Adjusting GDP for ecological deficit: the Index of Debt to the Future (IDF)

Theodore P. Lianos () and Anastasia Pseiridis
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Theodore P. Lianos: Athens University of Economics and Business

SN Business & Economics, 2021, vol. 1, issue 3, 1-22

Abstract: Abstract Many criticisms have been raised against the use of GDP as a measure of economic welfare. Although these criticisms may be justified, GDP arguably seems to remain the best measure of economic activity and could not be easily abandoned. It could, however, be adjusted for the ecological deficit that the production of goods and services creates. The Index of Debt to the Future (IDF) proposed in this paper adjusts the measured GDP by subtracting the part of GDP that creates the ecological deficit as estimated by the difference between biocapacity and ecological footprint. That part of GDP is a measure of the debt of the present generation to the future generations. The adjusted GDP, defined as the difference between GDP and the implied debt, is the net economic magnitude which the present generation should consider as its own. In addition to its simplicity, the proposed Index of Debt to the Future has the advantage of being easy to calculate with minimal marginal cost and easy to communicate to a wider audience. Graphic abstract

Keywords: Sustainable welfare; Ecological footprint; GDP; ISEW; GPI; SDG12 (search for similar items in EconPapers)
JEL-codes: E01 O44 Q01 Q56 Q57 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s43546-021-00041-0

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