Sustainable Development and Economic Performance Kimberly Burnett March 21, 2007
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Sustainable Development and Economic Performance Kimberly Burnett March 21, 2007
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Sustainable Development and Economic Performance Kimberly Burnett March 21, 2007. State Income Accounting Measures Economic Activity Narrowly Defined. But this Measure misses many Aspects of Human Welfare. Biodiverse and Healthy Watersheds?. Oahu Pigs. Maui Goats. Photo credit: JB Friday. - PowerPoint PPT Presentation
Transcript of Sustainable Development and Economic Performance Kimberly Burnett March 21, 2007
Sustainable Development and Economic Performance
Kimberly BurnettMarch 21, 2007
March 21, 2007 http://www.uhero.hawaii.edu
State Income Accounting Measures Economic Activity Narrowly Defined
March 21, 2007 http://www.uhero.hawaii.edu
But this Measure misses many Aspects of Human Welfare
March 21, 2007 http://www.uhero.hawaii.edu
Biodiverse and Healthy Watersheds?
March 21, 2007 http://www.uhero.hawaii.edu
Maui Goats
Photo credit: JB Friday
March 21, 2007 http://www.uhero.hawaii.edu
Or Degraded Watersheds?Nu`uanu 1920
March 21, 2007 http://www.uhero.hawaii.edu
Depreciation of Infrastructure + Watershed Degradation = Sewage Spills
March 21, 2007 http://www.uhero.hawaii.edu
The Economy
Firms
(production)
Households
(consumption)
Inputs OutputsTHE ECONOMY
Amenity valuesResource inputs
Wastes
Global life-support
Impacts on biodiversity
NATURE
March 21, 2007 http://www.uhero.hawaii.edu
Environomy
Firms
(production)
Households
(consumption)
Inputs OutputsTHE ECONOMY
Amenity valuesResource inputs
Wastes
Global life-support
Impacts on biodiversity
NATURE
March 21, 2007 http://www.uhero.hawaii.edu
The Components of GSP
Gross State Product (GSP) is the sum of the following:• Consumption (C)• Investment (I)• Government Expenditures (G)• Net Exports (NE)
GSP = C + I + G + NE
March 21, 2007 http://www.uhero.hawaii.edu
GSP and its Components
40%
17%
40%
3% Consumption
Investment
GovernmentexpendituresNet exports
March 21, 2007 http://www.uhero.hawaii.edu
GSP to NSP to GNSP
Another measure is Net State Product, which deducts capital depreciation from GSP NSP = C + I + G + NE – CD Green NSP measures environomy. From NSP, subtract
• Depreciation of natural capital (biodiversity, aquifers, reefs)• Defensive expenditures (scrubbers on smokestacks to reduce pollution)
» Falsely included in NSP in the first place» Subtract again to better reflect net increase in welfare
• Residual damages from pollution, congestion, and ecological damages (flooding, sewage spills, leptospirosis)
GNSP = C + I + G + NE – CD – (NCD + 2DE + RPD)
March 21, 2007 http://www.uhero.hawaii.edu
Case study – Ko`olau forested watershed
Amenity NPV, in millions MethodGroundwater quantity $4570 Lost recharge
Water quality $83.7 – $394 Averted dredging costs
In-stream uses $82.4 Survey on single fish species
Species habitat $487 Survey on single bird species
Biodiversity $0.6 – $5.5 Average cost listing 11 Ko`olau plant species
Subsistence $34.7 Replacement value, pigs
Hunting $62.8 Hunting expenditures
Aesthetic values $1040 Survey
Commercial harvests $0.6 Koa harvest
Ecotourism $1000 Ecotourism expenditures
Climate control $82.2 Replacement cost, carbon sequestration
TOTAL $7.4 – $7.8 billion
March 21, 2007 http://www.uhero.hawaii.edu
Sustainable/Green Income Accounting
Would include depreciation of natural capital, pollution damages
Better indicator of levels-of-living, forward-looking welfare
GNSP reflects the performance of the environomy
