European Environment Agency (EEA)

Beyond GDP — Brussels Conference


Source: European Environment Agency (EEA)

'Gross domestic product, regularly used as an indicator of the size of a country's economy, does not factor in the benefits from nor the costs to the ecosystem,' said EEA Executive Director Prof. Jacqueline McGlade in her presentation at the expert workshop preceding the 'Beyond GDP' conference in Brussels this week.

'The free services that the ecosystem provides such as, air and water should be measured, valued and added to the GDP for computing a more inclusive aggregated measure, which we call inclusive domestic product (IDP),' Prof. McGlade said.

Many negative impacts on the ecosystem such as over-harvesting, waste disposal, fragmentation by dams, and sealing of soil for development had no direct counterpart in GDP. As a result, the full cost of producing and consuming goods and services is not reflected in their ultimate market price. These ignored costs should be added to the current production output and imports of countries, sectors and companies enabling us to calculate the full cost of goods and services (FCGS), she said.

These two additional measures could be a valuable tool for policy-makers, enabling them to take more informed decisions on the costs of action versus inaction, on environmental costs and where to target ecological tax reform. However, such additional measures would supplement GDP, not replace or adjust it, the EEA director stressed.

To read the full report and see the presentation please go to the articles section.

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