Accounting for Sustainability

Abstract

This chapter discusses the formal model of green national accounts, then examine the empirical evidence for progress towards sustainable development in sub-Saharan Africa using this model. Formal approaches to national accounting can be dated from the seminal paper by Weitzman, with Hartwick, Maler, Hamilton providing the extension of this work to the greening of the national accounts. The key question, therefore, is what policy implications follow from the measurement of negative genuine savings. The policy questions this poses are: Finally, it should be obvious that the gross savings rate is basic determinant of the genuine savings rate. The chapter presents a theoretical approach to green national accounting and argued that the measurement of genuine saving, net saving less the value of resource depletion, environmental deterioration, can serve as an indicator of sustainable development. However, it would be wrong to conclude that the policy response regarding savings, natural resources is to boost genuine savings by restricting resource exploitation.