Anil Markandya, University Bath and World Bank (United Kingdom)
Introduction
The ongoing GREENSENSE project was the third project on Green National Accounting in the GARP series.. GARPII focused mainly on impacts of air pollution; damage calculations
(valuation) and damage attributions (source sectors) were undertaken, allowing environmental policies to be more effectively targeted. The impacts of climate change were calculated as the present value of future climate change damages in the study countries as a result of global CO
2
emissions in 1990. The methodology used in the GARP estimation of damages was based on the ExternE impact pathway approach.
GREENSENSE aims to extend this work in two major ways. The first is to update and extend the availability of data on the major impacts of the environmental damage caused by economic activity. The categories of environmental pressure considered in the project are extended to include: Air Pollution, Climate Change, Biodiversity, Natural Resources, Toxic
Substances, Urban Environmental Problems (Noise), Waste, and Water Pollution. The second is to develop and apply an environmental accounting framework that explicitly incorporates sustainability issues, including estimating the reductions in impacts required for sustainability, and estimating the costs implied in meeting these standards.
Methodology and Preliminary Results
A: The Economic- Environmental Reporting Framework
The project aims to provide information on the effects of economic activities on current human wellbeing, and on the sustainability of the economy. We argue that a single measure cannot meaningfully indicate both of these issues simultaneously. Therefore, the proposed framework consists of two components:
(a) An Index of Consumption Corrected for Environmental Damage (ICCED)
This index aims to show how measured changes in current human wellbeing alter when the effects of environmental damage are accounted for. It consists of personal consumption adjusted by the values of the environmental stocks and flows relevant to current human wellbeing. Comparing this from one period to the next shows how much an apparent increase in wellbeing due to increased personal consumption is reduced by any increase in environmental damage, or vice versa. This can be used to illustrate the net cost of achieving sustainability.
(b) Sustainability Indicators
A balance sheet of sustainability-relevant natural capital stocks and of flow pollutants associated with natural and manmade capital stocks. Comparing each of these figures with the relevant sustainability standard will allow the “distance to sustainability” to be calculated, and multiplying by the estimated unit avoidance cost will sho w the “value of the distance to sustainability”.
B: Preliminary Results: Environmental Damage Costs
This section presents a brief summary of some of the most important, and currently complete, preliminary estimates of damage to current human wellbeing. These will be used to give first estimates of an ICCED.
Air Pollution: Air pollution impacts are assessed using the impact pathway methodology, estimating impacts and damage costs by applying air quality and exposure response models together with receptor data on risks groups in the population, crops, and building materials.
High resolution emission scenarios of SO
2
, NO
X
, NH
3
, NMVOC and CO for 1990 and 1998
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are derived using the European emission databases CORINAIR, TNO/CEPMEIP, and
EMEP. Table 1 shows the damage costs suffered in EU countries. Of the costs, around
90% are accounted for by impacts to human health, with 80 % due to the effects of particulates on human health.
Table 1 Damage c osts (billion €
2000
) in the EU due to 1990 and 1998 EU emissions. Net importers of damage costs within the EU marked in green, net exporters in yellow.
1990 Costs
1998 Costs
3.4 6.2
55.
5 2.1
11.
5 0.4
28.
3 2.7 0.3
22.
3 0.2 7.9 2.1 1.5
21.
3
1.7 3.7
24.
7 0.9
10.
1 0.2
17.
3 2.2 0.2
18.
3 0.1 4.4 2.5 0.7
11.
2
Toxic Substances: Air quality modelling together with receptor data and exposure response functions for inhalation were used to analyse the impacts from lead, cadmium, arsenic, chromium, nickel, PCDD/Fs, and PAH. Detailed emission scenarios have been derived for the year 1990. Unit risk factors have been applied to assess the lung cancer cases and corresponding damage costs caused by different toxic substances in air; the results are
summarised in Table 2, where the ranges result from a range of available risk factors. A
water and soil model has also been developed to cover pollution in these media; this will be used to estimate damage costs occurring via ingestion.
Table 2
Impacts and damage costs (million €
2000
) due to inhalation of 1990 airborne toxic substances in the EU 15
Substance Reference for
Arsenic
Cadmium unit risk factor
(WHO) / (IRIS)
(Thun et al/IRIS)
Chromium (EPA/IRIS) / (WHO)
Nickel (WHO)
PAH (BaP) (WHO)
Total
Cases of Lung
Cancer
5-15
2
110-380
8
120
250-530
Damage Costs
8-23
3
170-580
12
180
370-800
Urban environmental problems (noise)
The most important issue for urban areas not covered in other sections of the project is the human health effects from traffic noise. Impacts from noise have been assessed for
Germany, Spain, and the UK, according to quantifiable stress-related health effects. Of the
costs shown in C: Preliminary Results: Sustainability Standards and Policy Targets
Three definitions of sustainability are will be analysed.
Weak Sustainability means investing the value of any decrease in natural capital.
Strong sustainability means is avoiding the loss of critical natural capital stocks. Intermediate Sustainability is adhering to politically achievable policy standards, represented here by existing EC directives. The policy targets to be analysed under each of these definitions are summarised in
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Table 4. The costs of meeting these targets are to be estimated later in the project.
For air pollution and toxic substances, the weak sustainability criterion cannot be measured, firstly because the link between concentrations, critical levels/loads, and the effect on ecosystems is not known, and therefore the change in ecosystems due to a change in deposition and concentration levels cannot be calculated, and secondly because the value of ecosystems is difficult to estimate. In terms of intermediate sustainability, concentrations targets are taken from current and draft EC legislation as indicated in the table. Critical levels and loads represent strong sustainability targets.
Table 3 , the majority are accounted for by amenity losses. Other effects are heart disease,
subjective sleep quality and hypertension.
C: Preliminary Results: Sustainability Standards and Policy Targets
Three definitions of sustainability are will be analysed. Weak Sustainability means investing the value of any decrease in natural capital. Strong sustainability means is avoiding the loss of critical natural capital stocks. Intermediate Sustainability is adhering to politically achievable policy standards, represented here by existing EC directives. The policy targets to be analysed under each of these definitions are summarised in
1

Table 4 . The costs of meeting these targets are to be estimated later in the project.
For air pollution and toxic substances , the weak sustainability criterion cannot be measured, firstly because the link between concentrations, critical levels/loads, and the effect on ecosystems is not known, and therefore the change in ecosystems due to a change in deposition and concentration levels cannot be calculated, and secondly because the value of ecosystems is difficult to estimate. In terms of intermediate sustainability, concentrations targets are taken from current and draft EC legislation as indicated in the table. Critical levels and loads represent strong sustainability targets.
Table 3
Damage costs (Million €
2000
) assessed for 1998 1 noise impacts in Germany, Spain, and the UK based on calculations from the EC UNITE project
Road
Rail
Germany Spain
7,000
1,200
4,300
320
United
Kingdom
7,120
130
Aviation 300 270 190
Total 8,000 4,900 7,000
1 the numbers are best available estimates for 1998. Most of the base exposure data were only available for 1991 and 1992
Climate change is considered here as a sustainability issue, which does not measurably affect current wellbeing. The present value of the impacts of climate change is estimated using the FUND model, an economic growth model, driven by scenarios of population and technology, where greenhouse gas emissions feed into models of carbon cycle and climate.
Climate change impacts include agriculture, water, energy, coastal zone, health and ecosystems. Calculated costs include heating, cooling and coastal protection costs, forced migration, loss of land and wetlands, mortality and morbidity. The model runs from 1950 to
2200, in time steps of one year. Marginal discounted damage costs per tonne of greenhouse gas emissions represent the weak sustainability criterion. The intermediate sustainability target is based on the EU’s policy target, while the strong sustainability target is based on a target concentration at the lower end of those discussed in the literature.
For natural resources , the value of extraction of energy resources in the UK, Spain and
Germany has been calculated as a weak sustainability criterion; this will be extended with an analysis of the potential implications of energy price changes under different scenarios. The intermediate and strong sustainability targets for energy take account of the climate change implications of energy use; this rather than availability is thought to be the factor limiting energy use. The strong sustainability target has been identified by analysing the output of energy use and economic growth scenarios produced by IIASA and the World Energy
Council.
Standards defined for noise do not correspond to sustainability issues, since noise does not have long-term implications, but reflect the minimal level of environmental quality that is acceptable for the population. The WHO has defined guideline values for this purpose, which can be taken as efficiency-based environmental standards.
For water pollution , strong sustainability requires that pollution should not exceed assimilative capacity, or endanger life support services. There is considerable uncertainty regarding threshold levels, therefore arguably a precautionary approach is required. The
Water Framework Directive (1997) stipulates that EU countries must prevent further deterioration of their waters, and protect, enhance and restore them in order to achieve
“good” or “high” status in all of their water bodies by the end of 2015. The requirements of this policy are taken here to satisfy the definition of strong, as well as intermediate, sustainability.
3 – Policy Implications
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The project will update and extend the results of the previous GARP projects, showing the pollutants and sectors responsible for the most costly environmental damage, thus allowing environmental policy to be more effectively targeted. By illustrating the extent of transboundary pollution, the results also provide scope for informing international environmental policy within the EU. Finally, the results will illustrate some of the policy objectives that could be appropriate under a policy of sustainable development, highlight the extent to which these differ from current policy objectives, and provide some indication of the net costs of achieving sustainability objectives, i.e. accounting for the value of the implied environmental benefits.
Abbreviations Used:
 g/m 3 h: microgrammes per cubic metre per hour
NH
3
: Ammonia
NO
X
: Nitrogen Oxide
NO
2
: Nitrogen Dioxide
NO
3
: Nitrate
O
3
: Ozone
P: Phosphorous
PM
10
: Particular matter with aerodynamic diameters smaller than 10 micro meter ppmv : Parts per million by volume ppbv : Parts per billion by volume
SO
2
: Sulphur dioxide
O
2
: Oxygen
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Table 4: Policy targets to be analysed under GREENSENSE. Shaded targets are those set for current wellbeing rather than sustainability motives
Environmental Impact Weak Sustainability
Air pollution As no damage costs on natural capital can be estimated a quantitative assessment is not possible.
Intermediate sustainability target set with reference to EC directives
NO
X
: 30
 g/m 3 by 2001
NO
2
: 40
 g/m 3 by 2010
SO
2
: 20
 g/m 3 by 2001
O
3
: 40
 g/m 3
O
3
, AOT40 1 crops [
 g/m 3 h]: 17000 by 2010
PM
10
: 40
 g/m 3 by 2005, 20 by 2010
Acid deposition: 50% Gap closure 2 by 2010.
Strong sustainability target: see text for derivation
NO
X
: 30
 g/m 3
NO
2
: Not applicable
SO
2
: 20
 g/m 3 for forests, 10
 g/m 3 for Cynanobacterial Lichens
O
3
AOT40 crops/ natural vegetation: 6000
 g/m 3 h
PM
10
: Not applicable
Acid deposition: 100% Gap Closure
NH
3
: 8
 g/m 3 for all vegetation
450 ppmv by 2120 Climate Change
Biodiversity
Natural resources
Toxic Substances
Invest the NPV of the cost of current Greenhouse Gas emissions
($4/tonne current estimate)
As no damage costs on natural capital can be estimated a quantitative assessment is not possible.
Energy: Invest value of depletion
Forestry: Invest value of depletion
Given current knowledge this condition cannot be identified
550 ppmv by 2120
12% energy from renewables by 2010
Lead: concentration in surface water: 0.05 mg/l
Lead: concentration in soil: 50-300 mg/kg dry
16-19% energy from renewables by
2010 (current estimate)
Lead in soil: 38-100 mg/kg dry mass
Urban Environmental
Problems (Noise)
Waste
Not Applicable mass
50 decibells (daytime domestic)
45 decibells (nighttime domestic)
Not applicable
Invest the value of damage (e.g. land converted for landfill)
Water Pollution Invest the value of any decline in water resource stocks.
P : < 0.04 mg/litre
NO
3
: < 6.5 mg/litre
P : < 0.04 mg/litre
NO
3
: < 6.5 mg/litre
O
2
: > 8 mg/litre O
2
: > 8 mg/litre
1 Accumulated Ozone Exposure above a Threshold of 40 ppbv 2 Gap Closure refers to closing the gap between 1990 emissions and the ultimate target of 100% protection of ecosystems
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