Nations the world over have one aspiration: improving GDP growth. And Ghana is no different. For the past few decades, Gross Domestic Product, or GDP, has been the mechanism by which our Republic has measured its economic progress.
GDP is calculated by measuring the monetary value of goods and services produced in a country over a given period. The value produced is a determining factor of how robust our country’s economy actually is. GDP figures – whether a concerted effort is required to spur economic growth, or an intervention is needed to avert a downturn – guide policy formulation by economists and informs decision-making by politicians.
In order to achieve growth, government exploits our natural resources to generate cash; and whenever Ghana attains an increase in its real output (real GDP), it is considered to have achieved economic growth.
However, the increase in Ghana’s output and consumption is likely to have some adverse effects on our environment. Economic growth is a major factor as far as ecological balance is concerned. Countries, to maximise resources so their GDP will improve, may deplete their biodiversity depending on how lucrative a targetted sector may be. The widespread impact of economic growth as a result of industrialisation and urbanisation will inevitably lead to increased air-pollution, global warming and other climate issues which potentially have devastating long-term consequences for our Republic.
Private consumption, for instance, is an important factor in evaluating economic growth through GDP; and may even signify an increased standard of living. Nonetheless, it could lead to an increased consumption of public goods encased in plastic. These plastics are difficult to dispose and are often dumped into the sea and other water-bodies, which poses a severe threat to wildlife.
There are a number of countries that reveal a stark contrast between economic growth and the environment. China is a classic example of this phenomenon. While its economic growth over the past few decades has led to significant poverty alleviation, transitioning to a middle-income country, its impact on the environment has been cataclysmic.
A school of thought suggests economic growth ruins the environment to a certain degree, and that beyond the post-industrial economy it could arm countries with the resources to manage the environment. From that entirely different perspective, economic growth could very well lead to a much more prudent preservation of the environment.
Indeed, individuals over a sustained period of economic growth will have a significant increase in their real incomes. As a result of this they can commit resources to protecting the environment, or even make better choices in their private consumption which have less adverse effects on the environment.
But all the same, there are several mitigating steps government can deploy to curb the destructive effect economic growth can have on the environment.
Firstly, government can impose taxes on the consumption of selected goods and services which are major contributors to carbon emissions. But government must measure the adverse effect and impose, accordingly, a reasonable tax on consumers.
Secondly, government can also encourage investment in clean energy and technologies that alleviate the damaging effects of pollution. A pragmatic step is to advocate for an energy transition and introduce incentives for investors wishing to venture into that sector. This would spur economic growth and simultaneously protect the environment.
Recent trends in research reveal renewable energy is becoming relatively more affordable than more harmful forms of energy production, such as burning coal. And, therefore, government and businesses should encourage private consumers to patronise such goods and services.
Thirdly, technology plays a critical role in protecting the environment while simultaneously advancing economic growth. Government, with the backing of green-oriented consumers, can make a concerted effort to replace vehicles that require petrol with cars which use electricity from renewable sources. This style of governance, or free market activity, allows a country’s outlook to increase, but also effectively reduces environmental damage. There are several promising environment-friendly technological developments which can enable greater efficiency and affordability. Private enterprise, governments and consumers must be proponents of this modern tech culture.
Nonetheless, government must begin to devise an alternative means of measuring economic growth. Two key factors that should be included in the measurement of economic growth are quality of life and environmental indicators. There has been a widespread demand by economists to use alternative metrics such as the Gross Ecosystem Product (GEP).
In order to better assess economic growth and environmental preservation, it has become necessary to go beyond the traditional yardstick by which countries have measured their progress. GDP doesn’t capture sustainable development. Meanwhile, there are other alternatives, such as the Gross Ecosystem Product (GEP), which allow as to account for the environment’s contribution to economic activity. The GEP also encourages governments, global organisations and businesses to invest in nature.
If governments are able to highlight the value on benefits that we gain from nature, GEP would also reorient attitudes toward the economy and encourage equitable development. Locations which may have hitherto been neglected may benefit from private investment and government spending.
The destruction to our environment, in which we all exist, can never be justified on the basis of economic growth. At some point in time it’ll be imperative to examine the basis on which Ghana perceives economic growth and national development; it must go hand-in-hand with environmental preservation.
>>>The Author is Chief Executive Officer at D. K. T. Djokoto & Co — an illustrious and trusted boutique management consulting firm which, since 1950, has provided sincere guidance on commerce, real estate, public relations, and political strategy to selected traditional royal houses, blue-chip businesses, high net-worth individuals and governments.