Denmark wants to re-measure the value of its economic output so that it reflect social and environmental costs, the country’s foreign minister said Thursday.
“If you seriously want to move towards sustainability, you also need to create a new understanding of growth,” Villy Soevndal told Denmark’s Politiken newspaper.
Currently, gross domestic product (GDP) is the standard measurement of the total value of a country’s output of goods and services, but not the socio-environmental costs of economic activity.
Denmark would work towards developing a new measure of growth, which takes into accounts socio-environmental costs, during its presidency of the EU, starting Jan. 1, 2012, Soevndal told Politiken.
Such a measure could have strong implications for Denmark, which is western Europe’s third-largest oil producer, and whose shipping industry transports 10 percent of global seaborne trade.
While these activities underwrite the Danish economy today, their environmental impact could negatively affect Denmark’s future prosperity.
“What’s really driving this movement is the fact that it’s not only Europe looking at this,” said Ove K. Pedersen, professor of international economics and politics at Copenhagen Business School.
“South Korea is working on a model of ‘qualitative growth’ and even China wants to incorporate environmental costs,” he told Politiken.
Meanwhile, France and Britain are already trying to include social and environmental concerns in measuring economic growth.
In Denmark, business analysts say they are broadly supportive of a new GDP measurement, but say it has taken a long time to implement because it is extremely difficult to calculate.