Download Green Accounting Exercise

1
ECOLOGICAL ECONOMICS
Doctoral Programs in Sustainable Energy Systems, Mechanical
Engineering and Environmental Engineering
Advanced Degree in Sustainable Energy Systems
2008-09
Project
Contacts : Rui Mota: [email protected]
Extensão : 3442 ou do exterior 21 841 9442
Objective:
The objective of this work is to obtain and compare several alternative measures of sustainable
development for several years for a country of your choice. Remember that data availability may
limit your choice. The proposed measures are the Green Net National Income (GNNI), the
Genuine Saving (GS), the Human Development Index (HDI), and the Ecological Footprint (EF).
Of these indicators, the focus of this work will be on calculating a time series of GNNI and GS.
For all other measures it is necessary to obtain existing estimates from the internet. The GNNI
should account at least for the depletion of natural resources (minerals and forests), the health
damages from air emissions, the value of technological progress, and an ecosystem amenity of
your choice (landscape, biodiversity, habitat, etc).
Deliverable:
Write a report (maximum 8000 words or 25 double-spaced pages) with the structure of a research
article devoted to analysis as considered by the journal Ecological Economics.
I.
From the models presented in class, choose the appropriate description of the country of study,
and derive the GNNI with the adjustments considered relevant. Briefly interpret the
unconventional terms.
2
II.
For the chosen country, gather, for as many years as available (all variables should be in current
market prices, i.e., if the data obtained is not in current prices, it is necessary to convert it), data
on:
1. Gross National Income (GNI), Gross Domestic Product (GDP),
2. Consumption of Fixed Capital (depreciation of man-made capital),
3. Gross Saving,
4. Consumer Price Index (CPI),
5. Total Factor Productivity (TFP),
6. Emissions of selected air pollutants, (SO2, NH3, NOx, VOC, PM2.5), and greenhouse gases
(CO2 and CH4) as equivalent CO2,
7. Changes in the stock of natural resources (minerals, forests, etc),
8. Prices of commercial natural capital products, and an estimate of marginal costs of
extraction or harvesting,
9. Valuation of the environmental amenity considered. Use benefit transfer techniques when
the source of the valuation is not for your site of study.
III.
1. Using the Hodrick Prescott Filter, filter out the short run cycles for all the data, thus
obtaining an approximation of the variables as if in the full use of resources.
2. Estimate the value of time derived in I, for various truncations of the integral.
3. Estimate the depreciation of natural capital and interpret its dynamics and contribution to
welfare changes and sustainability.
4. Estimate the value of the health damages attributed to air emissions and the value of the
costs of climate change. Compare and comment both costs.
5. Estimate the value of the ecosystem amenity considered in I. Apply benefit transfer if
needed, either using simply the Purchasing Power Parities (PPP) to account for the
different price levels, or use a simple benefit transfer function. To perform benefit
transfer it is necessary to:
a. identify existing studies or values that can be used for the transfer,
b. decide whether the existing values are transferable (is the service being valued
comparable to the service valued in the existing studies? Similar quality of sites,
similar availability of substitutes. Comparable population characteristics,
3
c. evaluate the quality of the studies to be transferred,
d. obtain or construct a benefit function.
IV.
Estimate GNNI and GS and compare the sustainability messages. Compare also with the HDI and
EF indicators. Comment on the results and suggest future contributions and terms for Green
Accounting.
State any approximation used, and comment on possible drawbacks and alternatives.
Useful Data Sources:
AMECO – AMECO is the annual macro-economic database of the European Commission's
Directorate General for Economic and Financial Affairs.
UNSTATS or UNDATA – United Nations Statistic Division.
World Bank – Includes data on minerals and other types of natural capital.
CAFE-CBA – Data on estimates of marginal damages from air emissions in Europe.
ExternE – More data on estimates of marginal damages from air emissions in Europe.
HDR – United Nations Development Programme site with statistical information on different
aspects of human development.
Global Footprint Network – Estimates of Ecological Footprint.
IV. Preliminary schedule of the work
Week 1,2
Start obtaining relevant information for the country and years of your choice. GNNI and GS
propose changes to the conventional aggregates of the national accounting systems, namely, GDP
and saving. Note that all data must be in current prices (and not in constant prices).
Check the definitions of
-
Gross Domestic Product,
-
Gross National Income (or Product),
-
Gross Disposable Income,
-
Gross Saving (GS),
-
Consumption of Fixed Capital (CFC) or depreciation.
4
in the SNA93 (UN’s System of National Accounts 1993), or in the ESA95 (European System of
National and Regional Accounts). Note that GDP is a measure of production and GNI is a
measure of income, which is more interesting in terms of sustainability assessment. To measure
sustainability, should we work with gross or net values, being net values obtained by subtracting
CFC from gross measures? And why?
Get economic data, namely:
i)
GDP, GNI, GDI, GS, CFC, Population, CPI and education expenditures.
Compare and comment the differences and trends of GNI and GNP, and between gross and net
measures. Also compare with Disposable Income. Plot and comment the differences and trends of
GDP per capita, GDP per person employed, and per hour worked. Check if the population is
practically constant. Check if the growth rates of the above aggregates were more or less growing
exponentially as predicted by growth models. Plot the aggregates in point 1 but now subtracting
depreciation.
Week 3
Deflate all aggregates in current prices to constant prices of year 2000 (either dollars or euros,
preferably euros) using the CPI time series. Collect data on TFP.
Collect environmental data for the country in question. Namely:
-
air emissions for the flow pollutants suggested in II, and their marginal
damage cost,
-
changes in resource stocks, either renewable (forests) or nonrenewable;
it may be reasonable and convenient to assume that some resource
stocks are negligible to the country of your choice,
-
market prices of the chosen resources, and an estimate of marginal
costs of extraction/harvest.
Apply the Hodrick Prescott Filter to all aggregates to eliminate short run cycles from the time
series. Compute the Output Gap and compare its evolution with inflation. Obtain data on EF and
HDI for the country and years of your choice.
Week 4
Construct a model based on the models presented in class that is an appropriate description of the
country of study, and derive expressions for the GNNI and GS with the adjustments considered
relevant. Estimate the terms for the value of the damages from air emissions, the resource
depletion, the value of time (with different truncations of the integral), the value of the chosen
5
amenity and calculate the time series for GNNI and GS. Compare the sustainability messages and
check for a mismatch between changes in GNNI and interest on genuine saving.
Week 5
Perform sensitivity analysis by changing the interest rate used, some prices and valuations, by
including and not the value of time (with different truncations) and the education expenditures.
Write a report explaining the results and conclusions, used assumptions, drawbacks. Compare the
conclusions for sustainability assessment from GNNI, GS, EF and HDI. Be aware of the different
aspects of sustainable development being measured by each indicator.