Page 173 - Invited Paper Session (IPS) - Volume 2

IPS195 Albert B.

Broadening the scope of GDP – a stocktaking on
including ecological developments
Albert Braakmann
Federal Statistical Office of Germany, Wiesbaden, Germany 1

Abstract
Gross Domestic Product (GDP) is the most prominent indicator of the System
of National Accounts (SNA), which is widely used for policy and administrative
purposes. GDP in real terms (i.e. price adjusted) has been accepted since some
decades as a measure for economic growth. At the same time GDP often is
considered as an indicator for societal progress and well-being. However, as
highlighted by the famous Stiglitz-Sen-Fitoussi-report of 2009, such an
interpretation of GDP is biased and can be misleading, given that most social
and environmental cost are not covered, or even worse, their repair adds to
GDP. In the case of environment the key words in this context are ecosystem
services, depletion and degradation and as a practical example the
repercussions of the global climate change could be mentioned. This paper
therefore looks at the conceptual as well as empirical pros and cons of
broadening the concept of GDP by including ecological developments.

Keywords
National accounts; Environment; Ecosystems; Well-Being.

1. Economic and environmental accounts
Air and water are indispensable requirements to human life, the cleaner
the better. The availability of food largely depends on environmental
conditions. Furthremore, natural resources are important for our economies:
The production and consumption of goods and services depends on
extracting minerals and other resources from nature. Eventually the material
circle ends by returning waste to nature.
For many economic decisions the yardstick mostly used is economic
growth measured by real gross domestic product (GDP), i.e. volume of goods
and services available to human societies. This key aggregate of the worldwide
System of National Accounts (SNA)was conceived as a measure for the
production of goods and services and often is taken as an indicator of societal
progress. In this context the production boundary is crucial, since it defines
the scope of production activities to be covered by GDP. Excluded for instance
is housework for the own household, although in most cases these activities

1 The views expressed in this paper are those of the author. They do not necessarily reflect the
views of the German Federal Statistical Office.
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