An Input-Output Analysis with an Environmentally Adjusted Agricultural and Forestry Sector in Bangladesh

Abstract

Traditional national income accounting methods does not make an allowance for the environmental damages incurred while producing the current output. Agriculture is no longer considered to be an environmentally friendly activity. In Bangladesh, efforts to feed an ever-increasing population have meant unsustainable farming practices and a steady depletion of the resource base. The quality of the environment has been degraded and ability of the future generations compromised. This calls for “greening” of GDP by deducting negative changes in environmental quality in national income calculation. This paper begins by developing an environmental account for Bangladesh's agricultural sector. This is done by collecting physical data on depletion and degradation of environmental resources and then estimating their costs by appropriate valuation techniques. The environmentally adjusted agricultural sector is then integrated with a Social Accounting Matrix. Finally, sectoral products for agriculture and forestry are estimated net of environmental cost.