environmental accounting and the eea jean-louis weber special adviser to economic environmental...
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Environmental Accounting and the EEA
Jean-Louis Weber
Special Adviser to Economic Environmental Accounting
European Environmnent Agency
Final IN-STREAM conference:Sustainability Indicators for Policy Making
Brussels, 27 - 28 September 2011
Recurrent demands for improved economic indicators and aggregates
• Historical pioneer “green accounting” projects: Norway, Canada, France, Philippines, Indonesia, the Netherlands, Spain…
• Rio1992, Agenda 21• UN SEEA1993 to “adjust” the UN System of National Accounts. SEEA revised in 2003• New SEEA revision by2012/13, including now a special volume on ecosystem
accounts and valuation• Recent initiatives:
– Beyond GDP Conference 2008– Potsdam 2008 G8+5 initiative and TEEB– Stiglitz/ Sen/ Fitoussi report on the measurement of economic performance 2009– New CBD Aishi-Nagoya Strategy 2010: demand for the inclusion of biodiversity and
ecosystem value into national accounts – World Bank’s new Global Partnership for “Green Accounting” and Ecosystem Valuation– References to environmental accounts for measuring progress in Green Economy, Green
Growth, Resource Efficiency…• In Europe, new Regulation on Environmental Accounts: Eurostat (the economy-
environment interface) and the EEA (ecosystem capital accounts)
UN manual for environmental-economic accounting: SEEA2003Enlargement of the System of National Accounts
Natural resources EcosystemsEconomic
assets (SNA) Non-economic
assets
Openingstocks
Opening stocks Opening State
SNAtransactions
and otherflows
Changes instocks
Changesin stocks
Economicactivities,
naturalprocesses,
etc.
Changesin state
Closing stocks Closing stocks
Closing state
Described in SNA
RM HASSAN - UN The System of Environmental and Economic Accounting (UN 2003) - RANESA Workshop June 12-16, 2005 Maputo
Part 1
The SNA satellite accounts for the
environment
expenditure, taxes, hybrid accounts, physical flows,
sub-soil, energy, water, land,economic assets depletion
Part 2
Ecosystem capital accounts
Ecosystem stocks and quality, ecosystem services, benefits and maintenance
costs…
Revision SEEA2012/13
Negative feedbacks of ecosystem degradation on production and wellbeing
Impacts on ecosystem capacity of delivering services/benefits
Products &
economic assets
Fossil energy & materials
Biomass/carbon
Water
Land functional services
Economy performance
Economic growthTradeValue-added, income, profit… ConsumptionInvestment Wealth (non-financial and financial assets)
Economic health(net savings, assets and debt quality, accountability, prices, well-being, knowledge)
Ecosystem potential (capacity to deliver services)
Ecosystem productivityFlowsAccumulation Stocks
Ecosystem health (biodiversity, integrity, resilience, interdependence)
Capital maintenance
(to remediate degradation)
Accounting for the performance(s) of 2 co-evolving systems: resources, productivity and health
Economic systemEc
osys
tem
Use of natural
resources
Source: Gilbert Long, 1972
The narrative behind Ecosystem Capital Accounts: 1- ecosystems deliver altogether multiple services
The narrative behind Ecosystem Capital Accounts: 2- only a surplus is accessible for human use
Ecoproduct (of cycling and reproductive systems/ capital) are produced by means of other ecoproducts. The ecosystem production function includes a surplus ecoproduct that can be used by the economy. (from Anthony Friend 2004)
Economy
Basic eco-product
Non-basic eco-product
Sources: Kling/U Michigan_2005 & Friend/ISEE_2004
Necessary for ecosystem reproduction (conservation of ecosystem health, integrity, functions & services)
Surplus accessible for harvest/abstraction
The narrative behind Ecosystem Capital Accounts: 2- only a surplus is accessible for human use
Basic eco-product
Non-basic eco-product
Sources: Kling/U Michigan_2005 & Friend/ISEE_2004
Possible compensation = artificial input (irrigation,
energy, fertilizers, infrastructures…)
Challenge = maximise yields while maintaining natural functions and biodiversity
Necessary for ecosystem reproduction (conservation of ecosystem health, integrity, functions & services)
Surplus accessible for harvest/abstraction
Non-sustainable harvest/abstraction Economy
The narrative behind Ecosystem Capital Accounts: 3 – Ecosystem capital produces altogether 3 broad types of services between which there is no compensation or tradeoff: biomass/carbon AND freshwater AND functional services. Ecosystem capital potential (& degradation) can be measured by combining measurements of these 3 broad services.
Accessible carbon surplus
Accessible water
surplus
Accessibleecosystem functional services
Total ecosystem capital potential
&
Ecosystem capital
degradation
GDP
Healthy ecosystem
Ecosystem assets/capital Ecosystem assets/capital
The narrative behind Ecosystem Capital Accounts:4 - Simplified ecosystem capital accounting circuit
The narrative behind Ecosystem Capital Accounts:4 - Simplified ecosystem capital accounting circuit
ES economic benefits (€)
ES economic benefits (€)
ES economic ES economic benefits (€)benefits (€)
ES economic ES economic benefits (€)benefits (€)
Ecosystem degraded by
over-use ()
Possible macro economic
aggregates Adjusted capital consumption
Final demand at full price
Non-paid costs needed to remediate ecosystem
degradation (€)
ES economic benefits (€)
ES economic benefits (€)
Economic natural assets/ resources
& ecosystem services (and €)
Economic natural assets/ resources
& ecosystem services (and €)
From theory to statistics and accounts
Theoretical background (very incomplete…):– Georgescu-Roegen (The Entropy Law and the Economic Process (1971),
Odum (emergy), Hollin (panarchy,interaction between scales)– Co-evolving systems (Norgaard)– Ecosystem services: Long (1972), Costanza and De Groot, Millennium
Ecosystem Assessment (2003)– Landscape ecology (UK)– Ecosystem units: socio-ecological systems (Gallopin, Carpenter, Rockström,
Stockholm Resilience Centre, MA2003…)– Ecosystem health (D. Rapport), resilience (the Resilience Alliance)
from economic-ecological theory to statistical practice and accounts : statistical units and classifications
Main relations between classifications & statistical units in the revised SEEA
Monetary Statistics of Products
Physical Statistics of Products
Land Use: productive land
functions
Land Cover: biophysical land units
Ecosystems:Socio-ecological landscape units (SELU)
(terrestrial, marine & atmospheric)
Land Functions & Ecosystem Services
Institutional & Production Units
(sectors & industries)
Land Ownership(private & public)
(from UNCEEA 2009 – EEA & FAO)
Ecosystem-Economy integrated accounts
Stock
Natural production
Natural consumption
Storage/Accumulation
Stock
Extraction/ harvesting
Returns/ Formation (sectors)
Final Consumption (sectors)
Extraction/ harvesting
Returns/ Formation
Final Consumption
PHYSICAL BALANCES
QUALITY/HEALTH INDEXESQUALITY/HEALTH INDEXES
LINKAGE TABLESLINKAGE TABLES
USE OF ECOSYSTEM RESOURCE
…USE OF FOSSIL RESOURCE
…USE OF FOSSIL RESOURCE
EMISSIONS, RESIDUALS
From resource
From fossil resource
EMISSIONS, RESIDUALS
From resource
From fossil resource
EXPENDITURES
IMPORTS-EXPORTS
Actual
Virtual (embedded)
IMPORTS-EXPORTSIMPORTS-EXPORTS
Actual
Virtual (embedded)
To land accounts
To water accounts
To biodiversity indexes
VigourStability, integrity Resilience Taxes, voluntary payments
Ecosystems Economy
SEEA Part 2SEEA Part 1
Simplified ecosystem capital accounts in Europe
• Make it feasible NOW – keep it simple• Don’t miss important issues: need a good checklist• All ecosystems: land/sea/atmosphere, and for land: urban, agriculture,
forest, other natural and soil.• 6 accounts/indexes for 1 diagnosis:
– 1-Biomass-Carbon // 2-Water // 3-Land/landscape // 4-Biodiversity // 5-Dependency // 6-Disease prevalence
– Diagnosis (instead of mere additions) and quantification: the “ecosystem distress syndrome” approach combined with basic balances of land, carbon, water…
• Physical accounts first, followed by valuation of selected flows and of ecosystem depreciation (on the basis of physical degradation and restoration costs – no valuation of stocks)
• For EU27, annual accounts to meet the policy agenda
t0
Total ecosystem capital potential & change
t1
Improvement
Degradation
Ecosystem physical degradation, sustainable benefits from ecosystem services and non-paid maintenance costs
Consumption of ecosystem capital (non-paid costs)
Sustainable benefits
(income from key ecosystem services)
Sustainable use
coefficients
Economic statistics & national accounts
Mean restoration
prices Improvement
Degradation
Sustainable benefits
(Value Added from key ecosystem
services)
Integration of resource efficiency indicators, ecosystem capital accounts & national accounts
GDP
Fossil energy
Sand, gravel
Biomass/ carbon
Freshwater
Land/ Landscape
Biodiversity
Atmosphere/ carbon assimilation
Biomass/ carbon
Sea/ carbon assimilation
CO2
DMISand/gravel
DMIWater
Metals,chemicalsDMI other
1st decoupling: from material/energy inputs
2nd decoupling: from environmental impacts
Sea/fisheries
Inland Ecosystems
DM
I Car
bon
Integrated Carbon
Accounts
Water Integrated
water accounts
Just 3 headline indicators ????
• Intensity of use of the accessible carbon surplus (integrates resource efficiency and ecosystem)
• Degradation of the ecosystem capital potential (integrates carbon, water landscape and biodiversity)
• Final consumption at the full cost of commodities (in euros, integrates purchaser prices and non paid ecosystem capital degradation)
Thank you!
Jean-Louis Weber