First state to launch Green GDP: Chhattisgarh

1. Chhattisgarh recently became the first state in India to launch a initiative that connects the ecosystem services of forests to the Green Gross Domestic Product (Green GDP).
2. This innovative approach integrates environmental health and ecosystem services with economic performance.
    

Understanding Traditional GDP vs Green GDP
 

1. Traditional GDP:
   1. Definition: It measures the annual value of goods and services produced within a country. Widely used since 1944, it focuses solely on economic output.
   2. Limitation: Traditional GDP overlooks environmental health, social well-being, and sustainability. It does not account for the long-term effects of economic activities on the environment.
       
2. Green GDP:
   1. Definition: Green GDP is a modified version of traditional GDP that incorporates environmental costs into economic output, such as resource depletion, pollution, and environmental degradation.
   2. Objective: Green GDP offers a more accurate representation of a nation’s economic performance by factoring in the environmental impact of economic activities.
       

Need for Green GDP
 

1. Limitation of Traditional GDP: Traditional GDP neglects sustainability and the environmental costs associated with economic activities.
2. Benefits of Green GDP:
   1. Ensures that economic growth aligns with sustainability.
   2. Reflects environmental and resource costs that are ignored in traditional GDP.
   3. Encourages responsible consumption, biodiversity conservation, and sustainable development.
       

Formula:  According to the World Bank, Green GDP = NDP (Net Domestic Product) − (Cost of Natural Resource Depletion + Cost of Ecosystem Degradation).  Where NDP = GDP − Depreciation of Produced Assets.  Cost of Natural Resource Depletion refers to the value lost due to overuse of natural resources. Cost of Ecosystem Degradation refers to the value lost from environmental damage such as pollution and deforestation.

 

Green GDP and Sustainable Development
 

Green GDP supports the achievement of multiple Sustainable Development Goals (SDGs) by promoting a more sustainable and responsible approach to economic growth:

1. Sustainable Resource Use (SDG 12): Green GDP promotes responsible consumption and production, ensuring long-term resource availability.
2. Climate Change Mitigation (SDG 13): Reduces fossil fuel dependence, supports renewable energy adoption, and mitigates climate change.
3. Biodiversity Conservation (SDGs 14 & 15): Encourages environmental preservation and the safeguarding of ecosystems.
4. Green Investments (SDG 8): Fosters green industries and jobs, contributing to inclusive and sustainable economic growth.
    

Note:- Uttarakhand first state to launch the Gross Environment Product (GEP) Index In 2024, Uttarakhand became the first state to launch the Gross Environment Product (GEP) Index, which evaluates environmental health by measuring factors beyond traditional ecosystem services. It includes the value of tree species, survival rates, and conservation efforts, providing a more comprehensive approach to ecosystem growth assessment.

 

Challenges in Green GDP Framework
 

Despite its promise, several challenges hinder the effective implementation of Green GDP:
 

1. Forest Cover Definition: Forest cover includes land with a tree canopy density of more than 10% and covers areas like orchards and bamboo plantations. The lack of standardized definitions can lead to inconsistencies in measurement.
2. Methodological Differences: No universally accepted method exists for calculating Green GDP, making cross-country comparisons difficult. Variations in local conditions, priorities, and available data create discrepancies in Green GDP assessments.
3. Local Body Integration Challenges:
   1. Lack of awareness and literacy on Green GDP concepts among grassroots leaders.
   2. Limited technical expertise and resource constraints at the local level impede accurate data collection and environmental monitoring.
4. Data Collection Challenges: Inconsistent environmental data collection at the local level leads to gaps in information, reducing the reliability of Green GDP calculations.
5. Unclear Financial Benefits: The direct financial benefits of Green GDP, especially for communities such as tribes and forest dwellers, are unclear. These communities play a crucial role in forest preservation, and it is vital that they benefit from these initiatives.
    

Global Practices in Green Gross Domestic Product (GDP) Countries around the world are exploring methods to integrate environmental considerations into their economic systems: United Nations (SEEA): The System of Environmental-Economic Accounting (SEEA) integrates economic and environmental data, providing a comprehensive view of the relationship between the economy and the environment. European Union: The EU's Beyond GDP initiative incorporates sustainability metrics into economic assessments, prioritizing long-term planetary health. World Bank (WAVES Program): Promotes sustainable development by integrating natural resource accounting into national development planning. Bhutan (Gross National Happiness): The GNH framework emphasizes ecological sustainability in development policies. Other Countries (China, Norway, US): These countries are also exploring incorporating environmental costs into national accounting systems.

 

Way Forward: Enhancing Green GDP Implementation
 

To fully realize the potential of Green GDP, several measures need to be undertaken:
 

1. Establishing a Standardized Framework: Develop a unified framework and methodology for measuring and valuing environmental costs and benefits, based on scientific and economic best practices.
2. Enhancing Data Collection and Quality: Improve the accuracy, consistency, and availability of environmental indicators, such as emissions, resource use, and ecosystem services. Harmonize data across countries to enable global benchmarking.
3. Raising Awareness and Advocacy: Promote the understanding of Green GDP among policymakers, businesses, and the public. Conduct educational campaigns and training programs to increase awareness about its importance.
4. Encouraging Stakeholder Collaboration: Facilitate the participation of governments, international organizations, civil society, and the private sector in Green GDP policymaking and implementation. Strengthen public-private partnerships (PPPs) to fund and support Green GDP initiatives.
5. Managing Trade-offs and Policy Conflicts: Develop policies that balance economic growth with environmental sustainability, ensuring equity and justice. Compensation mechanisms and incentives can help industries and communities transition to a green economy.

 

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