Green National Accounting
System in India:
Conceptual Issues and
Measurement Problems
S. Suresh Kumar
Member, Indian Statistical Service
Government of India
New Delhi
1
Introduction
• India’s population is growing at an annual growth rate of 1.9%.
– Size of population - 0.33 Billion (1951 Census)
– Increased to 1.21 Billion (2011).
• Annual GDP growth rate
– 3.5 - 4% - in the pre-liberalization period (Hindu Growth Rate )
– 7.3% during 2003-2010 and
– 6.3% in 2011-12.
• Liberalization of Indian Economy (1991 onwards)
• More development demands more land use changes like
deforestation, conversion of agricultural land into non-agricultural
use etc.
• About 52% of the population is depends on agriculture as small
farmers and agricultural laborers.
2
Introduction…
• ‘Poverty is the worst polluter’ – Late Mrs. Indira Gandhi, in
1972 in the world conference on ‘Human development’
• A host of legislations had been followed the Stockholm
conference
• Created Central Pollution Control Board (CPCB) in 1974
• Annual ‘Compendium of Environment Statistics’ since 1997
in line Framework for the Development of Environment
Statistics (FDES) by UNSD
• 8 studies on NRA for selected sectors during the period
2002-2008 (Mining, Air, Water, Land, and Forest).
• Constituted a Technical Advisory Committee in 2010 to
monitor the ‘Synthesis’ project . Report submitted in 2012
3
Introduction…
• Conflict between local communities who depend on natural
resources for their livelihood and government policies
• Dr. Jairam Ramesh, the then Hon’ble Minister of State for
Environment and Forest felt that India needs Green National
Accounts (GNA) that can influence the policy decisions of the
government with respect to environment and its protection.
• He observed in one of his speeches that ‘If you can’t measure
something, you can’t monitor it and manage it’.
• Constituted an ‘Expert Group’ under the chairmanship of Sir.
Partha Dasgupta, Professor-Emeritus, Cambridge University, UK
under the administrative control of Ministry of Statistics &
Programme Implementation. Central Statistics Office (CSO) comes
under this Ministry.
4
An Overview of Existing Accounting Systems
(System of National Accounts - SNA)
• A framework for the formulation of a set of accounting procedures
that the national governments use to compile routinely to track the
activities of their economies.
• A powerful tool to calculate major economic indicators like Gross
Domestic Product (GDP), Gross National Product (GNP), saving
rates, trade balance etc.
• First published in 1953 and latest in the series is the SNA 2008.
• The basic idea was to supply a reliable database to assess the
impact of public policy on the economy.
• Environmental concerns do not appear to have been adequately
addressed in the SNA primarily on account of the fact that
environmental activities fall outside the domain of the conventional
definition of economic activity.
5
An Overview of Existing Accounting Systems
(System of Environmental-Economic Accounting - SEEA)
• United Nations Statistical Commission (UNSC) established an
informal group of statisticians, called ‘London Group on Resource
Accounting’ in 1993.
• The objective:- to evolve the best practice in theory and practice of
environmental accounting confining to the framework of SNA and
to supply a forum for sharing national and international
developments in environmental accounting.
• Broadened the conventional and rather rigid definition of assets
adopted and followed under the SNA and developed an alternative
system of national accounting incorporating all natural resource
assets like land, soil, water, air etc., which form part of the
environmental functions like waste absorption, ecological functions
like habitat, flood and climate control, other non-economic
amenities like wild biota, subsoil assets, land, water, air etc.
6
An Overview of Existing Accounting Systems
(System of Environmental-Economic Accounting - SEEA)
• Developed as a Satellite Accounting System of SNA
• ‘The Handbook of National Accounting: Integrated Environmental
and Economic Accounting’ (SEEA) published in 2003, has evolved
certain monetary evaluation techniques to value the non-market
functions of the natural resources.
• The environmental assets identified by the SEEA are
– (a) natural resources; (b) mineral and energy resources; (c) soil
resources; (d) water resources; (e) biological resources; (f) land and
associated surface water; and (g) ecosystems.
• These categories were useful to assess the impact on sustainability
of natural resources and development.
• As the economic development and growth gather momentum, it
should ensure ecological welfare by maintaining key environmental
functions.
7
An Overview of Existing Accounting Systems
(System of Environmental-Economic Accounting - SEEA)
• In 2012, the SEEA Central Framework (SEEA CF) adopted as an
international statistical standard for environmental–economic accounting.
• Multipurpose conceptual framework for understanding the interactions
between the economy and the environment, and for describing stocks and
changes in stocks of environmental assets, built on agreed concepts,
definitions, classifications, and accounting rules.
• Significant change between the SEEA-2003 and SEEA CF in terms of the
treatment of environmental economic activities. The SEEA CF recognizes
only two economic activities as environmental:
– ‘environmental protection’ and ‘resource management’
• The structure and details of discussion on measurement of environmental
assets has been streamlined in a number of areas in SEEA CF when
compared to SEEA-2003.
• Discussion on the application of the Net Present Value approach to the
valuation of natural resources and the associated choice of discount rate
has been developed.
8
Interim Report of the Expert Group On
Green National Accounts
• Framework concludes that the objective of economic evaluation
should be a comprehensive notion of wealth. Wealth means the
social value of an economy’s entire stock of capital assets.
To estimate wealth, an economy’s productive base to be listed:
• Reproducible capital (roads, buildings, ports, machinery,
equipment) or ‘manufactured capital’. Market prices are typically
used to measure investments in reproducible capital.
• Human capital: People themselves are assets to nations.
– Population (Size and demographic profile):
– Education: Education involves costs and should be seen as investment
in people. Total benefits of education are the sum of private and
external benefits.
– Health: Good health enhances a person’s well-being and enhances
productivity.
• Natural capital (local ecosystems, biomes, sub-soil resources)
9
SEEA
SNA
Proposed Methodology
10
Major Challenges
• Economic & Political
– Large geographical area - 4 geographical regions
(Mountainous region, Plains, Desert areas, Southern
peninsular), - 4 climatic zones (Alpine Zone, Subtropical, Tropical, and Arid) with high degree of
biodiversity.
• Wood content of forest varies as per types of vegetation
• Segregation of data – According to region-wise
– Conflict on the ownership of resources (forest
dwellers vs. non-forest dwellers, upper riparian vs.
lower riparian)
11
Major Challenges…
• Data Related (existing)
– Different organizations having different mandates
involved in data collection.
– Varying levels of specialization and technical
capabilities.
– specific purposes with specific set of indictors at
specific time intervals.
– data dissemination policies may vary from
organizations to organizations
12
Major Challenges…
• A Solution to this Problem –
– Establishing correlation between the existing
databases of heterogeneous entity and linking
them together and building up a database for the
use of national accounting purposes
– Mechanisms need to be developed for the
dissemination of necessary data on agreed
principles
13
Major Challenges…
• Future Data Requirements
Sustainability Can be defined as
Final Stock – Consumption + Conservation + Augmentation
>= Initial Stock
• Selection of Indicators
– Existing system supports the methodology based on the System
of National Accounts (SNA).
– Human welfare indicators are qualitative in nature and falls
beyond the ambit of a market economy.
– The environmental services are a complex set of interactions
between the biotic and abiotic elements.
14
Major Challenges…
• What are the specific indicators for which estimations /
predictions are required and how will it be integrated with
the overall system?
– Existing Land-Use data not sufficient
• Depletion of Land / Forest quality
– Water Supply and Demand Analysis
• Water use according to Industry, urban, rural & Agriculture – Total
demand
• Quantification of Water resources – Both surface and Ground water
• Augmentation of water resources
- Oil, Natural Gas & Mineral resources
• Quantification of resources
• Rate of extraction
15
Major Challenges…
• Measurement issues
– Efforts should be made to identify data gaps at
country level and address it
– Data on some indicators are already available.
They are to be organized in time series manner
– Studies may be conducted to work out ratios
– Some of the indicators may be interpolated and
extrapolated with base year value
16
Issues in focus
• Implementation plan
• Data augmentation – The govt agencies producing all
relevant data needs to be identified.
• Standardization of concepts and definitions, guidelines for
the data collection and methods are to be formulated.
• Capacity augmentation in terms of training and creation of
manpower. Establishment of new institutions and
refurbishment of the existing ones.
• Collaborative mechanisms need to be initiated within the
country and with international agencies.
• Establishment of a mechanism for national level
coordination.
17
Thank You
For Your
Kind Attention
E-Mail: sureshkumarji@gmail.com
18