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It is time to abandon GDP in favor of a better growth metric, as the environment becomes more important for economies.

It is time to abandon GDP in favor of a better growth metric, as the environment becomes more important for economies.

Since more than 70 years, the gross national product has been the main indicator of economic progress in nations. GDP only accounts for the monetary gains from economic activity. It doesn’t take into account the degrading of the natural environment and finite resources as well as the human wellbeing. It is high time that we come up with something better.

GDP has promoted unsustainable practices that contribute to climate and biodiversity emergencies without ever acknowledging the contribution of nature. GDP is like a ledger refusing to accept red ink. It is like an accounting trick that allows us to release greenhouse gases into the atmosphere, destroy habitats, and neglect human well-being without ever having to worry.

Simon Kuznets, an economist, didn’t have to think about the current environmental catastrophe when he was making his predictions. The concept was developedIn the 1930s, after the Great Depression. Kuznets knew of the limitations of GDP, but it has since become the most important economic indicator. This puts policymakers who want to limit global climate change in a bit of a jam.

Gross ecosystem product

We need to look at other metrics, such as gross ecosystem production or GEP, to account for the contribution of nature to economic activity and human well-being.

However, research into calculating gross ecosystem product is only in its infancy, it attempts to place a monetary value on things like clean water, soil quality, food security, healthcare and the culturally-significant landscapes that contribute to our happiness. Gross ecosystem product is the dollar value that bees, as well as bogs that store carbon, have on our mental health and the stimulating effects it has on it.

Gross ecosystem product, which focuses only on the value of production and outputs, instead values nature’s input and encourages policymakers to invest in it. Since both metrics overlap in many areas, it would be foolish to simply add them together and get an overall figure. The two measures can still be used to provide information that is complementary and could allow for sustainable economic growth in the future.

Ecosystem services

For example, the Chinese government has been trying out gross ecosystem products in Qinghai province, a remote Tibetan plateau region that contains the source for the Mekong, Yangtze, and Yellow Rivers.

Researchers found that the gross ecosystem product was much greater than GDP in 2000 (81.5 billion Yuan vs. 26 billion Yuan). At that time, there was significantly more useful ecosystem activity than economic activity.

However, the gross ecosystem product was only three quarters of the size of GDP in 2015. 185.4 billion Yuan to 242 billion Yuan. This means that traditional economic growth was favored over the environment.

Surprisingly, Qinghai being the source of three major rivers, the study also revealed that the province exports ecosystem service like drinking water, fertilising nutrients, and other Chinese provinces. This is reflected in the gross ecosystem product accumulated from neighbouring countries.

A process could be initiated by neighboring regions to pay financial compensation to the province for the ability to quantify the Qinghais ecosystem export’s value. This could be an incentive for communities to preserve and grow ecosystem assets. This can be viewed from a global perspective. Imagine if Brazilian farmers were paid by European nations to manage the rainforest according to the amount of carbon it sequesters.

Similar to Ireland, gross ecosystem product would allow woodlands and bogs to contribute to the country’s economy. In such a situation, Irish cities might be forced to pay rural regions carbon storage fees or maintain culturally significant landscapes that promote mental health and well-being.

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Gross ecosystem product, which is the value we attach to our natural environment, would encourage us to think differently about how and where we manage, maintain, and grow those areas that have been overlooked in favor of centralised growth strategies.

For now, however, it is impractical to implement a system as simple as the United Nations’ gross ecosystem product. System of Environmental-Economic Accounting. This would require a global consensus economics on a scale unprecedented since the inception of the international financial system. After the second World War.

To manage the complex tradeoffs necessary to mitigate climate crisis, we need to think differently.

Stephen OnakuseHe is a Senior Lecturer in the Department of Food Business and Development and Deputy Director of Centre for Sustainable Livelihoods, University College Cork.

This article appeared first on The Conversation.

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