Environmental accounts overview Viveka Palm Statistics Sweden Aim The aim of the work on environmental accounts at UN, Eurostat and Statistics Sweden along with other countries is to develop a system of physical accounts that are linked to the economic activities described in the national accounts. In practice this means developing a system of environmental and natural resource statistics that can be linked to the industry, product and sector categories used in the national accounts, thus forming a satellite system of accounts around the national accounts. This way of presenting the data is of importance in several ways. The structure of the data makes it possible to integrate economy, environment and social data in the same statistical system. This enables for modelling of common driving forces. It also shows in greater detail than the ‘normal’ sector analysis what actors are involved in the more emission intensive production and consumption activities. It shows some detail, but still on an aggregate level that preserves the secrecy of the underlying data. The aim of this is to: Follow-up the effects of different policy instruments and components that drive the development, in relation to different political goals. Analyze how industries, public sectors and the household sector contribute to the national and international goals and laws. Analyze how economic growth and structural changes affects the use of natural resources, environmentally disturbing emissions and waste. Show how the mix of instruments affects e.g. production, resource use and employment. Generate and structure data so that they can be used in available common environmental-economic models. Establish environmental-economic indicators and profiles as part of the yearly societal follow-up of environmental policy. The system According to the UN, a system of environmental accounts should in principle cover: 2 2 Flows of materials through the economy, e.g. energy and chemicals, together with the emissions and waste to which these flows give rise. Data on emissions, above all to the air, have been published for many countries, but there are often differences between traditional emissions statistics and emissions in environmental accounts, e.g. where bunkering is concerned. Within the EU, many countries have opted to use the NAMEA system1 to describe these flows. Economic variables that are already included in the national accounts but are of obvious environmental interest, such as investments and expenditure in the area of environmental protection, environment-related taxes and subsidies, and environmental classification of activities and the employment associated with them, etc. Natural resources. Environmental accounts should make it possible to describe stocks and changes in stocks of selected finite or renewable resources, in moetary and qualitative aspects. The tools the central government has at its disposal for influencing the actors in the economy are information, and administrative and economic instruments. The administrative instruments include laws, standards and ordinances. The economic instruments consist primarily of charges, taxes and subsidies. The use of taxes and subsidies as instruments of environmental policy has grown in significance in recent years. Where environmental taxes and other excise duties are concerned, the emphasis is generally on the desired allocation effects. Subsidies, in turn, also have allocation effects, but are perhaps used principally for reasons of redistribution policy. The non-explicit allocation effects of subsidies are probably important not least in the environmental sphere. It has become clear in recent decades that the environment imposes limits on economic development. Problems have become apparent in terms both of the depletion of natural resources and of the environmental impact of emissions from the production of goods, heating and transport. Awareness of these problems has been formulated in, inter alia, the principle of sustainable development, which was expressed in the Brundtland Report in 1987 and received widespread international support at the UN Conference on Environment and Development in Rio de Janeiro in 1992. In Agenda 21, as adopted by the Rio conference, special emphasis is placed on the importance of all countries integrating “sustainability into economic management“ and establishing “better measurement of the crucial role of the environment as a source of natural 1 NAMEA stands for National Accounting Matrix including Environmental Accounts. In principle this is a Social Accounting Matrix (SAM) supplemented by environmental accounts data on, e.g., emissions to air and waste, linked to the Use and Supply Matrices that a SAM is constructed around. Just as a SAM is a way of presenting national accounts data, NAMEA is a way of presenting environmental accounts data. 3 3 capital and as a sink for by-products generated during the production of man-made capital and other human activities“. If these principles are to provide guidance in the political decision-making process, the environmental issues must be integrated in the information systems upon which decisions are based. There is a particular need of a national accounting system that provides comprehensive information on the environment and the economy. The general view of the building blocks of an accounting system is illustrated in figure 1. To describe the links between the economy and the environment in a complete environmental economic system statistics must be developed for all parts in the chain of cause and effect: natural resources, economic activities, emissions, deposition, load on different ecosystems and impact. The physical environmental accounts have its focus on the first three components in this chain. Damage to environment, health, infrastructure etc. ECONOMY Natural resources Production ENVIRONMENT Emission Deposition Load Consumption Rest of the world Export Import Figure 1. National and regional economic activities consume and transform natural resources into goods and services, and give rise to emissions and waste in the process. The physical environmental accounts record the physical flows and the economic flows from the national actors.