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Sustainable Development and Economic Performance Kimberly Burnett March 21, 2007

Sustainable Development and Economic Performance Kimberly Burnett March 21, 2007. State Income Accounting Measures Economic Activity Narrowly Defined. But this Measure misses many Aspects of Human Welfare. Biodiverse and Healthy Watersheds?. Oahu Pigs. Maui Goats. Photo credit: JB Friday.

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Sustainable Development and Economic Performance Kimberly Burnett March 21, 2007

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  1. Sustainable Development and Economic PerformanceKimberly BurnettMarch 21, 2007

  2. State Income Accounting Measures Economic Activity Narrowly Defined

  3. But this Measure misses many Aspects of Human Welfare

  4. Biodiverse and Healthy Watersheds?

  5. Oahu Pigs

  6. Maui Goats Photo credit: JB Friday

  7. Or Degraded Watersheds?Nu`uanu 1920

  8. Depreciation of Infrastructure + Watershed Degradation = Sewage Spills

  9. Sediment plumes

  10. Fish kills

  11. The Economy NATURE Impacts on biodiversity Firms (production) Wastes Inputs Outputs THE ECONOMY Households (consumption) Resource inputs Amenity values Global life-support

  12. Environomy NATURE Impacts on biodiversity Firms (production) Wastes Inputs Outputs THE ECONOMY Households (consumption) Resource inputs Amenity values Global life-support

  13. The Components of GSP • Gross State Product (GSP) is the sum of the following: • Consumption (C) • Investment (I) • Government Expenditures (G) • Net Exports (NE) • GSP = C + I + G + NE

  14. GSP and its Components

  15. GSP to NSP to GNSP • Another measure is Net State Product, which deducts capital depreciation from GSP • NSP = C + I + G + NE – CD • Green NSP measures environomy. From NSP, subtract • Depreciation of natural capital (biodiversity, aquifers, reefs) • Defensive expenditures (scrubbers on smokestacks to reduce pollution) • Falsely included in NSP in the first place • Subtract again to better reflect net increase in welfare • Residual damages from pollution, congestion, and ecological damages (flooding, sewage spills, leptospirosis) • GNSP = C + I + G + NE – CD – (NCD + 2DE + RPD)

  16. Case study – Ko`olau forested watershed

  17. Sustainable/Green Income Accounting • Would include depreciation of natural capital, pollution damages • Better indicator of levels-of-living, forward-looking welfare • GNSP reflects the performance of the environomy

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