The gross domestic product (GDP) of South China's Guangdong Province would have been 27 per cent lower in 2003 if adjusted for environmental costs, according to a joint report by two research institutes.

The green GDP of the province has been recorded as 1,118.9 billion yuan (US$134.81 billion), compared with the conventional GDP of 1,537.6 billion yuan (US$185.25 billion), according to the report published by the Guangzhou Institute of Geochemistry of the Chinese Academy of Sciences and the Guangdong Institute of Eco-environment and Soil Sciences.

Both the conventional and green GDP figures here are calculated using the individual results of 21 cities in Guangdong. Therefore the conventional GDP figure does not tally with that provided by the Provincial Statistics Bureau, which is based on records for the whole province.

At a time when the country is prioritizing sustainable growth, the report makes an initial attempt to calculate the environmental costs incurred through economic activity in Guangdong.

Along with nine other provinces and municipalities, Guangdong was chosen by the central government in March to conduct experiments on calculating green GDP.

The full test results are expected to be released next year and will lay the foundation for a nationwide system of green GDP calculations.

The independent research by the two institutes in Guangdong was based on the formula of "conventional GDP minus the depreciation of fixed assets, minus the reduction in the value of natural resources and minus environmental losses," explained Kuang Yaoqiu, a leading researcher on the project.

According to 2003 figures for Guangdong, the depreciation of fixed assets leads to 15.6 per cent reduction in conventional GDP, while a further 0.69 per cent covers the reduction in the value of natural resources, and a 10.8 per cent reduction represents environmental losses. Altogether this accounts for a 27 per cent decrease in GDP.

The formula and calculating models used in the study were in part devised by project staff and in part taken from work carried out by international experts.

On the accuracy of the calculation, Kuang said the resulting ratio of green GDP to conventional GDP was similar to those calculated by researchers working in other provinces and cities.

However, he was keen to point out that the accuracy was ultimately dependent upon the accuracy of original statistics released by related government agencies, adding that without market exchanges, the values of various natural resources are hard to determine.

Kuang said he believes the report could serve as a reference point for the government in its efforts to set up an official calculating method, but would like to see further optimization of the formula and models developed by his team.

(China Daily July 20, 2005)