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Inter-country environmental load displacement and adjusted national sustainability indicators: concepts and their policy applications

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The focus of this paper is to discuss and show the policy relevance of 'environmental load displacement' adjustments to national aggregate (macroeconomic) indicators for taking account of openness to the rest of the world. A national economy is considered as a set of production and consumption sectors interdependent with (i) natural processes and (ii) other national economies. In this structural perspective, three distinct 'adjustment' concepts are put to work in the development of aggregate indicators. The first type of adjustment centres on accounting conventions, through an enlargement of the scope of national accounting to include specified monetary accounting for selected categories of environmental assets. This is the basis for construction of an 'Aggregate Indicator of the Change, during the Current year, in the economic Assets of the Nation' (AICCAN for short). The second indicator type is based on hypotheses of adjustment of the economy itself that is, modelling of an 'adjusted economy' which respects specified environmental performance standards. We call the corresponding indicators 'greened economy GDP' (geGDP for short). In the third adjustment procedure, the AICCAN/geGDP concepts are maintained, and further classifications are introduced for making the distinction between 'costs borne' and 'costs caused' by a nation. A simple typology of the different types of between-nation 'load displacement' is presented, and a variety of selected examples is presented of different types of 'inter-country environmental load displacement' indicator concepts and empirical results that can be found in the published literature. Perspectives are developed for future research that can deepen statistical analysis of patterns of ecologically unequal exchange between countries.

Keywords: adjusted aggregate, AICCAN, ecologically unequal exchange, environmental load displacement, greened economy GDP, indicators, national accounts, political economy, statistics, sustainability

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