China Issues World's First 'Green GDP': Pollution Cost $64 Billion in 2004 (At Least)

We already know that environmental quality and economic well-being aren't at odds but are rather closely linked; still, our most common measure of economic progress—national GDP—keeps pollution off the books. Late last week, China made the first attempt of any country to put them back on.

A report published last Friday by the State Environmental Protection Agency (SEPA) and the National Bureau of Statistics (NBS) re-examines China's 2004 GDP, estimating that pollution cost the country 511.8 billion yuan (US$64 billion) in economic losses that year, or 3.05 percent of 2004's total economic output, putting the country's "green GDP" at 97 percent of the original GDP, said state media. But, government officials admit, the real number is much worse.

However, the figures mark "only the beginning of our efforts in calculating Green GDP," said Pan Yue, vice-minister of SEPA.

Wang Jinnan, vice-president of the Chinese Academy for Environmental Planning, explained: "Because of shortcomings in basic data and the technical approach, the results for 2004 represent only the environmental pollution cost.

"Even the estimate of environmental pollution is not complete for lack of figures on groundwater, soil and indoor air pollution," added Wang, also head of the group of the Green GDP accounting experts.

"Although we arrived at the figure of 3.05 per cent, it does not indicate that in 2004, China's Green GDP was 96.95 per cent of the conventional figure, because the green figures were very sketchy."

A complete environmental and economic assessment system, Pan and Qiu said, should cover depletion costs in at least five natural resources land, minerals, forests, water and fisheries and two types of degradation costs environmental pollution and ecological recovery.

The complete picture of China's Green GDP performance, Pan said, would be much worse.

Earlier this year, one Chinese official estimated that pollution costs the country up to 10% of its GDP per year, not long after the government allegedly declared it would not conduct a "green GDP" survey citing the enormous challenge of actually calculating such a figure (which involves determining what counts as pollution, what time table to use, how to count the cost of clean-up, and so on).

Indeed, despite forays into ecological economics by the US Congress, the United Nations, the World Bank, economist Herman Daly and others, environmental accounting remains clouded in uncertainty and controversy.

As noted above, China's estimate has a narrow focus, accounting for only ten of 20 environmental threats, and avoiding the cost of resource depletion and ecological damage altogether—costs which are known to be astronomical (it's interesting to think about how long the list of environmental valuations could go). Thankfully, the report also touches on the related social costs, noting that the country's low GDP per capita, about US$1000-3000, "cannot bear up any social problems caused by environmental pollution."

While noting that the "formula is still not complete and we have to keep working hard to improve it," Pan Yue, our favorite environmental official, implied that, rather than waiting on better statistics, China get to work developing better schemes to encourage the economy to tell the ecological truth during, not after production "Otherwise," he said, "it will be too late to save the country's environment."

: : China Green National Acounting Study Report 2004: SEPA release (full report as Chinese pdf); : : Xinhua ; EPA's National Center for Environmental Economics; : : "Where is the Wealth of Nations?" by the World Bank; unstats.un.org/unsd/envAccounting/ceea/default.asp">: : UN Committee of Experts on Environmental-Economic Accounting (UNCEEA) ; :: Green China Overview at WorldChanging

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