SURF nature

The Welsh Environment: Understanding the

connections with the economy

November 3rd 2011: Parc Hotel, Cardiff

A simple plan....

• Welsh economic progress and environmental connections?

• Welsh environmental/ecological change and economic connections?

• Neither question easy to answer

What we really need ?

A1: Economy to economy transactions (increases in demand for one good create additional demands for other goods

A2: Economy environment transactions: output of environmental good per unit of economic good

A4: Environment to economy transactions: output of economic good per unit of environmental good – effects of environmental goods on economic activity – effect of global warming on fishing

A3: Environment to environment transactions: effects of changes in environmental goods on other environmental goods - SO2 on water quality

How do we measure regional economic progress?

• Gross value added

• Welfare; whose?• What is included?• What is excluded?• Use of natural

capital?• Use of eco-systems?

70

72

74

76

78

80

82

84

86

Reporting environmental information alongside GVA

• Environmental accounts

• SD indicators• Apples and

pears

Environmental Satellite Accounts

• Environmental Satellite Accounts – demands that economic activity places on the environment

• Partial ESA now available for Wales – physical flows/resource productivity

• But still apples and pears…

Table in UK ESACoverage for

Wales

1.1 Oil & gas reserves

Partial

1.2 Oil & gas monetary balance sheet

Not available

1.3 Land cover account

Covered

1.4 Imports and exports of wood products

Covered

1.5 Fish stocks Covered

Table in UK ESACoverage for

Wales

2.1 Energy consumption (industries)

Covered

2.2 Atmospheric emissions (over time)

Covered

2.3. Atmospheric emissions (over time)

Covered

2.4 Bridging table: Atmospheric emissions

Not available (but not relevant)

2.5 Material flows Partial

2.6 Waste arisings Covered

2.7 Radioactive waste

Covered

2.8 Water consumption by industry sector

Covered

Table in UK ESACoverage for

Wales

3.1 Government revenue from environmental taxes

Covered

3.2 Environmental taxes breakdown by industry

Partial

3.3 Environmental protection spending by public sector

Covered

3.4 Environmental protection spending by public sector

Covered

3.5 Environmental protection spending in industries

Not available

Coverage of experimental ESA for Wales

Natural resources Physical flows Monetary accounts

Adjusting GVA for use of environmental goods and

services• Green GVA• Genuine

Progress Indicator

• Index of Sustainable Economic welfare

Wales: Trends in ISEW and GVA per Capita 1990-2005 (£2005/head)

4000.0

6000.0

8000.0

10000.0

12000.0

14000.0

16000.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

ISE W/ cap

GVA/ Cap

Conclusion

• Some progress in term of linking economic progress in Wales to environmental effects

• Other research aims to examine how projects majoring on environmental and ecological improvement impact the economy

Improving the environment: economic connections

• Large investments in Wales to improve services derived from natural environment

• how far is it possible to explicitly measure the economic outcomes connected to such projects?

• projects working with the built & natural environment might influence elements of the regional economy & have economic impacts in terms of GVA and employment improvements

• Tourism example

+1eme Nature and Sports Euro’Meet partnerspartners

+ …

projects aimed at improving the environment might

then……• support local employment directly and

indirectly • improve skills supply side for tourism • safeguard existing tourism revenues,

stopping leakages• extend the season;• change the distribution of visitor types:

perhaps encouraging more staying visitors;

• Resident benefits; housing markets….business location

Scale of economic benefits linked to

environmental interventions…..

• gross spending of project monies and related employment incomes in reference areas; direction of spending i.e. how far is project-related spending tied to employment, and what are monies spent on

• what is levered tourism spending spent on• where spending is on goods and services,

then what proportion of these bought within local economy?

Tools to assess linkages

• Welsh Input-Output tables (Environment Agency Wales)

• Welsh Tourism Satellite Accounts (TSA)

SPLASH: exploring the economic effects of the water recreation challenge fund for Wales

Splash

• Splash is the water recreation challenge fund for Wales

• Assistance available for projects that secure new or improved public access to Wales’ rivers, lakes, canals, reservoirs, and coastal waters for recreational and educational activities.

• Welsh Assembly Government offered up to 100% grants to projects which help people to enjoy the water resources. 

Indirect regional economy effects of SPLASH activity

2008-09 2009-10

Splash-project gross spending

532.5 1154.1

Splash project regional spending

381.8 818.9

Indirect output supported by Splash project regional spending

168.2 311.1

Total output supported in Wales by Splash regional spending

550.0 1130.0

Total GVA supported 235.0 490.0

Tourism effects?

• SPL2 - Llandysul Paddlers: watersports facility, environmental improvement, training facility, expectation of increase in watersport users on reference water from 9,000 to 16,000; land excavation, plans and project supervision etc.

What might these projected increases in visitation mean in

economic terms?• Assume in Llandysul

Paddlers if just 50% increase in the number of users relates to additional day trips then an additional 3,500 day trips is estimated to account for around £84,000 of direct gross spending on Welsh goods and services, and around £73,000 of regional gross value added (direct and indirect).

Conclusion

• More important to understand connections between economic changes and environment and vice versa

• Series of tools in development in Wales to assist

• How changes in the environment/ecology affect the economy?

• Much work to be done!