Estimating Green GDP and Its Linkage with Forest Cover in India: An SEEA-Based Framework and Granger Causality Approach

This study estimates Green GDP for India from 1971 to 2020 using the SEEA framework, integrating environmental degradation and natural resource depletion into national accounting based on standardized World Development Indicators. To address variations in data availability, three alternative Green GDP measures (GGDP1, GGDP2, and GGDP3) are constructed. The study further examines the dynamic relationship between environmentally adjusted economic performance and forest cover over the period 1990–2020 using Vector Autoregression (VAR) and Granger causality analysis. While both GDP and Green GDP exhibit a long-term upward trend, Green GDP consistently remains below conventional GDP, reflecting the economic costs of environmental degradation. Forest cover shows a gradual increase from 1990 onwards, although pressures from resource depletion persist. The empirical results indicate a unidirectional predictive relationship from Green GDP to forest cover, while no significant feedback is observed from forest cover to Green GDP under the current accounting framework. Impulse response analysis supports these findings, showing a positive response of forest cover to shocks in Green GDP. The absence of feedback effects reflects the underrepresentation of ecosystem services in national accounts. The findings highlight the need to strengthen environmental accounting and better integrate natural capital into policy frameworks for sustainable development.