Accounting for Greenhouse Gases in the Standard Productivity Framework

23 Pages Posted: 19 May 2009

See all articles by Tarek M. Harchaoui

Tarek M. Harchaoui

Statistics Canada - Microeconomic Analysis Division

Dmitry Kabrelyan

affiliation not provided to SSRN

Robert B. Smith

Environment Accounts Statistics Division (EASD)

Date Written: November 1, 2002

Abstract

The method that Canada and other developed countries use to measure productivity growth generally ignores the pollutants that are produced by the industrial process. For example, greenhouse gas emissions, though an inevitable consequence of production processes, are excluded from the productivity accounting framework. This study proposes an extended productivity measure that takes pollutants into account. It illustrates how it can be applied using carbon dioxide emissions. The proposed experimental measure is based on the standard multifactor productivity framework adjusted for the private cost of greenhouse gas emissions. Using this measure changes the estimate of productivity growth for the business sector. The paper first examines how industries have reduced their CO2 emissions relative to their saleable outputs over the last twenty years. This improvement is a form of efficiency gain. When this is taken into account using the new experimental methodology to estimate multifactor productivity, the estimate of productivity growth that is produced is about 17 percent higher than the conventional estimate over the period from 1981-1996.

Keywords: productivity, environment, eco-efficiency

JEL Classification: O1, Q5, D24, O47

Suggested Citation

Harchaoui, Tarek M. and Kabrelyan, Dmitry and Smith, Robert B., Accounting for Greenhouse Gases in the Standard Productivity Framework (November 1, 2002). Available at SSRN: https://ssrn.com/abstract=1403283 or http://dx.doi.org/10.2139/ssrn.1403283

Tarek M. Harchaoui (Contact Author)

Statistics Canada - Microeconomic Analysis Division ( email )

24 Floor - R.H.Coats Building
Tunney's Pasture
Ottawa, Ontaria K1A 0T6
Canada
613-951-9856 (Phone)

Dmitry Kabrelyan

affiliation not provided to SSRN ( email )

Robert B. Smith

Environment Accounts Statistics Division (EASD) ( email )

Ottawa, Ontario
Canada

HOME PAGE: http://www.statcan.gc.ca

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