Question

what if gross domestic product were revised to unclude cost/benefits of rhe changes to envirinmeate. what would the challenges accurately be?

Answer 1

If the GDP were revised to include the cost or benefits related to any changes in the environment, the government might face the following challenges:

- On the one hand, we include the production of several manufacturing companies in our GDP while, on the other hand, these same companies pollute the environment and so if the cost of this is added to the GDP, it will only counter the GDP contribution by the industries and hence, the calculation of GDP will become very complex.

- It will become very difficult to ascertain if any changes in the environment are permanent or temporary and hence, the cost or benefits associated with such a change will be included in the GDP or not. For example, most economies have been shut down because of the COVID-19 virus, and the pollution levels have drastically gone down. But when the economy starts functioning again, the environment will get back to being polluted. How will such a change be accounted into the GDP?

- It can become really difficult to calculate the cost or gain associated with any change in the environment as no such standards have been set anywhere in the world so far.