A backgrounder on the System of Environmental-Economic Accounting – Ecosystem Accounts
By Peter Burnett
Just last month the United Nations Statistical Commission adopted an international standard for ecosystem accounting. The new standard is the latest addition to the System of Environmental-Economic Accounting (SEEA) and is often known by its acronym, SEEA EA.
SEEA EA has been a long time coming. Countries agreed to pursue environmental accounting at the Rio Earth Summit in 1992, but it took until 2012 to develop and adopt the SEEA ‘Central Framework’. There was a companion draft ecosystem standard at that point, but countries couldn’t agree on its content, so they adopted it as ‘experimental’.
Joyful family welcome new arrival
It’s taken another eight years to adopt the SEEA EA as a full international standard, so it’s not surprising that top international officials were enthusiastic in their media releases:
‘A historic step towards transforming the way how we view and value nature’ said UN Secretary General António Guterres. ‘No longer will we allow mindless environmental destruction to be considered as economic progress.’
‘This is a major step forward’, said Inger Andersen, Executive Director of UN Environment. ‘The new framework can be a game changer in decision-making. By highlighting the contribution of nature, we now have a tool that allows us to properly view and value nature. It can help us bring about a rapid and lasting shift toward sustainability for both people and the environment.’
‘This is a giant leap towards measuring nature’s contributions to the economy’ said World Bank Global Director for Environment, Karin Kemper.
There were more quotes from more officials, but you get the drift. This is definitely good news.
Is this a big deal?
So will the SEEA EA be all that it’s cracked up to be?
Just having a standard is quite a big deal. It means authority and consistency. It should mean that national statisticians, treasury departments and other key government agencies will accept statistics derived from ecosystem accounts as being just as authoritative as mainstream economic statistics, which are derived from the National Accounts. (The SEEA and System of National Accounts, SNA, are designed to be compatible.)
It should also mean general government acceptance of the dependence of the economy on the environment, because the SEEA EA opens as follows:
1.1 It is well established that healthy ecosystems and biodiversity are fundamental to supporting and sustaining our wellbeing …
1.2 … there has been growing recognition that the degradation of nature is not purely an environmental issue requiring environmental policy responses. Thus, decision makers across all sectors need to consider their environmental context and the associated dependencies and impacts.
If that’s good enough for national statisticians, it should be good enough for government as a whole. While these statements may reflect old news in the academic literature; they could be new news for official analysis and government decision-making.
For starters, it certainly should mean that State of the Environment reports should be replaced by comprehensive ecosystem accounts. The resulting statistics on environmental degradation should then be just as authoritative as inflation or unemployment statistics. And a proposal for a new environmental program based on such statistics should be taken just as seriously by a Cabinet as a proposal for a program to support an emerging industry.
What’s in the box?
The SEEA EA is built on five core accounts:
1. Ecosystem extent accounts, which record the total area of each ecosystem, by type, within an ecosystem accounting area (eg, nation, political or natural region, river basin, protected area);
2. Ecosystem condition accounts, which record the condition of ecosystem assets in terms of selected characteristics (eg, physical and structural state, soil condition) over time;
3. Physical ecosystem services flow accounts, which record the supply of ecosystem services by ecosystem assets and the use of those services by economic units, including households;
4. Monetary ecosystem services flow accounts, as for physical flow accounts but measured, of course, in money;
5. Monetary ecosystem accounts record information on stocks of ecosystem assets and changes in those stocks (gains and losses).
The SEEA EA also supports ‘thematic accounting’, which organizes data around specific policy-relevant environmental themes, such as biodiversity, climate change, oceans and urban areas. Other important thematic accounts would include accounting for protected areas, wetlands and forests. It also contains a section on ‘applications and extensions’, such as using accounting data to support decision-making on biodiversity, or how to account for the oceans.
Is this a sell-out?
People often worry that environmental accounting means putting a dollar value on everything, the so-called ‘commodification of the environment’. Although the SEEA EA provides for ecosystem accounting in monetary terms, it does not require it. It is up to the user and could be a matter of horses for courses.
Where ecosystems provide direct ecosystem services to human economic activity, it might be both feasible and useful to keep monetary accounts. For example, a mountain native forest adjacent to both urban and horticultural areas might readily support monetary flow accounts for ecosystem services such as water purification, pollination and carbon sequestration, because it is possible to derive economic values for all of these.
Equally, it might not be feasible or useful to attempt monetary accounts for a remote island, little visited but providing habitat for listed threatened species. Here the benefits to humans are largely indirect, through biodiversity conservation. Monetary accounts would be very difficult to construct, because of the difficulty of valuing biodiversity for its own sake, but physical accounts would be very useful, offering the benefits of a standardised approach, not only to monitoring the extent and condition of the species concerned but for managing those characteristics.
I’d like to go on but I’ve run out of space! I think ecosystem accounts could have something in common with lasers: when first discovered, nobody knew quite what to do with them, but over time they have become indispensable.
Now that the hard technical work has been done, the big challenge is for governments to pick up this powerful new tool and put it to good use. That’s a much harder task than developing the SEEA EA. And we can’t wait nearly as long.