<p>A good place to start is a report by the U.S. National Academy of Science called <a href="http://www.nap.edu/catalog/6374/natures-numbers-expanding-the-national-economic-accounts-to-include-the" rel="nofollow">Nature's Numbers</a>. The upshot: There is a consensus among economists that it is possible to refine standard measures of GDP rigorously to incorporate adjustments for impacts on environment and natural resources. Implementation is in practice difficult due to data problems. </p>

<p>Most alternative indicies, e.g. GPI, are not consistent with national income accounting principles. But since there is a demand for such indicies, there is a supply response.</p>

CC BY-SA 3.0
2016-07-17T16:03:31.950Z
2016-07-17T16:03:31.950Z
Arthur Small
<p>It is widely recognised that GDP as conventionally measured does not reflect an economy’s impact on the environment and its consumption of natural resources.  There have been various attempts to develop broader measures of economic performance via adjustments to conventional GDP (some of which also address non-environmental limitations of conventional GDP), for example:</p>

<ol>
<li>Measure of Economic Welfare (<a href="http://www.economicsonline.co.uk/Global_economics/Measure_of_economic_welfare_MEW.html">Nordhaus &amp; Tobin 1972</a>)</li>
<li>“True NNP inclusive of natural resource stock diminution” (<a href="http://qed.econ.queensu.ca/working_papers/papers/qed_wp_771.pdf">Hartwick 1990</a>)</li>
<li>Gross Sustainable Development Product (GSDP) (<a href="http://globalcommunitywebnet.com/globalcommunity/measurementofsd.htm#AF">Global Community Assessment Centre</a>)</li>
<li>Genuine Progress Indicator (GPI) (eg <a href="http://anielski.com/wp-content/documents/Alberta%20GPI%20Blueprint.pdf">Anielski 2001</a>)</li>
<li><a href="http://en.wikipedia.org/wiki/Green_gross_domestic_product">Green GDP</a> (a term whose precise content appears to be disputed (see eg <a href="http://www.rff.org/Documents/RFF-DP-06-24.pdf">Boyd 2006</a>))</li>
</ol>

<p>Is this just a proliferation of alternative measures, or is it possible to discern progress or convergence towards a best or most useful measure that adjusts GDP for environmental and resource impacts, or perhaps different best measures for different purposes?</p>

CC BY-SA 3.0
2016-07-17T16:00:33.463Z
Short reply - I'll try to answer more fully later: A good place to start is a report by the U.S. National Academy of Science called "Nature's Numbers": http://www.nap.edu/catalog/6374/natures-numbers-expanding-the-national-economic-accounts-to-include-the . The upshot: There is a consensus among economists that it is possible to refine standard measures of GDP rigorously to incorporate adjustments for impacts on environment and natural resources. Implementation is difficult due to data problems. Most alternative indicies, e.g. GPI, are not consistent with national income accounting principles.
Arthur Small
CC BY-SA 3.0
2015-04-10T14:16:54.957Z
Man, I bet all the major economies (in GDP sense) would be currently in terrible recession if we measured them in an "Environmental GDP" instead. The problem is that it's hard to impossible to give numbers for environmental damage, as the problem is too broad.
Bregalad
<macroeconomics><environmental-economics>
Adjusting GDP for Environmental and Resource Impacts
Adam Bailey
# Adjusting GDP for Environmental and Resource Impacts

(Asked by: username_0 on 2015-03-04)

It is widely recognised that GDP as conventionally measured does not reflect an economy’s impact on the environment and its consumption of natural resources. There have been various attempts to develop broader measures of economic performance via adjustments to conventional GDP (some of which also address non-environmental limitations of conventional GDP), for example:

1. Measure of Economic Welfare ([Nordhaus & Tobin 1972](http://www.economicsonline.co.uk/Global_economics/Measure_of_economic_welfare_MEW.html))
2. “True NNP inclusive of natural resource stock diminution” ([Hartwick 1990](http://qed.econ.queensu.ca/working_papers/papers/qed_wp_771.pdf))
3. Gross Sustainable Development Product (GSDP) ([Global Community Assessment Centre](http://globalcommunitywebnet.com/globalcommunity/measurementofsd.htm#AF))
4. Genuine Progress Indicator (GPI) (eg [Anielski 2001](http://anielski.com/wp-content/documents/Alberta%20GPI%20Blueprint.pdf))
5. [Green GDP](http://en.wikipedia.org/wiki/Green_gross_domestic_product) (a term whose precise content appears to be disputed (see eg [Boyd 2006](http://www.rff.org/Documents/RFF-DP-06-24.pdf)))

Is this just a proliferation of alternative measures, or is it possible to discern progress or convergence towards a best or most useful measure that adjusts GDP for environmental and resource impacts, or perhaps different best measures for different purposes?

**Tags:** macroeconomics, environmental-economics
> **Comments:**
> **username_2**: Man, I bet all the major economies (in GDP sense) would be currently in terrible recession if we measured them in an "Environmental GDP" instead. The problem is that it's hard to impossible to give numbers for environmental damage, as the problem is too broad.  
> **username_1**: Short reply - I'll try to answer more fully later: A good place to start is a report by the U.S. National Academy of Science called "Nature's Numbers": http://www.nap.edu/catalog/6374/natures-numbers-expanding-the-national-economic-accounts-to-include-the . The upshot: There is a consensus among economists that it is possible to refine standard measures of GDP rigorously to incorporate adjustments for impacts on environment and natural resources. Implementation is difficult due to data problems. Most alternative indicies, e.g. GPI, are not consistent with national income accounting principles.  

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## 1 answers

### Answer by username_1 on 2016-07-17. Score: 2 | Accepted answer

A good place to start is a report by the U.S. National Academy of Science called [Nature's Numbers](http://www.nap.edu/catalog/6374/natures-numbers-expanding-the-national-economic-accounts-to-include-the). The upshot: There is a consensus among economists that it is possible to refine standard measures of GDP rigorously to incorporate adjustments for impacts on environment and natural resources. Implementation is in practice difficult due to data problems.

Most alternative indicies, e.g. GPI, are not consistent with national income accounting principles. But since there is a demand for such indicies, there is a supply response.


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