From moonlight jewels to common browns: what do butterfly accounts say about biodiversity conservation?

By Suzi Bond and Michael Vardon*

Biodiversity is important and butterflies are beautiful. But Australia’s biodiversity is in steep decline. Maybe environmental accounts can help here, and butterflies are a great example demonstrating how.

We have around 450 butterfly species in Australia, almost all of them native. Seven butterflies are listed as under the Environment Protection and Biodiversity Conservation Act (EPBC Act), although 19 more are thought to be eligible for listing. While some species are commonly observed and adaptable – such as the common brown – others, such as the moonlight jewel, are not. Accounting for these differences begins with understanding.

Moonlight jewels are ‘specialist’ butterflies. Specialists are more likely to be found intermittently, in few places, have particular habitat requirements, a limited number of food plants and are sometimes reliant on attendant ants. Specialists are not necessarily endangered but they are less common, more vulnerable to extinction and more likely to be an indicator of biodiversity conservation success and the state of the environment than ‘generalists’ like the common brown.

How do we know this? Through painstaking research, expert knowledge and long-term monitoring by trained volunteers, all summarised in biodiversity accounts for butterflies for the Australian Capital Territory. For other types of animals, for example birds and mammals, we have much research and knowledge but very little monitoring and no accounts, just a five-yearly State of the Environment Report with a story of woe.

To have any chance of successfully implementing the “Nature Positive Plan” announced by the Commonwealth Environment Minister Tanya Plibersek last December, then we are going to need more monitoring and reporting. This will be especially important for the planned “Nature Repair Markets”.

Biodiversity accounting

Biodiversity accounting provides a framework for integrating environmental and economic information. This accounting is part of the United Nation’s System of Environmental Economic Accounting, which has in theory been adopted by Australia’s governments, but has so far been under-resourced and provided underwhelming results.

Few countries have produced biodiversity accounts, partly a function of the newness of the accounts (the UN only adopted the SEEA Ecosystem Accounting in 2021) but also because of a lack of data. Without data you cannot make accounts. Because of this, the biodiversity accounts to date have used what data are available, which is on endangered species, rather than what is needed. Which means tallying the number of endangered species and putting this into a table. This does not tell you anything that you don’t already know. What we need to know is how, why, when and where things are changing. This requires monitoring and expert knowledge.

You would think that endangered species would be regularly monitored, and conservation actions recorded to figure out which conservation measures were giving the biggest conservation bang for the very limited conservation bucks. Sadly, this has not happened, as found in the Samuel Review.

Professor Graeme Samuel saw the potential for accounting, recommending accounts be produced and now the government has committed to their preparation in the Nature Positive Plan to “help us value nature”. The plan also commits to the “Better Use of Environment Data”. But it doesn’t commit to gathering more data: the focus is on artificial intelligence and remote sensing. Unfortunately, we cannot spot and identify butterflies from outer space, so we will have to keep the boots on the ground.

Butterfly values

Common browns, moonlight jewels, scarlet jezebels and golden ant-blues all conjure notions of value. They are of course all beautiful. Beyond this, they each occupy a different ecological niche and have different traits that make them more or less vulnerable to extinction.

As for value, we have already introduced the common brown and moonlight jewel.

The scarlet jezebel occasionally flies to the Australia Capital Territory and when it does it can be found in different places, but it does not breed. A heart breaker, but occurrence of this species probably tells us little about the state of the environment. This contrasts starkly with the golden ant-blue which is resident and breeds in the region, found only in a few places and is suspected to eat ant larvae. Like the moonlight jewel, a real treasure.

These butterflies and other breeding specialists can tell you a lot about the health of the ecosystems. This is because butterflies are excellent indicators of ecological condition as they respond quickly to change, are short lived, and many are specialists. They are also relatively easy to identify.

What about the economics?

If we follow Economics 101, the scarcer the commodity, the more valuable they become. Bad news for common browns. Worse, it would be possible for a specialist species like the moonlight jewel to increase in economic value due to declining abundance and listing as endangered. Not quite the outcome we want from biodiversity markets.

And how would we value the Bogong moth? This species is of great cultural significant to First Nations peoples. Once vast numbers flew by Canberra and the lights of Parliament House had to be switched off so as not to interfere with their migration to the Snowy Mountains. Their numbers crashed, but are beginning to recover, although no-one is sure why. They are culturally important and are internationally listed as endangered by the IUCN Red List, but not under Australian law.

Accounting and accountability

For the Nature Positive Plan to work and for us to build a capacity to keep our precious species, we need to have information and hold governments accountable. Ecosystem accounting provides the numbers, but for accounting to be possible it needs biodiversity monitoring. At present we do not have this for most species, and the endangered species lists highlight our failure to protect biodiversity and are a poor reflection of value.

If we are to be ‘nature positive’ then we need accounts to reflect the different values and needs of common browns, moonlight jewels, scarlet jezebels and golden ant-blues and all of the other species that are not on the endangered species list, so that they stay off the list, and the success of any conservation policy or plan can be judged.

Banner image: The narcissus jewel (Hypochrysops narcissus), a thing of beauty currently sitting outside our economic values system. (Image by Suzi Bond.)

*Dr Suzi Bond works at the Australian Bureau of Statistics where she is a specialist in biodiversity accounting, and is also an honorary member of the Australian National Insect Collection at CSIRO, an honorary senior lecturer at the Fenner School of Environment and Society at ANU, and a butterfly moderator for citizen science platforms Canberra Nature Map and Butterflies Australia. Suzi published the first field guide to the butterflies of the ACT in 2016, was a co-author on the first book published on ACT moths in 2022 and leads an ongoing butterfly monitoring project in collaboration with citizen scientists.

*Michael Vardon is the Associate Professor of Environmental Accounting at the Fenner School of Environment and Society (Australian National University). He has assisted more than 30 countries with development and implementation of the System of Environmental-Economic Accounting and is the former Director of the Centre of Environment and Energy Statistics at the Australian Bureau of Statistics. He has been an advisor to the World Bank and United Nations on accounting https://researchers.anu.edu.au/researchers/vardon-mj

The golden ant-blue butterfly (Acrodipsas aurata) is resident and breeds in the Canberra region, found only in a few places and is suspected to eat ant larvae. (Image by Suzi Bond.)

International declarations and other environmental promises: A game for those who talk but don’t walk

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By Peter Burnett

When is an international declaration on the environment worth the paper it’s printed on? Don’t worry, it’s a rhetorical question. Based on the way the Australian Government treats them, they’re not worth anything. Consider what we’ve recently said about forests and climate change.

When it comes to forests, Australia stands with Bolsonaro

I was a little taken aback when, at last November’s climate summit in Glasgow, Australia joined 140 other countries in signing the Glasgow Declaration on Forests and Land Use.

The declaration pledges to halt and reverse forest loss and land degradation by 2030 and the signatories represent 85% of the globe’s forested land.

Surely this was great news!

Unfortunately, of course, it was too good to be true. Countries were playing the old environmental promises game again. All you have to do is sign up — no action required.

Even President Bolsonaro of Brazil had signed! The same Bolsonaro who has been widely condemned for accelerating the destruction of the Brazilian Amazon.

As a declaration, this document is not legally binding. It’s also full of weasel words like ‘sustainable land use’ and ‘opportunities … to accelerate action’.

And, of course, even if you cut down all the trees, it’s not deforestation … as long as you plant new ones!

Are they any more serious at the OECD?

More recently, environment ministers from OECD countries had one of their five-yearly (or so) pow-wows in Paris at the end of March. Australia’s minister Sussan Ley was one of the vice-chairs and of course the OECD Secretary-General, Australia’s own Mathias Cormann, was there to advise ministers in their deliberations.

The top agenda topics were climate and plastics and the meeting yielded a formal outcome, the OECD Declaration on a Resilient and Healthy Environment for All.

Now we’ll see some action, I thought — unlike the UN, the OECD regards ministerial declarations as legal instruments, having a ‘solemn character’, though in this case the declaration is not actually legally binding.

So, I thought (naively) if this is a solemn commitment they’ll have to act!

The declaration committed OECD countries to net-zero by 2050, ‘including through accelerated action in this critical decade with a view to keeping the limit of a 1.5°C temperature increase within reach’ (my emphasis).

You might think this would require Australia to increase the ambition of its ‘26-28% by 2030’ target, but I’m sure you’d be wrong.

The Australian Government would probably cite later words from the statement that ‘we underscore the need to pursue collective action’ to achieve the Paris Agreement. We’ll step up if everyone else does so first.

Alternatively, we might announce ‘accelerated action’ in December 2029. I’m sure the lawyers will come up with something to get us off the hook.

Ministers also committed to ‘strengthen our efforts to align COVID-19 recovery plans with environmental and climate goals to build a green, inclusive and resilient recovery for all.’ If you thought this would require Australia to increase its policy ambition and pursue a green recovery, again I think you would be wrong.

I expect the government would say (without hint of irony or embarrassment), that its stimulus efforts were already ‘green, inclusive and resilient’. Green is, after all, in the eye of the beholder.

Plastic promises in Paris

Finally, ministers at the OECD pow wow committed to developing ‘comprehensive and coherent life cycle approaches to tackle plastic pollution’ and ‘promoting robust engagement in the intergovernmental negotiating committee to develop an internationally legally binding instrument on plastic pollution with the ambition of completing negotiations by the end of 2024’.

Australia is on more solid ground here, as it has some genuine policy ambition on plastics. These were forced on it when China stopped all imports of plastics and other waste in 2018, including ours, but … it’s the result that counts!

And no doubt Australia is happy enough to commit to an objective of negotiating a convention on plastics over the next nearly-three years. After all, it’s only a process commitment.

Much of the rest of the declaration consisted of pious incantations or directions to the OECD bureaucracy to do more work on policy tools, data-gathering and the like. No problems here — apart from a few dollars to support the OECD machine, this work creates no obligations.

In terms of putting ‘walk’ over ‘talk’ (ie, actions over words), Paris rates just a little ahead of Glasgow. I’d give the Paris declaration 2 out of 10 and Glasgow 1.

Postcard from Mathias: feeling expansive in Paris

A couple of other things jumped out at me in reading the record of the OECD meeting in Paris.

How strange it is to my Australian ears to hear Mathias Cormann abandon his ‘tell-em-nothing, concede nothing’ Australian political style, in favour of spruiking the international environmental cause, even though he did so in very-OECD economistic terms. I’ve emphasised the interesting words:

Secretary-General, Mr. Mathias Cormann, stressed the importance of a whole-of-government, whole-of-society approach to meeting the climate challenge. He set out key thoughts in this regard including the need to mainstream climate change across all areas, step up efforts on implementation, to secure real net reductions in emissions, mobilise investment and realign global flows towards the transition, the need for reliable data and monitoring, and the importance of enhancing efforts towards adaptation and managing losses and damages.

Esperanto anyone?

Of greater interest, the environment ministers had lunch with a group of business leaders. Emmanuel Faber, Chair of the International Sustainability Standards Board, and former CEO of Danone, a multinational food corporation based in Paris, stressed the need for:

a common language to understand the climate impact of portfolios, underlining this pivotal moment in developing such a common language that can guide decisions to align finance with environmental goals and avoid greenwashing (emphasis added)

We have such a common language in the form of the System of Environmental Economic Accounting (SEEA), adopted in 2012 and enhanced with a standard for Ecosystem Accounting in 2021.

In my view, what we really need is for governments to learn to speak it! (Reminded me of Esperanto — great idea, but a little lacking on the uptake)

While my main point has been to decry the dominance of talking over walking, in the case of environmental accounting, talking is walking!

Banner image: Vaunting ambitions declared in Paris amount to little back home.
(Image by GAIMARD at Pixabay)

‘Environmental accounting’ could revolutionise nature conservation, but Australia has squandered its potential

Peter Burnett, Australian National University and Michael Vardon, Australian National University

Let’s say a new irrigation scheme is proposed and all the land it’ll take up needs to be cleared — trees felled, soil upturned, and habitats destroyed. Water will also have to be allocated. Would the economic gain of the scheme outweigh the damage to the environment?

This is the kind of question so-called “land accounts” grapple with. Land accounts are a type of “environmental account”, which measures our interactions with the environment by recording them as transactions. They help us understand the environmental and economic outcomes of land use decisions.

Environmental accounting, for which Australia has a national strategy, seeks to integrate environmental and economic data to ensure sustainable decision making. Last month, the Australian Bureau of Statistics released the country’s first national land account under the strategy, describing it as “experimental”.

Environmental accounting could be a game changer for conserving nature, but the account released by the ABS falls flat. It’s yet another example of Australia’s environmental policy culture: we develop or adopt good ideas, but then just tinker with them, or even discard them.

A (really) long time coming

Environmental accounting has been a long time coming and dates back to the 1980s. It’s closely related to sustainable development, and in fact, the two ideas developed in parallel.

In 1992, the Rio Earth Summit endorsed both, and nations agreed to develop an international system of environmental accounting.

But it took the UN 20 years to endorse the System of Environmental Economic Accounting (SEEA) — the rules for developing accounts — as an international statistical standard. This endorsement means they’re authoritative and compatible with national accounts.

Then, in March this year, the international standard was finally extended to cover ecosystem accounting.

So, how are environmental accounts used?

“National accounts” are a way to measure the economic activity of Australia and they tell us our gross domestic product (GDP). Linking existing national accounts to environmental accounts means important decisions can capture environmental and economic outcomes, obviously making for better decisions.

For example, the case for orienting a stimulus package towards investing in renewable energy and land restoration will be much stronger if it can quantify not only economic benefits, but gains to natural assets, such as through revegetation.

Stuck in ‘experimental’ mode

Australia, through the ABS, was an early mover in developing environmental accounting. It has produced experimental accounts since the mid-1990s.

Some countries are now taking significant steps to produce and apply accounts. And a communiqué issued by the G7 in May endorses the UN’s SEEA and encourages making nature a regular part of all decision-making – in other words, “mainstreaming nature”. This is something for which SEEA is ideal.

It’s no accident this communiqué emerged from London. The UK is a leader in the field of applying accounting to environmental and economic management. It had a Natural Capital Committee for some years and its 25-year environmental plan provides for further account development, including for urban areas, fisheries and forestry.

Australian governments, on the other hand, have been slow to use environmental accounts. They took until 2018 to agree on an unambitious national strategy, which specified “intermediate” outcomes, only to 2023.

These targets include such policy basics as making environmental information for accounts “findable” and “accessible”. This is not far removed from what federal and state governments first signed up to in an agreement 30 years ago.

And the strategy places the holy grail of policy integration “into the future” beyond 2023 — for example, off into the never-never. As a result, we are on a slow track and seemingly stuck in “experimental” mode.

So, what’s the problem with the new land account?

The new land account is a very small step. While it has gathered a lot of information in one place, it tells us little, and essentially repackages old information (the newest data is for 2016).

It’s also in a format that cannot be integrated with national accounts, or even with other environmental accounts so far produced in Australia, such as those covering waste, water, energy and greenhouse gas emissions.

Integration of environmental and economic information is the raison d’etre for the international system. So how did this happen?

For accounts produced outside the ABS (such as for greenhouse gas emissions), different accounting frameworks were used, so this is understandable, though unfortunate. For the land accounts, it is less understandable and we can only speculate.

Not being able to integrate the land, water and national accounts means the environmental-economic trade-offs cannot be assessed. It seems the government is struggling to integrate an exercise of integration!

Governments fiddle while the planet burns

Australia’s 2021 intergenerational report, released last month, shows how far we are from producing good environmental information.

The environment section of the report acknowledges climate change and biodiversity loss as major problems, and the need to account for and maintain natural capital. But it goes on to do little more than make general observations and recite standard government talking points about existing policies.

If the report was informed by comprehensive environmental accounts, it could support the modelling of environmental trends going forward. This would give us a real sense of likely changes to natural capital and its impact on the economy.

But there are no plans for such an approach. In fact, this kind of “high potential, low ambition” approach to environmental policy is something of a trademark for this government. Another example is the recent cherry picking of recommendations from an independent review of Australia’s environment law.

While such an approach may deliver a successful political placebo, it is a formula for policy failure.

Just how loud will the wake-up call have to be? Recently, a climate-change-induced “heat dome” hit western North America. Lytton, Canada, which is closer to the North Pole than the equator, shattered temperature records with a staggering 49.6℃, before being decimated by wildfire.

If only such disasters, including our own Black Summer, would raise policy ambition more than the temperature.

Peter Burnett is an Honorary Associate Professor, ANU College of Law, Australian National University.
Michael Vardon is an Associate Professor at the Fenner School, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Postscript from the authors: While space didn’t allow the inclusion of this point in the original article in The Conversation, a key feature of environmental accounts is that they can be kept in both monetary and physical units. As a result, they do not require the commodification of nature. When accounts use monetary units, these are ‘exchange values’, ie actual market rates.

Where there is no market, as typically there is not for, say, biodiversity, the accounts can be kept in physical units such as hectares and a condition indicator. While the absence of a common monetary denominator does of course make the economic and environmental data less than fully commensurable, it does not prevent integrated decision-making if accounts are suitably comprehensive and there is ecological advice as to the minimum extent and condition required to sustain the environmental asset concerned into the future.

Extending the example in the article of a proposed irrigation scheme, the economic consequences of the proposed development (eg jobs, primary production) can be set alongside the environmental consequences (eg aquifer draw-down, habitat loss). If the accounts show that these losses would place the ecological assets at significant risk of loss or ongoing decline, say by drawing down aquifers faster than replenishment rate, or significantly increasing extinction risk for a species, the correct decision environmentally is not to approve. This is a major advance over a conventional environmental impact assessment because the information would be collected in advance and routinely, quantified in a standardised way and, though accounting records, measured cumulatively.

Banner image: Young Henri plants a tree for the future. (Image by David Salt)

At last, an international standard for ecosystem accounting! Now what?

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.

What now?

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.

Image by Ronny Overhate from Pixabay

The zero sum game – from biodiversity to emissions

A game for mugs or a magic pudding that just keeps giving?

By David Salt

Zero net emissions by 2050! It’s the goal proclaimed by many countries around the world*, and it’s aimed at stemming the tide of climate change.

Zero net emissions is the recipe for enabling business as usual (ie, strong economic growth) while supposedly dealing with the externalities resulting from business as usual (ie, civilisation-ending climate change).

And it’s a political winner because governments aren’t targeting specific economic sectors (ie, the fossil fuel industry). Indeed, this far away from 2050, they aren’t being pegged down by too many specifics on how it will be achieved. The generic solution, implicitly and explicitly rolled out everytime, is that technology will save the day.

The magic in the pudding

So where is the magic that drives this ‘zero-net’ proposition? It’s in the ‘net’ bit. This framing means you don’t have to be ‘zero’ in your emissions in any specific activity, like burning coal if that’s what tickles your fancy.

But you do have to be zero in your cumulative effort. If you produce carbon emissions in one area then you need to do something somewhere else that removes that carbon so the cumulative impact (the net effect) is zero.

How do you remove carbon from the atmosphere? The traditional way has been to plant trees or do existing activities in ways that emit less carbon, a good example being using renewable energy instead of fossil fuel energy.

It works as a political solution because it means you don’t have to explicitly say who is going to bear the burden of reducing their emissions. At some point, however, someone, somewhere is going to have to change their behaviour – after all, sustainability bites!

Experience so far with zero sum policy games suggests they are tricky to establish and easy to work around (ie, cheat).

Offset this

What, you weren’t aware of other zero-sum games? They’re actually quite popular and one place where it’s really taking off is in the arena of biodiversity conservation. The name of this specific game is called biodiversity offsetting.

When it comes to any economic activity with impacts on biodiversity there are many rules and regulations to prevent the loss of species and ecosystems.

To begin with, the proposer of a new economic development must demonstrate their proposal isn’t adversely impacting any native species or ecosystems. If it does, the developer is required to state what they will do about it to remove that impact.

Indeed, developers are expected to apply a mitigation hierarchy to their proposal (see the South Australian Government for an example) in which they need to show how they will first:
1. avoid the negative impacts of their development but doing it in a different way. But if there is still impact, they need to then demonstrate how they will
2. minimise the size of the impact of the development; and then
3. restore the area to make up for the impact.

However, if the developer can’t avoid, minimise or restore the impact they create, they can now offset the damage of the development by doing something good for the environment somewhere else. If you clear a stand of native trees over here for a shopping centre, you might offset this impact by planting the same species of tree somewhere nearby.

The aim is to achieve ‘no net loss of biodiversity’ over time. See, it’s a zero-sum policy game.

The trouble is, in many places it’s been seen by developers as a green light for development and has resulted in many perverse outcomes.

A green light for decline?

For starters, many developers don’t even bother with the mitigation hierarchy (because avoiding, minimising and restoring all cost considerable resources and regulators often don’t check to see whether the impact can be mitigated) and jump straight to some form of offset proposal. But proposing offsets for developments are usually quite complex and there’s a lot of research around to show they often don’t actually offset the impacts of the development (in space or time).

In some cases, the development impact is on something that is irreplaceable like the potential loss of threatened species. In these situations it’s impossible to offset the potential loss and the development should be blocked. Instead, the developer is sometimes asked to do something that might be ‘equivalent’ to a direct offset, like contributing money to an education awareness program that may help save the species. Such indirect offsets are not actually offsets at all but they do give cover for economic development to proceed.

The overall outcome is that while there is a goal of no net loss of biodiversity, biodiversity is lost anyway. Around the world we are seeing a mass extinction event taking place and biodiversity offsetting does not seem to be making any difference.

The devil is in the detail

The lesson here is that great care needs to be applied to the establishment of any zero sum policy game. It needs to be transparent, accountable and enforceable. And it cannot be applied merely as cover for business as usual to proceed without any checks and balances.

Economic activity that generates positive carbon emissions (ie, above zero) needs to be accountable for matching these emissions with activities elsewhere that generate negative carbon emissions (ie, activities that remove carbon).

Governments oversee this process and need to establish robust and transparent frameworks that keep track of these activities and their emissions, and report this tracking in a clear and simple way so everyone has faith in the system. To sustain this faith, the monitoring and measurement will need to be independent of government; something along the lines of what Zali Stegall recommended in her climate bill.

A lot of thought will need to go into how you trade emissions across time (eg, savings emissions today to pay for extra emissions in the future) and space (eg, buying emissions savings from another country for an emission heavy activity in our own backyard).

While the law surrounding such net zero policies will be enacted at the national level, it’s likely this game will involve the trading of positive and negative emissions between countries so the net zero frameworks will need to operate with agreed international norms.

The System of Environmental-Economic Accounts is one existing framework that might help with all of these issues.

Maybe net zero emissions is a policy pathway that might engage opposing political forces, something that efforts to date have failed to do. However, to transform the call for zero net emissions by 2050 into workable and effective policy, much effort will need to go into creating intuitions that will hold governments to account and prevent them from fudging the figures.

Image: the cover of the UN Emissions Gap Report for 2019

*According to the UN Emissions Gap Report for 2019, most emissions — 78%— come from the top 20 economies, the G20. Of these, only five had pledged to long-term zero net targets (and this did not include the three big emitters: China, the US and India). Around 70 countries worldwide have made pledges of being carbon neutral by 2050.

By all accounts, can we manage to save biodiversity?

Environmental accounting could be the key to saving nature

By Peter Burnett

It’s 2020, and the world is again discussing targets to save biodiversity. The approach hasn’t been very successful in the past and many are throwing up their hands in despair in the face of a rapidly unfolding biodiversity catastrophe. Could environmental accounting be the missing link in our thinking?

In an earlier blog I described the short history of environmental accounting and highlighted its potential. This was more than just extending the traditional (economic) national accounts to cover the environment, which was the original idea (especially to make GDP a much more accurate measure of economic performance by subtracting losses of ‘natural capital’). Governments could also use environmental accounting to manage the environment.

In another blog I wrote about key meetings to be held this year in Kunming, China, under the Convention on Biological Diversity (CoP 15, CBD, and preparatory meetings). The aim is to develop a new 10-year international plan to replace the Aichi targets that have operated for the last decade.

Given the significance of 2020 internationally (and our extreme bushfires in Australia putting nature at the top of the agenda domestically) it seemed to me like a good time to come back to what role environmental accounting might play in saving biodiversity.

Aim for net positive outcomes

Conservation scientists have been questioning the value of biodiversity targets and the way they are applied for some time. Most recently, this call was made in Nature Ecology & Evolution by Joseph Bull and colleagues. They argue that policy must shift away from conservation targets that are based just on avoiding biodiversity losses, towards considering net outcomes for biodiversity.

This would involve tracking the cumulative net impact of both development and conservation, while aiming for an overarching objective such as ‘a positive outcome for nature’. It would be bringing things like restoration and offsets into the equation.

In effect, the argument is to take the mitigation hierarchy, the ‘avoid, mitigate, offset’ approach most often associated with individual development approvals, and apply it at a global level. Yet Bull et al go even further, arguing that this language of net outcomes raises an even wider aspiration for tackling biodiversity loss, climate change and human development together.

This latter argument is similar to the one made by Malgorzata Blicharska and colleagues, that biodiversity supports sustainable development and the 2030 Sustainable Development Goals (SDGs) in many ways (‘Biodiversity’s contributions to sustainable development‘).

Also in a similar vein, Charlie Gardner and colleagues have argued that attention to biodiversity loss has been eclipsed by the climate crisis, and that conservationists must capitalise on the opportunities presented by the climate crisis to establish the idea that keeping ecosystems intact is one of the most cost-effective defences against climate impacts (‘conservation must capitalise on climates moment‘).

These recent articles suggest to me that there’s a growing realisation that the coming decade is not just the last chance to halt climate change, but also the last chance to address the ‘sixth great extinction’, before they get away from us completely. Hitching the two together might increase the chances of at least some success.

Biodiversity and sustainability: the accounting connection

If we were to turn ‘avoid, mitigate, offset’ into an overarching approach, one of the challenges identified by Bull et al was that the resulting need to measure net outcomes would require a plurality of metrics for measuring losses and gains to biodiversity.

With several colleagues, I responded by pointing out that environmental accounting, standardised globally in the System of Environmental-Economic Accounts (SEEA), already does this well (our Nature Ecology & Evolution paper is titled ‘Measuring net-positive outcomes for nature using accounting’). All that is needed is for governments to make it happen.

A key but often misunderstood point is that although environmental accounts are often, like conventional accounts, kept in monetary terms, it is just as valid to keep them in physical terms such as population numbers and measures of condition. Environmental accounts could, for example, measure a variety of biodiversity-relevant attributes such as species occurrence, distribution, abundance and age-sex structure of populations.

In contrast to financial accounting, there is no need to consolidate these different accounts into a single ‘bottom line’ unless this would be both feasible and meaningful.

In other words, if you are counting echidnas and platypii, there is no need to aggregate these into a single ‘monotreme account’ unless this is a useful thing to do. While a single bottom line is always ideal (which prompts economists to push hard for it) it is by no means the only solution.

In an ecological context, it could be just as useful to take all the accounts relevant to a particular ecosystem, which might include our echidna and platypus accounts, and ask whether the bottom line of each and every account exceeds a predetermined measure of ecosystem health. If they do, then the collective ‘bottom line’ for the ecosystem is ‘in the black’. If only some do, the ones below the measure point to the management intervention needed.

Why accounts?

Why bother using accounts? Why not just do a census or a stocktake, or ongoing monitoring? The answer lies in the problem being solved. Environmental accounts are not kept by scientists for research, but by a new and specialised form of accountant for management purposes.

Importantly for governance, environmental accounts that comply with the SEEA are consistent and auditable. This facilitates transparency and, where appropriate, comparisons.

Further, because accounts don’t just contain entries but record transactions, they reveal something about when and why something occurred, and who it was connected with. For example, a reduction in a species population due to approved land clearing would reveal not only the quantum but the date and party undertaking the clearing.

In a comprehensive set of accounts this action would be reveal not only the loss of natural capital, but the corresponding loss of ecosystem services.

All of these attributes contribute to good decision-making. Environmental accounting may not have been invented as a management tool, but serendipity has delivered this as a bonus.

The capacity of environmental accounts to be used in environmental management has been demonstrated in some case studies but not in a general and ongoing manner. Ideally it would be nice to scale up slowly but we don’t have the luxury of time.

If we are to manage, by all accounts, to save biodiversity, it might be because environmental accounting was a key part of the decisions taken at Kunming.

Image by Terri Sharp from Pixabay

An ‘environmental accounting’ primer

What is it? (and why should we use it?)

By Peter Burnett

‘Environmental accounting’ (or ‘environmental-economic accounting’ to use its full name) is, on first blush, a dry-as-dust topic. Yet the ideas behind it and the insights it unlocks are fundamental to good environmental governance and a meaningful shift towards sustainability. That’s in part why Australia’s governments adopted a national strategy, or at least a common national approach, to environmental accounting in 2018.

Recently I attended a workshop in Brisbane on environmental accounting* hosted by state and federal governments. The workshop was lively and well-attended, with many more participants asking to be part of the discussions than had been originally invited. Clearly the value of environmental accounting is beginning to be acknowledged across multiple sectors.

But the development of environmental accounting didn’t happen overnight. Its gestation took over half a century with some of its central concepts going back centuries. What’s more, a lot more needs to happen before its full potential is realised.

Origins

Environmental accounting can be traced back to the 1970s when several countries, including Norway and France, developed what was then described as ‘natural resource accounting’, or in the case of France, ‘patrimonial accounting’, as part of their response to the emergent major environmental concerns of that era. There were also fears associated with resource scarcity arising from the oil crisis of 1973. These accounts were kept in physical terms.

At about the same time, economists William Nordhaus and James Tobin (later to be Nobel laureates) wrote a seminal paper highlighting the shortcomings of GDP as an economic indicator. They argued for a ‘Measure of Economic Welfare’ (MEW) that subtracted consumption of capital, including ‘environmental capital’, from domestic product. This is because treating consumed capital as income creates an inflated sense of well-being in the short term but is unsustainable over the longer term. Implementing a MEW would require the inclusion in national accounts of figures for the consumption of environmental or ‘natural’ capital, expressed in monetary terms.

During the 1980s the United Nations Environment Program (UNEP) and the World Bank ran workshops aimed at linking environmental accounting to the System of National Accounts (SNA), an international standard maintained by the UN. This work may have influenced another well-known UN project, the Brundtland Report of 1987, famous for proposing a global goal of ‘sustainable development’.

Brundtland placed great emphasis on policy integration as essential to achieving sustainable development. Although Brundtland did not go on to recommend environmental accounting per se, it did couch some of its arguments in economic and accounting terms, referring for example to ‘overdrawn environmental resource accounts’ and the need to maintain the stock of ‘ecological capital’. Given the implicit connections made in Brundtland, it’s probably no coincidence that Agenda 21, the action plan adopted by the subsequent Rio Earth Summit of 1992, linked accounting and sustainability directly by including a commitment to develop integrated environmental and economic accounting as ‘a first step towards the integration of sustainability into economic management’.

With Agenda 21 providing a mandate, the UN soon published a handbook on integrated environmental and economic accounting in 1993. However, it took a further 20 years to develop the handbook into a full international accounting standard and even then the scope of the standard was confined to traditional natural resources, with ecosystem accounting relegated to a supporting ‘experimental’ framework. The UN is scheduled to consider adopting a revised version of this experimental framework as a full international accounting standard in 2021. I hope this indeed occurs, but it reflects how long these processes take. The gestation period for this work is nearly 30 years!

Delay aside, a key innovation of the resulting System of Environmental-Economic Accounts (SEEA) is the concept of ‘combined presentation’, the ability to produce accounts expressed in either physical or monetary terms, or both. This allows accounts to support two streams of work: 1. the integration of environmental consumption into national accounting and
2. the use of physical accounts to inform environmental management.

Why bother?

As national accounting informs economic decision-making, the rationale for environmental accounting in monetary terms is clear. But why bother with physical accounting, other than as an intermediate step to monetary accounts? The answer lies in two developments, one in the late 1960s and the other going back to medieval times.

Concerns about the extent of environmental decline had been growing steadily through the 1960s. In 1969** two resource economists, Robert Ayers and Allen Kneese made a profound observation concerning environmental ‘externalities’ (externalities are the costs or benefits affecting persons not party to an economic transaction). Their observation was that if environmental externalities could no longer be regarded as exceptions, but were more the norm, then good economic decision-making required a ‘materials balance’; that is, a full recording and accounting for environmental impacts, in physical terms. Implicitly, Ayers and Kneese had just made the case for environmental accounts.

The other development foundational to the case for environmental accounting is the concept of the ‘double entry’, which goes back at least to the medieval ‘Venetian method’ of book-keeping. Double entry recognises that almost all transactions involve both a gain and a loss. In purchasing equipment for example, a business gains the equipment but loses the money used to pay for it, so it records both the gain and the loss in separate ledgers, one for equipment and one for cash. Moreover, accounting links the two aspects of the transaction, showing that this purchase in the equipment ledger was paid for with this payment, and correspondingly that this payment was attributable to that equipment purchase.

Stocks and flows

Environmental accounting builds on the parallels between our interactions with each other in business and our interactions with the environment. Just as business accounting tracks the stocks of business assets and liabilities, and the flows of business receipts and expenditure, recording the net change in capital at year’s end, so environmental accounting tracks the stocks of environmental assets (and liabilities, eg pollutants) and the flows of ecosystem services (and expenditure on ecosystem maintenance), recording the net change in natural capital each year.

Moreover, environmental accounts record the transaction from both society’s end and the environment’s end, making it ‘quadruple entry’. As a result, environmental accounts can show for example that this flow of ecosystem services to society came from that environmental asset, depleting it by this much, but that the depletion was offset by that degree of natural replenishment and this much environmental maintenance. This capacity to link transactions so specifically to their causes and impacts is what makes accounting a powerful tool for environmental analysis and decision-making.

What next?

Environmental accounting is starting to build significant momentum in Australia. As this work is still in its infancy, despite its long gestation, the ongoing work under way nationally and internationally to develop accounting standards and protocols remains important. More important however is the need to pay extra attention to, pardon the pun, the other side of the ledger, the application of accounts for better decision-making. I will cover this in a future article.

* The Brisbane workshop on environmental accounting brought together a number of researchers to present their work on the development or application of accounts. For example, Victoria presented their work on using accounts to identify the ecosystem services provided by forests.

**1969 is big in the news at the moment with the 50^th anniversary of the Moon landing. It seems strange to me that so much attention is paid to this triumph of technology; while so little attention has been given to 1969 as the dawn of modern environmental policy. Beyond the analytical insights of Robert Ayers and Allen Kneese, 1969 also marked the passage of the world’s first comprehensive environmental law the US National Environmental Policy Act (NEPA), thanks significantly to the efforts of Professor Lynton Caldwell.

Image by Free-Photos from Pixabay