Boris Thurm
Scientific Collaborator, EPFL
What is new?
We propose a novel indicator, the Green Domestic Product (GrDP) to remedy some of the shortcomings of GDP.The GrDP extends the scope of the GDP to integrate the depletion of natural, social, and human capital. Concretely, GrDP is calculated by subtracting the external costs associated with producing goods and services from the standard measurement of GDP. The current scope of the GrDP includes the emissions of greenhouse gases (GHG), air pollutants, and heavy metals, and their impacts on climate change and human health.
Why does it matter?
Our decisions are influenced by what we know and by what we measure. Flawed measurements can lead to distorted decisions. The GDP is a valuable indicator measuring the monetary value of all goods and services produced in a country. However, it is not and never was an indicator of economic performance and social progress since it fails to account for the indirect impacts of productive activities such as environmental pollution. By considering the economic, environmental, and social dimensions, the GrDP allows us to make more informed and sustainable policy decisions, and to move beyond the dichotomy between promoting economic growth and protecting the environment.
What do we learn?
Our research underscores three key findings:
- In Europe, the gap between GDP and GrDP is narrowing, indicating that the economy is growing while external costs due to pollution are decreasing.
- Nonetheless, pollution costs persist at significant levels throughout Europe, ranging from approximately 5% of GDP in Switzerland and Nordic countries to over 30% in Eastern European nations in 2021.
- While there are glimpses of decoupling between economic growth and pollution, the pace of decarbonisation remains insufficient to achieve our goal of net zero GHG emissions by 2050.
There are opportunities for the future: many decarbonisation levers have significant co-benefits by also reducing air pollutant emissions and thus enhancing GrDP growth.
Thanks to our GrDP web app, you can interactively explore our results and visualize the evolution of the emissions of pollutants, external costs, GrDP, and decoupling between economic growth and environmental pollution in European countries.
You can also learn more by reading our reports that dive in the case of Switzerland, along with a more detailed methodological report.
