"APPRECIATE AND APPLY THE NEW

TECHNOLOGIES RELATED TO SUSTAINABLE

URBAN DEVELOPMENT"
GREEN GDP
1. What is GDP?
 Since the 1930s, the most widely used measure of a nation's economic progress has been changes
in Gross Domestic Product (GDP).
 GDP measures the flow of income and expenditures through a market economy by adding
together the value of all final goods and services produced in a nation in each time period. i.e. it
is the total market value of the goods and services produced by a country’s economy during a
specified period.
 This is achieved by adding together a nation’s personal consumption expenditures, government
expenditures, net exports, and net capital formation (investment).
 GDP measures only the total economic output and does not have any means to identify wealthy
and assets that arise because of the economic output.

2. What is green GDP?

The lack of sustainability measurement in GDP calculation has led to new concept called Green GDP.
Economy receives benefits from natural, social, and human capital, and the quality and quantity of that
capital is affected by levels of net investment in the economy. Green Gross Domestic Product is an
indicator of economic growth with environmental factors taken into consideration along with the
standard GDP of a country. GGDP is the measurement of national output that includes effects on the
environment and natural resources. GDP accounts biodiversity loss and costs of climate change.

3. Evolution of Green GDP

In 1993, the United Nations Statistical Institute firstly proposed the concept of GGDP in its System of
Integrated Environmental and Economic Accounting, which included the integration of resources and
environmental costs into the production of the national economy.

Figure 0.1 Timeline of evolution of GGDP

 4. Calculating GGDP
Calculating GGDP requires that net natural capital consumption, including resource depletion,
environmental degradation, and protective and restorative environmental initiatives, be subtracted from
traditional GDP. Early calculations of green GDP considered one or two but not all environmental
adjustments.

Figure 0.2 Calculation of GGDP

5. Cross country analysis

The growth rates of GDP and the growth rate of Green GDP in 2014, differ significantly in almost all
countries, Average GDP growth for all the countries was 1.92%, however we have negative values for
Green GDP growth of -0.06%, meaning that we have a difference of almost 2%. In most of the countries,
environmental quality has been sacrificed to achieve higher growth rates and higher benefits of standard
economic features. The GDP values brings an overall picture of how environment is treated in the process
of development.

6. Case study
Study Area

Wuyishan City is in the northwest Fujian Province, under the Nanping City, which consists of three streets,
seven towns, and the total area is about 2813.91 km 2. It is the only tourism city named after the famous
mountain. It is rich in natural tourism resources, and the most famous areas are Wuyishan Scenic Spots
and Nature Reserve, both of which were included in the lj List of World Natural and CulturalNJ. Wuyishan
Nature Reserve is the world's most typical area of the same latitude, with the largest existing area and
best preserved in the subtropical native forest ecosystems. Wuyishan City considers tourism as its pillar
industries, but the level of industrial development is low. Choosing Wuyishan City as the case is due to its
good natural ecosystem. To protect the ecological environment, Wuyishan City gives up developing
industries that can bring pollution but much GDP at the same time, which is adapted to using the type II
green GDP accounting system.

Types of the direct ecosystem services in Wuyishan City The outer area comparing superiority analysis
method is used to analyse the leading industries in Wuyishan City. The method is an important means for
selecting the regional leading industries (Chen and Zhang, 2006). The standard is the degree of regional
specialization, also known as specialization rate, which indicates the proportion of an industry in its
regional industrial structure in proportion with the proportion of the industry in the national industrial
structure. The formula is expressed as follows:

Figure 0.3 Superiority analysis method

The Green GDP accounting of Wuyishan After collecting relevant data, using feasible valuation methods
(see table2), we can calculate the value of direct ecosystem services of Wuyishan City. In 2005, the total
forest area of Wuyishan City is 1323075hm2 , so we get the subtotal value of direct ecosystem services in
table 3.

Figure 0.4 The value of direct ecosystem services in Wuyishan City in 2005

In this study, we introduce the value of direct ecosystem services to GDP accounting system, and calculate
the type II green GDP of Wuyishan city. As Table 3 shown, the direct ecosystem services value is 12.32
billion yuan, and GDP is 3.02 billion in Wuyishan City in 2005. After adding the two values, type II green
GDP of Wuyishan city in 2005 is 15.32 billion yuan RMB, which is 5 times than GDP. The accounting results
indicate that Wuyishan City has great value of direct ecosystem services. Among them, water saving value
is the largest with 55%, followed by air cleaning. This shows that the natural landscape of Wuyishan City
is not only to promote local tourism development but more important to provide a lot of services for
residents. The value of direct ecosystem services in GDP accounting system cannot be ignored. Therefore,
the development of local tourism industry should also strengthen the protection of the natural
environment.

Conclusion
The basic gist of the problem the green GDP calculation is trying to solve is what exactly the price
of economic growth is in terms of the quality of life within that area. For example, a factory that maintains
an excellent production schedule will add to the GDP in the country in which it is located. If that factory
excessively pollutes the air in the process, the economic growth it has spurred is somewhat negated by
the environmental damage it has done.

ENVIRONMENTAL ACCOUNTING