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Accounting for environmental assets.

R Repetto1

  • 1World Resources Institute, Washington, D.C.

Scientific American
|June 1, 1992
PubMed
Summary
This summary is machine-generated.

National income accounting fails to recognize environmental degradation, masking ecological impoverishment as economic progress. This flawed metric distorts our understanding of true national wealth and sustainable development.

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Area of Science:

  • Environmental economics
  • Natural resource accounting

Background:

  • Conventional national income metrics do not account for the depletion of natural capital.
  • Environmental degradation, such as deforestation and pollution, is often excluded from economic assessments.

Purpose of the Study:

  • To highlight the disconnect between national income measurement and the loss of natural assets.
  • To critique the prevailing economic paradigm that equates environmental destruction with progress.

Main Methods:

  • Conceptual analysis of national income accounting principles.
  • Examination of the treatment of natural resources in economic models.

Main Results:

  • Measured national income remains unaffected by the destruction of forests, soil, water, and wildlife.

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  • The disappearance of natural assets is erroneously interpreted as economic advancement.

    • Conclusions:

    • Current economic measurement systems provide a distorted view of national wealth.
    • A fundamental revision of national accounting is needed to incorporate environmental asset values for accurate progress assessment.