Topics
Green GDP
Green GDP is an economic measure that adjusts the traditional Gross Domestic Product (GDP) by accounting for environmental costs. While traditional GDP measures the total value of goods and services produced within a country, Green GDP goes further by subtracting the negative impacts on the environment, such as:
- Pollution: The degradation of air, water, and soil quality due to industrial activities, urbanization, and other sources of pollutants.
- Resource Depletion: The consumption of natural resources, including fossil fuels, minerals, forests, and water, that reduces the availability of these resources for future generations.
- Environmental Degradation: The loss of biodiversity, deforestation, and destruction of ecosystems as a result of economic activities.
Significance of Green GDP:
- Sustainable Development: Green GDP provides a more comprehensive picture of a nation's economic performance by incorporating the sustainability of growth. It emphasizes the importance of balancing economic progress with environmental preservation.
- Policy Making: It helps policymakers assess the true cost of economic activities, guiding them in making decisions that promote environmental sustainability and responsible resource management.
- Public Awareness: Green GDP raises awareness about the environmental consequences of economic growth and encourages businesses and consumers to consider the environmental impact of their actions.
Example: If a country's traditional GDP shows robust growth due to industrial expansion, but this growth is accompanied by significant air pollution and resource depletion, the Green GDP might show a lower value. This adjustment reflects the environmental costs associated with the economic activities, providing a more realistic measure of overall economic well-being.
-
IB Economics - Measures of Economic Activity
Study Notes