As the environment becomes crucial for economies, it’s time to ditch GDP for a better growth metric

For more than 70 years, the gross domestic product has been the key yardstick by which nations have measured economic progress. But GDP is designed to exclusively account for the monetary benefits accrued from economic activity. It is blind to the degradation of the natural environment, finite resources and human wellbeing. It is time we came up with something better.

Without ever having to acknowledge how nature has contributed to economic growth, GDP has promoted unsustainable practices that have contributed to the climate and biodiversity emergencies. To put it another way, GDP is like a ledger that will not accept red ink. Like an accounting trick, it has allowed us to vent greenhouse gasses into the atmosphere, destroy habitats and neglect human wellbeing without ever having to worry about the consequences.

Of course, the current environmental disaster was something that the economist Simon Kuznets did not have to consider when he developed the concept in the aftermath of the Great Depression in the 1930s. But notwithstanding its limitations, something Kuznets was himself aware of, GDP has become the main economic indicator in use today. This puts policymakers who are trying to limit global warming in somewhat of a bind.

Gross ecosystem product

As such, we need to start looking at…

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