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Pollution caused losses of 511.8 billion yuan (US$64 billion) in 2004, over 3 percent of the 16 trillion yuan (US$2 trillion) forming that year's GDP.

Estimated pollution treatment costs the same year amounted to 287.4 billion yuan (US$36 billion), or 1.8 percent of the GDP, of which water contamination accounted for nearly 56 percent.

These findings are in the world's first report on the impact of the environment on the economy, dubbed "Green GDP," released in Beijing yesterday.

The report, involving 41 areas of investigation, was jointly compiled by the State Environmental Protection Administration (SEPA) and the National Bureau of Statistics (NBS).

However, the figures mark "only the beginning of our efforts in calculating the Green GDP," said Pan Yue, vice-minister of SEPA.

Wang Jinnan, vice-president of the Chinese Academy for Environmental Planning, explained: "Because of shortcomings in basic data and the technical approach, the results for 2004 represent only the environmental pollution cost.

"Even the estimate of environmental pollution is not complete for lack of figures on groundwater, soil and indoor air pollution," added Wang, also head of the group of the Green GDP accounting experts.

The figures do, however, set a global standard.

"These are the world's first official figures on Green GDP calculation," said Qiu Xiaohua, commissioner of NBS.

"Globally, the calculation of Green GDP is being explored; and has attracted controversy over how to go about it. But it is urgent for China to work on this complicated issue and set standards for cleaning its environment."

Pan said that the figures should not point to the wrong conclusion.

"Although we arrived at the figure of 3.05 percent, it does not indicate that in 2004, China's Green GDP was 96.95 percent of the conventional figure, because the green figures were very sketchy."

A complete environmental and economic assessment system, Pan and Qiu said, should cover depletion costs in at least five natural resources, namely land, minerals, forests, water and fisheries as well as two types of costs degradation - environmental pollution and ecological recovery.

The complete picture of China's Green GDP performance, Pan said, would realistically be much worse.

"If we take all the missing elements into account, the whole Green GDP figure will be drastically lower than the conventional GDP, which has kept increasing in recent years at the cost of the environment," he said.

"Although it will be a long process to establish the system because of difficulty in obtaining data and the approach, we have to kickstart it. China cannot wait till all the pre-conditions are ready.

"Otherwise, it will be too late to save the country's environment."

Accounting experts have also developed a software program to allow local officials to calculate their own green performance figures.

(China Daily September 8, 2006)