Despite reports claiming certain provinces were dropping out of the green accounting project seen as harming their own interests, the official told China Daily that the 2005 report will "actually expand to cover 31 provinces and municipalities," showing "a great leap forward for the concept of Green GDP".

Officially called the Environmentally-Adjusted GDP Accounting Report, the Green GDP report is set to emphasize the amount of waste created to both public and officials the waste created, and environmental damage done, in the process of economic growth.

Simply put, Green GDP is calculated by deducting the cost of natural resources' depletion and environmental degradation from traditional GDP.

The report for 2005 will be released next month, said Pan Yue, vice-minister of the State Environmental Protection Administration (SEPA).

The first report, for 2004, was published in September last year. Officials told China Daily that the Green GDP report involves complex accounting procedures which take around two years longer than the compilation of conventional GDP figures for a fiscal year.

The 2004 report showed that the financial loss caused by environmental pollution totaled as much as 511.8 billion yuan (US$64 billion), or 3.05 percent of the nation's economy, based on the traditional GDP accounting method.

The new report will include two further indices increasing the accuracy of the evaluation of environmental losses, Pan said. One will compute the cost caused by transportation pollution; and the other will cover the cost of pollution clean-up.

The effort was launched in March 2004 by SEPA and the National Bureau of Statistics. In the last two years, an accounting analysis has been made to quantify environmental pollution, imputed treatment cost and the environmental degradation cost for 42 industries.

Pilot projects were launched in the three municipalities of Beijing, Tianjin and Chongqing, and the seven provinces of Hebei, Liaoning, Anhui, Zhejiang, Sichuan, Guangdong and Hainan.

Pan admitted that initially, SEPA faced a plethora of difficulties ranging from technical ones to resistance from regional and industrial officials. But much to his relief, SEPA has managed to work with the 10 regional governments to stick through, Pan said.

The general environmental situation remains bleak, as a result of what Pan called catering to immediate interests and reckless energy consumption.

Last year, China flunked its target of cutting major pollutants by 2 percent, which instead witnessed a growth of 2 percent.

(China Daily January 23, 2007)