Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

What is Gross Environment Product?


From UPSC perspective, the following things are important :

Prelims level : Gross Environment Product (GEP)

Mains level : GEP vs GDP

The Uttarakhand government recently announced it will initiate valuation of its natural resources in the form of ‘Gross Environment Product’ (GEP), said to be along the lines of Gross Domestic Product (GDP).

Why such a move?

  • The idea of the valuation of the components of the environment is not new.
  • But it got impetus following rapid degradation of ecosystems, which led to adverse impacts on more than 60 percent of services we get from the ecosystems.

What is Gross Environment Product (GEP)?

  • GEP is the measure of ecosystem services of any area.
  • It reflects the aggregated annual value of goods and services provided by ecosystems (forests, water bodies, oceans, etc.) to people in a given region, such as at district levels, state, and country.
  • It entails the establishment of a natural capital accounting framework by integrating ecological benefits into common measures of economic growth such as GDP.
  • It summarizes the value of ecosystem services in a single monetary metric.

Evolution of GEP

  • The term “ecosystem services” was coined in 1981 to attract academics towards this aspect.
  • Ecosystem services represent the benefits humans get: Forests, lakes, and grasslands; timber and dyed; carbon sequestration and nutrient cycling; soil formation and productivity; and tourism.
  • The definition is still in the process of evolution. The concept received attention and now is part of global knowledge.

Advantages offered

  • GEP can be applied as a scientific basis for Eco-Compensation and public financial transfers.
  • For example, Finance Commission’s revenue-sharing formula between the Union and the states including forest cover as a determining factor in a state’s share.
  • GEP can be applied to measure the status of ecosystem services, which is an important indicator of sustainable development.
  • It is also a critical indicator for measuring the progress of Eco-civilization.
  • Its implementation can help assess the impact of anthropological pressure on our ecosystem and natural resources- air, water, soil, forests.

The Himalayan context

  • The Himalayas contribute substantially to the sustainability of the Gangetic Plains where 500 million people live.
  • The Union government incorporated the value of ecosystem services of its states in national accounting.
  • According to the recommendation of the 12th and 13th Finance Commissions, grants were transferred to forest-rich states in amounts corresponding to their forest covers.
  • However, considering only the forest cover in transferring funds to states is inadequate.

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