A GREEN NET NATIONAL PRODUCT FOR DENMARK and THE GREEN REFORM MODEL

THE GREEN REFORM MODEL

The REFORM model of the Danish economy developed by the DREAM modeling group is currently used by the Danish Ministry of Finance and the Danish Economic Councils to evaluate the long-run effects of policies aimed at improving the performance of the Danish economy. Drawing on the expertise of the DREAM group, the Ministry of Finance plans to build a new macroeconomic model of the Danish economy where the economy’s long run equilibrium is described by the REFORM model. Peter Birch Sørensen and his research team will construct the GREEN REFORM model as a direct extension of the existing REFORM model.

The goal of this research project is to simulate the environmental effects of Danish economic activity and the economic effects of policy interventions to meet the targets for Danish environmental, energy and climate policy.

A GREEN NET NATIONAL PRODUCT FOR DENMARK

The purpose of this project is to develop a measure of Denmark’s Green Net National Product (GNNP). This will be done by adjusting the Gross Domestic Product (GDP) recorded in the National Accounts for the value of the environmental and ecosystem services consumed by Danish residents over the year and for the change in the value of the stocks of Denmark’s exhaustible and renewable resources, stocks of pollution, and other forms of “natural capital”. These adjustments of the conventional GDP will highlight the importance of environmental goods and services for the welfare of Danish citizens and indicate whether Danish economic growth takes place at the expense of the environment.
Synergy between the GREEN REFORM modelling and the GREEN GDP

The two projects will create synergy in that the GREEN REFORM modelling project constructs a simulation model of the Danish economy, which accounts for the interaction between the economy and the environment. In the GREEN GDP project the research group will develop nation-wide estimates of the values of environmental goods and services which will extend the data input for the GREEN REFORM modelling project. The project on the GNNP will improve the identification of the most important environmental goods and services in a Danish context and these findings may guide the construction of the GREEN REFORM model.