Title page 1

Contents 6

Abstract 4

Acknowledgements 5

Key Messages 8

Executive Summary 9

1. Introduction 11

2. Overview of several existing environmentally adjusted productivity metrics 12

Developing a SPG metric requires several important methodological choices 12

A summary of several indices proposed in the literature 13

Interpretation: How do different SPG indices compare? 16

Choice of dimensions: What is included and how has practical consequences 19

Choices related to environmental valuation: Different approaches to the valuation of the environment will impact results and change... 20

3. Comparison of the growth rates across different SPG metrics: a case study approach 22

Main results of the case study analysis 22

Growth rates of different SPG metrics and their drivers and illustration using one specification 28

Limitations of the analysis 48

4. Conclusion 50

References 51

Notes 58

Annex A. Derivations to express all indicators as a function of an environmental weight (𝜸) 63

Annex B. Derivations of the necessary conditions for SPG to exceed TFP growth 67

Annex C. Data and methods 72

Table 1. Expressing different indices as a function of a parameter gamma 17

Table 2. When are SPG rates positive? When does it exceed TFP growth? 18

Table 3. Comparison of average growth rates across different EAP metrics - Mexico 25

Table 4. Comparison of growth rates across EAP metrics - the Netherlands 26

Table 5. Comparison of growth rates across EAP metrics - New Zealand 27

Figure 1. Trends in output, input and externalities (Mexico - 1990-2019) 30

Figure 2. Average growth rates by decade in Mexico 32

Figure 3. TFP vs. EATFPI (Social) in Mexico (by subperiod) 33

Figure 4. Trends in output, input and externalities (the Netherlands - 1990-2019) 37

Figure 5. Average growth rates by decade 38

Figure 6. TFP vs. EATFPI (Social) in the Netherlands (by subperiod) 40

Figure 7. Trends in output, input and externalities (New Zealand - 1990-2021) 44

Figure 8. Average growth rates by decade 45

Figure 9. TFP vs. EATFPI (Social) in New Zealand (by subperiod) 47

Table A A.1. Indicators as a function of gamma 66

Table A C.1. Data sources used in the analysis 72

Table A C.2. Assumptions - Leaching and run-off 73

Table A C.3. Prices environmental externalities 74

Table A C.4. Calculation of the adjusted indicators 77

Table A C.5. Parameters used as environmental weights in ESPII, ESPIO, WEPI and WEPO 78