Gov’t seeks to factor resource use into GDP

Posted on May 28, 2014

THE GOVERNMENT is developing a system that accounts for the use of the country’s natural resources in a bid to gauge its economic impact and sustainability.

The system, natural capital accounting (NCA), measures the use of a country’s environment and natural resources to determine how these contribute to the economy and livelihoods, the National Economic and Development Authority (NEDA) said in a statement yesterday.

NEDA Deputy Director-General Emmanuel F. Esguerra said that NCA could address policy challenges concerning water pollution and siltation, land use conflicts, revenue and benefit sharing from mineral resources, coastal zone protection and disaster risk reduction.

Arsenio M. Balisacan, NEDA director-general, said in an interview with BusinessWorld that the system will account for the depreciation of the value of natural resources.

“The national income accounting doesn’t account for the depreciation of our natural resources,” Mr. Balisacan explained in the vernacular. “Deforestation [and] depletion of minerals lower your natural capital.”

“It’s like what happens in physics -- you transform one kind of energy into another. We have a lot of natural resources ... so when you transform, say, natural capital into human capital, you don’t necessarily compromise growth because you converted it into innovation, technology, health, or education.”

The NEDA chief said that the problem is whether the exploitation of resources is sustainable. He said that NCA would help the government see what natural capital is extracted, how much of it is renewed, how much is regenerated, and what other aspects of the environment may be affected.

“For example, we have a very strong wood industry... Forests also serve other purposes -- for clean air, for maintenance of biodiversity [and] protection for endangered species,” Mr. Balisacan said.

“Assess the value of all that is lost ... then you can factor it into the created wealth. Because you factor in the income from the exploitation, you can figure out what actual value of the resource went into the GDP (gross domestic product).”

The value that doesn’t go into the GDP, he said, can be used by the government to invest in another kind of capital.

The NCA is still being studied by the government, and Mr. Balisacan did not give a date for implementation.

“We still have a lot of questions,” he said. “How do we value our diversity? Do we know the actual value of our natural wealth?”

He noted that the NCA is part of a multi-country study called Wealth Accounting and Valuation of Ecosystems (WAVES) under the World Bank. “What we’ll implement is what we’ll learn from the case studies we’re doing here and from what we’ll learn from other countries,” he said.

In yesterday’s statement, Mr. Esguerra was quoted saying: “Despite the challenges faced in the past, current conditions in the country already make it possible to have natural capital accounting included in the country’s programming and policy formulation process.”

Speaking at the fourth WAVES Partnership meeting in Washington, DC, on May 14, Mr. Esguerra also noted greater demand for NCA and for environmental and natural resource concerns to be incorporated in the planning and policy of the government, civil society, and the private sector. -- B.C.P. Balaoing