"The research on green GDP will continue. We will not write off the project as long as the appropriate departments don't put it on hold," announced Wang Jinnan, the team leader of the green GDP project, earlier in August during an interview with the China Economy weekly. Wang was obliquely referring to the State Environmental Protection Administration (SEPA) and the National Bureau of Statistics (NBS).

Wang said his team was working on the green accounting for the year 2006. He also implied that because the 2005 report had been suspended did not necessarily entail a scrapping of his newer project.

When SEPA and NBS jointly unveiled the 2004 China Green National Economic Accounting Study Report in September 2006, they also promised that the one for 2005 would be published at the end of 2006 or in early 2007.

But the two departments failed to keep their word. "The report can't be released because there is no international standard available for green GDP accounting; no other country has conducted this kind of accounting," Xie Fuzhan, the head of NBS, announced at a press conference on July 12.

Expectation was further confounded when Wang Jinnan confirmed on July 22 that the report would be delayed indefinitely. His statement sparked wider concerns on the future of the green accounting. This process is believed necessary by 96.4 percent of the 2,504 respondents of a recent poll conducted by Social Survey Center of China Youth Daily and the Tencent News Center.

"My team will not stop researching the green GDP even if the project led by SEPA and NBS is shelved," stated Wang.

The unpublished report

Wang said that the 2005 report, though not published, had been hammered out in December 2006. It covers 42 sectors in 31 provinces, autonomous regions and municipalities. This is a significant increase compared to the 10 pilot provinces in the 2004 report. Moreover, the 2005 report listed losses caused by pollution and the amount deducted from the GDP in these locales.

"These reports are direct reminders aimed to educate the local governments about the environmental prices paid for economic growth," Wang explained.

The 2005 report factors in the pollution counts, the potential treatment costs and the environmental degradation costs.

Pollution counts refers to the amount of pollutants produced, treated and discharged. The potential treatment cost is the expenditure used to clean up the discharged pollutant via current technology. Environmental degradation costs refer to the damage created by pollution, such as the crop failure and health hazards.

The SEPA and the World Bank (WB) developed the methodology. Two inventors adapted it, as well as the NBS, into their respective statistics covering losses suffered from pollution in 2003 and 2004.

Although Wang's team has improved the methodology, the 2005 green GDP doesn't factor in the costs associated with natural resources consumption or losses occurring from ecological destruction: underground water pollution, soil pollution, indoor air pollution, etc.

Technical challenges

Green GDP is never short of controversy because of its methodological problems.

Several months after SEPA and NBS kicked off the Study on China's Green National Economic Accounting in March 2004, Wang Jinnan, during the 5th Young Scholar Annual Meeting of the China Association for Science and Technology in Shanghai, pointed out that green accounting could not be put into practice unless the technical problems were first solved.

As there is no established practice in the world, Wang and his colleagues have to "cross the river by feeling the stones".

"Green GDP is good. But it's difficult to implement," said Zheng Jinping, the spokesman of the NBS. "Some departments may expect too much from this type of accounting."

Li Deshui, former director of the NBS, also raised questions about the possibility of deducting environmental costs from the GDP at the China Summit on the Development of Recycling Economy.

The seasoned statistician held that it was hard to follow territorial principles in estimating environmental and resource losses; no sophisticated international standards yet existed. He made his point by citing an example: if a downstream province were affected by wastewater discharged by an upstream one, which province should subtract the environmental cost from its GDP?

Li maintained that since it's difficult to determine the price of sunshine, air, water, or other resources that cannot be traded in the market, the departments concerned should focus on the pollution count statistics.
 
Three years after the green GDP project was launched, Xie Fuzhan, on behalf of the NBS, voiced skepticism regarding the scientific basis of green accounting.

Green government performance evaluation

Besides technical problems, political meddling is another stumbling block hindering the release of the 2005 report.

"Once the report is published, people will find the economic picture of many provinces is not as rosy as the local officials have portrayed. It's definitely unacceptable for officials in areas where serious environmental problems exist," said Wang.

When the project was initiated in 2004, Pan Yue, deputy director of the SEPA, expressed concerns that in the long run, it is with a green GDP and a holistic approach to access governmental performance that would help to put China's economy on a green road.

He called for the integration of a green GDP into already established government performance evaluation systems when the 2004 report was unveiled in 2006.

"It seems unrealistic but environmental protection can be incorporated in the system," said Wang. Although it will take a long time to turn the green GDP project into a criteria assessing officials' performance, such an evaluation mechanism is a must to further develop scientific methodology.  

(China.org.cn by Ma Yina, August 28, 2007)