ON THE INTERPRETATION AND APPLICABILITY OF A GREEN NATIONAL PRODUCT

Several economists have recently suggested that the national product s hould be adjusted for the value of environmental damages. In this pape r we look at some of the difficulties one encounters when the correcti ng formulae derived from simple theoretical models are transferred to applied national accounting. In particular, the paper is concerned wit h the question of whether a corrected national income measure will act ually provide relevant information for policy-makers. It is shown that a ''green national product'' will be very difficult to interpret. In general, it may not give any indications of the necessity of imposing stronger environmental policy actions. Nor does it indicate the hypoth etical state of the economy after a change in environmental efforts.