Context: Chhattisgarh has introduced an innovative plan that connects ecosystem services of its forests with the Green GDP and has become the first state in India to introduce this pioneering initiative.

• The move highlight the direct link between significant environmental contributions of forests like clean air, water conservation, biodiversity and the state’s economic progress.

• Forest accounts for Chhattisgarh’s 44% of land cover playing crucial role in mitigating climate change. 

• Also, forest products like tendu leaves, lac, honey, and medicinal plants contribute significantly to the rural economy. 

About Green GDP

• Green GDP is an economic indicator that aims to measure the true economic performance of a country while considering the environmental impact of economic activity.

• Subtracts the environmental costs of economic activity from traditional GDP.

• Includes the value of environmental benefits, such as those provided by forests (clean air, water purification, biodiversity).

Key Features of the Initiative

• Valuing Ecosystem Services: Quantifying benefits such as clean air (CO2 absorption and oxygen production), water conservation (economic impact of rivers and springs), and biodiversity (ecological balance and farming support).

• These valuations will be incorporated into the state’s Green GDP calculations.

• Economic and Cultural Integration: Recognizing forests’ contributions beyond timber, including their cultural and spiritual significance, particularly for tribal communities.

• Promoting eco-tourism through jungle safaris and camping in the state’s national parks, boosting employment opportunities.

• Scientific Assessment: Employing scientists to measure and value the ecosystem services provided by forests to accurately reflect their contribution to the state’s economy.

Benefits of Green GDP

• Recognizes the non-tangible benefits of forests, such as climate regulation and soil enrichment, often overlooked in traditional GDP calculations.

• Highlights the trade-offs between economic growth and environmental sustainability.

• Encourages the adoption of policies that minimize environmental damage and promote sustainable resource use.

• Helps identify sectors with the highest environmental impact for targeted interventions.

Calculation

• Green GDP = Net Domestic Product - (Cost of Depletion of Natural Resources + Cost of Degradation of Ecosystem)

• Need for Green GDP: GDP overlooks environmental depletion and degradation, often treating them as economic gains. 

• For instance, cutting down a rainforest and selling the timber increases GDP but harms long-term wellbeing and growth.

Challenges of Green GDP

• Valuation Complexity: Assigning monetary value to non-market environmental benefits (e.g., biodiversity) is challenging.

• Data Gaps: Lack of reliable and comprehensive data on environmental degradation and natural resource usage.

• Implementation Issues: Adopting Green GDP requires significant adjustments in accounting frameworks and policymaking.

Initiatives for Green GDP Accounting

• SEEA: In 1993, the UN introduced the System of Environmental Economic Accounting (SEEA) to standardize concepts and methods for producing internationally comparable statistics on the environment and its relationship with the economy. 

• WAVES: Wealth Accounting and the Valuation of Ecosystem Services (WAVES) is a World Bank initiative to measure, value, and integrate natural capital into national economic accounts for sustainable development.