Green Accounting – Article Example
Analyzing the use of green accounting in comparing the wealth of nations al affiliation Analyzing the use of green accounting in comparing the wealth of nations
Traditionally, the wealth of countries has always been quantified based on the country’s GDP. However, according to the World Bank, national wealth should also incorporate the natural and human aspects that contribute to the wealth of nations. In line with this, World Bank proposes that the wealth of nations be compared using green accounting. According to IPS Correspondents (2014), green accounting is concerned measuring the national wealth of a country in terms of its natural resources and intangible capital including skills and governance.
Advantages of using green accounting to compare the wealth of nations
One of the benefits associated with the use green accounting in the comparison of national wealth stems from the fact that green accounting does not only measure produced capital, but also natural capital. As such, a country with a lot of natural resources can be classified as being wealthy even if its produced capital is low (IPS Correspondents, 2014). Also advantageous is the fact that once countries realize that natural resources can be used to measure national wealth; more policies will be put in place in order to protect the environment and enter the wealth race among countries. Such competition will be beneficial for all as it will reduce environment destruction which, according to Wangari Maathai, the Nobel peace award laureate, is the new national enemy (IPS Correspondents, 2014).
Disadvantages of using green accounting to compare the wealth of nations
There exists a huge economic gap between the world’s richest and poorest countries, meaning that if national wealth is to be measured in terms of natural and human resources, then this gap will only widen. According to IPS Correspondents (2014),whereas high income countries continue to gain overall wealth, low-income countries continue to lose such wealth, thus making the comparison of the two unfair.
Another disadvantage in using green accounting is concerned with the idea that the depletion of natural resources is done by people who are without skills, beliefs, and self-value (IPS Correspondents, 2014). Unfortunately most people in the world’s poorest countries lack such values, beliefs, and skills. Accordingly, such people continually deplete their national resources thus reducing the wealth of their nations and giving the rich countries an upper hand.
IPS Correspondents. (2014). Development: World Bank Urges “Green Accounting.” TerraViva Millennium Development Goals Journal. Retrieved from: www.ipsnews.net.