China's revived Green GDP program still faces challenges

March 28, 2013
China green national accounting

The Environment and Planning Institute of China's Ministry of Environmental Protection (MEP) has announced the 2010 Green National Accounting results (also called Green GDP Accounting). These show that the country's ecological and environmental degradation costs reached CNY1.53895 trillion (USD248 billion), accounting for about 3.5 percent of the GDP for 2010.

This compares to a cost to the economy of nearly CNY1.4 trillion (USD222 billion), equivalent to 3.8 percent of GDP, in 2009. An estimate of the environmental degradation cost for 2008 was CNY1.27 trillion (USD200 billion), equivalent to 3.9 percent of GDP, although the true figure could be even higher as the authors acknowledge their data is incomplete.

Despite issues with how these figures were compiled, and their underlying accuracy, it is hardly a surprise that they continue show the mounting cost to China of its “economic growth comes first” approach to development. Given the history of China's efforts to measure Green GDP, however, it is something of a surprise that the figures are available at all.

China's first Green GDP report, based on 2004 figures, was published in late 2006 as a joint exercise between State Environmental Protection Administration (the precursor the MEP) and National Bureau of Statistics (NBS), which is responsible for China's conventional economic performance statistics. At that time officials noted that an integrated environmental and economic accounting system should cover at least five types of natural resources depletion costs (land, minerals, forest, water and fishery resources) and two types of environmental degradation costs (environmental pollution and ecological damage).

Due to the limitation of basic data and technical approaches, the accounting results in 2004 only represent the environmental pollution cost – put at CNY511.8 billion (USD82.35 billion), equivalent to 3.05 percent of 2004 GDP – without accounts of costs of natural resources depletion and ecological damage.

An analysis of China's Green GDP accounting system by Graeme Lang of the City University of Hong Kong and Vic Li of the Balsillie School of International Affairs noted that while efforts were made to estimate the cost of resource depletion, hard-to-quantify items like the impact of pollution on public health and workforce productivity, depletion of underground water resources and loss of arable farmland (and agricultural productivity) as a result of soil erosion were largely omitted.

Despite popular support, the Green GDP project put on hold in early 2007 due to widespread resistance from regional and local governments, apparently allied to proponents of economic growth within the central government. After the first study, the NBS abruptly withdrew, blasting the results as "not sophisticated enough," according to a China Daily report in 2007.

Following its elevation to a full ministry in 2008, the MEP revived work on Green GDP, using the resources of its own research institute. The reason the 2008 calculations are incomplete, says the ministry, is that officials at the grass-roots level refused to provide key statistics, especially pollution-related data.

Commenting on the latest Green GPD data Professor Gao Min, of the Statistics Institute of Renmin University, pointed out that governments should use statistical tools dedicated to the specific description of the relationship between resources, the environment, and the economy.

“The Green GDP is just numbers,” he said. “What’s more important is how the numbers reflect the environmental losses, and what countermeasures can be taken against these losses.”