May 15, 2001
The Political Economy of Greening the National Income Accounts
Newsletter of the Association of Environmental and Resource Economists 21 (May 2001): 14-18.
Abstract: National income figures currently in use are highly misleading. With some notable exceptions such as owner-occupied housing and government services, income calculations are limited to market activities. However, our economy reaches far beyond its traditional market-boarders. Some negative economic effects on our environment are so large that they pose serious threats to our societal and economic well-being. Green accounting can significantly aid in policy decisions by assigning values to both the depreciation of natural resources and ecological services.
Because of political disagreement, however, official green accounting efforts in the United States have been on hold for the past half a decade. Whether and how to use the actual accounts in policy decisions will undoubtedly be a political issue, but the debate about creating the numbers in the first place should be moved from the political arena back to the Bureau of Economic Analysis (BEA) and the economics community.
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Posted by Gernot Wagner on Tuesday, May 15, 2001.