GREENING GOVERNMENT REPORT
Strategy (continued)
FIGURE 1
Source: Friends of the Earth
Note 1: The index takes as its base consumer
expenditure, the base for GDP, and adjusts it for eighteen aspects
of economic life not counted in GDP. Friends of the Earth identify
the key differences between the Index and GDP are that in the
Index spending to offset social and environmental costs (defensive
expenditure) is taken out; longer-term environmental damage and
the depreciation of natural capital are accounted for; the net
formation of man-made capital (that is, investment) is included;
changes in the distribution of income are included, reflecting
the fact that an additional pound in the pocket means more to
the poor than to the rich; and a value for household labour is
included.
From the mid 1970's the trends in GDP and the Index
of Sustainable Economic Welfare have diverged. According to Friends
of the Earth this is due to environmental degradation and increasing
inequality of income.
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