'Green' economist wants nations' GNP figures to factor in environmental costs

January 13, 1991|By New York Times News Service

THE HAGUE, Netherlands -- In a Spartan office on the eighth floor of the Netherlands Central Bureau of Statistics, a shy man with the stoop of a bookkeeper rather than the bearing of a firebrand has been quietly plotting a revolution in the way economists look at the environment.

For 30 years, Roefie Hueting has provoked and prodded planners and policy-makers, telling them they are fooling themselves in the way they measure a country's wealth, the wel

fare of its citizens, the prices of goods and services.

And he has devised his own way, a set of new indicators that would arrive at a "green" gross national product, accounting for the harm that economic activity does to the environment.

The idea is getting broader attention in Europe as the environmental debate heats up and public opinion turns in favor of more drastic steps to fight pollution.

By ignoring or disguising the cost of economic production to the environment, Mr. Hueting and other dissident economists argue, the gross national product of many countries has been inflated and sometimes grossly distorted.

It is absurd, Mr. Hueting contends, that measures to defend nature or to check or repair damage have been tallied as growth.

In his years as a gadfly, the meticulous and persistent Mr. Hueting has been an irritant to people on the left and the right.

He survived politicians who wanted to close down his department. Slowly he gained acclaim from his peers. Now governments and international institutions are listening.

The Dutch government has asked Mr. Hueting to produce an alternative system of national accounting to reflect the damage done to the air, water, soil, and animal and plant life and to account for the cost of maintaining or restoring them.

Planners at the United National Environment Program and officials at the World Bank have said that Mr. Hueting's publications got them thinking about the need for "environmental accounting" in recent years.

Mr. Hueting is far from the only economist contending that the habits of more than 50 years of economic accounting -- using the output of goods and services as the only measure of economic and even social success -- are outdated and misleading.

Arguments that new rules and premises are needed have also gained ground in the United States. A year ago, Congress directed the Commerce Department to work on a new system of calculating environmental costs and benefits.

In Europe, the idea of "green" accounting has pried its way into more and more government offices. Sweden has sent a delegation to the Netherlands for advice on starting its own project. France and Norway have started to compile inventories of their natural resources, a first step to linking the state of the environment to economic activity.

Germany, which is further along, has responded to pressure from its Green Party and is working out a system to correct the "double counting" in its national bookkeeping.

In a 1989 study, economist Christian Leipert showed that between 1970 and 1985, West Germany's spending to preserve or restore the environment increased from 5 percent of its gross national product to 10 percent and was consistently counted as growth.

That meant, Mr. Hueting said, that measures simply to check deterioration were recorded as a significant contribution.

"Take a water treatment plant," he said. "Under the present accounting system, it is booked as a contribution, though it should be entered as cost. It's built to make up for the loss of usable water. It does not generate growth. You can only count that plant as value added if you have first entered the ruined drinking water as a loss."

Redefining such costs and correcting the books is useful, he said, but "it's dangerous if politicians or statisticians present this as the solution, because, as is well known, most environmental destruction is never restored or compensated."

Mr. Hueting and other ecological economists hope that a new framework for national accounts will ultimately lead to a fundamental change of national goals and even a redefinition of progress.

Green accounting will show how far the world has drifted from rational behavior, they argue.

Applying a green GNP, Mr. Hueting said, will make polluting products more expensive and consequently will slow growth. But he said that this does not have to mean a decline in employment.

"Many activities that protect the environment will have to be more labor-intensive," he said. "An economy that protects the environment will create more jobs."

Mr. Hueting and his team of 30 specialists, among them biologists, chemists and physicists, reckon they need at least two years to come up with a draft for a "green" GNP.

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