An interesting article about a new, though still unproved, method, ‘Green GDP’ that might be able to measure what role a clean and green environment plays in economic growth.
An excerpt.
EPA considers 'Green GDP' method in bid to bolster cost-benefit tools
Inside EPA June 30, 2006
EPA is eying new approaches economists are developing to calculate the value of a clean environment to economic growth -- a controversial approach known as Green Gross Domestic Product (Green GDP) -- to boost its ability to value ecosystem improvements and help the agency cite those benefits when justifying strict regulations.
Environmentalists have long argued that ecosystem "services" provide benefits to humans, such as wetlands that control flooding and provide clean water, and that damage to the ecosystems comes at a cost.
But EPA and other agencies cannot easily cite these benefits when justifying strict rules, in part because there is no standardized method to value them. EPA officials are now turning to the growing economic focus on Green GDP to find new methods for calculating ecosystem benefits.
The issue is receiving new attention as China, Japan and the European Union increasingly seek to include ecosystem services in their GDP estimates. GDP traditionally measures the value of conventional goods and services.
But efforts in the United States could be controversial as coal and other industry groups oppose Green GDP approaches. In the 1990s, industry groups and some lawmakers blocked efforts by the Clinton administration to incorporate environmental and ecological benefits into GDP calculations.
In a bid to improve its cost-benefit tools, the agency recently cosponsored a workshop with the group Resources for the Future (RFF) -- where economists have recently published a series of papers on the Green GDP issue -- to explore ways to better calculate the environmental benefits that may stem from agency policies.
That May 25-26 workshop, Practical Measurement of Ecosystem Services: Can We Standardize the Way We Count Nature's Benefits?, included officials from EPA, the White House Office of Management & Budget, the Government Accountability Office (GAO), the Department of the Interior, RFF and the World Wildlife Fund. The participants discussed issues slowing policy development, standardization concerns and other aspects of valuing ecosystem services.
But key financial agencies, including the Department of Treasury and the Commerce Department, were not at the meeting.
Observers say the effort could provide EPA and other agencies with a definition of "ecosystem services" -- which they lack -- and methods for calculating ecosystem benefits. In the past, EPA has said it would welcome efforts to cite ecological benefits when developing policies, but were concerned that resource constraints, White House oversight and judicial review could dampen any efforts.
But one agency official says that while EPA is interested in efforts to value ecosystem services, more methodological work needs to be completed before the approach can be used in regulations. "Work needs to be done at a technical level before it reaches the stage where it could be used as a tool," the official says.
