Economic and Environmental Assessment in Green Economy

Green economy principles, issues, and strategies involve various dimensions, which exhibit close causal relationships, ranging from the interaction between two dimensions to the overall effects among the environment, economy, and society. The drivers–pressures–states–impacts–responses (DPSIR) framework has been proposed to identify the causal relationship between economic activities and environmental impact, so the DPSIR applies suitably to identify the causes and evaluate the impacts of the green economy. The DPSIR is a circulatory system that encompasses resource-related, environmental, social, economic, and technological elements, which influence the development of the green economy. These elements are categorized as drivers (D), pressures (P), states (S), impacts (I), and responses (R), which are indicators for explaining the sources of environmental crises and the respective cause-effect relationships. Corresponding to the framework of DPSIR, the computable general equilibrium (CGE) model, Life cycle assessment (LCA), and the cost benefit analysis (CBA) is proposed. LCA and DPSIR have similar structural concepts for assessing the environmental impact; drivers and pressures are connected by the emission factor; pressure and states are connected by fate and transport, and states and impact are connected by doses or effects. In LCA, activity intensity primarily concerns economic activities. In relation to the green economy, activity intensity represents not only an economic system but also social and environmental systems and their interactions. CGE model is used to identify the causes of environmental crises to support LCA. The CGE model consists of two parts, namely the SAM and an economic mathematical model of the interactions between accounts, and it is utilized to analyze the effects of ongoing policy measures for decision-making as well as to verify interdepartmental coordination and effects in policy choices. Green economy policies require consideration of costs and benefits for policy choices, hence, CBA has been employed as a decision-making tool for the green economy. When CBA is conducted to evaluate the costs and benefits of green economy strategies, the time and scope of cost and benefit calculation must be considered, and social and environmental values must be monetized through alternative and hypothetical market pricing.