A new system of sustainable accounting is known as Green Accounting, has emerged. So friends, in today’s article we are going to know about Green Accounting Meaning (What is Green Accounting?). So let’s discuss in details.
What is Green Accounting?
Green Accounting Meaning – The green accounting is a new system of sustainable accounting. In this accounting system, the GNP (Gross National Income) or the NI (National Income) of a country is estimated by taking into account both the depreciation of man-made capital and natural capital.
Green Accounting and Economic Accounting
Environmental accounting is also called green accounting. The sustainable development contains some important accounting system. In the context of national income accounting we get following types of accounts –
• The Conventional National Income Account – According to this system, the national income can be estimated by taking into account monetary value of all goods and services produced in the economy. In this system, price and quantity of the goods and services are computed. As for example- GDP = Price x Quantity.
• Sustainable Accounting – In case of sustainable accounting we take into account two different aspects man-made capital and natural capital. In the production process, a producer uses two types of resources man-made capital (Machines, Tools, etc.) and natural capital (Minerals, Water, etc.).
In this production process, several damages are occurred. The sustainable accounting take into account the damages the natural capital to derive the GNP (Gross National Product) of the country. Therefore, it is an improvement over the conventional method of accounting.
The importance of sustainable accounting was discussed in 1992 United Nations Conference on Environment and Development held at Rio-de-Janeiro which recommended all nations and the United Nations to develop a system of integrated environment and economic accounting.
• Integrated Environmental and Economic Accounting – The main objective of this accounting is to expand existing systems of national economic accounts in order to integrated environment and social dimensions in the accounting frame work currently it is known as “Green GNP“.
Objectives of Green Accounting
Following are the important Objectives of Green Accounting –
• The Green Accounting sets a linkage between economic development and depletion of natural resources.
• With the help of green GNP (Gross National Product) we can assess the availability of natural resources.
• Green accounting is also considered as an indicators of sustainable development.
• The green accounting shows the impact of economic development on the stock of natural resources.
What are the difference between Green accounting and Conventional Accounting?
The important difference between Green accounting and Conventional Accounting are given below –
|Conventional Accounting||Green Accounting|
|• Conventional accounting does not fully take into account pollution preventive expenditure.||• Green account considers pollution preventive expenditure and also environmental impact studies.|
|• The Conventional accounting system provides a partial picture of economic development.||• Green accounting gives us total picture of sustainable development.|
|• The conventional accounting system does not measure environmental degradation.||• Green accounting takes into account the volume of resource depletion to compute economic development.|
|• The conventional account considers only depreciation of the man-made capital.||• Green account takes into consideration both man-made capital and natural capital deprecation.|
|• The conventional account does not provide any information regarding environmental and ecological changes due to economic development.||• Green accounting gives a detail information regarding environmental quality change.|
So friends, this was the concept of Green Accounting meaning. Hope you get the full details about it and hope you like this article.
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