The indicator for measuring economy converting from GDP to GGDP: Is it worth? —— Research of the impact mechanism of GGDP algorithm on the global environment based on Saša Stjepanović

Abstract

We have seen the irrationality of the global community's long-standing use of GDP as an indicator of economic health, and we have also seen new hope for our global environment and economy using the new GGDP indicator. This paper proposes a model to quantify as precisely as possible the impact of the use of GGDP on the global environment, compare it with the GDP indicator currently used, and analyze whether this transition is worthwhile from environmental, economic, and social perspectives. We test the models and results using real-world data (from WMO, UNFCCC, IEA, UNEP), striving to draw more reasonable and scientific conclusions. Based on the position that it is easy to quantify, we wanted to choose indicators with strong versatility, which can be adapted to different countries, and chose the calculation method accordingly. This paper uses stepwise regression analysis method to establish a multiple linear regression model. In our model, indicators (KtCO2, Twaste, NRD) reflecting the effect of the global measures taken after using GGDP were used as independent variables, and indicators (global average temperature, global average precipitation, air humidity) reflecting global environmental impact were used as dependent variables. We collected data from 2010-2019 models to address how to quantify their global environmental impact, and concluded: for every million tons of CO2 emissions, the average global average temperature increase was 0.09 degrees; For every 1 per cent decrease in global natural resource depletion as a percentage of gross national income, global precipitation increases by an average of 8,9.35 mm; For every million tons of carbon dioxide emissions and 100 million tons of waste, global air humidity rises by an average of 3.956%, And these are all positive impacts that the use of GGDP indicators will have on the global environment. Indeed, the process of measuring the economy's indicators from GDP to GGDP requires a significant amount of cost. To analyze whether this transformation is worthwhile, we convert all the ecological value brought by the indicator transformation into US dollars so we can account and compare it easier. We used the cost-benefit analysis method and the multiple linear regression model established above to calculate the direct benefits, indirect benefits, direct costs and indirect costs generated in the transformation from GDP to GGDP. In addition, we estimate future trends in benefits and costs. In summary, due to the high cost of building a resource accounting department, for a short time, the global benefits were much smaller than the costs consumed, but with the development of technology, it will become easier to use more clean energy, reduce carbon dioxide and waste emissions, so the cost of emission reduction will be greatly reduced. At the same time, the improvement of the global ecological environment has effectively prevented some disasters caused by environmental degradation to a certain extent, resulting in a significant increase in potential benefits. In summary, we believe that this shift is still worthwhile and necessary in the long run.