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Using a system dynamics model, we compute the realized environmental investment rate. Using this rate as the weight, the green welfare index is computed from the consumption index and environmental services index. The environmental investment rate that maximizes the present value of the future stream of green welfare indices is estimated and called the optimal environmental investment rate. The normalized gap between these two rates is called ‘green growth gap,’ which gauges the deviation of the economy from the dynamically optimal path. The Green Growth Index is also developed to express this concept in a more digestible manner. These concepts and index are expected to be useful in the performance assessment of the national green growth strategy. This chapter provides a system dynamics model that can serve as a basis for measurement and policy feedback for green growth as a national strategy of Korea.
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- Green Growth Index and Policy Feedback
- Springer Netherlands
- Chapter 6