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Damages from pollution are not reflected in traditional national accounting measures, even though they clearly reduce welfare. Industrial countries generate the vast majority of the world’s pollution and waste. While the rich countries have only about one-sixth of the world’s population, they generate about two-thirds of global industrial wastes by volume. But pollution also jeopardizes economic development in poorer nations. For example, a “Green GDP” estimate for China’s Shaanxi province indicated that costs attributed to pollution alone amounted to over 10% of the official gross domestic product (GDP) for 2002. In some cases, toxic wastes are exported from industrialized countries to low-income nations that are ill-equipped to receive them. Rapid future development will mean that such problems are likely to grow, despite efforts to control them with environmental regulations.

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