Beyond GDP: National Accounting in the Age of Resource Depletion

After arguing that the stock of manufactured capital is an important driver of material and energy demands imposed upon the biosphere, a new accounting framework is derived from the laws of thermodynamics to reflect the fact that material and embodied energy accumulate within the capital stock of economic sectors. This framework extends the Energy Input-Output (EI-O) techniques first developed by Bullard, Herendeen, and others to estimate energy intensity of economic products. Implications from the new framework are discussed, including the value of economic metrics for policy-making, the need for physically-based rather than product-based EI-O formulations, a re-assessment of the concept of economic “growth,” and an evaluation of recycling, reuse, and dematerialization. The framework also provides an opportunity to assess an array of definitions for Daly's “steady-state economy” in relation to the ideal of a sustainable economy.

The book ends with a list of steps to be taken in creating a more comprehensive system of national accounts:

• National accounting agencies worldwide should develop and maintain balance sheets of both natural and manufactured capital in addition to national income statements
• All stocks and inter-sector flows should be provided in physical as well as financial units
• In the US, the Bureau for Economic Analysis (BEA) should restart detailed Capital, Labor, Energy, Material, and Services (KLEMS) reporting
• National accounting agencies should routinely estimate the energy intensity of economic products, and all of the above should be estimated and disseminated on an annual basis.