CEDS UNPAD

To What Extent Green Accounting Measure Sustainable Development

To what extent green accounting can properly measure sustainable development, not only depend on how well we maintain the link between the indicators and a clearlydefined concept of sustainable development but also on cautious interpretation of those indicators. Information from green accounting in general could be used to calculate adjusted, and better indicator of macroeconomic aggregates such as Green GDP, Genuine Savings, and Change in Wealth Per Capita. Green GDP, the most popular indicators, however, could not tell straightforwardly whether or not an economy is on sustainable path, neither could the growth of Green GDP. We show from a simple formal analysis of growth accounting that there are cases where interpretation of Green GDP growth could be misleading, especially when we are making comparison across economies (such as across province or districts) with differing resources dependence. Thus cautious interpretation of Green GDP (and its growth), is needed, and we propose that other indicators i.e. Genuine Saving and Change in Wealth Per Capita, which are easier to interpret, are better measures of sustainable development.

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Center for Economics and Development Studies is a research center under the Department of Economics, Padjadjaran University, Indonesia. A leading research institute in Indonesia in the area of economics and development studies.
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