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Green GDP Accounting Study Report 2004 issued
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"China Green National Accounting Study Report 2004" was issued jointly to the public by the State Environmental Protection Administration of China (SEPA) and the National Bureau of Statistics of China (NBS) on Sept. 08, 2006.


The report, the first of its kind on environmentally-adjusted GDP accounting in China, and marks the fact that the initial progress had been achieved on Chinese green GDP accounting.


The preliminary results show that economic loss caused by environmental pollution reaches 511.8 billion yuan, accounting for 3.05% of national GDP in 2004 while imputed treatment cost is 287.4 billion yuan, accounting for 1.80% of that.


Vice Minister Pan Yue of SEPA and Commissioner Qiu Xiaohua of NBS both indicated that the calculated environmental damage cost is only part of actual resources and environmental costs due to localization of departments and limits to technologies, and the integrated green GDP accounting still needs more arduous efforts and has a long way to go.


Green National Accounting (Green GDP Accounting for short) refers to an accounting system deducting natural resources depletion costs and environmental degradation costs ,so as to assess the quality of economic development in real sense.


The Green GDP Accounting Research Project was launched in March 2004 jointly by SEPA and NBS. In the past two years, the technical team conducted accounting analysis on physical quantification of environmental pollution, imputed treatment cost and environmental degradation cost for 42 industries and 3 regions of the East, the Central and the West China.


According to the accounting conclusion, economic loss caused by environmental pollution is 511.8 billion yuan, accounting for 3.05% of national GDP in 2004. Of the figure, environmental costs by water pollution, by air pollution and by solid wastes and pollution accidents are 286.28 billion yuan, 219.8 billion yuan and 5.74 billion yuan, accounting for 55.9%, 42.9% and 1.2% of the total costs, respectively.


According to Pan Yue and Qiu Xiaohua, an integrated environmental and economic accounting system should cover at least five types of natural resources depletion costs (land, minerals, forest, water and fishery resources) and two types of environmental degradation costs (environmental pollution cost and ecological damage cost).


Because of limitation to basic data and technical approaches, the accounting results in 2004 only represent the environmental pollution cost, without accounts of costs of natural resources depletion and ecological damage.


The environmental pollution costs should include costs of over 20 items while the current Chinese Green GDP accounting only covers costs of 10 items (health, agricultural and materials losses caused by air pollution; health, industrial and agricultural production losses, and water shortage caused by water pollution; economic loss caused by land occupation of solid wastes and etc.).


Groundwater, soil contamination and other key items are not dealt with in the accounting. On the whole, this accounting result is only a fraction of ultimate green GDP calculation result.


In addition, some underestimates and missing items existed in the calculated costs of 10 items. Even so, the environmental pollution cost has accounted for 3.05% of the GDP. This striking figure just demonstrates that environmental pollution is quite serious at present.


Apart from environmental pollution cost, pollution discharge amounts and treatment costs are also taken into calculation in the Green GDP accounting.


The calculation result shows that the one-off direct investment of about 1,080 billion yuan, accounting for about 7% of the GDP that year, should be required if all the discharged pollutants from point source were treated or disposed of in 2004.


Moreover, the additional operation expenses of 287.4 billion yuan (imputed treatment cost) are also needed for treatment, which accounts for 1.8% of the GDP in 2004. In fact, the pollution abatement and control investment only accounted for 1.18% of the GDP during the "Tenth Five-year Plan" period, which is of great gap with the accounting result.


Pan Yue and Qiu Xiaohua also indicated that the accounting result is sufficient to roughly estimate the current economic and environmental situation even if it is still not complete.


The calculated figures again prove that environmental crisis is more and more severely restricting economic development of China. In the traditional industrialization pattern, the GDP figure on the increase is based on the overdraft of resources and environment and public health.


Even though the economic growth characterized by "high consumption, high pollution and high risk" is of its own historical significance in China, China's economy has been in the bottleneck period of resources and energy today and it cannot bear any risks of resources exhaustion.


Meanwhile, Chinese society has also entered the period with various conflicts protruding in which per capita GDP is about 1,000-3,000 US dollars, which cannot bear up any social problems caused by environmental pollution.


The Central Committee of the Chinese Communist Party put forward the setting of concept of scientific development and building a harmonious society of China, and then building of a resources-conserving and environment-friendly society.


This means a significant sublimation of the political concept in China and provides a good opportunity for the Chinese economic growth pattern changing from traditional industrialization into new industrialization.


However, any good concept or ideology must be supported or ensured by a stable and firm system. If we cannot develop a set of comprehensive or objective measurement indicator system for economic growth, it will be impossible for us to achieve the set goals of setting a scientific development concept and building of a harmonious society of China.


Pan Yue noted that it would be a very long process to establish a green national economic accounting system ultimately as a result of obstacles in technology and system.


But it will be too late if we don't take action until all the pre-conditions become mature. We have to tackle thorny problems one by one. If one project was conducted, we would tackle one problem; if one problem was settled, we would release it to the public.


The further tasks of the working group should be as following: first, to improve accounting methods and conduct green national accounting as routine work.


SEPA will conduct three basic surveys in succession such as a nationwide pollution sources Surveys, a nationwide groundwater pollution investigation and a nationwide soil contamination investigation together with other departments concerned to supplement this accounting basis.


Moreover, the national survey for ecological damage loss will be launched soon in order to lay the foundation for calculation of overall environmental degradation cost; second, SEPA will place emphasis on research on how to formulate environmental and economic management policies related to pollution control, environmental revenue, ecological compensation and performance examination of governmental officers by using calculation results of green national accounting.


Since the report has analyzed the data regarding 42 industries and 3 regions and compared the environmental pollution situation in different industries or regions, SEPA will be facilitated to identify emphases of pollution control, collocate industrial environmental protection functional zones and coordinate regional development orientation with a definite objective, in order to promote sustainable development of regional economies.


Qiu Xiaohua said it was the common topic for statistical departments of the world all the time and it is an important task for the Chinese statistical department to explore green national economic accounting.


The National Bureau of Statistics will implement the requirements of the State Council to provide guarantee or support for the implementation of the scientific development concept, vigorously push forward research and practical work of green national economic accounting together with departments concerned.


The experts' assessment meeting for Green GDP Accounting Research was held jointly by SEPA and NBS in Beijing in July 2006. The experts group consisting of academicians and experts from the Chinese Academy of Sciences (CAS), Chinese Academy of Engineering (CAE), Chinese Academy of Society and Science (CASS) highly appraised the Green GDP accounting research.


The experts group is of the view that accounting technology and methodology put forward in the project research are scientific and rational, which have laid a solid foundation for the establishment of an integrated environmental and economic accounting system and been of great reference significance for integrated decision-making on environment and economy.


The expert group also agrees that the research is an important practice in following the people-oriented principle and implementing the scientific development concept, which is of innovative and landmark significance in Chinese environmental and economic accounting, and has met advanced international standards.


Chinese Green National Economic Accounting Research has drawn great attention at home and abroad and obtained great support from international community.


The Ministry of Science and Technology and the Ministry of Finance started the key national scientific research project; The World Bank set up technology-aid projects for specific purpose; the United Nations Environment Program (UNEP), the UN Statistical Commission, the Economic and Social Commission for Asia and the Pacific (ESCAP), the European Commission, Norway, Netherlands and China Council for International Cooperation on Environment and Development (CCICED) also rendered positive appraisal and encouragement for Chinese National Accounting Research.


In addition, the pilot or experimental work has been done in Beijing Municipality, Tianjin Municipality, Chongqing Municipality, Hebei Province, Liaoning Province, Anhui Province, Zhejiang Province, Sichuan Province, Guangdong Province and Hainan Province in support of Chinese Green National Accounting Research.


Nearly 30% of key industrial pollution enterprises, all the sewage plants, garbage treatment plants, big livestock and poultry breeding farms and 30,000 households were surveyed in the 10 provinces and cities.


Besides environmental protection and statistical governments, the health, agricultural, water conservancy, civil construction, transportation and other related governments were also involved in the survey. At present, the pilot work has been going smoothly in China and is expected for completion before the end of 2006.


Pan Yue and Qiu Xiaohua stated in conclusion that no any other country had ever conducted the complete and comprehensive environmental and economic accounting.


Therefore, Chinese environmental and economic accounting research makes a good attempt for the developing countries in the field of Green GDP accounting. SEPA and NBS are planning to further expand accounting scopes, improve accounting approaches and gradually establish a Chinese regular system of environmental and economic accounting report.


Provided by Chinese Academy for Environmental Planning


(Xinhua News Agency September 12, 2006)

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