Insee Analyses · November 2024 · n° 98

Can the climate be taken into account in the national accounts ? Climate-adjusted net savings are negative in France

Greenhouse gases (GHG) emissions have implicit costs that do not appear in the usual macroeconomic indicators. These implicit costs cover both the damage induced by climate change and the cost of decarbonizing production to avoid even greater future damage.

Previous studies have focused on how to take these phenomena into account in a national accounting framework. This document is INSEE's contribution to this research agenda. At this stage, the aim is not to establish a new framework for recurrent statistical production, but to sketch out a possible way forward, which could feed into the methodological debate and evolve with it.

In the augmented national accounts approach proposed here, recognition of the implicit cost, while not altering the measurement of gross domestic product (GDP), leads to a downward revision of the measurement of the net domestic product (NDP). This adjustment is representative of the effects of resident emissions on the depletion of “climate capital” and the reduction of the “carbon budget”. It is estimated at 4.1% for France in 2023 (5.5% when accounting for the effects of global warming on health and mortality). However, given the decline in resident emissions, this downward adjustment becomes less significant as the years go by: the growth in volume of the adjusted domestic net product (ANDP) was 0.3 points higher in 2023 than that of the usual NDP.

France's net savings, which measure the value of current income bequeathed to future generations, are also adjusted downwards by the recognition of the cost implicit in GHG emissions. It has thus been negative in recent years, and is estimated at -133 billion euros in 2023, indicating a lack of sustainability of the current activity. The total remaining discounted cost of decarbonizing the economy is estimated at 929 billion euros.