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To What Extent Green Accounting Measure Sustainable Development

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Author Info
Arief Anshory Yusuf () (Department of Economics, Padjadjaran University)
Armida Alisjahbana () (Department of Economics, Padjadjaran University)

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Abstract

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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File URL: http://www.equitablepolicy.org/wpaper/200307.pdf
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File Function: First version, 2003
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Publisher Info
Paper provided by Department of Economics, Padjadjaran University in its series Working Papers in Economics and Development Studies (WoPEDS) with number 200307.

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Length: 18 pages
Date of creation: Dec 2003
Date of revision: Dec 2003
Handle: RePEc:unp:wpaper:200307

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Related research
Keywords: Accounting; Sustainable Development; Indonesia;

Find related papers by JEL classification:
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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  1. Vincent, J. & Casteneda, B., 1997. "Economic Depreciation of Natural Resources in Asia and Implications for Net Savings and Long-Run Consumption," Papers 614, Harvard - Institute for International Development.
  2. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," World Bank Economic Review, Oxford University Press, vol. 13(2), pages 333-56, May.
  3. Hamilton, Kirk, 2000. "Sustaining economic welfare : estimating changes in per capita wealth," Policy Research Working Paper Series 2498, The World Bank. [Downloadable!]
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