Environmental Accounting
Where We Are Now, Where We Are Heading
By Joy E. Hecht
Interest is growing in modifying national income accounting systems to promote understanding of the links between economy and environment.
The field of environmental accounting has made great strides in the past two decades, moving from a rather arcane endeavor to one tested in dozens of countries and well established in a few. But the idea that nations might integrate the economic role of the environment into their income accounts is neither a quick ll nor a quick process; it has been under discussion since the 1960s. Despite controversies described in this article, however, interest is growing in modifying national income accounting systems to promote understanding of the links between economy and environment.
Why Change?
侧背头发型图片男Governments around the world develop economic data systems known as national income accounts to calculate macroeconomic indicators such as gross domestic product. Building a nation's economic u
of the environment into such accounts is a respon to veral perceived flaws in the System of National as defined by the United Nations and ud internationally. One flaw in the SNA often cited is that the cost of environmental protection cannot be identified. Conquently, money spent, say, to put pollution control devices on smokestacks increas GDP, even though the expenditure is not economically productive, some argue. The critics call for differentiating “defensive” expenditures from others within the account s.
Also misleading is the fact that some environmental goods are not marketed though they provide economic value. Fuelwood gathered in forests, meat and fish gathered for consumption, and medicinal plants are examples. So are drinking and irrigation water, who sale prices reflect the cost of distribution and treatment infrastructure, but not the water itlf. While some countries do include such goods in their national income accounts, no standard practices exist for doing so. When nonmarketed goods are included in the accounts, they still cannot be distinguished from tho that are marketed.
Valuing environmental rvices such as the watershed protection that forests afford and the crop fertilization that incts provide is difficult. Though some experts call for their inclusion in environmentally adjusted accounts, typically neither the economic value nor the degradation of the
rvices is included. On the other hand, however, the alternate goods and rvices needed to replace them-water treatment plants, for example—do contribute to GDP, which can be rather misleading.
Still another problem is that national income accounts treat the depreciation of manufactured
capital and natural capital differently. Physical capital—a building or a machine, for instance—is depreciated in accordance with conventional business accounting principles, while all consumption of natural capital is accounted for as income. Thus the accounts of a country that harvests its forests unsustainably will show high income for a few years, but will not reflect the destruction of the productive forest ast. While opinions vary on how to depreciate natural capital, they converge on the need to do so.
Which Indicators Are Uful?
Some proponents advocate simple “flag” indicators to alert policymakers to the broad role of the environment in the economy, for example, comparing conventional GDP with environmentally adjusted GDP, or conventional savings with so-called “genuine” savings that account for environmental factors. Both of the indicators can provide valuable warnings of the impacts of envir
onmental degradation on an economy. However, such flags are less uful in determining the source of environmental harm or identifying a policy respon. For this reason, many economists place primary importance not on the bottom line, but on the underlying data ud to build environmental accounts. The data can help answer such questions as how natural catastrophes like the fires that raged in Indonesia in the summer of 1998 may affect economic growth, or how environmental protection policies such as green taxes may affect the economy.
Who Is Doing This?
Environmental accounting is underway in veral dozen countries, where bureaucrats, statisticians, and other proponents both foreign and domestic have initiated activities over the past few decades. Several countries have made continuous investments in data systems, which are integrated into existing statistical systems and economic planning activities. Others have made more limited efforts to calculate a few indicators, or analyze a single ctor. Some of the earliest rearch on environmental accounting was done at RFF by Henry Peskin, working on the design of accounts for the United States.吉他的英文
One of the first countries to build environmental accounts is Norway, which began collecting data on
energy sources, fisheries, forests, and minerals in the 1970s to address resource scarcity. Over time, the Norwegians have expanded their accounts to include data on air pollutant emissions. Their accounts feed into a model of the national economy, which policymakers u to asss the energy implications of alternate growth strategies. Inclusion of the data also allows them to anticipate the impacts of different growth patterns on compliance with international conventions on pollutant emissions.
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More recently, a number of resource-dependent countries have become interested in measuring depreciation of their natural asts and adjusting their GDPs environmentally. One impetus for their interest was the 1989 s tudy “Wasting Asts: Natural Resources in the National Income Accounts,” in which Robert Repetto and his colleagues at the World Resources Institute estimated the depreciation of Indonesia’s forests, petroleum rerves, and soil asts. Once
adjusted to a ccount for that depreciation, Indonesia’s GDP and growth rates both sank significantly below conventional figures. While “Wasting Asts” called many to action, it also operated as a brake, leading many economists and statisticians to warn against a focus on green GDP, becau it tells decisionmakers nothing about the caus or solutions for environmental problems.
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Since that time, veral developing countries have made long-term commitments to broad-bad environmental accounting. Namibia began work on resource accounts in 1994, addressing such questions as whether the government has been able to capture rents from the minerals and fisheries ctors, how to allocate scarce water supplies, and how rangeland degradation affects the value of livestock.
30岁前的每一天The Philippines began work on environmental accounts in 1990. The approach ud there is to build all economic inputs and outputs into the accounts, including nonmarketed goods and rvices of the environment. Thus Filipinos estimate monetary values for such items as gathered fuelwood and the waste disposal rvices provided by air, water, and land; they then add in direct consumption of such rvices as recreation and aesthetic appreciation of the natural world. While their methodology is controversial, the accounts have provided Philippine government agencies and rearchers with a rich array of data for policymaking cymaking and analysis.
The United States has not been a leader in the environmental accounting arena. At the start of the Clinton administration, the Bureau of Economic Analysis (BEA) made a foray into environmental accounting in the minerals ctor, but this preliminary attempt became embroiled in political controversy and faced opposition from the minerals industry. Congress then asked the National Res
earch Council (NRC) to form a blue ribbon panel to consider what the nation should do in the way of environmental accounting. Since then, Congressional appropriations to BEA have been accompanied by an explicit prohibition on environmental accounting work. The ban may be lifted, however, once the recommendations of the NRC study are made public.
How to Account?
毛芋头的做法How environmental accounting is being done varies in a number of respects, notably the magnitude of the investment required, the objectivity of the data, the ability to compare different kinds of environmental impacts, and the kinds of policy purpos to which they may be applied. Here are some of the methods currently in u.
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Natural Resource Accounts. The include data on stocks of natural resources and changes in them caud by either natural process or human u. Such accounts typically cover agricultural land, fisheries, forests, minerals and petroleum, and water. In some countries tries, the accounts also include monetary data on the value of such resources. But attempts at valuation rai significant technical difficulties. It is fairly easy to track the value of resource flows when the goods are sold in markets, as in the ca of timber and fish. Valuing changes in the stocks, however, is more difficult b
ecau they could be the result either of a physical change in the resource or of a fluctuation in market price.
For environmental goods and rvices that are not sold, it is that much harder to establish the value either of the flow or of a change in stock. However, even physical data can be linked to the economy for policy purpos. For example, changes in income can sometimes be traced to changes in the resource ba or to the impact of environmental catastrophes on the economy.
Emissions accounting . Developed by the Dutch, the National Accounting Matrix including Environmental Accounts (NAMEA) structures the accounts in a matrix, which identifies pollutant emissions by economic ctor, Eurostat, the statistical arm of the European Union, is helping EU members apply this approach as part of its environmental accounting program. The physical data in the NAMEA system are ud to asss the impact of different growth strategies on environmental quality. Data can also be parated by type of pollutant emission to understand the impact on domestic, transborder, or global environments. If emissions are valued in monetary terms, the values can be ud to determine the economic cost of avoiding environmental degradation in the first place, as well as to compare costs and benefits of environmental protection.
Disaggregation of conventional national accounts.Sometimes data in the conventional accounts are taken apart to identify expenditures specifically related to the environment, such as tho incurred to prevent or mitigate harm, to buy and install protection equipment, or to pay for charges and subsidies. Over time, revelation of the data makes it possible to obrve links between changes in environmental policy and costs of environmental protection, as well as to track the evolution of the environmental protection industry.
While the data are of obvious interest, some people argue that looking at them in isolation can be misleading. For example, while end-of-pipe pollution control equipment is easily obrved, new factories and vehicles increasingly are lowering their pollutant emissions through product redesign or process change rather than relying on special equipment. In such cas, no pollution control expenditures would show up in the accounts, yet environmental performance might be better than in a ca where expenditures do show up.
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Value of nonmarketed environmental goods and rvices. Considerable controversy exists over whether to include the imputed value of nonmarketed environmental goods and rvices in environmental accounts, such as the benefits of an unpolluted lake or a scenic vista. On the one hand, the value of the items is crucial if the accounts are to be ud to asss tradeoffs between e
conomic and environmental goals. Otherwi, the accounts can end up reflecting the costs of protecting the environment without in any way reflecting the benefits. On the other hand, some people feel that valuation is a modeling activity that goes beyond conventional accounting and should not be directly linked to the SNA .The concern underlying their view is that it is difficult to standardize valuation methods, so the resulting accounts may not be comparable across countries or economic ctors within a country.
Green GDP.Developing a gross domestic product that includes the environment is also a matter of controversy. Most people actively involved in building environmental accounts
minimize its importance .Becau environmental accounting methods are not standardized, a green GDP can have a different meaning in each project that calculates it, so values are not comparable across countries. GDP Moreover, while a green GDP can draw attention to policy problems, it is not uful for figuring out how to resolve them. Nevertheless, most accounting projects that include monetary values do calculate this indicator .Great interest in it exists despite its limitations.
Toward Connsus on Method
Environmental accounting would receive a substantial boost if an international connsus could be r
eached on methodology .The UN Statistics Department has coordinated some of the ongoing efforts toward this end since the 1980s. In 1993, the UN published the System for Integrated Economic and Environmental Accounting (SEEA) as an annex to the 1993 revision of the SNA.SEEA is structured as a ries of methodological options, which include most of the different accounting activities described above; urs choo the options most appropriate to their needs.
No connsus exists on the various methods that the UN recommended. In fact, SEEA is now undergoing revision by the so-called “London Group,” co mprid primarily of national income accountants and statisticians from OECD countries. The group's work will be an important step toward connsus on accounting methods, but the process will be lengthy: Development of the conventional SNA took some forty years
Toward Widespread U
A number of steps can be taken now toward the goal of ensuring that environmental accounting is as well established as the SNA. First, information must circulate freely about existing environmental accounts and how they are contributing to economic and environmental policy. Ongoing work needs to be identified and systematically reviewed and analyzed to learn lessons, which may inform the de
sign and implementation of future accounting activities. The Green Accounting Initiative of the World Conrvation Union has embarked on this effort, and a number of other organizations are calling for similar activities. U of the World Wide Web may facilitate access to unpublished work, although it will require a concerted effort to obtain accounting reports and ek permission to load them on the Internet.
Second, development of a core of internationally standardized methods will contribute to willingness to adopt environmental accounting. Experts in the—field--including economists, environmentalists, academics, and others outside of the national statistical offices—should take a proactive role in tracking the work of the London Group and insist that the standard-tting process involve participants reprenting a spectrum of viewpoints, countries, and interested stakeholders. An opportunity exists for rearch institutes to take a lead in identifying the financial resources needed to facilitate a broader standard tting process, and to elicit a full range of voices to build a connsus on methodology.
