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Estimating Green Net National Product for Puerto Rico: An Economic Measure of Sustainability (Journal article)
Citation:
Wu, S. AND Matt Heberling. Estimating Green Net National Product for Puerto Rico: An Economic Measure of Sustainability (Journal article). ENVIRONMENTAL MANAGEMENT. Springer-Verlag, New York, NY, 57(4):822-835, (2016).
Impact/Purpose:
The US Environmental Protection Agency (USEPA) is working to incorporate sustainability into its decision-making and research (Committee on Incorporating Sustainability in the U.S. Environmental Protection Agency, National Research Council 2011). One area of research is developing the use of metrics to help guide decision-makers toward sustainable solutions (e.g., USEPA 2007; USEPA 2010; Heberling and Hopton 2012). The goal of the sustainability metrics research is to produce a useable and useful methodology for environmental management using scientifically-based metrics that assess the components of sustainability. The USEPA, Office of Research and Development (ORD), initiated a pilot project in the San Luis Basin, south-central Colorado to test the general framework evaluating sustainability at a regional scale (USEPA 2010; Heberling and Hopton 2012). With the pilot project completed, we wanted an antipodal case study, so we chose Puerto Rico.
Description:
This paper presents the data sources and methodology used to estimate Green Net National Product (GNNP), an economic metric of sustainability, for Puerto Rico. Using the change in GNNP as a one-sided test of weak sustainability (i.e., positive growth in GNNP is not enough to show the economy is sustainable), we measure the movement away from sustainability by examining the change in GNNP from 1993 to 2009. In order to calculate GNNP, we require both economic and natural capital data, but limited data for Puerto Rico require a number of simplifying assumptions. Based on the environmental challenges faced by Puerto Rico, we include damages from air emissions and solid waste, the storm protection value of mangroves and the value of extracting crushed stone as components in the depreciation of natural capital. Our estimate of GNNP also includes the value of time, which captures the effects of technological progress. The results show that GNNP had an increasing trend over the 17 years studied with two periods of negative growth (2004–2006 and 2007–2008). Our additional analysis suggests that the negative growth in 2004–2006 was possibly due to a temporary economic downturn. However, the negative growth in 2007–2008 was likely from the decline in the value of time, suggesting the island of Puerto Rico was moving away from sustainability during this time.
