1. Environmental and Natural Resource Economics 3rd ed. Jonathan M
Environmental and Natural Resource Economics 3rd ed. Jonathan M. Harris and Brian Roach Chapter 8 – National Income and Environmental Accounting
Copyright © 2013 Jonathan M. Harris

2. Figure 8.1: Indonesian GDP Adjusted for Resource Depreciation, 1971-1984
This classic natural resource depreciation study indicated that the environmentally-adjusted domestic product for Indonesia was generally much lower than standard GDP, and slower-growing. The temporary spike in EDP reflects an increase in world oil prices used to value oil Indonesian reserves, as well as a discovery of new reserves.
Source: Repetto et al., 1989.

3. Figure 8.2: Calculation of Adjusted Net Saving15
Depreciation of fixed capital
Percent of GNI 10
Education expenditure 5
Depletion of natural resources
Adjusted net saving takes into account the negative effect of natural resource depletion and pollution damages, as well as the positive effect of education expenditures.
Pollution damages -5
Gross Saving
Net Saving
Net saving plus education expenditure
Adjusted net saving excluding pollution damages
Adjusted net saving
Source: World Bank, 2012.
Note: GNI = gross national income.

4. Fixed capital depreciation Education expenditure
Table 8.1: Adjusted Net Saving (ANS) Rates, Selected Countries in Percent of GDP, (2008)
Country
Gross national saving
Fixed capital depreciation
Education expenditure
Energy depletion
Mineral depletion
Net forest depletion
Carbon damage
ANS
Chile
24.23
–12.86
3.60
0.26
–14.32
0.00
0.31
0.08
China
53.89
–10.08
1.80
–6.74
–1.70
–1.26
35.92
Congo, Rep.
26.68
–14.08
2.25
–71.19
–0.16
–56.50
France
18.74
–13.86
5.05
–0.03
–0.10
9.80
India
38.17
–8.49
3.17
–4.86
–1.42
–0.78
–1.16
24.64
Indonesia
22.25
–10.66
1.15
–12.60
–1.38
–0.61
–1.85
Russia
32.78
–12.39
3.54
–20.47
–1.00
–0.85
1.62
Saudi Arabia
48.33
–12.46
7.19
–43.51
–0.62
–1.06
Uganda
12.63
–7.42
3.27
–5.06
–0.15
United States
12.60
–13.96
4.79
–1.93
–0.11
–0.31
1.07
Adjusted net saving is typically much lower than gross national saving, often due to depletion of energy and mineral resources. Uganda is an example of a country with severe forest depletion.
Source: World Bank, 2012.

5. Figure 8.3a: Adjusted Net Saving, , World Bank Country Aggregates: High Income Countries, South Asia, Middle East, and North America
Trends over time show adjusted net savings decreasing in high-income countries, but rising in South Asia.

6. Figure 8.2: Adjusted Net Saving, , World Bank Country Aggregates: East Asia and Pacific, Latin America and Caribbean, Sub-Saharan Africa
Adjusted net savings has increased in East Asia, but fallen in sub-Saharan Africa. It has remained fairly steady in a range of 5-10% in Latin America and the Caribbean.
Source: World Bank, 2012.
Note: ANS = Adjusted Net Saving

7. Value (billions of dollars)
Table 8.2: Genuine Progress Indicator (GPI), United States, 2004
Component of GPI
Value (billions of dollars)
Personal consumption
7,589
Personal consumption after inequality adjustment
6,318
Value of household work and parenting
+2,542
Value of higher education
+828
Value of volunteer work
+131
Service value of consumer durables
+744
Service value of highways and streets
+112
Costs of crime
–34
Loss of leisure time
–402
Costs of underemployment
–177
Cost of consumer durables
–1,090
Costs of commuting and auto accidents
–698
Costs of environmental defensive expenditures
–21
Costs of pollution
–178
Value of lost wetlands, farmland, and forests
–368
Costs of nonrenewable energy depletion
–1,761
Damages from carbon emissions and ozone depletion
–1,662
Adjustment for capital investment and foreign borrowing
+135
Total
4,419
The Genuine Progress Indicator “deconstructs” GDP to identify positive and negative elements of economic activity. Long-term resource depletion and damages from carbon emissions and ozone depletion are large negative factors in the overall GPI measure.
Source: Talberth et al., 2007.

8. Figure 8.4: Comparison of GDP and GPI per Capita, United States, 1970-2004
While GDP has risen over time since 1950, GPI seemed to reach a maximum around 1975, and has not increased significantly since then.
Source: Talberth et al., 2007.
Note: GPI = Genuine Progress Indicator, GDP = gross domestic product.

9. Figure 8.5: New Zealand’s Auckland Regional GPI vs. GDP, 1990-2006
A regional GPI analysis of Auckland in New Zealand shows similar trends in GDP and GPI between 1990 and 2006, but that the growth in GPI is due to rising personal consumption, while environmental damages increased over the period. The rate of growth in personal consumption more than offset the environmental losses in overall GPI.
Source: McDonald et al., 2009.
Note: GPI = Genuine Progress Indicator, GDP = gross domestic product.

10. Figure 8.6: Components of the GPI for Maryland, 1960-2010
An analysis of GPI for Maryland shows that while economic indicators improved over the period , environmental indicators generally declined.
Source:

11. Figure 8.7: Better Life Index Values for Selected Countries
The multiple components of the Better Life Index allow comparison in different dimensions including environmental, health, and social indicators.
Source: OECD, 2011.

12. Agricultural Land Resources Total Environmental Asset Value
Figure 8.8: Example of Natural Resource Accounts
Board-Feet of Standing Timber
500, ,000
Price per Board-Foot $ $5.00
Timber Asset Value $2,500, $2,000,000
Forest Resources
Year 1
Year 2
Hectares of Land
6, ,000
Price per Hectare $1, $1,000
Agricultural Asset Value $6,000, $7,000,000
Agricultural Land Resources
$8,500, $9,000,000
Total Environmental Asset Value
Decrease in Capital Stock
Increase in Capital Stock
Environmental asset accounts can be maintained in both physical and economic units, giving a detailed picture of a country’s natural resources and trends over time, and also allowing calculation of total environmental asset value.

13. Table 8.A1: Historical Gross Domestic Product (GDP) Data, United States
Year
Unadjusted U.S. GDP ($ billion)
Unadjusted GDP per capita (dollars)
GDP per capita in 2011 dollars
1950
294
1,929
14,920
1960
526
2,914
17,747
1970
1,038
5,064
23,586
1980
2,788
12,270
29,105
1990
5,801
23,252
36,476
2000
9,952
36,170
46,214
2011
15,094
48,409
GDP growth needs to be adjusted for inflation to get an accurate measure of trends over time.
Source: U.S. Bureau of Economic Analysis and U.S. Census Bureau Web sites.