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STRENGTHENING INDICATORS AND ACCOUNTING SYSTEMS FOR NATURAL CAPITAL
National Net Savings, ‘Genuine’ Savings. Countries
measure how much money is saved on average as the
result of all positive and negative economic transactions.
However, because some economic revenue comes from
rent on natural capital, these should not all be considered
as part of Net Savings as they currently are in the SNA.
Part of these receipts should be reinvested to maintain
the income flow in a sustainable way, just as companies
do with regard to depreciation of other capital. In addition,
human capital and ecosystem capital should be maintained
like other forms of capital.
The World Bank’s ‘adjusted net or genuine savings’
indicators measure a ‘truer’ level of saving in a country
by not just looking at economic growth but also taking
into account the depreciation of produced capital,
investments in human capital (as measured by education
expenditures), depletion of minerals, energy, forests
and damage from local and global air pollutants (World
Bank 2006). These indicators should also include
the degradation of ecosystem capital which relates to
maintenance of all ecological functions, instead of – as
is currently attempted for forests – being limited to
depletion which only relates to the maintenance of
income from forest exploitation.
GDP vs National Income that takes nature into
account. GDP (the sum of sectors’ value added)
measures only the economic transactions which have
taken place during the accounting period, not the
welfare, well-being or wealth of a country. Because
these transactions are the basis for taxation (the main
government resource) and are also closely correlated
to employment, GDP has been overplayed in macroeconomic
decisions and is sometimes misinterpreted
as a welfare indicator by journalists and many economists.
Once GDP is restored to its original status, the
question of an alternate or supplementary headline
aggregate comes to the fore.
The international Commission on the Measurement
of Economic Performance and Social Progress (the
‘Stiglitz-Sen-Fitoussi Commission’) (Stiglitz et al. 2009)
has addressed current limitations and flaws in GDP use
(see Box 3.7).
Correcting the prices for consumption, imports
and exports. Some talk of ‘greening GDP’ when they
Box 3.7: The Stiglitz-Sen-Fitoussi Commission’s
critique of GDP
The Commission has addressed current limitations
and flaws in GDP use, insisting on the need to pay
more attention to other existing aggregates, namely
National Income and Households Consumption. It
started by looking at the properties of the National
Income. Derived from GDP, the Income aggregate
aims to measure how much money we can dispose
of freely for our own expenditures:
• where part of GDP is regularly sent abroad –
e.g. to pay revenue to a foreign shareholder of
domestic companies or to families of immigrant
workers – GDP is adjusted for these
transfers of revenue with the rest of the world,
leading to the so-called ‘Gross National
Income’;
• a second adjustment is made to take into
account the normal degradation of productive
capital and the need to repair or replace it, to
produce a Net National Income (National
Income).
The Commission examined which elements of this
Income are not disposable (e.g. income tax for the
Households sector) and which other imputations
should be considered e.g. non-market services
supplied by the government sector. It concluded by
proposing the compilation of a Net Disposable National
Income, mostly targeted at improving
households’ well-being.
If we take a step further in this direction and
consider that the Consumption of Natural Capital
still needs to be taken into account, we can
propose the calculation of an Adjusted Net Disposable
National Income. Being linked to production
processes, this imputation will mostly draw upon
business accounts.
Source: building on Stiglitz et al. 2009
actually mean ‘greening the economy’ – i.e. reducing
the impact on nature. One way to do this is to change
market signals to encourage activities that take nature
into account – e.g. getting the prices right through full
TEEB FOR NATIONAL AND INTERNATIONAL POLICY MAKERS - CHAPTER 3: PAGE 25