Tuesday, September 22, 2009


National income and total output of economy of a country is measured with Gross Domestic Product (GDP) or Gross Domestic Income (GDI). GDP is measured total market value of goods and services at a given time, yearly basis. GDP growth rate is percentage increase or decrease in GDP from earlier measurement cycle. GDP growth rate is determined by exports, government spending, retail expenditures, and inventory levels. Growth can be negatively affected by increase in imports. Rate of growth is one of most important indicators reflecting a nation’s economic health. If there is growth in GDP, there will also be growth in personal income, business, and jobs. With a decreasing GDP growth rate, businesses will stop new recruitment and investing in new purchases till economy improves. But this can further reduce GDP and there will be less money with consumers to purchase. If GDP growth rate becomes negative, then economy is moving towards a recession. Growth rate can affect stock markets as investors get information about a country’s economic health.
So far while measuring the GDP growth, factors like environmental degradation for achieving the economic growth is not taken into consideration. To achieve economic growth in the name of development natural ecosystems are destroyed, the pollution levels are increased. With the growing population there is much stress on natural resources of a country. The Earth's natural systems like forests, seas, rivers, all natural ecosystems provide many essential goods and services that ensure our survival and enhance our lifestyles and well-being - such as food, fibre, fuel, medicines, building materials, climate regulation, control of flood and recreation facilities. The ecosystems that provide these services are rapidly depleting to the point of collapse. Anthroponic induced climate change, infrastructure development, the loss of natural forests, ecosystems and agricultural production are primary drivers of these losses. The prevailing economic model that exacerbates these problems, rather than counteracts them, is fundamentally flawed. The green gross domestic product (green GDP) is an index of economic growth with the environmental consequences of that growth factored in.
In 2004, Wen Jiabao, the Chinese premier, announced that the green GDP index would replace the Chinese GDP index itself as a performance measure for government. The first green GDP accounting report, for 2004, was published in September 2006. It showed that the financial loss caused by pollution was 511.8 billion yuan ($66.3 billion), or 3.05 percent of the nation's economy. As an experiment in national accounting, the Green GDP effort collapsed in failure in 2007, when it became clear that the adjustment for environmental damage had reduced the growth rate to politically unacceptable levels, nearly zero in some provinces. In the face of mounting evidence that environmental damage and resource depletion was far more costly than anticipated, the government withdrew its support for the Green GDP methodology. Independent estimates of the cost to China of environmental degradation and resource depletion have for the last decade ranged from 8 to 12 percentage points of GDP growth. These estimates support the idea that, by this measure at least, the growth of the Chinese economy is close to zero. Statisticians caution that key methodological problems in calculating the GGDP, such as the monetary value of biodiversity loss and the impacts of climate change and carbon dioxide emissions. Many barometers are currently in use, particularly indices such as Waste Per Capita or Carbon Dioxide Emissions Per Annum. One must also acknowledge how poorly represented true growth or sustainable development is with the anachronic GDP.
"GDP is unfit to reflect many of today's challenges, such as climate change, public health, education and the environment," was the conclusion of Beyond GDP, an international conference on gross domestic product held in Brussels in November 2007. Many governments in the world have spent trillions of dollars last year to get out of "recession" to keep economy on track and get back to GDP growth at any cost, it seems as if the main goal is simply to maintain the current ailing market system and stimulate continued unsustainable consumption.
Presiding over the Convention on Biological Diversity, organised by the United Nations at the MCR Human Resources Development Institute, Hyderabad, the Union Minister said "Our economic future will be in danger, if we do not improve green cover at least to one-third of our land area. Let us recognise the enormous threats to our biodiversity. We need to achieve a 9 per cent green domestic product as well, along with economic growth. I think it is possible if we demonstrate greater sensitivity towards ecology. In fact, ecology and economy can go hand-in-hand," Sri Jairam Minister for Environment and Forests said.
Some environmental experts prefer physical indicators (such as "waste per capita" or "carbon dioxide emissions per year"), which may be aggregated to indices such as the "Sustainable Development Index"
Every country should measure both economic growth and environmental growth. For this GDP for economic growth and Green Domestic Product for status of Environment of a country should be measured. Then only the real picture of growth i.e economy vs environment or development vs sustainability will emerge.

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