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Are Greener National Accounts Better?

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  • Jeffrey R. Vincent

Abstract

"Green accounting" refers to the incorporation of changes in wealth, in particular natural resource wealth, into a country’s national accounts. Despite a large body of theoretical work and considerable promotional efforts by international and national organizations, there is no firm evidence that greener national accounting measures provide better indicators of long-run economic possibilities. In this paper I construct per capita estimates of green net national product (NNP) and genuine savings for 13 countries in Latin America during 1973-86. I then test econometrically whether these measures are systematically related to consumption in subsequent years. I deal with possible nonstationarity in the data series by estimating models expressed in first-differences, in addition to models expressed in levels. Despite incomplete adjustments and crude data, my estimates of genuine savings are related to future consumption in a manner consistent with theoretical predictions. In particular, all the coefficients on the individual components of genuine savings have the correct signs and are highly statistically significant in both the models with levels and the models with first-differences. Results are more mixed for green NNP. An irony of my results is that physical capital, not natural capital, appears to be the greater source of data problems for green accounting.

Suggested Citation

  • Jeffrey R. Vincent, 2001. "Are Greener National Accounts Better?," CID Working Papers 63A, Center for International Development at Harvard University.
    • Handle: RePEc:cid:wpfacu:63a
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    References listed on IDEAS

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    Cited by:

    1. Eoin McLaughlin & Cristián Ducoing & Les Oxley, 2024. "Tracing Sustainability in the Long Run: Genuine Savings Estimates 1850–2018," NBER Chapters, in: Measuring and Accounting for Environmental Public Goods: A National Accounts Perspective, National Bureau of Economic Research, Inc.
    2. Matthias Blum & Cristián Ducoing & Eoin McLaughlin, 2016. "Genuine Savings in developing and developed countries, 1900-2000," Discussion Papers in Environment and Development Economics 2016-15, University of St. Andrews, School of Geography and Sustainable Development.
    3. Greasley, David & Hanley, Nicholas & Kunnas, Jan & McLaughlin, Eoin & Oxley, Les & Warde, Paul, 2012. "How Environmental Pollution from Fossil Fuels can be included in measures of National Accounts and Estimates of Genuine Savings," Stirling Economics Discussion Papers 2012-16, University of Stirling, Division of Economics.
    4. Li, Chuan-Zhong & Löfgren, Karl-Gustaf, 2002. "On the Choice of Metrics in Dynamic Welfare Analysis: Utility versus Money Measures," Umeå Economic Studies 590, Umeå University, Department of Economics.
    5. Samakovlis, Eva, 2004. "Ecosystems, Sustainability and Growth for Sweden during 1991-2001," Occasional Papers 4, National Institute of Economic Research.
    6. Mota, Rui Pedro & Cunha-e-Sá, Maria A., 2019. "The Role of Technological Progress in Testing Adjusted Net Savings: Evidence from OECD Countries," Ecological Economics, Elsevier, vol. 164(C), pages 1-1.
    7. Mota, Rui Pedro & Domingos, Tiago, 2013. "Assessment of the theory of comprehensive national accounting with data for Portugal," Ecological Economics, Elsevier, vol. 95(C), pages 188-196.

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    More about this item

    Keywords

    national accounts; green accounting; sustainability; natural resources; Latin America;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General

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