Why GEP Matters

The innovative policies designed and implemented in China based on GEP accounting have the potential to provide support for continuous policy innovation in green and inclusive development worldwide.

Gross ecosystem product, or GEP, is a measure of the value nature contributes to economic activity within a certain area. Measuring it creates the opportunity to factor the health of ecosystems into decision making for sustainable economic and social development.

President Xi Jinping has advocated the idea that “clear waters and lush mountains are invaluable assets,” as an illustration to guide China’s green development philosophy. China began the calculation of GEP in 2015 and since then, it has become a crucial part of putting this philosophy into action.

In order to improve the accuracy of GEP calculations across different administrative regions with diverse geographies, climates and cultures, the country has issued 16 GEP accounting technical specifications and guidelines—one set at the national level and 15 at local levels. The National Development and Reform Commission and the National Bureau of Statistics have jointly issued the national GEP accounting standards to regulate GEP accounting methods nationwide.

So far, more than 200 GEP accounting projects of different scales have been carried out in China, indicating the metric’s value in evaluating the effectiveness of ecological protection, the contribution of ecosystems to human wellbeing and their support to economic and social development. For instance, the GEP of the Hainan Tropical Rainforest National Park stood at 204.51 billion yuan ($28.09 billion) in 2019, of which the value of material products accounted for 2.37 percent, the value of ecological services accounted for 82.58 percent, and the value of cultural services accounted for 15.05 percent.

Innovative, coordinated, green, open and shared development is China’s major guiding concept for economic development. It was first put forward in 2015 at the Fifth Plenary Session of the 18th Communist Party of China (CPC) Central Committee, and will be an important part of the Third Plenary Session of the 20th CPC Central Committee to be held on July 15-18. The five-yearly CPC National Congress and the Central Committee it elects are the highest leading bodies of China’s governing party. CPC Central Committee plenary sessions, held at least once a year, gather all Central Committee members to address important affairs in the country’s political, economic and social development.

Zhejiang is among the Chinese provinces best at applying GEP. In October 2020, it introduced the country’s first provincial-level GEP accounting standard, and carried out pilot projects in 11 counties and districts. On May 20, 2021, the CPC Central Committee and the State Council, the highest state administrative body, issued a guideline on supporting Zhejiang’s high-quality development, requiring other local governments in the country to explore and improve their GEP systems using Zhejiang as a model.

Air quality, water quality and other conditions are different in different regions, so the calculation of GEP helps local governments measure the value of their local environments more accurately, and on this basis, determine appropriate economic policies according to local conditions. Using GEP as an indicator to evaluate administrative performance also greatly encourages public agencies to invest in resource conservation, green industrial activities and sustainable projects, as well as stimulating ecosystem conservation and restoration efforts.

At present, destruction of ecosystems is still occurring around the world, leading to reduction in the benefits of nature to humans. This destruction underscores the urgent need for better ecological performance indicators and their integration into decision-making processes. The innovative policies designed and implemented in China based on GEP accounting, as well as its experience in theory and practice, have the potential to provide support for continuous policy innovation in green and inclusive development worldwide.