Environmental Science Module 11: GDP, GNP, and HDI PDF

Environmental Science 11 “GDP, GNP, and HDI” MS. CARLA JHOY JOCSON  NO. 10 ENVIRONMENTAL SCIENCE “GDP, GNP, and HDI” Define GDP, GNP and HDI Relate GDP, GNP and HDI to environmental management  NO. 11 ENVIRONMENTAL SCIEN...

Environmental Science 11 “GDP, GNP, and HDI” MS. CARLA JHOY JOCSON  NO. 10 ENVIRONMENTAL SCIENCE “GDP, GNP, and HDI” Define GDP, GNP and HDI Relate GDP, GNP and HDI to environmental management  NO. 11 ENVIRONMENTAL SCIENCE Gross Domestic Product (GDP) The total value of the output of goods and services produced by an economy, by both residents and nonresidents, regardless of the allocation to domestic and foreign claims. It is used to show the relative wealth of different countries and through yearly comparisons to show levels of economic growth. Gross domestic product (GDP) is one of the most common indicators used to track the health of a nation's economy. The calculation of a country's GDP takes into consideration a number of different factors about that country's economy, including its consumption and investment.  NO. 11 ENVIRONMENTAL SCIENCE GDP VS GNP VS GNI While GDP measures the economic activity within the physical borders of a country (whether the producers are native to that country or foreign-owned entities), the gross national product (GNP) is a measurement of the overall production of persons or corporations native to a country, including those based abroad. GNP excludes domestic production by foreigners. Gross National Income (GNI) is another measure of economic growth. It is the sum of all income earned by citizens or nationals of a country (regardless of whether or not the underlying economic activity takes place domestically or abroad).  NO. 11 ENVIRONMENTAL SCIENCE LIMITATIONS OF GDP 1. It ignores the value of informal or unrecorded economic activity. GDP relies on recorded transactions and official data, so it does not take into account the extent of informal economic activity. GDP fails to account for the value of under-the- table employment, black market activity, or unremunerated volunteer work, which can all be significant in some nations. and cannot account for the value of leisure time or household production, which are  NO. 11 ENVIRONMENTAL SCIENCE LIMITATIONS OF GDP 2. It is geographically limited in a globally open economy. GDP does not take into account profits earned in a nation by overseas companies that are remitted back to foreign investors. 3. It emphasizes material output without considering overall well-being. GDP growth alone cannot measure a nation's development or its citizens' well- being, as noted above.  NO. 11 ENVIRONMENTAL SCIENCE LIMITATIONS OF GDP 4. It ignores business-to-business activity GDP considers only final goods production and new capital investment and deliberately nets out intermediate spending and transactions between businesses. 5. It counts costs and waste as economic benefits GDP counts all final private and government spending as additions to income and output for society, regardless of whether they are actually productive or profitable. This means that obviously unproductive or even destructive activities are  NO. 11 ENVIRONMENTAL SCIENCE HUMAN DEVELOPMENT INDEX (HDI) The HDI was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone. The HDI can also be used to question national policy choices, asking how two countries with the same level of GNI per capita can end up with different human development outcomes. These contrasts can stimulate debate about government policy priorities. The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living.  NO. 11 ENVIRONMENTAL SCIENCE COMPONENTS OF HDI 1. Long and healthy life The first component of the HDI – a long and healthy life – is measured by life expectancy. 2. Access to Education The second component – access to education – is measured by expected years of schooling of children at school-entry age and mean years of schooling of the adult population.  NO. 11 ENVIRONMENTAL SCIENCE COMPONENTS OF HDI 3. Standard of Living The architects of the HDI have decided to add a third dimension – a decent standard of living – and to measure it by Gross National Income per capita. For most of human history, our ancestors were stuck in a world of poor health, hunger and little access to formal education. Economic growth – particularly over the past few centuries – has allowed some part of the world population to break out of these conditions.  NO. 11 ENVIRONMENTAL SCIENCE Environmental Performance Indicators (EPI) Collectively, the methods for assessing environmental impacts and the uses of natural resources (both living and non-living) are called environmental performance indicators. Generally, performance indicators are used in fields ranging from marketing and economics to education and legal studies to measure a project’s progress and/or success.  NO. 11 ENVIRONMENTAL SCIENCE FOUR TYPES OF INDICATORS 1. Inputs: Inputs are the natural resources or ecosystem services being used. 2. Outputs: Outputs are the goods or services that result from that activity. 3. Outcomes: Outcomes typically cannot be quantified and instead represent environmental, social, and economic dimensions of well-being. 4. Impacts: Impacts refer to the longer-term and more extensive results of the outcomes and outputs, and can include the interaction of the latter two indicators.  NO. 11 ENVIRONMENTAL SCIENCE USES OF EPI Monitoring the impacts of both short-term and long-term activities with EPIs allows decision makers to make changes that result in performance with lesser environmental impacts. In some cases, changes can be made to ongoing projects, or the results of an EPI can be used for publicity if the performance data indicate the activity is environmentally-sound. In other cases, the EPI establishes a performance benchmark against which other projects are measured, or the results are used in the strategic planning phase while projects are in development. In this way, past successes and failures can both be incorporated into future plans. NO. 10 Environmental Science