ON THE WELFARE SIGNIFICANCE OF GREEN ACCOUNTING AS TAUGHT BY PARABLE

''Green NNP'' is a national accounting concept that subtracts off from GNP not just depreciation of capital, but also depletion of environme ntal assets. For a time-autonomous technology, Green NNP has a rigorou s welfare interpretation as an exact measure of the economy's future p ower to consume. The present paper extends the standard framework to c over the case of labor-augmenting technological progress. For this spe cial case of lime dependence, a powerful conceptual parable applies. I t is ''as if'' the conclusion from a simple-minded welfare story told by the standard neoclassical one-sector growth model covers a far more general situation involving any number of different types of capital, any convex production possibilities set, and fully optimizing behavio r. Implications and applications are discussed. (C) 1997 Academic Pres s.