China Postpones Release of Report on ‘Green’ GDP Accounting

China Watch Home About China Watch

The release of a landmark 2005 Green National Accounting study that calculates the environmental costs of China’s rapid economic development has been “postponed indefinitely,” according to Wang Jinnan, the head of the study group. Wang told China Youth Daily last Monday that disagreement between the two government departments that authored the report—China’s State Environmental Protection Administration (SEPA) and the National Bureau of Statistics (NBS)—over what to include and how to release this information was a major reason for the report’s delay. He noted that several participating local governments had also expressed reluctance in publicizing the data.

The goal of Green National Accounting, also known as Green Gross Domestic Product (Green GDP) accounting, is to measure the “true cost” of economic growth by deducting the costs of natural resources depletion and environmental degradation from traditional GDP calculations. But economists in China and elsewhere have faced a variety of methodological challenges in developing this approach, which has made the concept more attractive in theory than in practice.

Starting in 2004, SEPA and NBS launched a series of pilot projects in green GDP accounting in some 10 provinces and municipalities across China—at a time when no country in the world was using such an accounting system. According to the first official report, released last September, China’s economic losses from environmental pollution in 2004 totaled some 511.8 billion yuan (US$67.7 billion), or roughly 3.1 percent of GDP. But this represented only part of the true cost of environmental damage, the authors noted, due to limitations of technologies and data. A complete green GDP accounting system requires calculating costs of resource depletion and ecological damage that cannot typically be monetized, they said.

Earlier this month, NBS head Xie Fuzhan announced that the so-called “green GDP accounting system” in fact does not exist because there is no international standard available for the measurement. Xie also stressed that the Chinese government will continue with efforts to develop the accounting system. Wang, the study’s leader, however, believes that despite the deficiencies of the existing system, the reported results still provide a useful indication of China’s current environmental situation. He says the report’s publication would help local officials better understand the “hidden” costs of environmental degradation behind the nation’s rapid economic growth.

China Watch is a joint initiative of the Worldwatch Institute and Beijing-based Global Environmental Institute (GEI) and is supported by the blue moon fund.