Developing and Implementing Green National Accounts and the Green GDP

A green GDP-development and implementation of the green national accounts and a green GDP

University of Copenhagen has initiated a collaboration with Statistics Denmark on a new project to further develop Denmark's green national accounts. The project will explore the political-administrative processes behind the use of the green national accounts as well as edit a specific calculation of a so-called ' green GDP ' for Denmark.

The three-year project that runs until the end of 2019, is made possible by a grant from the KR-foundation.

Political and administrative barriers to an active use of the green national accounts

A one-sided use of traditional financial targets, first and foremost, GDP, entails a risk that political and administrative decisions are not adequately take into account the costs of depletion of resources and changes in the environment. This has been long recognized and criticised, not only by environmental organisations, but also by the UN, EU, World Bank and OECD etc.

The green national accounts have been developed in response to this criticism, but the practical use of it is still in its infancy. An important part of the work is therefore to investigate how the green national accounting information about the relationship between environment and economy may have an integral role in the political, administrative and business processes.

The project will, among other things. map the various obstacles for the use of the green national accounts, including the barriers in the form of practical and institutional conditions as well as conventional thinking. It will, among other things. be examined how politicians and officials have responded to criticism of the unilateral use of the traditional GDP and on the many initiatives to the presentation of alternative goals and objectives.

This part of the project is headed by professor Jens Hoff, Department of political science, University of Copenhagen. Associated with a PostDoc Martin M. B. Rasmussen.

Read about the research project at the Department of Political Science in Danish here.

The development of the green national accounts and calculation of a green GDP

The green national accounts is based on a number of individual divisional financial statements, of which some of them have been calculated in the physical quantities and thus does not include a financial valuation. This applies, for example, accounts for greenhouse gas emissions, which contains a list of emissions in tonnes.

Where the green national accounts thus contains a wide variety of physical and financial sub accounts, who cannot immediately be merged into a bottom line, is the "green GDP" a summary of all these aspects (and possibly other) by means of a financial valuation. 

The "green" GDP is calculated can be defined and interpreted in a variety of ways, and the project must therefore ensure that the calculation of a Danish "green GDP" made in the most appropriate manner and in accordance with the latest research in this area. It is an important objective to ensure that the "green GDP" is based on and are consistent with the physical and financial data in the green national accounts, as Statistics Denmark establishes in parallel.

The calculation of the "green GDP" is:

calculation of the green gdp

While these elements are necessary for the calculation of the "green GDP", they are also separate important applications independent of their share in a "green GDP".

This part of the work is headed by Peter Birch Sørensen, Department of Economics, University of Copenhagen, in cooperation with Ole Gravgård, Statistics Denmark. Associated with PhD Vibe Busk Larsen and Phd Rasmus Kehlet Berg.

Read more about Vibe Busk Larsens project here.

Read more about Rasmus Kehlet Bergs project here.

National and international involvement in the project

An important part of the project is to visualise and make use of the results and raise awareness of the green national accounts. The project will therefore be followed by a group of national and international experts. The group is being established, but so far we have obtained a commitment for participation from Glenn Marie Long, Chief Technical Advisor in the World Bank, Lars Haagen Pedersen, head of Department in the Ministry of Finance, Jørgen Elmeskov, national statistician, Signe Krarup, special advisor in the Ministry of Environment and Food, Thomas Bue Bjørner, head of department in the Danish Economic Council Secretariat.