Can NNP be used for welfare comparisons?
- 29 January 2007
- journal article
- research article
- Published by Cambridge University Press (CUP) in Environment and Development Economics
- Vol. 12 (1) , 11-31
- https://doi.org/10.1017/s1355770x06003366
Abstract
This paper contains a critical assessment of the claim that NNP can be used for welfare comparisons. The analysis assumes that national accounts are comprehensive (in particular ‘greened’ by taking into account environmental amenities and natural resource depletion), but does not assume optimal resource allocation. The general conclusion is that greater NNP corresponds to welfare enhancement only if net investment flows are revalued. Real utility-NNP and real measurable NNP made comparable across time by means of a consumer price index allow for such revaluation, and thus indicate welfare improvement.Keywords
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