Abstract
While the gross national/domestic product (GNP/GDP) index is a highly reliable indicator that reflects economic performance of a country, it still largely ignores the depreciation of assets, non-market economy and especially the damages to the environment caused by growth. Environmental sustainability of economic growth has come to be recognized as one of the most important pillars of sustainable growth and development. In order to tackle many challenges of the so-called green growth and sustainable development we try to build a new/alternative Green GDP indicator that should give us a clearer perspective of the consequences of economic progress by offering a new approach in quantifying the cost of ecological and environmental degradation. The indicator reviews economic growth through the environmental prism without speculating on how economic and social trends will evolve and how these developments will guide policy making in the years to come. We are well conscious that this indicator cannot ideally reflect the genuine status and improvement of national output, however, we see it as an attempt to encourage further discussions on the green growth in a diverse range of developing and developed countries. The results reveal a necessity for a new synergy between economic and environmental concepts, hence this study should be seen as an opportunity, not an obstacle for equitable and sustainable growth/development prospects.
Highlights
A frequently asked question lately is whether the traditional measures of a country’s level of economic activity and progress, such as gross domestic product (GDP) or gross national product (GNP), fail to account for the environmental issues
When this point is crossed, further economic growth can deteriorate the quality of life due to the costs associated with an increasing income inequality, loss of leisure time and natural resource depletion
The goal of this study is to present the calculation of an environmentally adjusted GDP measure on the crosscountry base in order to shed some more light on the relevance of green growth and sustainable development
Summary
A frequently asked question lately is whether the traditional measures of a country’s level of economic activity and progress, such as gross domestic product (GDP) or gross national product (GNP), fail to account for the environmental issues. We have to be objective as well and state that standard measures such as GDP do have an enormous impact on policy goals and regulations, public and academic discourse as well the media since it is a powerful accountability mechanism (Boyd, 2009) that is objective, scientific and rule-driven, politically and institutionally independent and allows us to observe a complex economic system on an aggregate and disaggregate level Motivated by these questions, throughout history, numerous scholars have tried to evaluate economic growth by proposing alternative measures that would incorporate different aspects of well-being, but none of the proposed indicators have yet captured enough range to dethrone the GDP measure. These deficiencies could be detected by using alternative methods of national accounting or by calculating the Green GDP indicator (Vaghefi, Siwar and Aziz, 2015)
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