To What Extent Green Accounting Measure Sustainable Development

Arief Yusuf and Armida Alisjahbana

No 200307, Working Papers in Economics and Development Studies (WoPEDS) from Department of Economics, Padjadjaran University

Abstract: To what extent green accounting can properly measure sustainable development, not only depend on how well we maintain the link between the indicators and a clearlydefined concept of sustainable development but also on cautious interpretation of those indicators. Information from green accounting in general could be used to calculate adjusted, and better indicator of macroeconomic aggregates such as Green GDP, Genuine Savings, and Change in Wealth Per Capita. Green GDP, the most popular indicators, however, could not tell straightforwardly whether or not an economy is on sustainable path, neither could the growth of Green GDP. We show from a simple formal analysis of growth accounting that there are cases where interpretation of Green GDP growth could be misleading, especially when we are making comparison across economies (such as across province or districts) with differing resources dependence. Thus cautious interpretation of Green GDP (and its growth), is needed, and we propose that other indicators i.e. Genuine Saving and Change in Wealth Per Capita, which are easier to interpret, are better measures of sustainable development.

Keywords: Accounting; Sustainable Development; Indonesia (search for similar items in EconPapers)
JEL-codes: E21 O40 Q01 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2003-12, Revised 2003-12
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