National Accounting for Resource and Environmental Degradation: Alternative Approaches and Concepts

Abstract

The national economic accounts summarize the flows of services, materials, and products that characterize a nation’s economic activity. Generally, and especially in industrialized countries, the flows accounted for are those reflected in monetary transactions.² From the earliest days of modern national accounting systems (that is, those systems developed in the first half of the 20th century), economists have emphasized the limitations of using monetary transactions to measure total economic activity, let alone to measure total societal well-being. These limitations can be especially serious in developing countries where nonmarket, household production can constitute the majority of total economic activity.³ Nevertheless, the national accounts—and especially certain sub-totals drawn from these accounts such as the Gross National Product—have gained popular status a key measure, if not the key measure, of a nation’s economic and social performance.

This paper is a revision of a report originally prepared for the U. S. Congress, Office of Technology Assessment. A longer, more technical version of this paper may be found in Robert Costanza, ed. Ecological Economics: The Science and Management of Sustainability New York: Columbia University Press, Chapter 13, 1991.