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Making the environment count

Nordic accounts and indicators for analysing and integrating environment and economy

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In 2013, the Nordic Ministers for the Environment decided to strenghten the measurement of green estimates of welfare and socio-economic developments. The report Making the Environment Count is describing how statistics on the environment and the economy thorugh the System of Environmental-Economic Accounts can be used to enable cross-sectorial analysis. The report proposes indicators that can be compiled annually in a Nordic context through existing statistics linking economic statistics to environmental statistics.

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Methodology

The Gross Domestic Product (GDP) is - at least in principle - the value (measured in current market prices) of the national production of goods and services during a time period (see below, headline National accounts: GDP and value added). It summarizes a myriad of results from the production activities of a national economy in one single number. From the very beginning it has been clear that GDP has weaknesses as a measure of welfare. It does not account for e.g. leisure, natural resource depletion, environmental degradation or, for instance, household production. In addition most of the contribution by the public sector is measured by the costs of production since market valuations in this part of an economy are largely lacking. Simon Kuznets, Nobel prize winner, noted already in 1934 that the welfare of a nation can scarcely be inferred from a measurement of national income. Neither can increases in GDP be considered to increase human welfare. Income distributions as well as other socio-economic aspects have to be taken into account. Despite this longstanding common understanding, GDP is still often used as a simple measure of progress and wealth.

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