How measurement of sustainable development is done through Green Net National Income and Genuine Savings?

Solution

The measurement of sustainable development is done in terms of two different aggregates:

1. Green Net National Income: Green Net National Income is the difference between Net National Income and Depreciation of Natural Capital. It involves the knowledge of following concepts:

(a) Net National Income: It is the market value of the final goods and services produced by the residents of the country during the period of one year.

(b) Depreciation of Natural Capital: Depreciation refers to loss of value of the capital because of its continuous use. Natural captial refers to the sum total of natural resources including environment. Accordingly depreciation of natural capital refers to the loss of value of natural resources of a country because of their continuous use, as well as environmental degradation.

Green National Income = Net National Income – Depletion of Natural Resources – Environmental Degradation.

Sustainable development is to be measured in terms of the rise in Green National Income.

2. Genuine Savings: Another measure of sustainable development is genuine savings. The genuine saving is the rate of savings adjusted not only for depreciation of man-made capital but also for loss of value of the natural capital.

Genuine Savings = Rate of Savings – Depreciation of man-made capital – Depreciation Natural Capital (Depletion of Natural Resources and Degradation of Environment).

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Some More Questions From Environment And Sustainable Development Chapter

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Environment And Sustainable Development

How measurement of sustainable development is done through Green Net National Income and Genuine Savings?

Some More Questions From Environment And Sustainable Development Chapter

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