Beyond the Supply & Use Tables:
Water Ecosystem Capital Accounts
& the Use of Accounts in Water Economics
Jean-Louis Weber
Special Adviser Economic Environnemental Accounting
European Environment Agency
jean-louis.weber@eea.europa.eu
GDP growth and the need to account for natural resource use
and the ecosystem capital at the global scale
Resource efficiency =
spare materials &
energy (technology,
consumption
patterns)
GDP at 3% = "sustainable growth"
2000
1800
1600
1400
1200
1000
GDP
800
600
400 4.7
17 Mio
Miokm2
km3
12.5
Miokm2
km3
22 Mio
Available
Use
of accessible
200
20
10
20
'2
0
20
30
20
40
20
50
20
60
20
70
20
80
20
90
21
00
21
10
0
cropland resource
freshwater
(today 54%)
Resource efficiency =
ecological management
of land, soil & water,
ecosystem capital
maintenance
GDP: Concerns about meaning and measurement
•
Bertrand de Jouvenel 1968: “Because National Accounts are based on financial transactions, they
account nothing for Nature, to which we don’t owe anything in terms of payments but to which we owe
everything in terms of livelihood.”
• Early “green GDP” adjustments: how to maintain national income when natural resource are depleting
(“the weak sustainability”)? What are the “good” and “bad” components of GDP? (the first SEEA1993 –
no implementation)
More recently:
• Beyond GDP Conference, Brussels 2008: keep GDP but supplement it with indicators
• TEEB, 2008, GDP of the Poor
• Commission on the Measurement of Economic Performance and Social Progress (“Stiglitz report”), Paris
2009: National Income is more important than Gross domestic Product; Social distribution of Disposable
Income still poorly addressed; “dual” issue of sustainability: overconsumption/ underinvestment
• Capital approaches:
–
–
–
Early attempts at the World Bank: “Genuine or Adjusted Net Savings”
Multi-capitals approaches of sustainable development: man-made, financial, natural, human, social
Ecosystem approaches: Green Accounting for Indian States Project, Simplified Ecosystem Capital Accounts (EEA),
SEEA revision...
UN manual for environmental-economic accounting: SEEA2003
Enlargement of SNA1993 (now 2008)
Revision  SEEA2012/13
Impacts on ecosystem capacity of
Natural resources
Ecosystems
delivering
services/benefits
Economic
Non-economic
assets (SNA)
assets
Opening
stocks
SNA
transactions 
and other
flows
Changes in
stocks
Closing stocks
Volume
Opening
stocks1
Volume
2
Opening
State
The SNA satellite
Ecosystem approach
accounts for theEconomic to accounting
Changes
activities,
Changes
environment


in stocks
natural Ecosystem stocks
in state
and
processes,
quality, valuation options…
expenditure, taxes,
etc.
hybrid accounts,
physical flows,
sub-soil, energy, water land,
Closing
economic assets depletion
stocks
Closing
state
Described in SNA
Negative feedbacks of ecosystem
degradation on production and wellbeing
RM HASSAN - UN The System of Environmental and Economic Accounting (UN 2003) RANESA Workshop June 12-16, 2005 Maputo
Natural and Man-Made Capital(s)
Land
Water
Biomass, carbon
Fauna-Flora
Functional Services
Biodiversity
Natural Resources
ECOSYSTEM CAPITAL
Inputs & Residuals
Production
&
Trade
of
Commodities
&
Assets
Fossil energy and materials
NATURAL CAPITAL
MAN-MADE CAPITAL
Remark : Ecosystem Capital = inventories of resources
RESOURCES STOCKS, SUPPLY & USE
+ functional systems
FUNCTIONS & STRUCTURES, HEALTH
Ecosystem capital: structures, processes, functions & services
Ecosystem biophysical
structures & processes
[landscapes, biodiversity, Net
Primary Production...]
Ecosystem
functions
[nutrient cycling,
water regulation,
habitats, biomass...]
Ecosystem
services
[provision, regulation,
socio-cultural
services]
Socio-economic
benefits from ES
[private & collective
well being]
Weber, J.-L., 2010,
adapted from Haines-Young, R. & Potschin, M.
Ecosystem Services:
Draft Common International Classification of Ecosystem Services (CICES)
Theme
Class
Group
Terrestrial plant and animal foodstuffs
Nutrition
Freshwater plant and animal foodstuffs
Marine plant and animal foodstuffs
Potable water
Provisioning
Materials
Energy
Regulation of wastes
Biotic materials
Abiotic materials
Renewable biofuels
Renewable abiotic energy sources
Bioremediation
Dilution and sequestration
Air flow regulation
Flow regulation
Water flow regulation
Mass flow regulation
Regulation and Maintenance
Atmospheric regulation
Regulation of physical environment
Water quality regulation
Pedogenesis and soil quality regulation
Lifecycle maintenance & habitat protection
Regulation of biotic environment
Pest and disease control
Gene pool protection
Symbolic
Cultural
Intellectual and Experiential
Source, CICES proposal, Roy Haines-Young and Marion Potschin, eds, EEA, 2010
Aesthetic, Heritage
Religious and spiritual
Recreation and community activities
Information & knowledge
Ecosystem capital: systems & services, benefits & costs
Expenditures for
environmental
protection & resource
management
Non paid
Degradation
Ecosystem biophysical
structures & processes
Non-sustainable use of ES
[landscapes, biodiversity, Net
Primary Production...]
Maintenance &
restoration costs non
paid by the economy
Ecosystem
functions
[nutrient cycling,
water regulation,
habitats, biomass...]
Ecosystem
services
[provision, regulation,
socio-cultural
services]
Physical flows
Monetary benefits
Monetary costs
Weber, J.-L., 2010,
adapted from Haines-Young, R. & Potschin, M.
Non valued
private and
collective benefits
Socio-economic
benefits from ES
[private & collective
well being]
(mostly public goods)
Sustainable macro
economic benefits
(sector functional income)
Primary benefits,
externalities &
rents
(mostly private)
The ecosystem capital accounting circuit
Additional cost
needed to restore
ecosystems from
degradation (€)
Non-sustainable use
Sustainable use
 Real Net National Income
 Final Consumption at Full
Cost
Healthy
ecosystems
Ecosystem capital (
j)
Use of natural resources,
ecosystem services ( )
j
Economy (€)
Ecosystem capital accounts
• Physical accounts of ecosystem capital degradation
– Data collection and assimilation: Earth Observation by satellite, in situ monitoring,
socio-economic statistics
– Targets identification:
• The accounting target: the same potential at the end of the year that at the beginning =
capital maintenance
• The policy target: the stated objectives of regulations, conventions and laws
– Integration of simplified accounts:
• International standards, classifications (SEEA...)
• Multi-criteria diagnosis and quantification
• Monetary accounts of ecosystem capital depreciation (consumption)
–
–
–
–
Mean prices of restoration and valuation of degradation
Ecosystem degradation embedded into international trade & concealed capital transfers
Adjustment of National Income to Real Net National Income and of Final Consumption (full cost)
Recording of ecological debts
• Monetary accounts of sustainable ecosystem-based macro-economic benefits
– Generation of Value Added from sustainable ecosystems (agro-system, forest, fisheries, tourism…)
– Distribution of VA between beneficiary sectors
– Valuation at the macro scale of selected regulating services (carbon sequestration, flood
regulation, pollution mitigation)
– International transfers of sustainable benefits embedded into trade
Ecosystem Account
Water basic balance
Water Ecosystem Capital Accounts
Opening stocks by ecosystems/water bodies
•
•
Precipitations
Natural Inflows
•
•
•
•
•
•
Withdrawals by activities
Net transfers between ecosystems/water bodies
Returns to the water system from activities
Imports/Exports and return to the sea
Storage in the user system
Consumption/evaporation in the use system
•
•
•
Real evapotranspiration
Changes due to natural & multiple causes
Natural outflows
Final stocks by ecosystems/water bodies
Water ecosystem health accounts
•
•
•
•
Sector Accounts
Supply & Use, MFA, NAMEA
•
•
•
•
•
•
Withdrawals by activities
Net transfers between ecosystems/water bodies
Returns to the water system from activities
Imports/Exports and return to the sea
Storage in the user system
Consumption/evaporation in the use system
In situ water usage
•
•
•
•
Returns of waste water
Storage in dams
Rainfed agriculture
Evapotranspiration by irrigation
Water net availability
Water bio-chemical quality
Ecological quality of river basins
Multicriteria diagnosis/ water
Linkage tables & integrated diagnosis
• Landscape ecological potential
• Carbon/Biomass productivity & storage
• Biodiversity
• Water
• Multicriteria diagnosis/ ecosystem degradation
Consumption of ecosystem capital/ water
• Additional Maintenance Costs/ water
Sustainable benefits from ecosystem services/ water
• Sustainability coefficients
Virtual water embedded into Import-Export, footprint
• Virtual water by products, j
•
Water footprint by products, €
Water Actual Transactions and Costs (€)
• Supply and purchase of water
• Taxes and subsidies
• Water Protection and Management Expenditures
Sustainable benefits from ecosystem services/ water
• Input-Output analysis (“hypothetical extraction”)
Joan Escriù Water Agency of Catalunya
Monetary accounts: Cost of water supply and environmental cost
REMAINING RESOURCE
COST (CRR)
Cost of the hypothetical
measures of restoration of
the degradation that will
be left in water bodies
with respect to the natural
state of reference (IN)
once reached the
objective of the WFD (EO).
EO
Integral cost of replacement
EN
CRR
CAA
CA
EA
COST OF WATER SUPPLY
(CAA)
Costs of resource
procurement, distribution and
return. The acquisition cost
must be the optimal
combination of resource
generation and resource
reassignment of the uses
based on the quality required.
EE
Cost of services
ENVIRONMENTAL COST
(CA)
Cost of partial restoration to meet the objective of the WFD in 2015 (EO) from the maximum
state of deterioration (EE) generated by the human activities before applying any measures
of mitigation. A part of the same one (EA-EE) corresponds to the cost of the measures
applied until now. The rest (EO-EA) corresponds to the cost of the measures necessary to
reach the objective of the WFD.
Example of full cost accounting : physical and monetary
Joan Escriù Water Agency of Catalunya
Environmental Cost of the WFD = CAR1 + CAR2 + CAR3
Cost of the “effective measures” for meeting the objetive of the WFD considered in the
Programe of Measures of River Basin Management Plan
PHYSICAL ACCOUNTS
Impacts on
water use
Degradation
of
water quality
DA3
DA1
restoration
MONETARY ACCOUNTS
Cost of measures for
resource procurement
CAR3
Physico-chemical objectives
Cost of measures for
mitigating impacts of uses CAR1
over the water bodies
Biological & hydro-morphological objectives
Impacts
on
ecosystems
DA2
Cost of measures of
ecosystem restoration
CAR2
The benefits side:
first step of the calculation of „inclusive sustainable benefits“ from the
services of an ecosystem (e.g. agro-systems, forests, fisheries...)
TE
GVA = < g > * TE
GVA-TE1 GVA-TEj GVA-TEn
Forward effects
F
∑o
F
∑j
F
∑o + F∑j
GVA-TE1
GVA-TEi
GVA-TEn
Forward GVA/GDP effects by sector:
Total quantity of Gross Value, which cannot
be added by itself and by the users of the
products of sector i, if sector i reduces or
ceases its production
B
∑o
B
∑i
B
B
∑o + ∑i
Backward GVA/GDP effects by sector:
Total quantity of Gross Value, which cannot be
added by itself and by the product suppliers of
sector j, if sector j reduces or ceases its production
Interpretation of „Total GVA-Effect
Matrix“ resulting of the linkage of
the „Total Effects/Flows Matrix“ of
hypothetical extraction with the
national Gross Value Added
Wuppertal Institut: José Acosta Fernández
02.06.2010 - EEA workshop
Water Accounts, Ecosystem Services & Human Wellbeing:
Example of integrated water accounting by Artois-Picardie Basin Agency - France
• 20 000 Km2
• 4,7 Millions inhabitants
• GDP: 98 billions €
• GPD/inhabitant: 21 107 €
• GPD/inh France: 25 978 €
• Unemployment rate:
12,7%
• France: 9,9 %
• 96% of drinkable
water come from
groundwater
Courtesy Arnaud Courtecuisse, Agence de l’Eau Artois-Picardie, France, 2006
Risk of not meeting WFD quality objectives by 2015
Courtesy Arnaud Courtecuisse, Agence de l’Eau Artois-Picardie, France, 2006
Comparison of water bill vis à vis household’s available income
Mean Water bill (all services) /
Mean available income per household
Mean available
income per
household (A)
Mean Water invoice
per household
(120m3/year) (B)
B/A
Aisne
23 499
455
1,94%
Nord
24 314
Pas de Calais
23 194
428
1,85%
Somme
23 796
382
1,61%
Courtesy Arnaud Courtecuisse, Agence de l’Eau Artois-Picardie, France, 2006
366
1,51%
Water bill / mean available Income: social discrepancies
• several groups of municipalities with
ratio>3% (2-3% is a guidance value – see
OCDE, EU, Académie de l’eau)
• these groups of municipalities combine
high water price and low mean available
income (and sometimes household’s
expenses to buy bottled water are
equivalent to the annual water bill)
Comparison with unemployment 2004
• the commonly used value of annual
consumption of 120 m3 per household hides
important differences of mean consumption
per region
• mean available income per municipality
hides also various situations (and the real
part of the population facing major difficulties
to pay water bills)
Courtesy Arnaud Courtecuisse, Agence de l’Eau Artois-Picardie, France, 2006
Green National Accounts & Ecosystem Services Valuation
National Accounts =
the macro-economic picture
adjusted for natural capital depreciation
Benefits & Costs Assessments =
inclusive accounts for projects, sectors…
Ecosystem capital
Stocks & flows
Health
Land cover
Biomass/Carbon
Soil
Biodiversity
Water catchments
Sea
Atmosphere
Vigour
Organisation
Resilience
Autonomy
Healthy populations
1
2
3
4
5
n
Ecosystem services valuation
Bottom-up, individual preferences, market and shadow prices,
Costs-Benefits Analysis, General Equilibrium model
Service n
Service n value ??
Operation costs E.S n
Service 5: e.g. existence
Service 5 value ?
Operation costs E.S 5
Service 4: e.g. water regulation
Service 4 value
Operation costs E.S 4
Service 3: e.g. eco-tourism
Service 3 value
Operation costs E.S 3
Service 2:
2: e.g.
e.g. fish
fish provision
provision
Service
Service 2 value
Operation costs E.S 2
Service 1: e.g. timber provision
Service 1 value
Operation costs E.S 1
Ecosystem / public good protection (all services)
Ecosystem restoration costs
Top-Down, collective preferences, multi-criteria decision (economic & social
values, long term targets…), Consumption of Ecosystem Capital
Jean-Louis Weber, CBD Conférence, Libreville, 16 Septembre 2010
Ecological Taxes, Subsidies, Tradable
Offset Certificates / Depreciation...
Simplified ecosystem capital accounts
• All ecosystems: land/sea/atmosphere, and for land: urban,
agriculture, forest, inland water, other natural and soil.
• Focus on ecosystem degradation
• Feasible NOW – keep it simple
• Don’t miss important issues: need a good checklist
• 6 indexes for 1 diagnosis:
– 1-Land // 2-Biomass // 3-Water // 4-Biodiversity // 5-Dependency //
6-Healthy populations
– Diagnosis (instead of mere additions) and quantification: the
“ecosystem distress syndrome” approach combined with basic accounts
• Physical accounts firstly, followed by valuation
 The “fast tract implementation of ecosystem capital accounts”
in Europe, based on land accounts.
Jean-Louis Weber, CBD Conférence, Libreville, 16 Septembre 2010
Importance of accounting by relevant functional units (e.g. catchments)
West
The total water resource of the country 10
lakes distributed over 2 catchments. The
western catchment with 2 lakes is close to a
scarcity threshold while water resource is
abundant in the eastern catchment (8 lakes).
East
Scenario A: 1 lake is lost in the east
Scenario B: 1 lake is lost in the west.
x
x
Resource loss of 1 lake in the eastern catchment
(a)
Aggregated national loss (without
catchments): (10-9)% = 10%
(b)
National average of loss by catchments:
(2-2)% + (9-8)%
= 5.5%
2
Resource loss of 1 lake in the western catchment
(a)
Aggregated national loss (without
catchments): (10-9)% = 10%
(b)
National aggregation of loss by catchments:
(2-1)% + (9-9)%
= 25%
2
Need relevant time frame for monitoring impacts
on ecosystems: e.g. water resource/demand
Mean annual values may tell the same stories for very different conditions
(e.g. no water shortage in this river in both cases)
100
100
80
80
Ressource
60
Ressource
60
Demande
Demande
Moy. Ressource
40
Moy. Demande
Moy. Ressource
40
20
20
0
0
0
3
6
9
12
Moy. Demande
0
3
6
9
12
Quality matters as much as Quantity
Other countries have
similar maps ???
Ex. FR, mid-1990,s, fast track
computation river quality from
maps
(Source: Crouzet, Le Gall and Germain, IFEN)
Europe in the Global Ecosystem
Virtual water embedded into trade
vs. water footprint (virtual water from non-sustainable origin)
Evolution of the hydrological footprint per capita of the Community of Madrid (m3 per inhabitant per year)
Source: José Manuel Naredo Pérez (Coordinador) et. al., El agua virtual y la huella hidrológica en la
Comunidad de Madrid” © Canal de Isabel II - 2009
Need for thematic integration of water accounts
with land, bio-carbon & biodiversity
Example from southern Spain: NPP increase in dry region
•
•
•
Much of the increased NPP in semi-arid Spain is due to new irrigations (water taken from fossil
reservoirs or directly taken from nature/rivers …)
And so more NPP brings also some functional simplification of the ecosystem
If such causal relations exist they should be reflected in some “biodiversity account” (but the
species responses are usually delayed due to nature’s buffering capacity) (from Emil D. Ivanov, EEAETC LUSI)
Geographical integration of ecosystem accounts
Arable land &
Artificial areas permanent
crops
Pastures &
mosaics
Forested land
Semi-natural
vegetation
Open spaces/
bare soils
Water bodies
Wetlands
Corine Land Cover
Economy
Ecosystems
PHYSICAL BALANCES
Rivers
Lakes, dams
Economy
Ecosystems
Stock
Natural production
USE OF ECOSYSTEM RESOURCE
C
Natural production
USE OF ECOSYSTEM RESOURCE
Extraction/ harvesting
Extraction/ harvesting
Extraction/ harvesting
Extraction/ harvesting
Returns/ Formation (sectors)
Returns/ Formation
Returns/ Formation (sectors)
Returns/ Formation
Final Consumption (sectors)
Final Consumption
Final Consumption (sectors)
Final Consumption
Natural consumption
USE OF FOSSIL RESOURCE
…
Storage/Accumulation
From fossil resource
Vigour
Stability, integrity
Resilience
EXPENDITURES
Taxes, voluntary payments
To land accounts
W
Natural consumption
Storage/Accumulation
EMISSIONS, RESIDUALS
From resource
QUALITY/HEALTH INDEXES
LINKAGE TABLES
IMPORTS-EXPORTS
Stock
QUALITY/HEALTH INDEXES
Vigour
Stability, integrity
Resilience
LINKAGE TABLES
USE OF FOSSIL RESOURCE
…
EMISSIONS, RESIDUALS
From resource
From fossil resource
EXPENDITURES
Taxes, voluntary payments
To land accounts
IMPORTS-EXPORTS
To water accounts
Actual
To water accounts
Actual
To biodiversity indexes
Virtual (embedded)
To biodiversity indexes
Virtual (embedded)
Economy
Ecosystems
PHYSICAL BALANCES
Economy
Ecosystems
PHYSICAL BALANCES
Stock
Stock
Natural production
USE OF ECOSYSTEM RESOURCE
Natural production
USE OF ECOSYSTEM RESOURCE
Extraction/ harvesting
Extraction/ harvesting
Extraction/ harvesting
Extraction/ harvesting
Returns/ Formation (sectors)
Returns/ Formation
Returns/ Formation (sectors)
Returns/ Formation
Final Consumption (sectors)
Final Consumption
Final Consumption (sectors)
Final Consumption
L
Natural consumption
Storage/Accumulation
Stock
QUALITY/HEALTH INDEXES
Vigour
Stability, integrity
Resilience
LINKAGE TABLES
Groundwater
PHYSICAL BALANCES
Stock
Stock
Coastal water
USE OF FOSSIL RESOURCE
…
Storage/Accumulation
EMISSIONS, RESIDUALS
From resource
From fossil resource
EXPENDITURES
Taxes, voluntary payments
To land accounts
Bdv
Natural consumption
IMPORTS-EXPORTS
USE OF FOSSIL RESOURCE
…
EMISSIONS, RESIDUALS
Stock
QUALITY/HEALTH INDEXES
Vigour
Stability, integrity
Resilience
LINKAGE TABLES
From resource
From fossil resource
EXPENDITURES
Taxes, voluntary payments
To land accounts
IMPORTS-EXPORTS
To water accounts
Actual
To water accounts
Actual
To biodiversity indexes
Virtual (embedded)
To biodiversity indexes
Virtual (embedded)
E
C
R
I
N
S
• Thank you!