Calculating the green gross domestic product for the Maltese islands

Abstract

Therefore, the inadequacy of GDP, as currently defined, as an all encompassing unit of measure of collective well-being creates a need and a search for a more suitable measure of the welfare of the environment, not only at a point in time but on an on-going basis. By adjusting the GDP for externalities und long term effects of pollution, policy-makers, people in general and other stake holders would have a more appropriate gauge of real sustainable growth i.e. of value added. Hereunder, this adjusted measure of GDP will be referred to as Green GDP. Such a measurement will indicate where the environment is being most negatively effected and also help policy-makers address directly those areas which are the most effected or at risk. As soon as negative effects are determined on a timely basis, decisions can be taken for a drastic change in policies vis-a-vis the environment. Another use tor measuring Green GDP is that over a period of time the collected raw data can be used for the construction of predictive models which give advance insight as to whether economic policies in general would have environmental consequences if implemented. Though the idea of Green GDP may seem new in Malta, it has been around since the 1960s in other countries. It has only been in the recent years that all political parties have started to wave the green flag and this following increased awareness and pressure by the general public. As a result, government policies, where relevant, began to include the environment and connected issues into consideration, which is a way forward. The aim of this study is to give a tentative indication as to how much the Maltese economic activity is effecting the environment in monetary terms and the effect of these externalities on the GDP.