BEIJING -- Environmental pollution caused China to suffer 511.8 billion yuan (about US$64 billion) in economic losses in 2004, which amounted to 3.05 percent of GDP that year, according to a government research report released on Thursday.

It is China's first research report on China's "green national economy", also called "green GDP", which is calculated by subtracting the cost of natural resources used and the cost of environmental degradation from the GDP.

"This marks only the beginning of our efforts in Green GDP calculation. Our formula is still not complete and we have to keep working hard to improve it," said Pan Yue, deputy director of the State Environmental Protection Administration (SEPA), at a press conference in Beijing.

The report was jointly released by the SEPA and the National Bureau of Statistics.

The "Green GDP" calculation system is based on the cost of using five kinds of natural resources - land, minerals, forest, water and fisheries - and the cost of two kinds of environmental degradation - environmental pollution and ecological damage.

"Owing to technological limitations we only calculated the cost of 10 of 20 items of environmental pollution this time," said Pan, noting the cost of underground water pollution and soil pollution was not included.

"If all the factors are taken into account, you can imagine how serious the loss caused by environmental pollution actually is," said Pan.

According to the report, the cost of water pollution is 286.3 billion yuan, air pollution 219.8 billion yuan and solid waste pollution and pollution accidents 5.7 billion yuan.

Wang Jingnan, chief engineer of the Chinese Academy of Environmental Planning and a key player in the research, said China needs to make about 1.08 trillion yuan of direct investment, mainly for construction of facilities, and shoulder 287.4 billion yuan of operational costs, to have industrial pollutants and household waste produced in 2004 treated completely.

Officials with SEPA and NBS said in the next step, the two departments will improve the calculation methods and carry out "Green GDP" calculation on a regular basis.

The environmental department will conduct a nationwide survey of pollution sources, underground water pollution, soil pollution and ecological damages.