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Home >> Opinion
UPDATED: 16:11, September 15, 2004
"Green GDP" index system is approaching: Interview
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The report that China is to set up a framework of the "Green GDP" index system and trial running of the system has drawn an extensive attention at home and abroad. What does this system mean? How will the test-run be carried out? What's the relation between the system and development of a region, and the thing to do with you and me and him? A journalist of People's Daily had an exclusive interview with Pan Yun, Deputy Director of the State Environmental Protection Administration.

Journalist: Some people argue that GDP cannot reflect the quality of economy comprehensively, so they call it "gray" GDP. What's your understanding of it?

Pan: This parlance is reasonable to some extent. GDP, as a core index in the calculation system for the national economy, doesn't take the cost of resources and environment into account. It shows only whether the economy has grown in a region or in a country, but it's unable to reflect resources consumption and changes of environment quality. China's growth method featuring high-energy consumption, low efficiency and high discharge of wastes has incurred an astonishing consumption of resources and discharge of pollutants although Chinas' GDP grows at 8 percent annually.

Journalist: Can "Green GDP" fix up the defects?

Pan: As a brand-new calculation system of national economy, the "Green GDP" index system has put together the accounting of economy and environmental costs. To sum up, it is about deducting environmental costs from the traditional gross domestic products. Therefore, Green GDP = traditional gross GDP minus the cost of environment damage and the cost of human damage. Green GDP can be regarded as "genuine GDP", for it has not only reflected economic growth, but also showed the quality of growth. It can help a country or a region evaluate its progress and development.

Journalist: Do the local governments welcome the "Baton" of Green GDP, since it has to deduct cost of environment losses and consumption of resources from the gross GDP?

Pan: "Green GDP" strives to unify economic growth with environmental protection so that it reflects achievements and costs of national economy activities. Adoption of this system will certainly lead to drastic fall in statistics of economic growth and bring about changes to appraisal system for officials' performance. In the past, GDP growth serves as the sole criterion for officials' performance. If we take economic growth, social development and environmental protection into consideration for the appraisal of the performance of officials, many of them will not have a correct understanding of it, thus becoming a resistance to the system.

Journalist: the governmental officials seem so to speak the first stumbling block to be removed?

Pan: It is so indeed. The "baton" of Green GDP has first to get passed through the officials. However, they are not like "a whole piece of iron sheet". In recent years, a lot of officials working at developed regions have felt the pain of lack of resources and harms of environmental pollution. As a result they've changed their thinking. Secondly, "Green GDP" is really a gospel for those less developed regions, which possess good environment. The officials there will welcome such an appraisal criterion.

Journalist: How will the "Green GDP" influence an enterprise?

Pan: The system will have direct and far-reaching influence for enterprises. In actual economic activities, on the one hand, some enterprises only attach importance to direct cost related to their growth and added value, but turn a blind eye to serious damage to resources and environment entailed by its activities. And on the other, the macro-control departments need to analyze the real economic operation. It is necessary for the departments to calculate the environmental cost in enterprises. "Green GDP" index system not only effectively restricts enterprise's impulse to expand but also provides them with an internal motive force for economic growth.

Saving energy means reducing energy consumption, which contributes to saving cost used in alleviating pollution. In the long run, the "Green GDP" benefits for enterprises basically outweigh the defects.

Journalist: Some say "Green GDP" has nothing to do with common people. It is government's business. What is your opinion?

Pan: I'm afraid this is a misunderstanding, because when taking the accounting of the Green GDP, many environmental factors cannot be calculated in money. Therefore, an approach called public evaluation is invented abroad. When large-scale public project will affect the environment, professional departments and independent expert organizations will make public survey and consultation on a larger scale. At last the decision is made in accordance with the public judgment. The subjective data should be used as an important supplement to the "Green GDP".

"Green GDP" system cannot be adopted without the participation of the public. I hope every one will give attention to the progress of the "Green GDP", for you have "one vote" in it.

Fixing price the major technological problem

Journalist: Calculation cannot be done if price is not fixed. In reality, it's hard to set prices for lots of things. How does the system handle this problem?

Pan: Setting price is the major technological problem when adopting the "Green GDP". As we know, transaction in market is the premise of GDP calculation. But how are we to determine the value of environment? The environment is not involved in transactions in market. For instance, when we fell a forest and sell the timbers, the price of timber can be added into the GDP statistics, but how much is the cost of the ensuing animal extinction and soil erosion. There is no market price for the wild animals, birds and soils. The environmental cost is hard to be figured out therefore. Secondly, there is no scientific calculation method for environment cost in some projects. For instance, a thermo-power plant will discharge sulfur dioxide and carbon dioxide, which will affect air quality or even the climate. The loss as such is impossible to calculate.

Journalist: Does this mean that the "Green GDP" cannot be adopted?

Pan: Yes, it can. Setting price in the "Green GDP" index system is a worldwide problem. Another challenge is the lack of related laws and regulations, i.e. laws on resources and statistics, evaluation criteria and sharing of information, etc. We shall start the research regardless of how difficult the task is so as to gradually set up a Green GDP system that is in line with China's conditions. We will take three to six years to establish an initial framework for the "Green GDP".

Journalist: Some media say six provinces and cities including Beijing and Shanghai have been chosen as places to test run the system. Is this true?

Pan: Not decided yet. The State Environmental Protection Administration has decided to test run the system in certain provinces and cities. The cities will be selected on the basis of voluntary participation.

Journalist: Has the timetable been worked out?

Pan: A schedule comprising three phases has been made.

Phase 1: Oct 2004 to Dec 2004. This is the preparatory period, in which technical preparation, training and spot check for pollution losses will be done.

Phase 2: Jan 2005 to Sept 2005. The cities and provinces will set up leading bodies and technical assurance system to carry out the GDP calculation and evaluation of loss caused by pollution.

Phase 3: Oct 2005 to June 2006. Release the evaluation and calculation report.

To set up an initial "Green GDP" index system catering to China's national conditions in three to six years is the overall objective that we are striving for.

By People's Daily Online

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