The macroeconomic equivalent of Net Value Added is the Net Domestic Product ( NDP ).
2.
Net value added is obtained by deducting consumption of fixed capital ( or depreciation charges ) from gross value added.
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Net value added therefore equals gross wages, pre-tax profits net of depreciation, and indirect taxes less subsidies.
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In this example the return of BP is measured as Net Value Added and the UK economy is used as a benchmark.
5.
In official national accounts, a distinction is made between gross value added ( including depreciation charges ) and net value added ( excluding them ).
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The impact of this on net value added is offset to some extent by the fact that a tenant, or lessee, incurs no asset depreciation, whereas an owner would.
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But net value added will be lower when a fixed asset is rented, because the rental has to cover the lessor's operating and interest costs as well as asset depreciation.
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Along with William Nordhaus, the model has also been used to construct a green account that measure the role each industry plays in generating air pollution damages and compares these damages to their net value added.
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