Previous Year Question

Green Accounting attempts to incorporate the environmental consequences of economic activity into economic accounting. It considers not only conventional production and income but also factors such as natural-resource depletion, environmental degradation and costs associated with pollution. According to India's Ministry of Statistics and Programme Implementation (MoSPI), environmental-economic accounting integrates economic and environmental information within a common accounting framework.

Conventional national-income or GDP measures record economic production, but they do not necessarily treat the depletion of natural resources and environmental damage directly as costs of that production. The System of Environmental-Economic Accounting (SEEA) helps address this limitation by systematically recording relationships between the economy and environment, including resource extraction, depletion and environmental degradation.

Therefore, Green Accounting should not be understood as being limited only to deforestation. Forest loss may form one component, but the concept is broader and can include water, land, mineral and energy resources, pollution, and other forms of environmental degradation. MoSPI's environmental accounting material similarly emphasises both natural-resource depletion and environmental degradation.