Research article
Framework construction and application of China's Gross Economic-Ecological Product accounting

https://doi.org/10.1016/j.jenvman.2019.109852Get rights and content

Highlights

  • GEEP is calculated based on the GDP of the economic system, meanwhile considering the damage to the ecological environment and the ecological benefit.

  • In 2016, China's GEEP was 126.6 trillion RMB, 1.6 times of GDP.

  • The regional Gini coefficient based on GEEP was smaller than the regional Gini coefficient calculated based on GDP.

Abstract

In order to integrate resource consumption, environmental damage and ecological benefits into the evaluation system of social and economic development, and practice the green concept of “Lucid waters and lush mountains are invaluable assets”, this research was based on the Green GDP and Gross Ecosystem Product accounting to develop comprehensive accounting indicators for Gross Economic-Ecological Product (GEEP). At the same time, the 2016 GEEP of 31 provinces in China is calculated. The results show that: 1) GEEP is a comprehensive ecological-economic accounting system based on weak sustainable development theory and welfare economics. GEEP follows the principle of GDP accounting and carries out value accounting for the final products of ecological and economic systems. Based on GDP, GEEP considers the ecological-environmental damage caused by human beings in economic product activities and the benefits of the ecological system to the economic system. 2) In 2016, China's GEEP was 126.6 trillion RMB, 1.6 times of GDP, among them, the cost of pollution damage was 2.1 trillion RMB, the ecological degradation cost was 0.69 trillion RMB, and the ecosystem regulating service was 51.4 trillion RMB. 3) The regional Gini coefficient based on GEEP was 0.44, which was 0.07 smaller than the regional Gini coefficient calculated based on GDP in 2016, thus GEEP accounting would benefit to shrink regional disparity. 4) Compared GEEP ranking with GDP ranking of all provinces, GEEP rankings in Inner Mongolia, Heilongjiang, Yunnan, Qinghai and Tibet have increased by more than 10 ranks compared with GDP, and Beijing, Shanghai, Tianjin, Hebei and Shaanxi, their GEEP ranking compared with the GDP ranking has descending more than 10 places.

Introduction

As an important indicator for assessing the Macro-economy, Gross Domestic Product (GDP) is a general measure of the overall economic performance of a country. However, the current National Accounting System has certain limitations and it cannot measure whether the economy develops towards a sustainable path (Hartwick, 1990; Hamilton, 1995; ShahaniDeneulin and Lila, 2009; Costanza et al., 2014). To this end, the international research began to establish a green national economic accounting system in the 1970s, by deducting the cost of natural resource consumption and pollution damage from the GDP accounting system. It is more reasonable to measure economic development results and national economic welfare more realistically.

Green GDP and Genuine Savings have been regarded as indicators of sustainability to a nation or region, in order to make up the deficiencies in the traditional System of National Accounts (Pearce and Atkinson, 1993; Hamilton, 1994,1996). The United Nations Statistics Division has issued and revised the Systematic Environmental and Economic Accounting System (SEEA) for three times(United Nations, 1993, 2003, 2012), providing a basic framework for the establishment of green national economic accounting to be adopted. SEEA allows for the integration of environmental information with economic information in a single framework. The value of environmental depletion is considered to be a cost against income; hence, in the sequence of economic accounts, the definition of depletion adjusted balancing items and aggregates entail deducting depletion from the measures of value added, income and saving (United Nations, 2012). However, the SEEA Central Framework does not incorporate ecological benefits into economic system, and the stock and flow accounting of ecological assets is supplemented in the SEEA Experimental Ecosystem Accounting.

How to monetize evaluation of depletion of natural resources and degradation of the ecological environment within a national accounting framework is one of the main difficulties to green national accounting. China sponsored the Green GDP and made public Chinese Environmental and Economic Accounting Report 2004(Wang et al., 2009) in 2006. The work reported that the cost to environmental pollution in 2004 was about 3.05% of GDP. The report was warmly welcomed and hailed by the international community, the first such report issued by the national government around the world. So far, Green GDP from 2004 through 2016 has been completed by the Chinese Academy of Environmental Planning institute. Basically, the SEEA has made some adjustments to China's specific situation and has joined the accounting for China's ecological degradation costs since 2008. China economic-environmental accounting technical guideline was published and It promoted the study of China's green national economic accounting system (Wang et al., 2009, 2013; Yu et al., 2009). It is the shortcoming of SEEA and green GDP that they only reduce the resources and environmental costs of economic system growth, but do not take into account all the ecological benefits provided by ecosystems, which is essential for human well-being (Costanza et al., 1997). This may lead to excessive pursuit of economic growth and damage to the ecological environment.

The ecosystem services are the direct and indirect benefits obtained by humans from their ecosystems (Costanza et al., 1997; De Groot et al., 2010; Obeng and Aguilar, 2018; Sannigrahi et al., 2018). The contribution of ecosystem to the world's economy and human well-being has been widely recognized in science and policy (Rodríguez-Loinaz and Alday JOnaindia, 2015; Millennium Ecosystem Assessment, 2005; Ouyang et al., 2016). However, improper information about ecosystem services, inadequate and inaccurate valuation of natural resources and ineffective conservation policy system are found to be the key challenges for developing a comprehensive ecosystem service valuation system (Turner and Daily, 2008; Tallis and Polasky, 2009; Matzdorf and Meyer, 2014). Chinese scholar Ouyang et al. (2013) proposed the concept of Gross Ecosystem Product (GEP), which fully accounted for the ecological benefits including ecosystem provisioning value, ecosystem regulating value, and ecosystem cultural value provided by the ecosystem annually. From an ecosystem perspective, GEP considers the benefits that ecosystems bring to economic systems. But it is also important to note that ecosystems cannot provide any benefits to people without the presence of people, their communities, and their built environment (Costanza, 2014). This has given rise to the degradation of non-marketed services as a result of actions taken to increase the supply of marketed ecosystem benefit (Rodríguez-Loinaz and Alday JOnaindia, 2015). Protecting and enhancing the provision of non-marketed ecosystem benefit is critical to both human and economic aspects. It is important to integrate of the ecosystem and economic systems into the same accounting system.

In order to incorporate environmental damage, ecological degradation and ecological benefits into the evaluation system of social and economic development, this paper constructs a comprehensive Gross Economic-Ecological Product (GEEP) accounting framework based on Green GDP and GEP accounting. At the same time, in 2016, GEEP accounted for 31 provinces, municipalities and autonomous regions of China, and the spatial distribution of GEEP is analyzed.

Section snippets

Framework of Gross Economic-Ecological Product

The theoretical basis for GEEP is weak sustainable development and welfare economics theory. Weak sustainable development considers that capital stock can be replaced by different elements, allowing artificial capital to replace natural capital (Gao, 2004), which means ecosystem and economic system may replace each other and can be integrated into the same accounting system. Welfare economics realized that the purpose of economic activities is to increase the welfare of individuals in society.

The results of Green Gross Domestic Product

GGDP is the deduction of ecological degradation costs and pollution damage costs based on GDP. In 2016, China's GGDP was 75.2 trillion RMB, accounting for 96.4% of GDP in the same year. In particular, the cost of pollution damage was 2117.5 billion RMB, and the cost of ecological degradation was 688. billion RMB. Among the cost of pollution damage in China, the cost of water pollution damage was 900.5 billion RMB, the cost of air pollution damage was 1172.4 billion RMB, and the land damage

Results and Discussion

  • 1)

    GEEP is an integrated economic-environment accounting system based on weak sustainable development theory and welfare economics. GEEP has similar accounting principle, methodological matrix and technical approach of GDP, and it considers both the value of the final products of ecological and economic systems and services provided by the ecosystem's flow amount. GEEP is calculated based on the GDP of the economic system, meanwhile taking into account the damage caused by human beings in economic

Acknowledgments

This study was supported by the National Key Research and Development Program of China (No. 2016YFC0208804), and the National Natural Science Foundation of China (Grant No.41371533).

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