A new index of environmental quality

Elettra Agliardi, Mehmet Pinar, Thanasis Stengos

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There are already some indicators and descriptive statistics in environmental accounts (see United Nations, 2003). The system of national accounts (SNA) includes stocks of natural resources, pollutant and material (energy) flow accounts at the industry level, expenditures incurred by industries, government and households to protect the environment. Assets are evaluated either as net present value or net price. Several macroeconomic indicators measuring some aspects of the environmental quality of a country have been elaborated. The environmentally adjusted net domestic product (eaNDP) is obtained by combining the conventional NDP with monetary values of environmental degradation (Repetto et al. 1989). From national accounting matrix including environmental accounts (NAMEA) single indicators are obtained for different themes (e.g. acidification of the atmosphere, eutrofication of waters etc) by aggregating the emissions, using some common measurement unit and then comparing them with a national target level. The NAMEA, however, does not provide a single-valued indicator that aggregates across all themes. A single-valued indicator of total material requirements (TMR) can be derived from SNA, which sums all the material use in the economy by weights, to measure dematerialization. Many researchers have criticized eaNDP for mixing actual transactions with hypothetical values (monetary values) of environmental degradation; as a response, the indicators geNDP and SNI have been elaborated. Greened economy net domestic product (geNDP) estimates national income in a hypothetical future in which the economy must meet certain environmental standards and the impact is estimated by internalizing the costs of reducing environmental degradation (for a hypothetical model, see De Boer et al, 1994; the Swedish National Institute of Economic Research, 2000). Sustainable national income (SNI) estimates the maximum level of national income that would be obtained if the economy met all environmental standards using the current technology (see, for example, Verbrugger et al. 2000). Although the above mentioned indicators and descriptive statistics have been provided in environmental accounts, there is no consensus over which indicators to use. Moreover, each indicator serves a somewhat different policy purpose. Finally, the above-mentioned indicators are often based on arbitrary weighting of the relevant variables. Thus, a construction of an index of environmental quality is all-important.
Original languageEnglish
Publication statusPublished - 2012
Event12th International Association for Energy Economics (IAEE) European Energy Conference - Venice, Italy
Duration: 9 Sept 201212 Sept 2012


Conference12th International Association for Energy Economics (IAEE) European Energy Conference


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