Archive:Environmental accounts - A beautiful tool to study the links between the environment and the economy
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- Published in Sigma - The Bulletin of European Statistics, 2008/03
Environmental accounts analyse the links between the environment and the economy at regional, national or European level. The accounts are, for example, used to see how the growth in an economy — increased GDP, larger labour force and higher use of energy — has affected the use of natural resources. The latter can be measured by the expansion in land used for construction and the increase in both energy and raw material consumption. The environmental accounts are also used to analyse the effect of economic policy measures, such as what impact a tax for industry would have on the generation of waste or air emissions.
Introduction
National accounts provide an all-inclusive framework within which economic data can be presented in a coherent and consistent manner. They use internationally agreed standards and present in a condensed way information about how the economy works and is developing. Often the information is summarised in one indicator: gross domestic product.
The beautiful feature of environmental accounts is that they are (mostly) compiled by reorganising already existing data concerning the economy and the environment in a way that is consistent with the accounting principles of national accounts. Satellite accounts on environment, agriculture, forestry, energy, etc. are produced in order to study particular parts of the economy in greater depth and to complement the general purpose of national accounts.
‘The aim of environmental accounts is to outline the potential impact of economic and social activity on the environment. The idea is to list, in quantifiable terms, for example, the amount of pollution produced by industry and households, which may in turn be compared with employment and the value of output produced by these sectors. Policymakers can then decide where it is most efficient to act,’ explained Julio Cabeca, Head of Section in Eurostat’s Environmental Statistics and Accounts Unit.
In recent years European policies are to a larger and larger degree focusing on how the European economy can be developed in a sustainable direction.
‘At European level one major focus right now is on climate change and how it will affect European economies,’ remarked Elisabeth Møllgaard, Statistical Officer dealing with environmental accounts at Eurostat.
In this context environmental accounts data can be used to analyse which sector is emitting the most greenhouse gases. Carbon dioxide, CO2, is a major contributor to global warming. Eurostat data show that the electricity, gas and water supply industry was responsible for around 40 % of CO2 emissions in the EU in the last couple of years. Together with the manufacturing industry they accounted for two thirds of total CO2 emissions. The data also show that environmental pressure in relation to the economy was considerably higher for the electricity, gas and water industry than for all other industries. This is calculated by looking at the share of gross value added for the sector and the amount of CO2 emitted by the industry.
Three different accounts monitor the flows
The environmental accounts methodology is mainly based on the system of integrated environmental and economic accounting (SEEA), endorsed by the United Nations Statistical Commission. The SEEA describes in detail how basic statistical data on environmental issues, economic issues and so forth can be reorganised into accounts that are consistent with national accounts.
Eurostat’s environmental accounts are organised in three sections. The first is called economic environmental accounts and includes transactions related to the environment which are not shown separately in national accounts. Examples are investments in cleaner production technology, environmental taxes, and goods and services produced specifically to improve the environment. This could be windmills or solar panels, for example.
The second group is the physical environmental accounts, which follow all the material that flows through the economy. These accounts include both the economy’s needs and the resulting residuals, such as emissions and waste. The accounts also help monitor consumption of natural resources, and show whether the amount of material passing through the economy is increasing, if it is increasing faster than the growth rate of the economy, or whether it is increasing in per capita terms. The accounts can be useful when trying to minimise the generation of dangerous waste, for example, and are an important tool in the follow-up of sustainable development.
The third group is the environmental assets accounts. In Eurostat they include data on the volume of forests, water and subsoil assets — such as oil and gases. These accounts are used to monitor the rate of depletion of a particular environmental asset.
Harmonising environmental accounts in Europe
Environmental accounting is getting more and more attention and the European Commission has decided to develop the use of environmental accounts further. For this purpose Eurostat cooperates closely with other European Commission services, such as those for environment and the Joint Research Centre, as well as the European Environment Agency. A new European strategy on environmental accounts is in the pipeline, which will be adopted by the Statistical Programme Committee by the end of 2008.
At EU level, data collection of environmental accounts is not mandatory but the aim is to obtain full data coverage for, for example, expenditure, air emissions and material flow accounts by 2010.
‘A proposal to develop statistical legislation will be presented to the Statistical Programme Committee by the end of 2008 in order to ensure the stability of data coverage in the long run,’ said Mr Cabeca.
Simultaneously, a review of the environmental accounts bible — the system of environmental and economic accounts (SEEA) — is carried out. The work is conducted in a joint effort with the United Nations Statistics Division, the International Monetary Fund, the OECD and the World Bank. The outcome will be a revised version of the Handbook of national accounting — Integrated environmental and economic accounting, which is expected in 2012.
‘Much effort is being put into harmonising environmental accounts results across Europe, including links to other areas of statistics as well as harmonised production of environmental accounts and improved comparability and timeliness,’ commented Mr Cabeca.
‘There is indeed political interest in environmental accounts and in many countries they are well developed. Top of the class are countries such as Germany, Italy, Norway, the Netherlands and Sweden, where politicians have realised the value of the accounts as an analytical tool,’ said Ms Møllgaard.
Finally Mr Cabeca said that due to its internal coherence and consistency the system of integrated environmental and economic accounting is favoured by Eurostat for delivering sets of indicators that can be used in policymaking.
‘SEEA indicators are stronger and better than those that are developed in isolation and do not come from an integrated system. They have the potential to show the impact of different policies in detail. Therefore, they suit evidence-based policymaking better.’