Costs of environmental damage would halve growth rate: expert
More than half of China's annual gross domestic product growth would be wiped off the books if the full costs of environmental degradation were taken into account, according to an environmental policy expert.
Daniel Esty, Yale University's Hillhouse professor of environmental law and policy, said he had access to mainland university studies and 'at least one Chinese government preliminary study' indicating that pollution had an annually recurring cost of 2.5 per cent to 3.5 per cent of GDP.
'This almost certainly understates the full diminishment that should be accounted for because it's not tracking resource stock that's being depleted,' he said, adding that he believed a full account would reduce GDP growth rates by at least 4.5 per cent a year.
China's annual GDP growth is projected at 7.5 per cent over the next five years according to the 11th Five-Year Programme.
Wang Jinnan, chief engineer of the Chinese Academy for Environmental Planning, said he could not comment on Professor Esty's figure as the magnitude of environmental costs could vary depending on the formula used. 'Our own studies have not been completed yet and I do not know which methodology [Professor Esty] used to arrive at his figure,' he said.
Professor Esty, who has also worked for the US Environmental Protection Agency, said it was vital for China to adopt green GDP measurements.
'One of the very fundamental principles of management and good business is that what is measured is taken seriously, and what is not measured is not,' he told a green forum held in Beijing on Wednesday.
'So it's absolutely critical, even if it's just an approximation, to begin to gauge the harm caused by economic activities.'
A green GDP proposal was first put forward in 2004 by the State Environment Protection Agency and has gained increasing traction among leaders with the endorsement of a five-year plan focused on sustainable development. President Hu Jintao endorsed the index at a meeting in January.
