002)."GoodNumbersGone
Bad".CNN.Retrieved20080402.
2."GreenAccounting".GernotWagner.2007.Retrieved
20080402.
3.CobbClifford,andCobb,John."TheGreenNational
Product",UniversityPressofAmerica,c1994.p.2
"Introduction"
4."IsGrowthObsolete?"(pdf).MiltonMoss.1973.
Retrieved20080402.
5.CobbClifford,andCobb,John."TheGreenNational
Product",UniversityPressofAmerica,c1994.p.10
11"HowtoMeasureWelfare:SomeOptions"
6."FixingGDP:GreenAccountingintheUnitedStates".
NationalPublicRadio.April9,2004.Retrieved
20080402.
7.CobbClifford,andCobb,John."TheGreenNational

7.CobbClifford,andCobb,John."TheGreenNational
Product",UniversityPressofAmerica,c1994.p.280
"BridgingEconomicsandEcology"
8.CobbClifford,andCobb,John."TheGreenNational
Product",UniversityPressofAmerica,c1994.p.280
281"BridgingEconomicsandEcology"
9."GenuineProgressIndicator".RedifiningProgress.
2008.Retrieved20080402.
10."GenuineProgressIndicator".RedefiningProgress.
2008.Retrieved20080402.
11."On"GreenNationalProduct":Theoriesanda
ComparisonAmongDifferenceApproaches"(pdf).
EolssPublishers.2007.Retrieved20080402.

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