New environmental accounts must change how growth is measured: Economic growth can make a country richer even as it runs down the natural assets on which future prosperity depends. When groundwater is extracted faster than it is replenished, forests are cleared or soil loses fertility, the resulting economic activity may add to GDP. The depletion of natural wealth, however, finds no equivalent place in the headline measure of economic performance. India’s new environmental accounting strategy seeks to correct this imbalance.
The Ministry of Statistics and Programme Implementation has released the Strategy for Environmental Economic Accounts in India 2026–2030, a five-year plan to bring forests, water, land, soil, minerals, carbon stocks, biodiversity and ecosystem services into a more systematic statistical framework alongside conventional economic indicators. It follows the 2022–2026 strategy and addresses a basic weakness in economic policymaking: decisions on production and investment are difficult to assess fully when the depletion of the natural assets they depend on is not adequately measured.
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The underlying proposition is straightforward. If natural resources are productive assets, their depletion should be visible in the information available to governments when they make economic decisions.
What GDP leaves out
Gross domestic product measures the value of goods and services produced during a given period. It does not, by itself, establish whether that production has increased a country’s underlying wealth or depleted it.
The distinction between income and wealth is central to the problem. An economy can report rising output even as its stock of natural assets declines. When a forest is cut down and its timber sold, the resulting economic activity is recorded. The loss of the forest’s capacity to store carbon, regulate water flows, prevent soil erosion and sustain biodiversity does not appear as an equivalent deduction from GDP.
Environmental-economic accounting seeks to make these changes visible. India follows the United Nations’ System of Environmental-Economic Accounting (SEEA), an internationally agreed statistical framework that brings environmental and economic information together. It complements the System of National Accounts rather than replacing it, recording natural assets and their changes in physical terms and, where appropriate, monetary values.
This distinction is important. Putting a monetary value on a forest or a water resource does not mean that every ecological function can be priced adequately. Physical measures remain essential, particularly where the loss of an ecosystem may be difficult or impossible to reverse. The objective is to give policymakers a fuller account of the assets on which production and livelihoods depend.
MoSPI’s new strategy identifies about 10 priority areas, including forests, water, land, soil, minerals, carbon stocks, biodiversity, pollination services, environment-related economic activity and expanded environmental statistics. The task now is to develop consistent accounts from data that are often collected by different agencies, using different methods and at different intervals.
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Water and minerals expose the economic cost
Water illustrates why these accounts could improve economic decisions. India has about 18% of the world’s population but only 4% of its water resources. The World Bank estimates that per capita water availability has fallen by roughly half since 1970 and that about 600 million people face water stress. Water-dependent sectors contribute around half of India’s economic value added and employ nearly 70% of its workforce. These figures make water security an economic concern as much as an environmental one.
An environmental account cannot create water where supplies are inadequate. It can, however, help establish the relationship between withdrawals, the condition of water resources and the output generated by agriculture or industry. In a groundwater-dependent agricultural district, for example, production figures considered alongside changes in groundwater stocks would give decision-makers a better basis for assessing whether current patterns of cultivation are sustainable.
Such information could inform decisions on crop choices, irrigation investment and the allocation of water between competing uses. Its value would depend on whether the accounts are sufficiently detailed and timely to influence those decisions.
Minerals pose a related problem. Mining raises output and can generate substantial public revenue, but extraction reduces a finite resource stock. Accounts that record extraction, depletion and new discoveries could help governments assess changes in resource availability alongside the income generated by mining. The resulting information would not settle the trade-offs involved in mineral development, but it could make the costs of those choices more visible.
The wider economic exposure is substantial. The World Bank has estimated that a partial collapse of selected ecosystem services, including wild pollination, marine fisheries and timber from native forests, could reduce global GDP by $2.7 trillion annually by 2030 relative to its baseline scenario. This is a modelled estimate, not a forecast of an inevitable loss. It nevertheless illustrates the economic consequences that conventional production figures can fail to capture.
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Environmental accounts no guarantee for better policy
India’s initiative is part of a broader international effort to bring environmental sustainability into economic measurement. The United Nations’ 2025 System of National Accounts includes a new chapter on national accounts and measures of well-being and environmental sustainability, while recognising the complementary role of SEEA. Environmental accounting is increasingly being treated as part of the statistical infrastructure needed to assess economic performance.
For India, the difficult work lies in making the data useful at the level where decisions are taken. Natural resources are unevenly distributed, and national averages can conceal severe local shortages or rapid deterioration in particular ecosystems. State and district-level accounts, supported by consistent methods and reliable data, would help reveal these differences.
The availability of specialised expertise is another constraint acknowledged in the policy discussion. Environmental accounting requires knowledge of statistics and economics as well as ecology, resource assessment and the administrative systems that generate the underlying data. Government departments will need the capacity to compile, interpret and update these accounts. Policymakers and businesses must also be able to understand what the figures mean for investment and public expenditure.
There is a further limitation. Accounting can make resource depletion visible, but it cannot determine how governments should weigh conservation against employment, infrastructure or industrial growth. Nor will the publication of better statistics automatically alter incentives that encourage excessive extraction or underprice environmental damage. Those outcomes require decisions on regulation, public investment and the allocation of costs.
The test of the 2026–2030 strategy will therefore be whether its accounts enter the appraisal of actual projects and policies. When a road, mine, factory, irrigation scheme or urban expansion is proposed, decision-makers should have access to credible information about the natural assets it will use and the losses it may impose.
India has begun building the statistical framework for that assessment. Its value will ultimately depend on whether governments use it before approving decisions that may be costly, or impossible, to reverse.