Green Accounting: Issues and Challenges
The IUP Journal of Managerial Economics, Vol. VIII, No. 3, pp. 46-60, August 2010
Posted: 25 Sep 2010
Date Written: August 2010
National income measures like Gross Domestic Product (GDP) and Net Domestic Product (NDP) have been used as measures of the economic progress and standard of living in almost all countries for a long time. Decision makers and researchers use these measures for new policy initiatives and to analyze policy alternatives respectively. The traditional Systems of National Accounting (SNA) are now recognized as inadequate, as they cannot accurately measure the contribution of environment and the impact of economic activities on it due to the exclusion of the non-marketed services provided by natural assets, inconsistent treatment of depreciation on man-made and natural assets, and inadequate representation of the degradation of environment. This gives a false impression of increase in income to the decision makers and researchers, while natural wealth is actually reducing. Hence, green accounting can be useful for sustainable national income accounting and in removing the current biases.
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