The Green Gross Domestic Product (GDP) is an economic growth indicator that quantifies and estimates the effects of that growth on the environment.
What does it mean to have a green GDP?
The green gross domestic product (green GDP or GGDP) is a measure of economic growth that takes into account the environmental effects of that expansion. Green GDP quantifies biodiversity loss and accounts for the costs of climate change. Physical measures (such as “trash per capita” or “carbon dioxide emissions per year”), which may be collected into indices like the “Sustainable Development Index,” are preferred by some environmental specialists.
What exactly is a green GDP, and how is it calculated?
The Green Gross Domestic Product, or Green GDP for short, is a measure of economic growth that takes environmental concerns into account in addition to a country’s regular GDP. Climate change-related biodiversity losses and costs are factored into Green GDP. Physical measures such as “carbon dioxide per year” and “trash per capita” can be combined to create indices such as the “Sustainable Development Index.”
What is the Rationale behind Green GDP?
Because they are measures of economic growth and ideal living standards, typical GDP measurements have limits. The standard GDP merely measures overall economic output and has no way of identifying wealthy people or assets that exist as a result of that output.
Normal GDP also has no method of understanding whether or not the level of income generated in a country is sustainable. Green GDP is being attempted to circumvent this constraint.
National Capital is underrepresented in GDP because it is deemed unimportant. Policymakers and economic planners do not place enough emphasis on the benefits that protective environmental initiatives may provide in the future in relation to their costs. Due to the operational challenges in measuring and valuing such assets, the positive advantages that may result from any forest or agricultural property are not taken into consideration. In addition, the impact of depletion of natural resources required to run the economy is factored into typical GDP calculations.
The requirement for a comprehensive macroeconomic indicator goes hand in hand with the necessity for long-term growth. GDP is incorrectly regarded as a measure of societal well-being, and as a result, it is frequently utilized in political and economic policy research. In this case, the Green GDP will be a viable option.
It’s also important to understand the distinction between economic growth and economic development, which is explained in the linked article.
How is Green GDP Calculated?
By deducting net natural capital consumption from conventional GDP, green GDP is computed. This covers resource depletion, environmental degradation, and environmental measures to protect the environment. These calculations can also be applied to the net domestic product (NDP), which is calculated by subtracting capital depreciation from GDP. Because national accounts are expressed in this manner, each resource extraction activity must be converted into a monetary value in every situation.
GDP vs Green GDP
Some of the specified outputs are difficult to measure, according to critics of estimates that take environmental considerations into account. This is especially challenging when the environmental asset does not exist in a regular market and so cannot be traded. One example of this type of resource is ecosystem services. If valuation is done indirectly, there is a chance that calculations will be based on speculation or hypothetical assumptions.
Those who favor the modified aggregates can respond in one of two ways to this criticism. First, as our technology capabilities advance, more precise valuation methodologies have been developed and will continue to be developed. Second, while assessments of non-market natural assets may not be accurate, the modifications they require are nevertheless a better alternative to traditional GDP.
Learn about key environmental standards and protocols that can help you pass the exam.
What are the three different types of GDP?
- The monetary worth of all finished goods and services produced inside a country during a certain period is known as the gross domestic product (GDP).
- GDP is a measure of a country’s economic health that is used to estimate its size and rate of growth.
- GDP can be computed in three different ways: expenditures, production, and income. To provide further information, it can be adjusted for inflation and population.
- Despite its shortcomings, GDP is an important tool for policymakers, investors, and corporations to use when making strategic decisions.
What is the difference between Gross Domestic Product (GDP) and Green GDP?
Several distinct growth indicators are used to assess, track, and sustain economic growth. The GDP, real GDP, and green GDP are all covered. The Gross Domestic Product (GDP) is defined as the monetary worth of all finished goods and services produced inside a country during a certain period, commonly computed using the C+I+G+ formula (X-M). The original GDP, on the other hand, is adjusted for inflation rates to get the Real GDP. Inflation affects GDP by changing the value of final goods and services over time, which is why real GDP is a more accurate representation of a country’s output. Green GDP is distinct from both real and original GDP in that it considers the environmental effects of economic growth. To put it another way, it’s the GDP before it’s been adjusted for environmental effects. The Green GDP measures biodiversity loss, climate change costs, carbon emissions, and other factors.
Is green GDP used in India?
India is one of the world’s fastest-growing economies, but it faces a huge challenge: how to meet the basic requirements of its population without exceeding environmental constraints. Despite the fact that millions of Indians have been lifted out of poverty in recent decades, massive inequities between rich and poor have become more entrenched. The richest 1% of Indians hold about 60% of the country’s wealth, making India the world’s 12th most unequal society. And the country is gradually facing a labor shortage as global markets and technologies move, limiting job options and making it even more difficult to escape poverty. T
Despite making significant international commitments to the 2030 Global Development Agenda and the Paris Climate Agreement, India is ranked 68th out of 80 countries on the Global Green Economy Index (GGEI). There is still a lot of work to be done. The Green Economy Barometer gives insight into the successes of the Indian economy across high-impact sectors, and is thus critical in the development of the Government of India’s next 15-year plan.
The 2018 Green Economy Barometer
The India Green Economy Barometer is part of a series evaluating the green economies of our seven partner countries. It tracks the economy in five areas:
- Measuring What Matters examines India’s economic modeling and measurement’s resiliency. It addresses alternatives to solely economic means of measurement, such as Gross National Happiness, the Happy Planet Index, and the Social Progress Index, such as Gross National Happiness, the Happy Planet Index, and the Social Progress Index. In 2017, India was rated 6th out of 190 nations in terms of GDP growth, but it was placed 122nd out of 155 countries in terms of Gross National Happiness.
- Agriculture, Renewable Energy, Construction, Transportation, and Medium and Small Industries are among the key sectors identified as having a strong potential for development toward greening. In 2012-13, MSME contributed a high 37 percent to GDP, and it has the potential to create millions of new employment.
- Investing in People examines the state of people and the government’s efforts to improve and develop human resources. The Government of India made it mandatory for corporations to spend 2% of their income on corporate social responsibility in 2013.
- Managing Natural Systems emphasizes the protection of India’s natural capital, which includes both valuable but finite raw minerals and intangible assets such as biodiversity, rare species, and clean air and water. It looks at what more can be done to achieve equitable resource distribution and promote production and consumption resilience.
- Influencing Financial Flows examines the direction and magnitude of green investment in the economy, as well as government spending on the green economy, and assesses the financial sector’s inclusion. The government has taken the initiative to better manage resources by enacting additional coal taxes, which resulted in a total collection of INR 170 billion in 2014-15. Meanwhile, renewable energy has drawn a staggering $11.4 billion in investment.
Conclusion
The Indian Green Economy Barometer summarizes the five components of sustainable development that must be addressed: reforming finance, greening the economy, respecting nature, and investing in people. This paper is aimed at policymakers and practitioners who are the driving forces behind the economy’s transition to a more sustainable future. The report provides significant suggestions across the economy that are important for moving forward on the path to a green economy. Reforming finance, which involves providing incentives, risk coverage, a legal framework, technology, and infrastructure to support green MSMEs, as well as promoting decentralized service models and local enterprises, are among the measures.
Which country was the first to implement green GDP?
It is a measure of a country’s readiness for long-term economic development, as well as waste per capita and carbon dioxide emissions increase or decline. China pioneered this concept by presenting the first green GDP data for the year 2004 in 2006.
Why is green GDP so important?
To demonstrate this, the study created many scenarios. According to the report, a 10% reduction in particle emissions by 2030 will only result in a 0.3 percent reduction in GDP when compared to business as usual. A 30% reduction in particle emissions, on the other hand, reduces GDP by $97 billion, or 0.7 percent, with minimal effect on growth rates.
In all instances, there are major health benefits. The savings from lower health-care costs vary from $105 billion in a 30% drop to $24 billion in a 10% reduction. This compensates for the predicted GDP loss to a great extent.
Green growth is measurable and significant, according to the research, because India is a hotspot of unique species and ecosystems. The study was the first to conduct a complete assessment of the value of ecosystem services throughout India’s varied biomes.
It corresponds to around 3.0 percent to 5.0 percent of GDP, according to conservative estimates. “Traditional growth measurements fail to capture the environmental costs, which have been demonstrated to be especially severe at today’s high development rates. There are also technologies now available to quantify natural capital’s major contribution in the form of ecosystem services. As a result, it’s critical to measure green Gross Domestic Product (green GDP) as an indicator of economic growth that includes environmental costs and services,” Mani added.
What is GDP PDF in green?
Education’s Contributions to the Green GDP Green GDP may be used to completely quantify the role of education within the green GDP accounting system and embody the true value of education in economic growth.
What is the formula for calculating green GNP?
GNP in the green. GNP does not account for the costs of I pollution of the environment and (ii) depletion of natural resources as a result of output production. Increases in GNP alone will not reflect an improvement in quality of life if they result in increased pollution or a reduction in resources accessible to future generations. As a result, the idea of Green GNP has been established as a means of assessing economic well-being.
“GNP that is an indicator of a sustainable use of the natural environment and equitable distribution of development benefits” is how Green GNP is defined. The following traits are denoted by this concept: I Sustainable economic development, defined as development that does not degrade the environment (pollution) or deplete natural resources. (ii) An equitable distribution of the development’s benefits. (iii) Contributes to long-term economic prosperity.
In 2021, what would India’s GDP be?
In its second advance estimates of national accounts released on Monday, the National Statistical Office (NSO) forecasted the country’s growth for 2021-22 at 8.9%, slightly lower than the 9.2% estimated in its first advance estimates released in January.
Furthermore, the National Statistics Office (NSO) reduced its estimates of GDP contraction for the coronavirus pandemic-affected last fiscal year (2020-21) to 6.6 percent. The previous projection was for a 7.3% decrease.
In April-June 2020, the Indian economy contracted 23.8 percent, and in July-September 2020, it contracted 6.6 percent.
“While an adverse base was expected to flatten growth in Q3 FY2022, the NSO’s initial estimates are far below our expectations (6.2 percent for GDP), with a marginal increase in manufacturing and a contraction in construction that is surprising given the heavy rains in the southern states,” said Aditi Nayar, Chief Economist at ICRA.
“GDP at constant (2011-12) prices is estimated at Rs 38.22 trillion in Q3 of 2021-22, up from Rs 36.26 trillion in Q3 of 2020-21, indicating an increase of 5.4 percent,” according to an official release.
According to the announcement, real GDP (GDP) or Gross Domestic Product (GDP) at constant (2011-12) prices is expected to reach Rs 147.72 trillion in 2021-22, up from Rs 135.58 trillion in the first updated estimate announced on January 31, 2022.
GDP growth is expected to be 8.9% in 2021-22, compared to a decline of 6.6 percent in 2020-21.
In terms of value, GDP in October-December 2021-22 was Rs 38,22,159 crore, up from Rs 36,22,220 crore in the same period of 2020-21.
According to NSO data, the manufacturing sector’s Gross Value Added (GVA) growth remained nearly steady at 0.2 percent in the third quarter of 2021-22, compared to 8.4 percent a year ago.
GVA growth in the farm sector was weak in the third quarter, at 2.6 percent, compared to 4.1 percent a year before.
GVA in the construction sector decreased by 2.8%, compared to 6.6% rise a year ago.
The electricity, gas, water supply, and other utility services segment grew by 3.7 percent in the third quarter of current fiscal year, compared to 1.5 percent growth the previous year.
Similarly, trade, hotel, transportation, communication, and broadcasting services expanded by 6.1 percent, compared to a decline of 10.1 percent a year ago.
In Q3 FY22, financial, real estate, and professional services growth was 4.6 percent, compared to 10.3 percent in Q3 FY21.
During the quarter under examination, public administration, defense, and other services expanded by 16.8%, compared to a decrease of 2.9 percent a year earlier.
Meanwhile, China’s economy grew by 4% between October and December of 2021.
“India’s GDP growth for Q3FY22 was a touch lower than our forecast of 5.7 percent, as the manufacturing sector grew slowly and the construction industry experienced unanticipated de-growth.” We have, however, decisively emerged from the pandemic recession, with all sectors of the economy showing signs of recovery.
“Going ahead, unlock trade will help growth in Q4FY22, as most governments have eliminated pandemic-related limitations, but weak rural demand and geopolitical shock from the Russia-Ukraine conflict may impair global growth and supply chains.” The impending pass-through of higher oil and gas costs could affect domestic demand mood, according to Elara Capital economist Garima Kapoor.
“Strong growth in the services sector and a pick-up in private final consumption expenditure drove India’s real GDP growth to 5.4 percent in Q3.” While agriculture’s growth slowed in Q3, the construction sector’s growth became negative.
“On the plus side, actual expenditure levels in both the private and public sectors are greater than they were before the pandemic.
“Given the encouraging trends in government revenues and spending until January 2022, as well as the upward revision in the nominal GDP growth rate for FY22, the fiscal deficit to GDP ratio for FY22 may come out better than what the (federal) budget projected,” said Rupa Rege Nitsure, group chief economist, L&T Financial Holdings.
“The growth number is pretty disappointing,” Sujan Hajra, chief economist of Mumbai-based Anand Rathi Securities, said, citing weaker rural consumer demand and investments as reasons.
After crude prices soared beyond $100 a barrel, India, which imports virtually all of its oil, might face a wider trade imbalance, a weaker rupee, and greater inflation, with a knock to GDP considered as the main concern.
“We believe the fiscal and monetary policy accommodation will remain, given the geopolitical volatility and crude oil prices,” Hajra added.
According to Nomura, a 10% increase in oil prices would shave 0.2 percentage points off India’s GDP growth while adding 0.3 to 0.4 percentage points to retail inflation.
Widening sanctions against Russia are likely to have a ripple impact on India, according to Sakshi Gupta, senior economist at HDFC Bank.
“We see a 20-30 basis point downside risk to our base predictions,” she said. For the time being, HDFC expects the GDP to rise 8.2% in the coming fiscal year.