4613.0 - Australia's Environment: Issues and Trends, 2007  
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Contents >> Population and urban trends >> Economic growth

GraphECONOMIC GROWTH TRENDS


Gross domestic product per capita


The performance of the economy is represented in the national accounts by such measures as growth in gross domestic product (GDP). GDP is a measure of the overall value of economic production in Australia in a given period. Growth in the economy is a key determinant of employment and, therefore, economic wellbeing of households. The volume measure of GDP is an indicator of real growth in Australian production. Between 1997-98 and 2005-06, Australia’s real GDP grew by 31%.

GDP per capita is also a measure of the performance of the economy and takes growth in the population into account. Between 1997-98 and 2005-06, Australia’s GDP per capita grew by 19% in volume terms.

Economic activity is often associated with depletion and/or degradation of natural resources. For example, the degradation of water quality due to land clearing for agricultural production or urban development, can adversely affect native plants and animals in freshwater ecosystems.

Similarly, air quality can be linked to the generation of income. Economic activity, particularly among the more energy-intensive industries relying on coal-generated electricity, generate air pollution that affect human health and the environment.

Gross domestic product per capita
Graph: Gross domestic product per capita
Note: Chain volume measure; reference year 2004-05
Source: ABS, Australian System of National Accounts, 2005-06 (cat. no. 5204.0)

Decoupling indicators have emerged as a way to measure whether economic growth is occurring without corresponding pressures on the environment. Decoupling has been described as breaking the link between economic growth and environmental degradation. An example of decoupling is when a developed nation experiences economic growth without an equivalent increase in its greenhouse gas emissions. Decoupling indicators are one way to make an assessment of whether levels of growth are sustainable in the longer term. Appendix A contains more information about decoupling indicators.

Depletion- adjusted gross domestic product

While gross domestic product (GDP) reflects the value added arising from the use of environmental assets, it does not reflect the economic costs of depleting and degrading those assets.

A depletion-adjusted GDP attempts to incorporate the environmental damage and depletion associated with economic activity. This is achieved by deducting depletion and degradation from the conventional GDP measure, then adding in any new discoveries or reappraisals of subsoil assets. At this stage, the estimates are still experimental and should therefore be regarded as indicative only.

Degradation of environmental assets occurs when the value of the stock is reduced through a decline in quality. For example, land degradation can result from land clearance and deforestation; agricultural depletion of soil nutrients, poor irrigation practices and pollution.
Depletion of environmental assets occurs when the value of the stock is reduced through use in a productive activity. For example, the extraction and use of subsoil assets through mining activity depletes the total stock of these assets available for future use.


DEPLETION- ADJUSTED GROSS DOMESTIC PRODUCT
2001-02
2002-03
2003-04
2004-05
2005-06
$ million
$ million
$ million
$ million
$ million

GDP
735 714
781 675
840 285
896 568
965 969
Depletion-adjusted GDP (a)
734 397
780 810
839 391
896 481
965 735
Subsoil depletion
3 137
3 685
4 206
4 199
4 295
plus Land degradation
314
322
331
345
362
less Subsoil additions
2 133
3 142
3 642
4 456
4 423
equals Net depletion
1 317
865
894
87
234

(a) Estimates are experimental, therefore use with caution.
Source: ABS, Australian System of National Accounts, Data available on request.


Subsoil depletions/additions and land degradation
Graph:Subsoil depletions/additions and land degradation
(a) Estimates are experimental, therefore use with caution.
Source: ABS, Australian System of National Accounts, Data available on request.



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