The State Environmental Protection Administration (SEPA) said on Monday that 10 municipalities and provinces, including Beijing, have started work to take environmental costs into account when calculating their gross domestic product (GDP).

The first results of the pilot are expected to be released early next year and, it is hoped, will lay a good foundation for nationwide implementation of what has been called "green GDP" calculation.

The country's economic boom has had a negative impact on its environment. Experts have been calling for GDP figures to include environmental costs to counter the ecological damage that GDP targets are thought by some to exacerbate.

Experts estimate that when environmental costs are deducted, the average annual GDP growth rate in China will be cut by as much as 2 percentage points. The national GDP growth was 8 percent in 2002 and exceeded 9 percent for the past two years.

According to SEPA Vice Minister Pan Yue, different systems for environmental accounting will be set up to match the various conditions in diverse municipalities and provinces.

Meanwhile, ways to assess and calculate economic damage caused by pollution will be developed and payments for environmental harm studied.

Pan said the scheme would be significant in laying a foundation for sustainable development, but admitted that there would be many difficulties in setting up a nationwide green GDP calculation system.

Chief engineer at the Chinese Academy for Environmental Planning, Wang Jinnan, said a technical guide for environmental economic accounting has been designed as a reference for municipalities and provinces.

Based on the guide, accounting systems will be developed to match each area's specific conditions, Wang said. Training programs will also be offered later this month for officials from participating areas to help them better understand and complete the work.

Wang's academy is the leading research organization offering technical support to the work, a joint undertaking of the administration and the National Bureau of Statistics (NBS). The two authorities set up a team last March to carry out preliminary studies.

Wang said they are also doing similar calculations at the national level, but these results will not come out until next May.

Chen Kun of the Chinese Society for Sustainable Development said the move is a great step forward for the government but pointed out that green GDP is only a start and that much more will be required.

"Green GDP can expose existing problems, but it is not the solution," he said.

Chen said the best way for China is to change its model of economic development and pursue a more sustainable "circular economy" that employs the most efficient use of resources and achieves maximum economic and environmental benefits at minimum cost.

Also yesterday, members of the Standing Committee of the National People's Congress (NPC) approved a law to prioritize renewable energy in the country's energy strategy.

The law would be effective next year and aims to encourage the use of renewable energy sources, such as wind, solar and thermal power.

(China Daily March 1, 2005)