Measuring a country’s commitment to the environment could involve assessing the proportion of its economy dedicated to protecting, rehabilitating, and conserving the natural world. In the past, the United States has attempted to track the “green jobs” and “green goods and services” sectors. However, the US government presently does not account for this critical sector.
Research from George Mason University attempts to plug this gap by tracking the environmental, goods and services (EGSS) sector of the U.S. economy.
The green economy
Ninety countries have adopted environmental-economic accounting frameworks developed by the UN Statistical Commission. In the United States, researchers faced the challenge of creating a pilot account that would align with established US federal government approaches while remaining comparable to those of other nations. This involved scrutinizing European and American product and industry classification standards to identify shared data points that corresponded with UN guidelines.
The researchers identified relevant economic activity for the years 2015 and 2019, and used the BEA’s comprehensive supply-use tables, which contain economic inputs and outputs for over 5,300 product categories, to build their estimates. The results showed that the Environmental and Economic Satellite Accounts (EGSS) amounted to $620.6 billion in 2015 and $724.5 billion in 2019, with waste management being the top category, accounting for 25% of the entire sector. This corresponds with similar studies conducted in the EU, where waste management is also the largest environmental-economic category.
The researchers also distinguished between private- and public-sector output, finding that in 2015, the government portion of environmental output accounted for 28.3%, while private-sector output accounted for 71.7%. By 2019, this balance had slightly shifted, with 27.2% attributed to government spending and 72.8% to commerce.
Limited impact
“A lot of companies are putting out sustainability reports, but when you get down to what percentage of them actually include an annual dollar value attached to their activity, it’s very low,” the researchers explain.
While the SEC’s proposals for mandatory environmental reporting may help to plug this gap, they are also likely to be watered down as a result of corporate lobbying. What’s more, progress with the pilot is likely to depend heavily on how Biden’s budget progresses for 2024.
“It’s formally listed in the budget that they have an increase allocated to this as part of the increase in the BEA’s budget. Obviously, we’ll have to see how things pan out in terms of whether the budget moves forward,” the researchers explain.
According to the researchers, a meticulous assessment of the financial aspects involved in the realm of the “green economy” holds the potential to facilitate a nuanced and impact-driven discourse on climate-related matters.
By delving into the nitty-gritty of calculating the monetary value associated with Environmental, Green, and Social Spending (EGSS), researchers and policymakers could shed light on critical questions such as the correlation between increased EGSS expenditure and emissions reduction, as well as the varying degrees of influence exhibited by different investment categories.
The ability to quantify both the input and the outcome becomes indispensable in order to make informed assertions about the effectiveness of such initiatives.
