VI~~~~ RONMEN E N V I R O N M E N T >3 ~D E P A R T M E N T *mdbub t P A P E R S PAPER NO. 039 TOWARD ENVIRONMENTALLY AND SOCIALLY SUSTAINABLE DEVELOPMENT ENVIRONMENTAL ECONOMICS SERIES Green National Accounts: Policy Uses and Empirical Experience Kirk Hamilton Ernst Lutz July 1996 v G \ EEnvironmentally Sustainable Development The World Bank ESD jM Pollution and Environmental Economics Division Green National Accounts: Policy Uses and Empirical Experience Kirk Hamilton Ernst Lutz July 1996 Papers in this series are not formal publications of the World Bank. They are circulated to encourage thought and discussion. The use and citation of this paper should take this into account. The views expressed are those of the authors and should not be attributed to the World Bank. Contents Acknowledgments 1. Introduction 1 2. Background on National Accounting and the SEEA 4 3. Policy Uses of Resource and Environmental Accounts 6 4. Experience with Resource and Environmental Accounting 17 5. Conclusions 41 References 43 Box, Figures, and Tables: Box: Box 1: The Wealth of Nations 11 Figures: Figure 1: Pakistan - Investment and Saving 8 Figure 2: Shares of National Wealth 11 Tables: Table 1: Costa Rica 21 Table 2: Indonesia 24 Table 3: Japan 26 Table 4: Mexico 27 Table 5: United States 38 Environmental Economics Series Acknowledgments The support and critical comments of John A., and Young, C., 1994, The Policy Dixon, Andrew Steer and Mohan Implications of Natural Resource and Munasinghe are gratefully acknowledged. Environmental Accounting, Centre for Social Chapter 4 of this report draws upon a study and Economic Research on the Global prepared for the World Bank: Harnilton, K., Environment (CSERGE), University College Pearce, D.W., Atkinson, G., Gomez-Lobo, London and University of East Anglia. Environmental Economics Series 1 Introduction Over the past 25 years the breadth of environ- failure play in the degradation of the mental and natural resource policy-making environment. This has put the focus squarely has expanded from dealing with pollution on policy, where it belongs. Policy failures incidents, such as the grounding of an oil come in many forms, from inadequate tanker, to grappling with the new property rights regimes, to under-pricing of complexities of achieving 'sustainable natural resources, to subsidies on energy, development' and protecting the global fertilizers and pesticides that lead to negative commons. Governments everywhere have impacts on the environment. Market failure committed themselves to these new goals, exists wherever economic activities impose whether as a product of the United Nations costs on others, in the form of pollutants Conference on Environment and carried downwind or downstream for Development in 1992, or in response to the instance, without any mechanismns for report of the Brundtland Commission in 1987. remediation. As a result, policy makers need new measures of progress. Market failure is the prime reason that many analysts question the policy signals provided There has been corresponding innovation in by our traditional economic indicators, in information systems to guide resource and particular the Gross National Product (GNP). environmental policies, from the collection of As codified in the UN System of National physical and economic data to the Accounts (SNA), GNP measures the sum total development of conceptual frameworks. The of economic production on the basis of OECD's 'Pressure-State-Response' transactions in the marketplace. As a result, framework, for instance, provides the means GNP masks the depletion of natural resources to interrelate complex information concerning and presents an incomplete picture of the human activities and the environment. costs imposed by the polluting byproducts of Environmental performance indicators have economic activity. This has led many people taken on a key role in many countries. And to conclude, as in the case of Robert Repetto, natural resource and environmental accounts, that: with their coupling to economic accounts and indicators, promise to provide policy makers This difference in the treatment of natural with measures of progress towards resources and other tangible assets [in the environmentally sustainable development. existing national accounts] reinforces the false dichotomy between the economy and The development of environmental and 'the environment' that leads policy makers to natural resource economics has highlighted the critical role that policy failure and market Environmental Economics Series Green National Accounts: Policy Uses and Empirical Experience ignore or destroy the latter in the name of The United Nations has recently attempted to economic development . bring some order to this field with the publication of interim guidelines on an The new emphasis that governments have integrated System of Environmental and placed on sustainable development is another Economic Accounts (SEEA)5. This system source of criticisms of the traditional national aims to provide a common framework within accounts. Measures such as Net National which greener national accounting Product (NNP) and National Income, while aggregates, natural resource accounts and better than GNP for measuring sustainability, pollution flow accounts have their appointed account only for the depreciation of produced places. assets, ignoring the value of depletion of natural resources and degradation of the For developing countries, the adjustments to environment. They cannot serve, therefore, as standard national accounting aggregates that guides for policies aimed at achieving result from resource and environmental sustainable development. 'Greener' accounting can be sizable. This is obviously aggregates, it is hoped, can. true for the most resource-dependent economies, but it is also likely to be of In addition to these criticisms of traditional growing importance for those countries that national accounting aggregates, natural are rapidly industrializing and urbanizing - resource and environmental accounting has for these countries the growth in damages many other antecedents. The experience of from pollution emissions, in terms of human the 'oil crisis' in the 1970's led to a concern health in particular, is of mounting concern. with the physical scarcity of natural resources - the construction of natural resource Because of the strong potential for resource accounts detailing the changing stocks and and environmental accounting to influence flows of physical quantities of resources was policies in developing countries, the World the result2. Worries about the toxic effects of Bank has been an active participant in efforts pollutants led to increasing interest in to 'green' the accounts - part of this understanding the pathways that particular intellectual journey is described in the next materials take through the economic system, section of this report. In 1995 the Bank with the development of material balance published Monitoring Environmental Progress, 3 accounts being one of the responses3. And the which presented crude preliminary estimates desire to analyze the connection between of the rates of 'genuine' saving (accounting economic activity and pollutant flows for resource depletion and environmental produced models linking Input/Output degradation) and total wealth for a wide tables to accounts of pollution emissions4. All range of countries. Efforts are now underway of these roots are still evident in what is to carry out country-level case studies and to broadly termed resource and environmental introduce green accounting aggregates more accounting. widely into the work of the Bank. There is by now considerable empirical experience in the construction of a variety of resource and environmental accounts. One of I Repetto et a. (1993, p3). the goals of this report is to critically examnine 2 Alfsen (1993). the potential policy uses of the different 3 Alfsen (1993). varieties of accounts, in particular greener Ayres and Kneese (1969). 4 Leontief (1970) and Victor (1972). United Nations (1993b). 2 Environment Department Papers Introduction national accounting aggregates such as for both developed and developing countries. genuine savings and 'Eco-Domestic Product.' Before proceeding with this, the next section The second goal is to describe and assess the provides some background on national range of experience that has been published accounting and the SEEA. Environmental Economics Series 3 2 Background on National Accounting and the SEEA After the second world war, rebuilding Nations Statistical Office (UNSTAT) shattered economies and forging economic developed a framework for preparing a growth were the main economic objectives System of integrated Enviromnental and for most countries. The System of National Economic Accounts (SEEA). A preliminary Accounts (SNA) was developed around that version of the framework was tested in time, and not surprisingly, it focused Mexico and Papua New Guinea. Both the exclusively upon measuring economic main elements of the SEEA and the case growth and in particular production in studies (as well as other conceptual and markets for which prices are available. Most applied work) were published in the form of people saw no need for better treatment of an UNSTAT-World Bank Symposium. With natural resources and the environment at that the UNSTAT framework, an Eco-Domestic time; resources were considered abundant Product (EDP) can be calculated as follows: and the environment as an inexhaustible sink. depreciation of produced assets is estimated Since then, however, the world population and subtracted from GDP to arrive at an and the world economy have grown NDP; then estimates for depletion of natural tremendously, which has put a stress on the resources and degradation of the natural environment. The need to consider environment are made and subtracted from natural capital has therefore gained broad NDP to arrive at EDP. acceptance, as has the realization that development encompasses the human and In Agenda 21, a key document emerging from social dimensions as well. the Rio Sumrnit in 1992, it was recommended that integrated environmental and economic The 1968 SNA guidelines, which were valid accounting be undertaken by the until 1993, considered depreciation of governments of the signatory countries. Such produced capital but did not deal with work would provide these governments with natural capital and its linkages with the a set of supplementary indicators and would econornic system. During the 1980s, five encourage the collection of relevant UNEP-World Bank workshops were held to information and compilation in the area of discuss the shortcomnings of the SNA and natural resources and the environment. possible remedies, with the results published in 1989.6 In the early 1990s, the United 6 Ahmad et al. (1989). 7 Lutz ( 1993). Environmental Economics Series 4 Green National Accounts: Policy Uses and Empirical Experience The 1993 revision of the SNA. Under the experience has been gained and a greater general guidance of the Intersecretariat consensus achieved on issues such as Working Group on National Income valuation, a revised document will be issued. Accounts (consisting of the Commission of In addition, UNSD is currently working on a the European Communities, OECD, manual that is to assist countries with UNSTAT, the IMF, and the Bank), expert practical step-by-step guidelines on how to meetings were held from the mid-1980s to the do integrated environmental and economic early 1990s to address various issues in accounting. national accounting. From the environmental perspective, the two most significant changes Satellite accounts try to integrate introduced in the 1993 SNA were: environmental data sets with existing national accounts information, while 1. A more comprehensive view as to what maintaining SNA concepts and principles as constitutes an asset - all assets that far as possible. Environmental costs, benefits contribute to marketable production are and natural resource assets, as well as included. Such assets include land, expenditures for environmental protection, subsoil resources, cultivated plants and are presented in flow accounts and balance livestock, and noncultivated natural sheets in a consistent manner. That way the assets that yield products such as timber. accounting identities of the SNA are Where harvests exceed a sustainable maintained. One of the values of the SEEA yield, and where therefore stocks are framework compared to more partial being drawn down, the excess is approaches is that it permits balancing, so subtracted from current income. that rough monetary estimates can be made for residual categories. 2. A recommnendation that integrated environmental and economic accounting A major difference between the SNA and the should be done in satellite (i.e. SEEA is that the latter has a more detailed supplementary) accounts that are linked asset classification, and that more estimates with the main (or 'core') accounts of the and imputations are made in near-market or SNA. A full integration of integrated non-market areas (for depletion and environmental and economic accounting degradation), whereas the SNA continues to into the main accounts was not concentrate on income and assets that can be considered feasible because of the limited valued based on market price information. case study work that had been done up to that time and because of outstanding Naturally, there are a number of outstanding conceptual and valuation issues. conceptual and empirical issues. This should not be surprising, given that it took many Integrated Environmental Accounts. The United years to develop the current system of Nations Statistical Division (UNSD) has national accounts, for which (market) data developed a Handbook on Integrated tends to be easily available, whereas for Environmental and Econornic Accounting, natural resources and the environment the which was published in tandem with the new physical information tends to be sketchy and SNA in 1993 and which outlines how the valuation issues difficult. integrated accounts are to be prepared. It is called an 'interim version' - i.e. once more 5 Environment Department Papers 3 Policy Uses of Resource and Environmental Accounts Having cormnitted themselves to achieving These three players in government policy, the sustainable development, governments face a economic, the resource sector and the number of challenges beyond the traditional environmental ministries, all have a role in concerns of natural resource and achieving sustainable development. environmental ministries. Chief among these Unfortunately, all three have generally had is achieving closer integration between narrow views of their roles and a full economic policies and policies for the integration or even communication has often management of natural resources and the been lacking. environment. A key message from the Brundtland Commnission report is that current At the most macro level, the planning economic development policies may ministry is concerned with the savings- compromise the ability of future generations investment gap, and the supply of foreign to enjoy sustained levels of well-being. finance to fill this gap. This relates directly to one of the traditional concerns of the finance The need for integration of policies is ministry, the external balance and its reinforced by the experience of many sustainability. The other typical concern at countries that have adopted National the ministry of finance is the fiscal deficit, and Environmental Action Plans (NEAPs) or whether governrment borrowing9 is 'Green Plans' aimed at providing an overall sustainable. The finance ministry is charged policy framework for the environtnents. with achieving economic growth, but does Typically, these policy frameworks read as if not have the tools to determnine whether they were written by the resource and current growth is being bought at the expense environmental ministriesfor the resource and of future well-being. Resource mninistries are environmental ministries, with no links to the often only concerned with promoting the interests of economic ministries such as exploitation of natural resources, while finance and planning. environmental ministries have responsibilities for conservation and environmental protection, but have generally The World Bank requires that NEAPs be established had difficulty establishing priorities. for all International Development Association (IDA) borrowers, as a condition for access to this concessional finance. In developed countries, the 9 Netherlands and Canada were among the 'early And/or monetary policy, if the fiscal deficit is adopters' of Green Plans. financed by printing money. Environmental Economics Series 6 Green National Accounts: Policy Uses and Empirical Experience Resource and environmental accounting The potential and prospective uses of these cannot solve institutional problems, but it can different categories of accounts are presented provide the informational basis for better below. The first two sections are devoted to integration of economic, natural resource and alternative national accounting aggregates. environmental policies. The valuation exercises that underlie monetized National Accounting Aggregates (1): Genuine environmental accounts can be of direct Saving benefit in priority-setting. Monetized environmental accounts can provide high- Savings and investment play a central role in level indicators of sustainable development. the economics of development, but the And both monetized and physical traditional measures in the national accounts environmental accounts can support policy ignore depletion of environmental assets. To models that depict the broad environmental correct this, genuine saving is defined as net consequences of different economnic saving less the value of resource depletion strategies as well as the economic and the value of environmental consequences of resource and environmental degradation10. The policy implications of policies. measuring genuine saving are quite direct: sustained negative genuine savings must lead, This section aims to explore the potential eventually, to declining welfare. Moreover, the policy uses of resource and enviromnental consideration of the determinants of genuine accounting. As noted in the Introduction, saving provides an essential linkage between there are several different flavors or the interests of ministries of natural approaches to environmental accounting. resources, environment, finance, and While many taxonormies are possible, the planning. breakdown that most closely matches what countries are actually doing is the following: Figure 1 provides an example calculation of the rate of genuine saving in Pakistan. The a adjusted national accounting aggregates, underlying accounting is straightforward: such as EDP or expanded measures of gross saving equals gross investment less saving and wealth; foreign borrowing, while net saving subtracts * natural resource accounts, where the the value of depreciation of produced assets; emphasis is on balance sheet items - the the two genuine savings measures deduct the opening and closing stocks of various depletion of natural resources and the value natural resources - and the flows that add of degradation of the environment (in this to and subtract from the balance sheet case soil erosion and health damages position; these accounts are in quantities attributable to pollution) in succession. and (possibly) values, and may or may not be linked to the SNA through the From the policy-maker's perspective, the National Balance Sheet Accounts; interesting question concerns what policies * resource and pollutantflow accounts that affect the levels of the individual curves. The embody considerable sectoral detail and gross saving curve anchors all others, in the often are explicitly linked to the Input- sense that the macroeconomic policies that Output Accounts, a part of the SNA; affect savings effort will shift all the other * and environmental expenditure accounts, which represent a breakout of existing figures in the SNA. 0 Cf. Pearce and Atkinson (1993); Hamilton (1994); World Bank (1995). 7 Environment Department Papers Policy Uses of Resource and Environmental Accounts Pakistan - Investment and Saving 0.2s 0.2 - \_ , Foreign borrowing 0 5- 0.15- / - i _nvestment 2 Gross saving 16i Depreciation Net saving e Depletion , ......-Gen. saving 1 0.1 - ' ' - Gen, saving 2 0.1~~~~~~~~~~.. / '*> ; '-,.*' . ' \ Degradation 0.05 - ' 0.0 1980 1981 1982 1983 1984 1985 1986 1987 1988 t989 1990 t991 1992 Figure 1. Source: authors' calculations, based on Brandon (1996). curves upward or downward. The level of . Is the level of government current foreign borrowing then determines gross expenditure appropriate and sustainable? investment. Depreciation of assets is largely a Dissaving by the government sector physical phenomenon, representing the value depresses the aggregate saving rate. of ordinary wear and tear on the stock of * Does the tax system penalize or encourage produced capital, and so is not altered by saving? Consumption taxes, income taxes policy. Policies concerning natural resource and payroll taxes all have different exploitation and environmental management incentive effects for savers. then affect the size of the remaining * Does monetary policy set positive real deductions. interest rates? Negative real interest rates are an obvious disincentive to save. What follows is a closer look at the policy * Do government policies support a viable issues that are raised by the analysis of financial sector? This affects both genuine savings, beginning with the incentives to save and the efficiency with determinants of saving effort. which savings are channeled into investments. The gross savings rate in any country is determined by a whole range of micro- and The point in all of this is not that an macroeconomic policies that affect savings environmental economist in the ministry of behavior by individuals and institutions. In environment should be dictating macro- seeking to alter rates of saving, the questions economic policies to the rninistry of finance. for the policy-maker include: Environmental Economics Series 8 Green National Accounts: Policy Uses and Empirical Experience Rather, if the rate of genuine saving is * Are the royalties from natural resources deemed to be too low - negative rates being invested or consumed? What kinds of the obvious example - then the starting point investments are made? is necessarily the macroeconomic determinants of total savings effort. The export of natural resources involves the liquidation of some amount of the natural Next, one of the key determinants of genuine resource base. From the perspective of savings rates for developing countries is the genuine savings an important question is value of resource depletion. It is obviously therefore: incorrect to conclude that genuine savings should be boosted by restricting resource * Do policies to promote natural resource exploitation. One of the key lessons from exports also embody plans for the growth theory is that the discovery of a investment of the resource royalties? natural resource, properly managed, leads to a permanent increase in the sustainable Soil erosion is a problem to be remedied at stream of income for a country. The policy particular locales in particular countries. question with regard to natural resources is Where erosion is occurring at inefficient rates, therefore what constitutes 'proper one policy response would be to subsidize the management.' Clearly, the important concern adoption of better cropping and soil is the achievement of efficient levels of management practices. resource exploitation. The policy considerations are therefore: In many developing countries rapid urbanization and industrialization are * Do tenurial regimes encourage sustainable leading to major increases in pollution exploitation? Open access to living emissions and declining ambient resources generally leads to their depletion. environmental quality - this is particularly so * Are royalties set correctly, to capture in the metropolitan areas of Asia and Latin resource rents while leaving the exploiting America. The response to this problem is not, firms with adequate rates of return? of course, to aim for the elimination of pollution, but rather to aim for what An important element of the proper economists would consider to be the efficient management of the resource endowment is to level of em-Lissions. The policy questions this ensure that royalties on natural resource poses are: exploitation are invested in other productive . Do policies with respect to pollution assets - it is this rather simple concept of emissions target efficient levels where 'preserving total capital' that is captured by esio ns tan abatement cost are genuine savings measures. Basic questions for equated it the argin? countries with natural resources are: * Even if the efficient level is achieved, are sufficient savings being made to offset any See Weitzman (1976). Recently, Sachs andWarner cumulative effects of pollution that this ( 1996) have shown that resource-dependent countries may entail? Since the efficient level of have had lower rates of GNP growth since 1970 than emissions is non-zero, there is a their peers. The conclusion from Gelb (1988) is that corresponding requirement for increases in only extremely disciplined macro policies, including saving in order to maintain the level of the means of recycling resource export revenues, can welfare over time. maximize the benefits and minimize the costs of resource booms. 9 Environment Department Papers Policy Uses of Resource and Environmental Accounts This is a sampling of the range of policy extended to include current expenditures on issues raised by the analysis of genuine education as a form of government savings. The analysis demonstrates that there investment. Second, the analysis of genuine are indeed issues for each of the economic, saving can lead to a natural expansion of resource and environment ministries if traditional measures of national wealth - Box government commitments to sustainable 1 examines the issues raised by considering development are to be met. There are also national wealth to be the sum of human potentially strong interactions between these resources, natural resources and produced ministries, particularly with regard to the assets. recycling of resource royalties into other investments, but also with respect to the What targets should policy-makers set for macroeconomic scale of pollution damages as genuine saving? Certainly the evidence is that well. high rates of saving and high rates of investment in both produced assets and Further intuition into genuine saving can be human resources lead to strong growth. The gained by considering how development is analysis of genuine saving provides some financed. Total investment may be viewed as important new perspectives on the growth being financed out of foreign borrowing, a story. First, a clearer picture of the net depreciation allowance, a depletion creation of wealth emerges, because the allowance, and an environmental depletion of resources is treated degradation allowance. Governments that symmetrically with the depreciation of wished to be provident would ensure that produced assets. Countries that are funds were set aside in the form of these liquidating natural resources rapidly and allowances. Where such allowances have consuming the proceeds will show up clearly been made, the resulting positive rates of in this analysis (the World Bank's Monitoring genuine saving measure the extent to which Environmental Progress, for instance, shows net wealth is being created for the future. many countries with negative genuine saving rates). Secondly, a new view of the growth- There are some important caveats that need environment tradeoff emerges, because the to be added to this discussion of genuine damages from pollution emissions are saving. First, not all saving is the same, in the deducted from genuine savings. Countries sense that savings sitting in foreign bank that opt to grow now and worry about the accounts belonging to a small segment within environment later will therefore be a society are unlikely to lead to development. highlighted by the savings analysis, because In other words, distributional issues are not the effect of this policy will be to depress addressed in the aggregate genuine savings genuine savings - some of the accumulation measure for a nation. Second, not all of capital is offset by the cumulative effects of investment is the same, in the sense that there pollution. If these countries maintain are both productive and wasteful persistently negative rates of genuine saving, investments. A key concern that follows from the welfare of their populations will decline. the analysis of genuine savings, therefore, is the quality of investment. Investments in National Accounting Aggregates (2): Other human capital, especially in primary Measures education in developing countries, are likely to be important in this regard. Greener measures of national income, what the SEEA terms Eco-Domestic Product (EDP), The latter point raises two issues. First, the will also have an influence on policy. Such measurement of genuine saving should be measures may indirectly encourage policies Environmental Economics Series 10 Green National Accounts: Policy Uses and Empirical Experience Box 1 The Wealth of Nations 'Back of the envelope' calculations of the wealth of nations were presented in Monitoring Environmental Progress (World Bank 1995). By taking the present value of the stream of income generated over the expected lifetime of the current population, a crude total wealth measure for each country was derived. Separate estimates were made of the value of natural resources and produced assets, permitting the calculation of a value of human capital as a residual. While the resulting figures for individual countries do not bear close scrutiny, broad trends across regions and income categories can be seen, as shown in the figure below. Figure 2. Shares of National Wealth Raw Material Exporters (4.6% of world total) Other Developing Countries (15.9% of world total) Produced Natural High-income countries Assets Capital (79.6% of world total) 20% ~~~~~~~ProducedNaul . J / . \ Natural~~Naura Human < _ ^ 4 Assets S Capital 36% L -'~~~~16 28% I ~~~~~~~~~~~~~~~~~~~~~Natural A ~~~~Produced Capital Human Assets 17% Resources 1ri 6 36% Human Resources 56% Human Resources 67% The basic message from this analysis is that development can be conceived as a process of portfolio management: countries have a given natural endowment that may be transformed into other forms of wealth; natural resource exporters aiming to develop their economies need to balance human resources and produced assets in this process of transformation. What is remarkable about Figure 2 is that produced assets make up a near-constant proportion of total wealth across different country groupings. If there is a lack in developing countries it is in human resources. and a mindset for politicians, statisticians, economic management. However, planners and others that encourages sounder environmental accounting will not by itself 11 Environment Department Papers Policy Uses of Resource and Environmental Accounts result in improved environmental policies; seem, should encourage politicians to focus the latter can be expected to be encouraged on EDP rather than GDP, and should only indirectly. Better income accounting heighten environmental awareness among should be seen as one element along with staff in central banks, economic ministries, other tools in a multi-pronged strategy which and elsewhere. includes environmental impact assessments at the project level, integrated environmental Because national income accounts underlie and economic analyses for policy work at the most macro policy work, there should also be sectoral and macro-economic level, and an indirect influence and benefit there. Macro public investment/expenditure reviews. economists have tended to ignore the environment, in part because it was largely More accurate performance measurement. The outside the national accounts system; thus it primary benefit of environmental accounting was discounted as relevant only for people is to obtain a more accurate overall picture of with an environmental interest. Integrated a nation's income and wealth as far as environmental and economic accounting, by produced and natural capital is concerned. monetizing natural resource and But even more important than adjusted environmental effects, extends the range of Inumbers' may be the actual process of data available to macro economists and can gathering the data and analyzing it, and alert them to the relative economic discussing the sectoral results. There have importance of key natural resource and been examples where the initial effort on environmental areas. However, the policy physical forestry accounts has led to a implications are again more indirect than national debate even though no EDP has been direct, and more general rather than specific. calculated. Measuring EDP will create a 'more enabling environment,' but it may not, by itself, result in Environmental accounting, by working better environmental and macroeconomic policies. toward valuing depletion and degradation, can help prioritize the relative importance of Much of what the improved accounts will environmental issues. Environmental indicate may also not be completely new; accounting efforts, as part of or in parallel rather, it may provide additional information with environmental action plans (which have on known problems. For example, for a tended to be more descriptive in nature) mineral exporting country with limited should be valuable in setting priorities. It reserves remaining, improved environmental should be mentioned in this context that there and economic accounting will show an EDP have been data gathering efforts in the past, that is significantly lower than the GDP. related to or unrelated to natural resources, Policy makers, whose revenues may depend where bodies of data were generated, but not on the mineral exploitation, will be aware of profitably utilized in subsequent analyses. To the fact of limited reserves and of the need to avoid such situations, it is important to bring make investments in other assets, with or a cost-benefit perspective to data gathering without improved accounting. The latter efforts, comparing the costs of obtaining would help alert policy makers to the general additional data to the potential uses and need to consume less in the present and to benefits. invest more in order to sustain economic development; however, it will not force their Indirect 'Policy Benefits.' As far as policy hand or be specific in the actions that need to implications of improved accounting for the be taken or indicate what the 'proper' level of environment are concerned, these are more investment needs to be. Nevertheless, other indirect than direct. Better numbers, it would things being equal, it should indirectly Environmental Economics Series 12 Green National Accounts: Policy Uses and Empirical Experience encourage policies that lead to more the revised SNA. The principal policy and sustained development. analytical uses of these accounts include: The policy impact for rmineral exporters will . Measuring physical scarcity. As noted also depend on the risk preferences of policy previously, the origins of natural resource makers. Reducing current consumption and accounts lie in the 1970's when the increasing investments is risky for physical scarcity of crude petroleum governments at any stage of development. By seemed to present a threat to economic not reducing current consumption and development. Resource accounts permit increasing investment, the problem is the calculation of crude scarcity indicators postponed until the reserves, in the example such as the reserves to production ratio, above, are actually depleted. This which gives the remaining years of postponement may be extended if new finds resource supply at current extraction or technological breakthroughs are made. rates. However, it must be recognized Again, integrated environmental and economic that physical scarcity and econornic accounting, with all its difficulties, can help scarcity are not the same thing, and that it display alternatives to policy makers, but given is the latter that represents the constraint the realities described above, including on development. Measures of physical varying risk preferences, it will not determine scarcity can be important for critical the choices. materials, and may be an important input into such policy questions as determining When it comes to environmental degradation, the need to maintain strategic reserves of green national accounts may or may not alert particular materials. policy makers to specific problems. When specific problems are identified as significant, . Resource management. Again, one of the the national accounts information itself does concerns when resource accounts were not indicate the type of policy action or first established in the 1970's was that project, if any, that should be undertaken to there was excessive exploitation of natural address the problem. Rather, the problems resources. What constitutes 'excessive identified as important in the accounts need exploitation', however, is a question lying to be analyzed more in depth locally or outside the accounts, requiring dynamic regionally to determnine the possible response. economic analysis. But there are physical Again, in most instances, those problems may constraints as well, such as the fact that already have been known; the accounting, excessive pumping of crude petroleum however, may contribute to prioritizing their from a given deposit will decrease the economic importance. total amount ultimately available, as the oil reserves lose contiguity. Given a Natural Resource Accounts criterion for excessive exploitation, resource accounts can provide the Natural resource accounts generally have a empirical evidence for it. A variety of balance sheet flavor, with their emphasis on policy remedies can then be explored, opening and closing stocks, in quantity and including tenure arrangements and values, of natural resources including both royalty schemes. commercial natural resources and non- commercial or environmental resources. As Balance sheet of the resource sectors. The such, resource accounts form the basis of the existing national accounts are expanded national balance sheet accounts in substantially incomplete with regard to the resource sectors because the values of 13 Environment Department Papers Policy Uses of Resource and Environmental Accounts natural resource assets are not measured. account, and ultimately into the national This affects the analysis of economic balance sheet, one of the economic effects performance for these sectors, which in of deteriorating environrmental quality turn affects government policies with can be measured as damage to these regard to the natural resource sectors. resources. This can be an important input into policy decisions concerning the * Productivity measurement. Because the optimal level of pollution abatement for balance sheet of the resource sectors does pollutants such as SO2 or emissions of not measure the value of resource assets toxics into water. in the standard national accounts, the measure of productivity in these sectors is Natural resource accounts, and their distorted, which then distorts national counterparts in the national balance sheet measures of productivity. Productivity accounts, can therefore have wide use with comparisons between resource-rich and regard to resource management policies and resource-poor countries are also affected broader environmental policies. by this gap. Resource and Pollutant Flow Accounts • Portfolio analysis and management. Measuring natural resources in the Resource and pollutant flow accounts are national balance sheet implies that generally conceived as physical extensions to governments can work with a measure of the (monetary) Input-Output (IJO) accounts. total wealth in examining policies for For each production and final demand sector sustainable development - see Box 1. The in the I/O tables these accounts associate a balance of natural versus produced assets physical flow of natural resources, typically in this measure of total wealth then as inputs such as energy to production becomes an important indicator as processes, and a physical flow of wastes and governments consider development emissions in the form of SO2, NOX, BOD, etc. OptioveunsnTs consideroc ievelpmren With links to the I/O tables these accounts options. This approach is even more lend themselves naturally to policy modeling. powerful if human capital is estimated Examples of policy uses include: and brought into the balance sheet. * Valuing depletion. A value for resource * Measuring the incidence of environmental depletionis a simple byproduct of the regulations and taxes. Models based on stock-flow accounting that makes up a flow accounts can be used to estimate the natural resource account. Current impact (on output and profits, for measures such as net domestic product do example) of existing and prospective not value the depletion of natural regulations and taxes with regard to the resources. The liquidation of importantlenviroment. Measuring the burden of components of national wealth therefore policies is an important element of policy does not have any effect on standard design. measures of economnic performance. The policy implications of accounting for * Estimating emission tax rates. Where depletion were discussed in the market-based instruments are being preceding sections. considered as a policy option, computable general equilibrium models using * Effects of environmental degradation. By pollutant flow accounts can be used to building living natural resources such as estimate the approximate size of a tax - an forests and fisheries into a resource example would be a CO2 stax, to Environmental Economics Series 14 Green National Accounts: Policy Uses and Empirical Experience achieve the policy goal of limiting component of the output from such emissions to 1990 levels by the year 2000. models. Consideration of environmental effects could then become as routine as * Efficiency of resource use. One important consideration of balance of payments determinant of the burden that effects when policy analysts produce production activities place on the projections. environment concerns the efficiency of use of natural resources. Resource flow * Dispersion and impact models. Whichever accounts can be used directly to measure modeling approach described above is these efficiencies in different sectors, or employed, the calculation of pollution overall per unit of GDP, and models can emissions is the required input for be constructed to examine the effects of 'downstream' models of dispersion and different policies on efficiency of use. impact. Once impacts on health, living 'Energy analysis' as widely carried out in resources, produced assets and natural the 1970's was one example of such policy ecosystems have been estimated, use. valuation of these impacts becomes possible. This implies that the net benefits e International trade. Both resource use and of policies with regard to trade and pollution emissions can be linked to the development, for instance, can be level and structure of international trade estimated, which may lead to adjustments through I/O based models. This provides of these policies in order to maximize the link between trade policies and the benefits. pollution burden associated with a particular structure of trade; for instance, Of the physical accounts under consideration, countries that export raw and semi- resource and pollutant flow accounts clearly finished materials will typically incur a have links to the widest variety of policy large burden of air emissions associated issues. with energy use. This approach can be used for both current analysis and Environmental Expenditure Accounts prospective modeling. Environmental expenditure accounts * Structural change. As in the case of generally consist of detailed data on capital linkages to international trade, resource and operating expenditures by economic and pollutant flow accounts in sectors for the protection and enhancement of combination with I/O models can be used the environment. The accounts may or may to explore the ramifications of structural not include detail on the type of pollutant change in the economy. This provides a controlled or the environmental medium link between industrial development being protected. The prospective uses of policies and their likely effects on the these accounts are fairly straightforward: environment. * Measurement of the total economic burden of * Macro models. Tying resource and environmental protection. By measuring pollutant flow accounts to the standard explicitly what is only implicit in the macro models that governments use for standard national accounts, economic projections would permit the environmental expenditure accounts reporting of environmental effects (in permit macro-level consideration of terms of resource throughput and whether the costs of environmental terms of resource throughput and pollution emissions) as a standard 15 Environment Department Papers Policy Uses of Resource and Environmental Accounts protection are commensurate with the unit abatement costs. These costs then benefits. become a basic input to the estimation of abatement cost curves, widely used in Measurement of sectoral costs. policy modeling, and the valuation of Environmental expenditure accounts also environmental degradation from permit policy-makers to gauge the emnissions. sectoral distribution of the costs associated with environmental It should be noted, however, that measuring regulations and taxes, an important environmental expenditures is a subject consideration with regard to equity. fraught with definitional and measurement problems. To give just one example, * Measurement of unit abatement costs. If the manufacturers now often introduce new survey vehicles used to collect data on production technologies that jointly increase environmental expenditures also collect productivity and decrease emissions - in such data on the amount of abatement a case there is no meaningful way to establish achieved, it is possible to estimate average what is the cost of protecting the environment. Environmental Economics Series 16 4 Experience with Resource and Environmental Accounting Having set the stage with regard to the policy The assessments below are organized by uses of natural resource and environmental country, with countries appearing in accounting, the next task is to assess some of alphabetical order. the empirical efforts that have been published. By now most OECD countries Australia have official green accounting efforts underway, with statistical offices publishing Young, M.D. (1992) Natural Resource or aiming to publish a variety of resource and Accounting: Some Australian Experiences and environmental accounts. In the developing Observations, Working Paper 92/1, CSIRO, world many of the studies to date have been Canberra. (also published in Lutz 1993) carried out by researchers rather than statistical offices. Natural resource accounting has been identified as one of 15 possible policy changes The following is a brief analysis of published to promote (ecologically) sustainable attempts at constructing natural resource development in Australia. The development accounts, satellite accounts, and/or altered of these accounts is in the early stages. In fact, national accounting aggregates. With the Young claims that there is a fair amount of publication of the SEEA in late 1993 the skepticism towards modified national groundwork was laid for a series of case accounts as an aid to environmental decision- studies of the application of the new satellite making. accounting framework, including efforts in Colombia, Ghana, Indonesia, Korea and the Young attempts to calculate a 'green' GDP by Philippines (the reports for these exercises are taking account of the use of renewable and expected to be published in 1997). This nonrenewable resources use in production. section reviews the empirical experience in Given data collection problems, many of the different countries prior to the publication of entries are based on 'guesstimates' which the SEEA, including the key tests of the were designed to be 'environmentally accounting framework in Mexico and Papua generous'. The valuation method used is New Guinea. Some of the more recent Repetto et al. (1989) although the document experience in OECD countries is also presents adjustments as modified GDP. The presented. agricultural sector accounted for almost 5% of 12 The value of human-made capital depreciation is not deducted. Environmental Economics Series 17 Green National Accounts: Policy Uses and Empirical Experience Australian GDP in 1987-88. l 3Estimates of of the annual costs and benefits of land use habitat decline and land degradation (erosion within a region. Interestingly, whilst local and salinity) were in the region of 0.6% to land admninistrators and resource 1.6% of GDP during the period 1980 to 1989 managers support aggregated accounting (average 0.8%). The adjustment to GDP is systems, they opposed a GIS-based system therefore small. which would indicate the impacts of particular projects. Young envisages that The extraction of nonrenewable resources is a this system would be able to answer an larger component of economic activity in array of questions such as the likely effects Australia. Repetto's treatment of discoveries of conservation programmes on land use. is used, allowing adjusted GDP to be greater than conventional GDP in any year. This is McCarthy, P., 1994, Prospectsfor Environmental indeed found to be the case in all but two of Satellite Accounts linked to the Australian the years during the period covered (1980- National Accounts, meeting on National 1989). Young says that this would provide Accounts and the Environment, London, March very poor signals for environmental and 16-18, 1994. resource management. This need not lead to a rejection of resource accounting, but to more The Australian Bureau of Statistics is a recognition that there are methodological producing an expanded national balance issues to be resolved such as the treatmnent of sheet account that will include land values, discoveries. In addition, Young appears to subsoil assets, livestock and forests as include price changes in the adjustment, tangible assets, according to McCarthy (1994). whereas these are usually presented in This work is aimed at "extended economic- reconciliation accounts or balance sheets as a environmental analysis" and the capital gain/loss. Young also makes several development of models. An important use of suggestions to improve the usefulness of the account and related analysis will be in the adjusted accounts. evaluation of the sustainability of economic activity in Australia. (a) Given a population growth rate of 2% in Australia, GDP per capita should be McCarthy notes that there has been pressure stressed. (Of course this tells us nothing from environmentalists and some parts of the concerning how this GDP is actually government and the environmental distributed.) protection industry to publish a 'green GDP'. This pressure has been resisted partly because (b) National accounts deal mainly with of uncertainties in valuation procedures and marketed activities. As such they are an partly because of concerns about whether indicator of the level of economic activity green GDP would send correct signals to and not a measure of welfare. Social costs policy-makers. Young (1993) has been and benefits should not be neglected influential in urging caution in this regard. where the non-marketed value of services from the environment might be expected Canada to be significant. Anielski, M. (1992) Resource Accounting: (c) Concentrate on regional or sectoral Indicators of the Sustainability of Alberta's Forest accounts. Geographical Information Resources, Paper presented to the International Systems (GIS) could provide data for maps Society of Ecological Economics Conference 1992, Stockholm. 13 This includes farming, forestry, fishing and hunting. 18 Environment Department Papers Experience with Resource and Environmental Accounting Anielski presents pilot physical and monetary Born, A. (1992) Development of Natural Resource accounts for forest resources in Alberta, Accounts: Physical and Monetary Accounts for covering the period 1964-1990. The intention Crude Oil and Natural Gas Reserves in Alberta, is to gain information on the sustainability of Statistics Canada. the services that natural capital (i.e. here, the stock of Alberta's forests) provides. This study is part of a project to develop National Balance Sheets Accounts for Canada The construction of physical accounts that include natural resources as assets. Born involves the calculation an opening stock presents measures of Alberta's oil and gas (area x volume per unit area). The relevant established reserves in terms of both volume flows are mean annual increment (MAI), (physical) and value (monetary) during the harvest, natural loss and afforestation. The period 1951 to 1990.14 The theoretical trend of the net closing balance is shown to background to the adjustments receives have been increasing steadily over the period, detailed attention with thorough discussions where the closing stock in 1990 was 8% of the methodological issues involved, greater than in 1964. (Old growth area has including the 'meaning' of economic rent and declined because of 'disturbances' - i.e. fire, the validity of the various assumptions insects and land-use change). These figures underlying it's measurement (i.e. are dependent on the accuracy of data on homogenous resource stocks, perfect MAI which can be checked by periodic competition etc.).'5 inventories. Arielski states that sufficient information exists to construct The central aim of the paper is to present comprehensive timber accounts for Alberta. additions to the standard wealth accounts to include the value of gas and oil resources in These accounts can be further linked to the the ground. Reconciliation tables present conventional SNA through valuation of wealth accounts for Alberta's natural gas and physical volumes and flows. The price of oil resources showing opening and closing timber is subject to large fluctuations and this stocks. The closing stock balances of net is reflected in the values obtained for the tangible assets is equivalent to the opening stocks and flows measured. The value of stock plus the exploration costs plus volume closing stocks therefore fluctuated year to changes plus price changes (all valued at year, although in each year (apart from 1980 market price, except for exploration costs and and 1981) the value of harvest was exceeded depletion). Exploration, development and by the value of growth. In this sense, operating costs all need to be deducted to Alberta's forest resources have been managed obtain the rental value from which the sustainably, although the value of this growth is not a component of currently measured domestic income accounts in Alberta. Values 14 Alberta is the largest producer of oil and natural gas for non-marketed services are also in Canada (i.e. in 1989 the value of it's production considered, although no calculations are was 84% of the national total). It also has the largest undertaken in this study. Extensions to reserves. Established reserves are recoverable under measure the value of services such as current technological and present and anticipated ameriity, carbon fixing and the provision of economic conditions. The SEEA convention of amenity, carbon fixing and the provision of estimating proven reserves as the latter is considered wildlife habitat would be interesting and go too conservative for macroeconomic planning some way toward actual measurement of purposes. total economic value. S 5Rent is often estimated as the residual of the international price after all other factor costs incurred in extraction have been subtracted. Environmental Economics Series 19 Green National Accounts: Policy Uses and Empirical Experience discounted values of opening and closing reaching this goal. The energy use flow stocks can be derived. This includes a normal accounts underlying the greenhouse gas return to capital (imputed to avoid double- accounts have been used by the Department counting in the wealth accounts), which Born of Finance in a computable general interprets as the replacement cost value of the equilibrium model to exarnine the level of net capital stock, depreciation and the carbon tax required to achieve stabilization. average yield on long-term corporate bonds. Depletion is then valued at some imputed Hamilton et al. (1994) report on two ecological value and adjusted to a current prospective uses of the new environmental (undiscounted) market value. The proportion accounts. The expanded wealth accounts of this rent in the wellhead price varied from could be an important component of the about 37% to 74%. annual report to Parliament on sustainable development required by the Green Plan The values of oil and natural gas derived (Canada's environmental policy framework). reflect both the fluctuating prices for And the forest accounts being prepared in resources and diminishing stocks. The values conjunction with the province of Ontario may of reserves are not apportioned to various be employed by that province in assessing the institutional sectors of the balance sheet. value of non-extractive uses of the forest. These distributional aspects will be the subject of further work. Costa Rica Smith, P., 1994, The Canadian National Accounts Solorzano, R., de Camino, R., Woodward, R., Tosi, Environmental Component: A Status Report, J., Watson, V., Vasquez, A., Villalobos, C., Jimenez, meeting on National Accounts and the J., Repetto, R. and Cruz, W. (1991) Accounts Environment, London, March 16-18, 1994. Overdue: Natural Resource Depreciation in Costa Rica, World Resources Institute, Washington DC. Smith reports on the work of Statistics Canada to develop natural resource accounts The World Resource Institute undertook a in quantity and value, physical resource use natural resource accounting exercise for Costa and pollution emissions accounts, and Rica with local counterparts (Sol6rzano et al. environrnental protection expenditure 1991). The accounting framework basically accounts. With the exception of the natural follows WRI's previous work for Indonesia resource accounts, which will be embedded (Repetto et al. 1989). in the national balance sheet account of the SNA, these are viewed as adjuncts to the The forestry account presents the loss of standard national accounts, and there are no immediate and future timber in physical and plans to produce a green GDP. monetary values, using stumpage values estimated separately for hard, soft and medium Most of the policy uses of the accounts to date density timber according to distance from reflect the components that were available processing sawmills. The soil erosion account first, those concerning greenhouse gases. The covers the loss of principal nutrients for plant greenhouse gas emission accounts constitute growth, based on the volume of soil erosion an inventory that is being used to track and the cost of its equivalent in fertilizer progress towards Canada's commnitment to terms. For fisheries only the loss of the stabilize greenhouse emissions at their 1990 trms.iFor fsheies, one loss ofihe level by the year 2000. They have also been principal species in one important ishing area used in an Input-Output (I/O) modeling (Nicoya Bay) are considered, using a exercise examining policy options for bioeconomic model estimated econometrically 20 Environment Department Papers Experience with Resource and Environmental Accounting Table 1 GDP, Resource Depletion And 'NDP'* Costa Rica - 1970/1989 Constant 1984 Colones, mnillions Forestry Agriculture Fisheries Total Y ear l__ _ _ _ _ _ _ _ _ _ _ _ GDP I 'NDP' GDP I 'NDP' GDP | 'NDP' GDP [ 'NDP' 1970 21044 19104 93446 82513 1971 19277 17403 139 132 94382 81858 1972 20278 18292 138 131 100912 89173 1973 23570 21488 163 158 116525 103366 1974 23835 20655 197 203 122740 108144 1975 25503 22518 196 212 125393 111155 1976 26960 24429 244 277 132310 118940 1977 31513 28960 219 284 143990 130285 1978 2829 -1123 31258 28908 567 679 153124 138900 1979 3059 -2861 29713 26792 763 856 160598 143277 1980 3024 - 2258 28668 25580 641 779 161894 145132 1981 3029 357 36804 33973 652 646 158237 145216 1982 2189 251 35220 32100 751 652 145932 134928 1983 2527 -4143 33679 30794 586 503 154481 139815 1984 3071 -4446 34540 31512 865 699 163011 147438 1985 2917 -4776 31879 28614 1268 995 169299 153374 1986 2968 -8703 37057 34560 1225 839 177327 158365 1987 2746 -4920 33615 31320 1466 663 186019 170846 1988 37309 34687 207816 181352 1989 39459 36883 231289 205362 Source: Sol6rzano et al. (1991) * Excludes conventional capital consumption allowance. to calculate the change in sustainable harvest Finland levels and resource rents with increasing fish effort. All expected future damages are Kolttola, L., 1994, The Forest Sector and the capitalized into present values and added to Environment, (Statistics Finland), meeting on the depreciation figures. National Accounts and the Environment, London, March 16-18, 1994. The main results are summarized in Table 1. Forest resource depreciation was deducted A pilot project on natural resource accounting from gross forestry product, soil depreciation began in the statistical office in 1985, deducted from agricultural value added and according to Kolttola (1994). Complete wood fishery depreciation from gross fishery material accounts in physical quantities were product, generating respective net product published in 1992. These accounts have been series. The net forestry product series is used in economic modeling, carbon balance negative for almost all years, a result which accounting and in experimental monetary lacks a theoretical explanation. valuation of forest resources. Environmental Economics Series 21 Green National Accounts: Policy Uses and Empirical Experience The wood material accounts are the basic the issue of the cost of fully implementing the element of the forest sector component of the accounts was raised. Finnish Long Term Modeling System (FMS), employed by the government to explore What is distinctive about the French system is development issues over the longer run. This the notion of patrimony. As Grobecker and is a simulation model which also includes Weber note, "it is... what we have inherited energy use and air emission components. from our ancestors and what we should bequeath (1eguer) to future generations." Kolttola notes that the "relevance of Patrimony accounts are viewed as a tool for information is a key question in the the management of this process. development of physical accounts... Efficient use of physical accounts requires close Weber (1993) states that the patrimony interaction between statisticians, analysts and accounts can also be the basis of a system of policy-makers." environmental indicators. The inadequacy of existing environmental indicators is France considered to be one cause of environmental degradation. One example of the use of the Grobecker, C., and Weber, J-L, 1993, La place de forest accounts component in resource la comptabilite du patrimoine naturel dans les management is described: the accounts for travaux de l'institutfrangais de l1environnement, annual growth versus cut for forest resources Cinquieme colloque de comptabilitW nationale de in the Gascogne were used as the basis of l'Association de Comptabilite Nationale, Paris, projections to settle a local dispute concerning 13-15 decembre 1993. whether forest resources were being exploited sustainably. Weber, J-L, 1993, Environment Statistics and Natural Resource (Patrimony) Accounting, Germany UNDPIUNSTAT Workshop on Natural Resource and Environmental Accounting, Beijing, Apr. 20- Radermacher, W., and Stahmer, C., 1994, 22 1993. Environmental Accounting and National Accounts in Germany, (Statistisches Bundesamt), The French system of 'patrimony accounts' meeting on National Accounts and the consists of three components: element Environment, London, March 16-18, 1994. accounts, ecosystem accounts, and agent accounts. With the exception of As Radermacher and Stahmer (1994) report, environmental protection expenditures, these the Federal Statistical Office is engaged in the are measured in physical quantities. development of a system of Environmental Grobecker and Weber (1993) describe the Economic Accounting (EEA). This will have position of the patrimony accounts within the five subject areas: (i) material, energy and new French Institute for the Environment emission flow accounts, tied to the I/O (IFEN). Resource accounts for water and accounts; (ii) a geographic information forestry are the most complete to date. system (GIS) on the use of land and space; Potential users of the patrimony accounts (iii) a set of indicators of the state of the were asked for their judgments concerning environment; (iv) environmental protection the application of the accounts. The natural activities accounts; and (v) accounts of the resource accounts and resource use accounts imputed costs of achieving standards for within the overall system were judged by sustainable use of the environment (this has a users to be useful for medium-to-long term strong affinity with the work of the management of natural resources. However, Netherlands, described below). 22 Environment Department Papers Experience with Resource and Environmental Accounting One of the more innovative aspects of the biodiversity and various non-renewable EEA is the proposal to link GIS, indicators resources. After that, economic valuation and accounting systems - progress along would be investigated with the aim of these lines will be worth monitoring. An ultimately constructing integrated economic important prospective use of the material, and environmental accounting (IEEA), as energy and emission flow accounts is in the called for in Chapter 8 of Agenda 21. analysis of international trade, to look at material use and pollution emissions implicit The purposes of the exercises are listed as: in the pattern of trade. (a) to keep track of the resource base and the With regards to the main policy uses of the state of the natural environment a general EEA, Radermacher and Stahmer are explicit: monitoring function; and "the EEA is to provide data for economic decisions; not for technical checks and (b) to remind people of the environmental regulations, not for the implementation of consequences of economic activities and administrative measures by environmental or hence to 'alter our perception of what kind planning agencies, but as instruments for of development is desirable and, in turn, assessing external effects and for developing the policy choices we make' (Parikh et al. efficient economic countermeasures." 1992 p.2)- a persuasive function. Hamilton et al. (1994) report on discussions Outline schema are presented for natural with the Federal Environment Ministry resource accounts, but little physical data and concerning other potential applications of the no economic data for India as a whole are EEA. The list includes: waste issues, reported. including recycling regulations and the possibility of a waste tax; information to Indonesia support policies to curb CO2 emissions; measurement of which sectors bear the Repetto, R., Magrath, W., Wells, M., Beer, C., and heaviest burden of environmental protection Rossini F. (1989) Wasting Assets: Natural costs; and the analysis of transboundary Resources in the National Accounts. Washington: pollution issues. World Resources Institute. India One of the best-known natural resource accounting studies is the pioneering exercise Parikh, K., J.Parikh., V.K.Sharma and J.Painuly by the World Resources Institute (Repetto et (1992) Natural Resource Accounting: a Framework al. 1989) for Indonesia. Changes in the stocks for India, Indira Gandhi Institute of Development of natural resources (oil, forests and soil) are Research, Bombay. considered in the capital and flow accounts. The Indira Gandhi Institute of Development The valuation principle assumed for oil and Research in Bombay (Parikh et al. 1992) has forests (timber) is the net price method: rents prepared an exploratory report on natural are determined by the international resource resource accounting for the Indian Ministry commodity price less all factor costs incurred of Environment and Forests. A framework is in extraction. This implies that domestic and established which suggests assessing the international markets for the resource are physical environmental impacts of selected assumed to be perfect, and optimal paths of production and consumption activities, extraction follow the Hotelling Rule. Opening including the informal sector, and physical and closing stocks in each period are accounts for soil, air, water, forests, multiplied by the respective rent, and the Environmental Economics Series 23 Green National Accounts: Policy Uses and Empirical Experience Table 2 GDP, Resource Depletion And "NDP" Indonesia - 1971 to 1984 Constant 1973 Rupiah, billions Year GDP Resource "NDP" Depletion 1971 5545 + 1126 6671 1972 6060 - 100 5967 1973 6753 - 279 6474 1974 7296 + 2605 9901 1975 7631 -1121 6510 1976 8156 -684 7472 1977 8882 -1711 7171 1978 9567 - 1607 7960 1979 10165 -2219 7946 1980 11169 -2663 8506 1981 12055 -2215 9840 1982 12325 - 1764 10561 1983 12842 -2870 9972 1984 13520 -2330 1118 Source: Repetto et al. (1989) variation between each represents the because it ignores the depreciation of (dis)investment in natural capital. produced assets. The figures are usually below the conventional measures, however in For soil erosion, the loss of potential future 1971 and 1974 the 'NDP' is higher than the farm income is considered equivalent to the conventional GDP, owing to oil discoveries' 6 depreciation of an economic asset. and price changes. Incremental erosion due to human intervention is estimated in physical terms by Japan the difference between per-hectare loss on forest land and on dryland farming (tegal). Uno, K. (1989) Economic Growth and Yield-erosion relationships are also estimated, Environmental Change in Japan: Net National with the farm income declining linearly as Welfare and Beyond, in Archibuji, F. and Nijkamp, erosion increases. The one-year costs of P. (eds.), Economy and Ecology: Towards erosion are then capitalized to obtain the total Sustainable Development. London: Kluwer present value of the future stream of Academic Publishers. productivity losses associated with the erosion in that year, which is considered to be The estimation of environmental damages at the economic measure of soil depreciation. a national level in Japan is linked with efforts to obtain a Net National Welfare measure The results from the three resource accounts (NNW) in line with the framework developed are aggregated into one measure of 'natural by Tobin and Nordhaus (1972). The starting capital domestic investment' ('NDI'), which is added to the GDP (Table 2). The new 16 This treatment of discoveries as additions to net aggregate is named 'NDP', but it is still an product is one of the most controversial aspects of incomplete measure of net domestic product the study. See Hartwick (1993), Hamilton (1994). 24 Environment Department Papers Experience with Resource and Environmental Accounting point is the conventional concept of GDP and theoretically a better approach but it could then welfare adjustments are made. not be undertaken because of the lack of data. The first NNW estimation was carried out by the Economic Council of the Government of - Losses due to urbanization: although the Japan in 1973, covering the period from 1955 scope of the possible negative effects may to 1970. The results were subsequently be larger, only increasing distances for updated, covering the period up to 1975. commuters and traffic accidents are Finally, a third attempt at NNW estimation imputed. The former comprises the was made by Uno (1989), bringing the figures physical and mental fatigue caused by up to 1980 and 1985. increased commuting hours, and the latter provides valuation of deaths and injuries The main adjustments in the latest version based on the "value of life" and the average are: value of compensation in case of accidents. - Governmuent consumption: only education, The results (Table 3) show that the gap - Goernentconumpion:onl edcaton, between NNW and GDP increased during the health, social security and welfare services .whol pro an itrsingradditint the are considered in the NNW estimates. whole period, an hterestig addnteon to the Othergovennentexpeniture aredebate raised on whether or not economic Other government expenditures are excluded because they are considered growth in Japan contributed to improving defensive expenditures or to maintain human well-being. consistency with earlier calculations. Mexico - Personal consumption: defensive expenses van Tongeren, J., Schweinfest, S., Lutz, E., Gomez and purchases of consumer durable goods Luna M. and Guillen, F. (1991) Integrated are excluded, the latter being replaced by Environmental and Economic Accounting: A Case an imputation of their services. Studyfor Mexico Environment Working Paper No. - Capital investment: investment in plant 50, The World Bank, Washington DC. (also and equipment, social overhead, and published in Lutz 1993) housing are excluded and replaced by The study case for Mexico (Van Tongeren et imputations of their services. al. 1991) was carried out in 1990 and 1991 - Leisure time: the value of leisure time is jointly by the United Nations Statistical Office imputed based on average wages per hour, (UNSO), the World Bank and the National adjusted by age, group and sex. Institute of Statistics, Geography and Informatics of Mexico (INEGI). It was the first - Non-market activities: the value of empirical experience with the overall domestic services of housewives is analytical framework developed in UNSO's imputed based on the average wage of Draft Handbook on Environmental female workers. Accounting (United Nations, 1990), providing two measures for the Environmentally- - Environmental damages: the social costs of Adjusted net Domestic Product (EDP) for the environmental pollution are estimated by year 1985. the expenses necessary to recover a 'normal physical environmental level" in The System of Economic and Environmental terms of air pollution, water pollution and Accounts for Mexico (SEEA) was constructed waste treatment. The direct monetary by an expansion of the conventional structure estimation of damages is considered of the National Accounts. The main Environmental Economics Series 25 Green National Accounts: Policy Uses and Empirical Experience Table 3 NNW and GNP: Japan - 1955 to 1985 in constant 1970 Yen, billions 1955] 1960 19651 1970 1975f 1980 1985 GNP 17268 26183 41591 72144 93260 118105 143387 NNW 18036 23128 32116 47548 74231 90646 103781 Gov. Expenditures 1199 1374 2254 2988 3865 4283 4887 Pers. 10427 14706 22168 32097 43003 54009 61700 Consumption Gov. Capital Serv. 62 99 169 317 559 756 1103 Durable Goods 91 195 755 2342 4187 5270 6183 Services 4871 6098 7325 10509 16759 18961 20816 Leisure Time & 1876 2388 4068 7213 12707 12571 13079 Non-market Act. Environmental -38 -1037 -3735 -6805 -5729 -3932 -3103 Damages Urbanization -452 -695 -889 -1113 -1119 -1272 -1514 Losses Source: Uno (1989) innovation is the enlargement of the asset same figures are presented employing the boundary, including oil depletion, user cost approach developed by El Serafy degradation concerns (water and air (1989). Finally, the avoidance cost approach pollution, soil erosion, ground water use and was used for the valuation of quality changes the deposition of solid wastes), land use in natural assets stocks. concerns (water and air pollution, soil erosion, ground water use and the deposition The results are presented using an input- of solid wastes), land use concerns and output scheme. Therefore, they show not only deforestation. The EDP measures are the macro effects of the depletion and obtained by deducting the cost of resource degradation but they also identify the depletion from NDP (EDP1) and economic use of natural resources as well as environmental degradation (EDP2). the environmental protection expenses made by different sectors. Table 4 summarizes the Three approaches were used to value the main results. This table shows that net accounts in physical units. The depletion domestic product would be significantly figures were obtained by calculating the affected if the changes in natural capital were value of the stock of assets by the net price considered: net accumulation would decrease method, i.e. the market value minus cost from 11% of NDP to -15% if the most including a normal profit. Alternatively, the restrictive measure (EDP2) is adopted. 26 Environment Department Papers Experience with Resource and Environmental Accounting Table 4 NDP, EDP1 And EDP2 Mexico - 1985 1985 Mexican Pesos, billions NDP EDP1 EDP2 Net 42060516 39662772 36448314 Product/Expenditure Final Consumption 34948897 34948897 34890558 Capital Accumulation, Net 2305910 -850209 - Economic Assets 4703654 4703654 4703654 - Environmental Assets 4373654 -2397744 -5553863 Exports-Imports 2407965 2407965 2407965 Source: Van Tongeren, J. et al. (1992) The Netherlands policy goal can be measured in aggregate. This effectively combines accounting de Haan, M., Keuning, S.I., and Bosch, P., 1993, approaches with the environmental Integrating Indicators in a National Accounting performance indicator work of the Matrix Including Environmental Accounts Netherlands Ministry of Environment and (NAMEA), NA 060,1993, Voorburg: Central Physical Planning (see Adriaanse 1993). The Bureau of Statistics. themes include the greenhouse effect, ozone depletion, acidification, eutrophication, and Hueting, R., and Bosch, P., 1994, Sustainable waste production. National Income in the Netherlands: The Calculation of Environmental Losses in Money Hueting and Bosch (1994) describe a parallel Terms, Statistics Netherlands, meeting on approach to green accounting. They aim to National Accounts and the Environment, measure sustainable national income by London, March 16-18, 1994. valuing environmental losses as the cost of achieving sustainable use of the environment. There are two basic streams of green While policy goals are not explicitly accounting work at the Central Bureau of discussed in this work, achieving sustainable Statistics. The first, described by de Haas et use of the environment is a stated policy of al. (1993), is the construction of a 'national the Netherlands government. Hamilton et al. accounting matrix including environmental (1994) note another aspect of this work: since accounts' (NAMEA). As well as breaking out sustainable use of the environment is a global the standard national accounts in matrix rather than purely country-specific concept, form, cells in the extended matrix measure the effects on sustainability of the pollution emissions associated with different Netherlands' imports of raw materials from economic sectors. These emissions figures are other countries also needs to be considered. then grouped into themes, e.g., greenhouse This raises interesting questions concerning warming, for which policy goals have been how, for instance, unsustainable resource established, and then weighted into 'pressure harvest policies in raw material supplying equivalents' so that the distance from the Environmental Economics Series 27 Green National Accounts: Policy Uses and Empirical Experience countries should be treated, not just in the to their diversity based on a diversity count accounts but in trade policy as well. per unit area multiplied by abundance of this species per unit of area. New Zealand Norway Clough, P. (1991) Natural Resource Accounting for New Zealand's Indigenous Forests: Report to Aaheim, A., and Nyborg, K., 1993, Green National the Ministry of Environment, New Zealand Product: Good Intentions, Poor Device?, Research Institute of Economic Research (Inc.), interim draft. Department discussion paper No. 103, November 1993, Statistics Norway. The feasibility of compiling pilot accounts for New Zealand's indigenous forests is Alfsen, K.H., 1993, Natural Resource Accounting considered in this report, which draws upon and Analysis in Norway, Conference on Medium- a more general application of natural resource Term Economic Assessment, Oslo, 2-4 June, 1993. accounts (NRA) in New Zealand (Wright, 1989, 1990). The intention in this work is to Norway began its resource accounting work derive an NRA that shows stocks at given in the 1970's when concerns about physical periods and the flows between these periods. scarcity of resources and resource Owing to the relatively small volumes of management were at the forefront. The economically exploitable timber, much of the original ambitious workplan has gradually discussion is concerned with non-marketed been scaled back to a core set of accounts, as values and the total economic value of the the policy usefulness of these accounts has resource in question. become an explicit criterion for their development and continuation. The Forests are divided into three classes - Norwegian experience is particularly protected, non-commercially available and pertinent to the topic of this paper, therefore. commercially available. The values of these classes are in turn divided into four The first point to note is that the Norwegians components - extractive timber, externality are not keen on the notion of green GDP, as user, amenity and option (non-use) values. evidenced by Aaheim and Nyborg (1993) of Valuation problems exist, although there are the Central Bureau of Statistics. Their reasons techniques to derive these values including center on whether it is possible to measure stated preference (contingent valuation) and green GDP (or other green national revealed preference (hedonic pricing, travel accounting aggregates) in any meaningful cost) methods. The possibility of double- way - if the answer to this question is counting arises where in some revealed negative, then policy should not be based on preference techniques the value of amenity or green aggregates. recreational value has already been attributed to another sector (say, tourism). This is not a There are several strands to the argument problem in microeconomic cost-benefit against green aggregates. First Aaheim and studies but arises in an aggregate exercise Nyborg point to empirical evidence such as national accounting. Non-use values concerning the divergence between such as biodiversity present more complex 'willingness to pay' for environmental measurement problems, although, for amenities (or to avoid their being damaged example, contingent valuation could be and diminished) and 'willingness to accept employed (Munasinghe, 1992). The author compensation' for environmental amenities illustrates one measurement approach that may be lost. This casts doubt on whereby forest classes are ranked according contingent valuation approaches to valuing the environment. Next, marginal abatement 28 Environment Department Papers Experience with Resource and Environmental Accounting costs only equal marginal damages when you air emissions, as well as the analysis of the are at the optimum level of pollution domestic consequences of international emissions, so that using the former to value protocols to which Norway is a signatory. environmental change, as many economists The accounting structure embraces both argue on both practical and theoretical reserve and use accounts, and the latter can grounds, is not justified. Third, green GDP be quite detailed, particularly in the case of calculations typically do not include general energy. The energy and emissions accounts equilibrium effects - roughly speaking, are now built into the Multi-Sectoral Growth internalizing the value of environmental Model (MSG), which is used by the damages should affect all prices in the Norwegian government to explore long term economy, with consequences for resource economic prospects. allocation decisions throughout the economy. Finally, expanding the measure of national The presentation of economic, resource and wealth to include natural resources and the environmental variables as standard outputs environment relies on future values of of models such as MSG is key in focusing extraction and resource prices that are decision-makers on the linkages between inherently uncertain. these policy areas in Norway. In addition, the use of common data and models in the Alfsen (1993) reviews the Norwegian analysis of natural resource issues has experience with natural resource accounting facilitated communication between the and analysis. Natural resource accounting Ministries of Finance, Environment, and sprang from a desire for better long term Petroleum and Energy. The questions posed resource management. Several ancillary to the models are important ones: Are benefits of the project were foreseen: environmental targets compatible with collection of new and improved data for economic goals? How will any proposed monitoring resource use; reducing policy change affect both the economy and duplication in data collection; and building the environment? How will future resource conformity between resource data and availability and future states of the traditional economic statistics. Accounting environment affect economic development? approaches were deemed most useful where quantity is important, rather than quality. Papua New Guinea Accordingly, the first accounts were for energy, fish, land use, minerals, forests, and Bartelmus, P. Lutz, E. and Schweinfest, S. (1992) sand and gravel - inventories of air emissions Integrated Environmental and Economic were added later. Accounting: A Case Studyfor Papua New Guinea, Environment Working Paper No. 54, Environment The initial policy concerns motivating the Department, World Bank, Washington DC. (also accounts in Norway were with the physical published in Lutz 1993) scarcity of resources and their (mis)management. The supply and demand The SEEA has been built on the premise that responses to the oil shock of the 1970's that national accounts provide the most widely have been observed have reduced the concern used indicators for policy-making, but that about physical scarcity. Today the resource they neglect important long-term accounting work is part of an ongoing effort considerations. Papua New Guinea (PNG) to integrate resource and environmental was chosen for this case study as it is in the issues into existing economic planning early stages of industrialization - some 90% of procedures. The focus of this effort has the population live in rural areas. gradually narrowed to energy resources and Environmental Economics Series 29 Green National Accounts: Policy Uses and Empirical Experience Physical resource accounts can be linked to Depreciation of renewable resources can be the monetary balance sheets and flow measured using a variant of the net price accounts of the SNA. Bartelmus et al method - i.e. harvest minus net growth. undertake this for 2 elements, namely the Bartelmus et al. do not advocate the user cost identification of environmental protection method for these resources as the lifetime of services and of corresponding expenditures, the resource is potentially very long and and the inclusion of asset balances for hence user cost, very small. Where data are produced and non-produced tangible assets. reliable, the calculation of this rent can give Public environmental expenditure by central the government information concerning the government is a relatively small (but appropriate level of taxes and royalties. increasing) part of GDP in PNG - an average About 75% of the total land area of PNG is of 0.27% of GDP from 1986 to 1990 (current covered by forests. The forestry sector is in prices). This represented an average of 0.74% economic terms, relatively small (about 4% of of the total goverrnent budget. GDP). Data on total forests are also sparse and unreliable, although some data are Monetary balances were prepared for subsoil available in physical terms, conveying the assets using available data on net revenues impression that the amount of logged-over and average reserve life expectancy per mine land has been increasing. Shifting cultivation to obtain a value for an opening stock. The has also been responsible for net closing balance for 1989 is negative, owing to deforestation over the period 1980 to 1990. A the closure to the largest mnine in PNG zero adjustment is proposed for fisheries (Bougainville) and a slump in mineral prices rents, as it is estimated that annual catches in that year. Bartelmus et al. suggest that the are presently below maximum sustainable use of some long-term average price could yields (although no estimates of fish stocks avoid this problem. The value of depletion are available). 18 involved in the calculation of the closing stock forms the basis of an adjusted net value Environmental quality in the SEEA is usually added (NVA1) and its sum total, EDP1. costed at potential restoration or avoidance costs. A supplementary approach is taken For measuring annual depletion using both here, because of the existence of the net price (Repetto et al 1989) and 'user compensation schemes for local cost' (El Serafy 1989) approaches were environmental effects (i.e. 'markets' for employed. With a 10% discount rate and data welfare effects of environmental impacts in a on the life expectancy of mines, the user costs particular area). Low and high bound annual for the years 1985 to 1990 amounted to 1.4% estimates of impacts from sectors are derived of GDP in 1987 and 0.3% of GDP in 1989. The based on assumptions as to the social value of fluctuations where due to discoveries and the the environment (from 1980 to 1990). These closure of the Bougainville mine. Discoveries sectors and respective degradation values (in do not alter the adjustment as they are treated terms of % of NDP) are agriculture (forest as 'other volume changes' in the SEEA clearing for cultivation) - 0.3% to 4.4%; monetary balance sheets.'7 Price fluctuations forestry (logging activities) - 1.2% to 1.8%; are responsible for the large variations in net mining (localized water pollution) - 1.3% to price from 1985 to 1990. The level of EDP1 is in the order of 1% to 9% lower than NDP. 8The fisheries sector contributes 0.3% to GDP. Bartelmus er al note that non-marketed (i.e. 17 Discoveries are considered to be natural fluctuations subsistence) output from fishing could amount to and not the result of economic production. about 13% of GDP. 30 Environment Department Papers Experience with Resource and Environmental Accounting 3.8%; and the energy sector (hydropower) - macroeconomic policy regime of import 0.1% (one estimate). substitution and the distortion of domestic terms-of-trade in favor of industry led to The lower bound adjustments (together with negative net investment in the primary sector the net price adjustments from EDP1) form (i.e. agriculture) during the 1970's and early EDP2, which is some 3% to 10% lower than 1980's. NDP in the short time period studied. Whilst actual consumption did not exceed NDP as The 'conventional view' is that stabilization usually defined, it is greater than EDP2 from and structural adjustment policies lead to the 1986 to 1990 (apart from 1988). increased exploitation of resources the export of which earns precious foreign exchange. The Philippines However, Cruz and Repetto contend that in the case of the Philippines this exploitation Cruz, W. and Repetto, R. (1992) The occurred before these policy regimes where Environmental Effects of Stabilisation and imposed and therefore rents accrued to these Structural Adjustment Programs: The Philippines resources prior to the shift in policy regime. Case, World Resources Institute, Washington DC. Hence, even if market conditions favored further exploitation, this historic legacy In previous national accounting studies, WRI would result in supply constraints being focused in detail on.how to undertake encountered. The environmental impact of adjustments to national accounts (Repetto et the policy shift was felt in the increased al. 1989; Solorzano et al. 1991). In this study, exploitation of open access resources which the focus is on 'uses' and specifically the provide vulnerable ecosystem functions. Philippines' experience with stabilization and Ultimately, overuse of marginal resources structural adjustment programmes. such as forest lands, mangroves and fisheries Conventional macroeconomic accounting is unsustainable and activities are then frameworks do not consider the transferred to other fragile areas. However, environmental consequences of such policies, this exploitation is largely undertaken in In contrast, 'natural resource accounting order to provide subsistence for landless provides a macroeconomic framework for laborers and will be non-marketed. As such, evaluating ecological decline' (p17). national accounts will contain little or no record of these activities and hence no rent Resource depreciation is estimated for can be imputed. In order to infer the full forestry, soil erosion and coastal fisheries. environmental effects of stabilization and Combined, these estimates averaged annually structural adjustment policies, information about 4% of GDP (and 20% of gross domestic must be sought above and beyond green investment) from 1970-87 (where the majority national accounts. of this loss is accounted for by timber extraction). This was greater than external Stabilization policies are short-term measures debt, increasing at a rate of 3.2% of GDP as to correct balance-of-payments and national indicated by a deteriorating balance of budget deficits. Structural adjustment is payments position. Cruz and Repetto see this aimed at longer term efforts to 'free up' factor increasing liability as symptomatic of the markets and generally to dismantle inefficient worsening balance sheet for natural assets. intervention. Environmental consequences However, it is the debt issue that has received are not usually of paramount concern in these the most attention. Natural resources were endeavors. Cruz and Repetto attempt to run down and the proceeds used to finance redress the balance using a Computable consumption or inefficient investments or General Equilibrium (CGE) model which were lost in capital flight. The Environmental Economics Series 31 Green National Accounts: Policy Uses and Empirical Experience includes land as a separate factor of Sweden (Johansson, 1989). The willingness- production. Then the environmental effects of to-pay measure is then aggregated over the a combined policy of trade liberalization and Swedish population. A total WTP of some 3.6 a 20% devaluation are considered. The policy million SEK per year is inferred as leads to increased GDP but increases soil representing the value of depreciation of erosion, fishing (marginally), rmining, logging biodiversity in 1987. and energy use. The model also points to policy prescriptions such as the levying of However, an alternative approach was based resource rent taxes as a way of raising on the total area of protected land required to revenues without inflicting 'pain' on the obtain a 'reasonable' level of protection for national economy, which would have the biodiversity. In Sweden it is estimated that effect of encouraging conservation of this criterion would imply the preservation of marketed resource use. habitats on 10% of total forested land as a minimum target. Currently, an estimated 5% Sweden of forested land in Sweden is protected in reserves (or for other reasons). To meet the Hultkrantz, L. (1992) "National Account of 10% target, annual protection costs must be Timber and Forest Environmental Resources in increased. An estimate of the timber rents Sweden", Environmental and Resource Economics, foregone as a result of this additional 2: 283-305. protection results in a higher depreciation charge of 600 million SEK. Hultkrantz presents environmental accounts for the forestry sector in Sweden. His Statistics Sweden, 1993, Environmental Accounts: adjustments are three-fold: Progress Report on a Swedish Government Commissioned Project to Develop Physical Natural a) An imputation for the value of the net Resources and Environmental Accounts, May change in the growing stock of timber, 1993. referred to as direct forest values. This is a stock adjustment - i.e. the value of the Statistics Sweden has been given specific change in the forest stock as measured by instructions by the government to produce timber rents. physical resource and environmental b) The value of (sustainable) activities such as accounts as supplements to the traditional berry and mushroom picking, meat from national accounts (as reported in Statistics hunting game. These are service flows Sweden 1993). The initial accounts will be for from the forest. energy and heavy metals (cadmium, lead, c) Stock adjustments for the value of the chromium and mercury), but this work will change in non-commercial environmental be expanded to cover other area where assets. These assets are biodiversity, carbon Parliament has passed environmental policy sinks, exchangeable cations in soil (i.e. resolutions: CO2, S02, NOR, hydrocarbons, acidification) and lichen stocks (that and discharges of chlorinated organic provide the service of reindeer forage). compounds by the pulp and paper industry. Hultkrantz finds that in 1987 there was a The statistical office has also been asked to 'depreciation' in the stock of diversity of flora work with the National Institute of Economic and fauna living in Sweden's forest habitats. Research to develop methods and models for Two separate methodologies are proposed to measuring the links between the economy measure this change. The first is based on a and the environment. The goals of this work contingent valuation study concerning the are numerous: analysis of the contributions of protection of 300 endangered species in 32 Environment Department Papers Experience with Resource and Environmental Accounting different sectors of society to national and attributable to fuelwood production. Some international environrmental goals; imputation of the gross value of this assessment of the environmental and production is already made in the Tanzanian economic effects of different control regimes; accounts. This, Peskin believes is and analysis of the effects on the enviromnent undoubtedly an underestimate as it does not of structural change in the economy. The record a significant nonmarketed component work is expected to lead to a tool for the (i.e. fuelwood collection for household use). formulation of long term economic and There is also no imputation for depletion of environmental policy. A possible long run natural capital. By multiplying an estimated development is the use of the resource and 137 mnillion working days per year spent environmental accounts to produce an collecting fuelwood by the minimum daily adjusted measure of national product. wage, a proxy for the value of depletion is obtained. The final imputation must be net of Official resource and environmental the value of regeneration of forest, the accounting work in Sweden is at a physical measure of which is the mean preliminary stage. annual increment. The final figure obtained is 1906 million Tanzanian shillings which is Tanzania about 5% of conventionally measured GDP in 1980 and considerably greater than the Peskin, H.M. (1989b) Accountingfor Natural marketed imputation for fuelwood Resource Depletion and Degradation in Developing production in that year. Countries, Environment Department Working Paper No. 13, World Bank, Washington DC. Thailand The most part of this paper is devoted to an Sadoff, C.W. (1992) The Effects of Thailand's outline of Peskin's methodology behind the Logging Ban: Overview and Preliminary Results, concept of Net Environmental Benefit. Thailand Development Research Institute. However, the final section does provide an adjusted account that imputes a value for the In terms of GDP growth, Thailand has often depletion of forest resources in Tanzania due been described an econornic success story. to fuelwood collection. The author notes that These impressive growth rates have been perceptions of the usefulness of indicators achieved through a run-down of natural such as national accounts ultimately depend assets, although whether or not this is on the ability to measure what people sustainable is open to question. Sadoff perceive to be of importance and in the attempts to show how an adjusted national context of the environment this will involve accounting framework can be used to analyze efforts to adequately measure changes over this proposition and the effects of Thailand's time in the stock of natural capital. A logging ban of 1989 in response to major decrease in the goods and services that flooding in 1988. capital can produce over time is termed physical depreciation. As the stream of Making the appropriate adjustments for the income produced by this capital is reduced it user cost and net price approaches, Sadoff is also a case of value depreciation. However, finds that the resulting average adjusted value depreciation can also occur due to aggregates are 1.5% and 2.2% of GDP changes in tastes and technology. respectively over the period 1970 to 1990.'9 The adjusted accounts presented by Peskin 19 deal with the value of physical depreciation Deductions are made from GDP. No account is of forests in Tanzania for the year 1980 taken of the depreciation of man-made capital. Environmental Economics Series 33 Green National Accounts: Policy Uses and Empirical Experience However, throughout the 1970's (the period techniques, the (discounted) total economnic of peak deforestation), whilst the level of value (TEV) of environmental services can be adjusted domestic product is revised inferred, where the TEV is the value of the downwards, the modifications suggest that services of a resource and is the sum of direct growth has been understated (although not use, indirect use and existence values. Adger significantly). From 1980, the value of total and Whitby state that they are not couching rents (however measured) declined these adjustments in terms of sustainable significantly. In the absence of any evidence income but are instead providing an with respect to prices or extraction activity, indication of the relative contribution of the this might be attributed to increasing costs as agriculture and forestry sector to welfare. the forest stock dwindles. Since the logging ban, measured total rents have been almost The use of nitrogen in agriculture has grown insignificant, where rates of deforestation considerably since 1978, leading to pollution have fallen some 88% from pre-ban levels. of water resources in the UK. Hanley (1989) There remains much illegal clearing. surveyed households in the Anglian Water Commercial clearing has decreased by about Authority area in order to estimate the 55% of 1980 levels. benefits of the abatement of agricultural nitrate pollution in terms of cleaner drinking Sadoff claims that the logging ban has led to water. This was valued at £13 per household, increased rates of logging in neighboring which gives an aggregate yearly benefit of the countries which do not practice Thai improvement of water quality of £10.8 management practices. Some of these million. The agricultural and forestry sector countries - notably Laos and Vietnam - have provides carbon fixing services for the announced plans designed to stem these emissions of other sectors (Adger et al. 1991). trends. In conclusion, it is stated that the ban Using Anderson's (1989) estimate of a social has had little of the adverse economic costs cost of £31 per tonne of carbon and an claimed at the time but has also had little of estimate of net carbon emissions of -4.75 the environmental benefits, as deforestation million tonnes, a value for this carbon credit continues. The dissipation of total rents from benefit of £146.2 million was obtained. 1980 onward is perhaps some indication that Positive externalities are also associated with timber resources have been used inefficiently. landscape, wildlife and recreational benefits Finally, Sadoff contends that simulations on public areas. The adjustment for positive using the values obtained in the study show flows of services from these areas in 1988 is that a more efficient policy would be a £888 million. combination of sustainable management practices where logging is permitted and a The use of stated preference techniques is not tightening of the ban elsewhere. without controversy - e.g. the existence of repeated large discrepancies between United Kingdom willingness-to-pay and willingness-to-accept measures of welfare (Knetsch, 1989). Adger W.N. and Whitby, M. (1993) National Aggregation to the national level has its own Resource Accounting in the Land-Use Sector: associated problems and may contain biases Theory and Practice, European Review of depending on the degree of substitutability or Agricultural Economics, 20: 77-97. complementarity between, say, designated areas providing amenity values. For example, This paper is one of the few that uses results if these areas are substitutes, then estimated derived from stated preference studies in a aggregate WTP will be overvalued. national accounting framework. Using these 34 Environment Department Papers Experience with Resource and Environmental Accounting In sum, Adger and Whitby find that adjusted Depletion is estimated for nonrenewable Net Product is about 25% greater than resources using both the net price and user conventional Net Product for the UK cost methods, although the relative merits of agricultural sector. This is due to the positive either are not considered. The net price value of carbon fixing and water quality method is divided into two measurements - improvement. The only deduction made is for (1) the value of the change in the stock during defensive expenditures.20 The authors do not the accounting period, while (2) uses the estimate the change on the previous more usual method of taking the gross accounting period, so an assessment of net margin, net of extraction costs. It is not natural capital deterioration cannot be certain whether the former makes any inferred. Many sources of degradation are allowance for a return to capital. Discoveries excluded, as the authors admit (and this are not treated as negative depletion in equally applies to other environmental contrast to Repetto (1989). In nearly all services). The uses of the account are instances, as might be expected, user cost is a tentative but indicate that policies that lower proportion of gross revenues of the degrade the countryside are likely to have sector than net price (1) which in turn is less larger welfare impacts than will be apparent than net price (2). In the case of the net price by looking at the conventional accounts. This (2) approach, total rents for oil and gas were result only becomes apparent by emphasizing in the region of 0.5% to 6% from 1980 to 1990. the non-marketed services that the sector All three methods are subject to fluctuations provides. owing to the volatility of prices. Bryant, C. and Cook, P. (1992) Environmental There is no calculation of rent for the coal Issues and the National Accounts, Economic industry. This is due to the difficulties in Trends, No. 469. interpreting the meaning of 'net receipts' in the mining industry. As there are no profits in This paper represents an application of the the sector, Bryant and Cook state that rents various strands of resource accounting must be zero. This is interpreted in another approaches to the UK. Physical data are way with reference to the user cost approach. assembled in a resource account under four There are relatively large reserves of coal, headings - nonrenewable sub-soil assets although the problem of 'non-existent' profits (economically recoverable reserves of oil and arises here as well. One implication of these natural gas, technically extractable coal), findings is that coal reserves should be forests, air and water (emissions and reclassified as environmental assets - i.e. these disposals of pollutants rather than reserves are not economically extractable.21 environmental quality itself). The data is No data on reserves for sand, gravel, gypsum, assembled along the lines of the SEEA in ball and china clay, limestone, granite, slate balance sheets for 1990 in both physical terms and salt are available. These extractive sectors and, where possible, monetary terms. contribute little to national output and the resources involved are relatively abundant. 20 These included payments to maintain landscape and wildlife amenity, as well as the promotion of recreation and education. Together with an estimated £5.6 million in expenditures to clean up Faber and Proops (1991) estimate the share of rent in the agricultural pollution and £9 million to meet EC price of coal in 1990 and find this to be 10. 1%. This is standards for drinking water, these (non-household) low relative to the findings for oil and gas (at 54.2 and defensive expenditures amounted to £57.6 million in 57.9 respectively) but indicates that total rents would 1988. have been positive in that year. Environmental Economics Series 35 Green National Accounts: Policy Uses and Empirical Experience ECOTEC (1993) estimated defensive environmental issues would be raised, expenditures in the UK to amount to about although the decision makers benefiting from 3% of GDP in 1990 (half of which is this information are less clearly identified.22 accounted for by pollution abatement alone). Of this, government undertakes 94% of this A regional approach is taken in the expenditure. It is often suggested that these construction of water accounts, in order to defensive expenditures be deducted from reflect the spatial variability of water national accounting aggregates (Daly, 1989). supply.23 One of the uses of water accounts As Bryant and Cook note, this should not be envisaged is the prediction of water interpreted as conventional wisdom. It also shortages. The report claims that the lack of yields a paradox in that a country that water stock data makes such prediction devotes more resources to, say, pollution impossible. abatement will have a lower level of GDP and NDP. However, abatement provides benefits Finally, the report notes that the construction over time in addition to the costs incurred in of energy accounts has been particularly forgone consumption elsewhere and it is at useful in the Norwegian context. ERL also least arguable that it might be treated as an express enthusiasm for this emphasis, not investment in natural capital. Bryant and least because of the relatively abundant data Cook seem to prefer to treat defensive for this sector. Various energy sources are expenditures as a proxy for environmental considered. The Digest of UK Energy damage and then proceed to discuss the Statistics provides physical data on coal, oil possible valuation of 'residual environmental and gas extraction and reserves, which this degradation' - i.e. the value of damage that is report lists in a time series. An extraction, not restored by defensive expenditures. conversion and use table is shown based on this physical information. The accounts are in Environmental Resources Limited (ERL) (1992) physical form and there is no discussion of Natural Resource Accounts for the UK, valuation. ERL clearly favor natural resource Department of the Environment, London. accounting in the Norwegian mode, arguing that this information can and has been used Commissioned by the UK Department of as a predictive instrument rather than just ex Environmnent (DoE) to examine the potential post summaries. use of natural resource accounts in the UK, this report develops pilot resource accounts Lynch, R., and Brown, A., 1994, The National for forestry, water and energy. Its remit was Accounts and the Environment - Developments in to consider international experience in this the United Kingdom, Central Statistical Office and field, develop the aforementioned accounts Department of the Environment, meeting on and examine the potential for the National Accounts and the Environment, London, development of satellite accounts to the SNA. March 16-18,1994. ERL consider the uses of resource accounts to be the 'improvement of decision-making about natural resource and environmental 22 For example, the report speculates as to whether the management', 'provision of information on arrangement of existing data in an accounting natural resources and their uses as inputs to framework would offer additional insight to resource analytical models used for economic and managers. resource planning' and the improvement of 23 'measurements of national income and For example World Resources 1992-3 shows that national wealth' (p,). In general, the annual internal renewable water resources (i.e. run- national wealth' (p2). In general, the off) in the UK is 120.0 km3 of which 24% is used perception is that the profile of each year. 36 Environment Department Papers Experience with Resource and Environmental Accounting The UK government Strategy for Sustainable The first work was the Measure of Economic Development (as noted in Lynch and Brown Welfare (MEW) presented by Tobin and 1994) states that resource and environmental Nordhaus (1972). The major differences accounts will be important in monitoring between MEW and GNP are: sustainable growth. Such green accounts could provide one of a number of indicators - imputations for the value of leisure time, of the benefits and damage to the household work and the services of environment associated with economic government and consumer capital, change. While environmental accounts could - deductions for government intermediate provide objective, comprehensive and goods and 'regrettable necessities', private systematic information which is necessary if intermediate product, disamenities of consideration of the environment is to modem life, capital consumption and become a central element in decision-making growth requirements to equip new workers, and in government and industry, there are no to provide a growing standard of living to plans to aim for a single environmental future workers. indicator or index. The results, covering the period 1929/1965, Work on resource and environmental present a positive growth of per capita accounting has just commenced in the UK. income but at a lower rate than NNP (Table The Central Statistical Office has published a 5). review article on the topic (Bryant and Cook 1992), and the Department of the Daly and Cobb (1989) used a simnilar rationale Environment has established a task force to to create the Index of Sustainable Economic examine options for work. Welfare (ISEW): the conventional measures from the national accounts are adjusted by USA imputations and subtractions in order to provide an improved measure of social Daly, H., and Cobb, J.B. Jr. (1989) For the income based on the notion of sustainability. Common Good, Beacon Press, Boston. The main differences from MEW are in the treatment of non-market activity (ISEW omits Nordhaus, W. (1992) Is Growth Sustainable? the value of leisure), 'defensive expenditures' Reflections on the Concept of Sustainable Economic (ISEW omits health expenditures and Growth. Paper presented to the International investment), long-term environmental Economics Society, Varenna, Italy, Oct. 1992. damages (arbitrarily determined in ISEW but not present in MEW), adjustment for income Nordhaus, W. and Tobin, J. (1972) Is Growth inequality and other corrections: auto Obsolete? Economic Growth. Fiftieth Anniversary accidents, loss of wetlands and farndands Colloquium V. New York: Columbia University and national advertising. There is also an Press. adjustment for depletion of non-renewable resources: the total value of mineral The construction of welfare-adjusted production is subtracted. The series covers measures of national accounts was the subject the period 1950/1986, and it shows a negative of several academic studies in the United per capita output growth for the period States (Nordhaus and Tobin 1972, Daly and 1965/1986 (Table 5). Cobb 1989, Nordhaus, 1992). Sustainability issues are presented in those studies as an In a more recent paper Nordhaus (1992) attempt to provide more 'realistic' income provides a third estimate, called 'Hicks measures. However, their results vary widely. Environmental Economics Series 37 Green National Accounts: Policy Uses and Empirical Experience Table 5 Comparison Of Growth Rates Of Different Income Concepts United States - 1950/1986 Income Growth 1950/1965 1965/1986 Growth Slowdown Total Income Growth: ISEW 3.81 1.02 -2.79 MEW 2.07 na na Hicks Income No. 1 4.41 2.35 -2.06 GNP 3.75 3.05 -0.70 NNP 3.69 2.05 -1.14 Population Growth 1.63 1.05 -0.58 Per Capita Income Growth: ISEW 2.15 -0.03 -2.18 MEW 0.43 na na Hicks Income No. 1 2.74 1.29 -1.45 GNP 2.09 1.98 -0.11 NNP 2.03 1.85 -0.17 Source: Nordhaus (1992) Income No. 1'. It is an attempt to construct a discoveries at their full rental rate, Prince and sustainable income measure derived from Gordon net out from the usual 'rent times Hicks' definition (Hicks 1939). The results units of the resource depleted' calculation, the from Daly and Cobb (1989) are used with (marginal) cost of discovery multiplied by the several changes, excluding arbitrary or units discovered - this parallels the theoretically incorrect entries and replacing adjustment for discoveries derived in some estimates with figures obtained from Hamilton (1993). The results are not related to Eisner (1989). The results show that 'Hicks an estimate of 'green' NDP. The value of oil Income No. 1' growth is always positive, depletion in the US varied from 2% of GDP slightly higher than GNP and NNP in the during the first half of the 1980s to less than 1950/1965 period, and slower in 1965/1986 1% of GDP in the remainder of the decade. (Table 5). By relating changes in environmental indices Prince, R. and Gordon, P.L. (1994) "Greening the to the costs of abatement the environmental National Accounts", Congressional Budget Office, degradation of air and water quality is valued Washington DC. - i.e. how much would it cost to maintain last years level of environmental quality. While it The empirical section of this study presents would appear that on average both air and estimates of total rents from the depletion of water quality - as measured by the indices - oil in the US from 1981 to 1990. For the same improved from 1981 to 1990, significant period, the value of degradation of air and values for degradation are nonetheless water quality is also estimated. obtained. The total value of environment degradation remains fairly constant at about Total rents are calculated using a formula 1% of GDP throughout the 1980s. proposed by Hartwick and Hageman (1993). This differs from that originally proposed by Hartwick (1990). Rather than valuing 38 Environment Department Papers Experience with Resource and Environmental Experience Bureau of Economic Analysis, 1994a, Integrated degradation, and by which sectors are these Economic and Environmental Analysis, press costs borne. release, BEA 94-20. The article dealing with sources and methods Bureau of Economic Analysis, 1994b, Integrated for the accounts (Bureau of Economic Economic and Environmental Analysis, Survey of Analysis 1994c) addresses policy uses more Current Business, April 1994. directly. One such use is in identifying over- exploitation, for example of mineral resources Bureau of Economic Analysis, 1994c, Accounting on public lands, or the New England fishery. for Mineral Resources: Issues and BEA's Initial Another set of uses revolves around the Estimates, Survey of Current Business, April 1994. productivity analysis of the resource sectors, and the concomitant effects on the overall The Bureau of Economic Analysis (BEA) productivity of the economy. Finally it is published its first Integrated Economic and noted that the lack of accounts of resource Environmental Satellite Account (IEESA) in stocks and their changes on Federal lands has 1994. According to the press release led to "less than optimal" budgeting announcing the publication (Bureau of decisions by the Federal government. Economic Analysis 1994a) the accounts were designed to: (i) examine the effects of It is expected that the IEESA will be changing patterns of demand on natural expanded to include the value of stocks and resource use; and (ii) support the analysis of flows of living resources, once new funding is the effects of changing resource costs and secured. availability on the suppliers and users of natural resources. The BEA had published Zimbabwe accounts of environmental protection expenditures since the mid-1970's. The Adger, W.N. (1993) Sustainable National Income IEESA incorporated these data as well as new and Natural Resource Degradation: Initial Results estimates of the value of subsoil reserves and for Zimbabwe, in Turner, R.K. (ed.) Sustainable flows into a framework similar to the United Environmental Economics and Management: Nations' SEEA (United Nations 1993b). Principles and Practice, Belhaven Press, London. The article in the Survey of Current Business This study estimates the rents from presenting the new accounts (Bureau of deforestation in Zimbabwe in 1987, soil Economic Analysis 1994b) deals with the erosion in 1990 and mineral extraction for the range of analytical questions they were last quarter of 1990 and the first quarter of designed to examine. These include 1991. The relevance of national accounts questions concerning what is the rate of adjusted for resource depletion is claimed to natural resource use, what is the economic be of particular importance in developing return to mineral stocks in the extractive economies where there is a high dependence industries, and to what extent have resource on primary production. additions (discoveries and revisions) matched depletion. The environmental protection Fuelwood is a major source of energy in expenditure components of the accounts were Africa and the assessment is that Zimbabwe designed to examine the share of the cost has a fuelwood deficit (Hosier, 1986). burden borne by households, governments Demand outstrips supply and hence a rent and business, and may ultimately speak to might be expected to accrue to these what are the costs of environmental dwindling forest resources. In 1987, the net stock reduction was 2.66 million tonnes. An estimate of the extraction costs was imputed Environmental Economics Series 39 Green National Accounts: Policy Uses and Empirical Experience from estimates of the minimum agricultural nearly 30% of agricultural GDP (5% of wage. This gives an estimate of average costs, aggregate GDP).24 where in the event of increasing effort required to search for fuelwood we would Calculation of rents in the mineral sector expect marginal costs (MC) to exceed average highlighted the variability of these costs (AC). Subtracting AC from the market measurements. In the last quarter of 1990 price of fuelwood in 1987, gives an estimate rents were 20% of traditionally defined of depreciation (rent). The value of this sectoral net product (gross profits less depreciation was ZM$ 93.77 (9% of depreciation of man-made capital). In the first agricultural GDP). quarter of 1991 these amounted to 27% of sectoral net product. A production boom The value of soil erosion has previously been stimulated by the devaluation of the estimated using either the measurement of Zimbabwe dollar is given as the main reason lost productivity or replacement costs of lost for this increase - i.e. 1991(Q1) adjusted net nutrients. Adger estimates soil erosion using product was over 7% greater than 1990(Q4) in the former (for example see Bishop, 1989). contrast to traditional net product which Assuming that soil conservation measures grew over 18% over the period. reduce erosion below the level of natural replacement and contribute to observed In terms of the uses of these adjustments, incremental yield, then the difference in the improved resource management is stressed, estimated gross margins on the conserving as are macroeconomic policy and and non-conserving farms gives a cost of sustainability issues in general. Data erosion. Estimates of ZM$203.23 million for problems are emphasized, suggesting that the lost maize and cotton production were with implementation of SEEA to a wider range of the estimated forestry rent, depreciation of developing countries will prove complex. natural capital in 1987 was equivalent to 24 The value of depreciation on man-made capital in the agricultural sector was about 6% of agricultural GDP. 40 Environment Department Papers 5 Conclusions Still in its development phase, natural There is by now a large and growing body of resource and environmental accounting is a published work on green accounts, as both field with important implications for policies developed and developing countries have for sustainable development. As governments experimented with the construction of attempt to match their actions to their integrated environmental and economic rhetoric on achieving sustainability, the accounts. The UN System of Environmental importance of environmental accounting will and Economic Accounts will prove useful in grow. standardizing the structure of these accounts. While the published work reflects a wide The development and use of environmental variety of approaches to constructing accounting will not be a uniform process accounts, this sort of experimentation is across countries. Many developed countries healthy in any developing field. have sophisticated models that permit the integration of resource and environmental Of the range of satellite accounts described information into macroeconomic analysis. For above, it is likely that the resource use and these countries the usefulness of adjusting pollution emission accounts, tied to the Input- national accounts aggregates may be limited, Output accounts, will have the most direct largely because policy simulations can be policy relevance, at least for richer countries. carried out directly. The physical natural These accounts can feed into a variety of resource and environmental accounts macro, general equilibrium and I/O impact described above can support the models to enhance the analysis of resource implementation of these models. and environmental issues, and to design policy responses. Natural resource accounts Building complex policy models may be an are, in addition, likely to be important for expensive luxury in many developing resource-rich nations concerned about countries, however. For these countries, rapid sustainable development. assessments of resource depletion and the value of environmental degradation, placed While physical accounts on resource and in the savings and wealth framework pollutant flows will have policy uses, the presented above, will guide policy-makers greatest potential for the integration of aiming for sustainable development. Green economic and environmental concerns lies in national accounting aggregates, including the development of new, greener, national national income and genuine savings, place accounting aggregates. Of these aggregates, natural resources and the environment in an measures of genuine savings will have economic context that is otherwise lacking in greater policy relevance than 'green GNP.' developing countries. Environmental Economics Series 41 Green National Accounts: Policy Uses and Empirical Experience The policy questions that are raised by the and the emissions of pollutants to the analysis of genuine savings go far beyond the environment is directly relevant, in addition obvious admonition to save more and to the more traditional elements of monetary consume less. A wide range of policies and fiscal policy as they affect public and affecting the exploitation of natural resources private saving and investment behavior. 42 Environment Department Papers References The following lists both articles that are referenced in the text and key papers in the literature on natural resource and environmental accounting. Aaheim, A., and Nyborg, K., 1993, Green National Product: Good Intentions, Poor Device?, Research Department discussion paper No. 103, November 1993, Statistics Norway. Adger W.N. and Whitby, M., 1993, National Resource Accounting in the Land-Use Sector: Theory and Practice, European Review of Agricultural Economics, 20: 77-97. Adger, W.N., 1993, Sustainable National Income and Natural Resource Degradation: Initial Results for Zimbabwe, in Turner, R.K. (ed.) Sustainable Environmental Economics and Management: Principles and Practice, Belhaven Press, London. Adriaanse, A., 1993, Environment Policy Performance Indicators, Netherlands Ministry of Housing, Physical Planning and Environment. Ahmad, Y.J., El Serafy, S., and Lutz, E., (eds), 1989, Environmental Accounting for Sustainable Development, The World Bank, Washington. Alfsen, K.H., 1993, Natural Resource Accounting and Analysis in Norway, Conference on Medium-Term Economic Assessment, Oslo, 2-4 June, 1993. Anielski, M., 1992, Resource Accounting: Indicators of the Sustainability of Alberta's Forest Resources, Paper presented to the International Society of Ecological Economics Conference 1992, Stockholm. Asheim, G., 1994, Net National Product as an Indicator of Sustainability, Scandinavian Journal of Economics 96 (2), 257-265. Ayres, R.U. and Kneese, A., 1969, Production, Consumption and Externality, American Economic Review, LIX, June 1969. Bartelmus, P., Stahmer, C., and van Tongeren, J., 1989, Integrated Environmental and Economic Accounting, International Association for Research on Income and Wealth, 21st General Conference, Lahnstein, West Germany, August 1989. Environmental Economics Series 43 Green National Accounts: Policy Uses and Empirical Experience Bartelmus, P., Lutz, E., and Schweinfest, S., 1993, Integrated Environmental and Economic Accounting: A Case Study for Papua New Guinea, in Lutz (ed) op. cit. Born, A., 1992, Development of Natural Resource Accounts: Physical and Monetary Accounts for Crude Oil and Natural Gas Reserves in Alberta Canada, National Accounts and Environment Division, Discussion paper no. 11, Statistics Canada, Ottawa. Brandon, C., 1996, Valuing Environmental Costs in Pakistan: the Economy-Wide Impact of Environmental Degradation, Asis Technical Department, The World Bank (mimeo). Bryant, C., and Cook, P., 1992, Environmental Issues and the National Accounts, Economic Trends, 469, 99-122. Bureau of Economic Analysis, 1994a, Integrated Economic and Environmental Analysis, press release, BEA 94-20. Bureau of Economic Analysis, 1994b, Integrated Economic and Environmental Analysis, Survey of Current Business, April 1994. Bureau of Economic Analysis, 1994c, Accounting for Mineral Resources: Issues and BEA's Initial Estimates, Survey of Current Business, April 1994. Clough, P., 1991, Natural Resource Accounting for New Zealand's Indigenous Forests: Report to the Ministry of Environment, New Zealand Institute of Economnic Research (Inc.), interim draft. Cropper, M., and Oates, W., 1992, Environmental Economics: A Survey, Journal of Economic Literature, Vol XXX (June 1992), 675-740. Cruz, W. and Repetto, R., 1992, The Environmental Effects of Stabilisation and Structural Adjustment Programs: The Philippines Case, World Resources Institute, Washington DC. Daly, H., and Cobb, J.B. Jr., 1989, For the Common Good, Beacon Press, Boston. Dasgupta, P., and Heal G., 1979, Economic Theory and Exhaustible Resources, Cambridge University Press, Cambridge. de Haan, M., Keuning, S.J., and Bosch, P., 1993, Integrating Indicators in a National Accounting Matrix Including Environmental Accounts (NAMEA), NA 060, 1993, Voorburg: Central Bureau of Statistics. El Serafy, S., 1989, The Proper Calculation of Income from Depletable Natural Resources, in Ahmad op. Cit. Environmental Resources Limited (ERL), 1992, Natural Resource Accounts for the UK, Department of the Environment, London. 44 Environment Department Papers References Grobecker, C., and Weber, J-L, 1993, La place de la comptabilite du patrimoine naturel dans les travaux de l'institut fran,ais de l'environnement, Cinquieme colloque de comptabilite nationale de l'Association de Comptabilite Nationale, Paris, 13-15 decembre 1993. Hamilton, K., 1994, Green Adjustments to GDP, Resources Policy 1994 20 (3), 155-168. Hamilton, K., and Atkinson, G., 1996, Air Pollution and Green Accounts, Energy Policy Vol. 24, No. 7, 1996. Hamilton, K., Pearce, D.W., Atkinson, G., Gomez-Lobo, A., and Young, C., 1994, The Policy Implications of Natural Resource and Environmental Accounting, Working paper, London: Centre for Social and Economic Research on the Global Environment. Hamilton, K.,1996, Pollution and Pollution Abatement in the National Accounts, Review of Income and Wealth, Series 42, No. 1, March 1996, 13-33. Hamilton, K., and Ward, M., 1996, Greening the National Accounts: Valuation Issues and Policy Uses, presented to the International Symposium on Integrated Environmental and Economic Accounting in Theory and Practice, Tokyo, March 5-8 1996. Harrison, A., 1989, Introducing Natural Capital into the SNA, in Ahmad op. cit. Hartwick, J.M, 1977, Intergenerational Equity and the Investing of Rents from Exhaustible Resources, American Economic Review, 67, No. 5, 972-4. Hartwick, J.M., 1990, Natural Resources, National Accounting and Economic Depreciation, Journal of Public Economics 43 (1990) 291-304. Hartwick, J.M., 1992, Deforestation and National Accounting, Environmental and Resource Economics 2: 513-2 1. Hartwick, J.M., 1993, Notes on Economic Depreciation of Natural Resource Stocks and National Accounting, in Franz, A., and Stahmer, C., (eds) Approaches to Environmental Accounting, Physica-Verlag, Heidelberg. Hartwick, J.M., and Hageman, A., 1993, 'Economic Depreciation of Mineral Stocks and the Contribution of El Serafy', in Lutz op. cit. Herfindahl, O.C., and Kneese, A.V., 1973, Measuring Social and Economic Change: Benefits and Costs of Environmental Pollution, in Moss op. cit. Hicks, J.R., 1946, Value and Capital, 2nd Edition, Oxford University Press, Oxford. Hill, P., and Harrison, A., 1994, Accounting for Subsoil Assets in the 1993 SNA, presented to the London Group on National Accounts and the Environment, London, March 15-18. Hotelling, H., 1931, The Economics of Exhaustible Resources, Journal of Political Economy, 39, 137-75. Environmental Economics Series 45 Green National Accounts: Policy Uses and Empirical Experience Hueting, R., and Bosch, P., 1990, On the Correction of National Income for Environmental Losses, Statistical Journal of the United Nations, ECE 7 (1990), 75-83. Hueting, R., and Bosch, P., 1994, Sustainable National Income in the Netherlands: The Calculation of Environmental Losses in Money Terms, Statistics Netherlands, meeting on National Accounts and the Environment, London, March 16-18, 1994. Hultkrantz, L., 1992, National Account of Timber and Forest Environmental Resources in Sweden, Environmental and Resource Economics, 2: 283-305. Juster, F.T., 1973, A Framework for the Measurement of Economic and Social Performance, in Moss op. cit. Kolttola, L., 1994, The Forest Sector and the Environment, (Statistics Finland), meeting on National Accounts and the Environment, London, March 16-18, 1994. Leipert, C., 1989, National Income and Economic Growth: The Conceptual Side of Defensive Expenditures, Journal of Economic Issues, Vol. XXIII No. 3, 843-56. Leontief, W., 1970, Environmental Repercussions and the Economic Structure: an Input/Output Approach, Review of Economics and Statistics, II, August 1970. Lutz, E. (ed), 1993, Toward Improved Accounting for the Environment, The World Bank, Washington. Lynch, R., and Brown, A., 1994, The National Accounts and the Environment - Developments in the United Kingdom, Central Statistical Office and Department of the Environment, meeting on National Accounts and the Environment, London, March 16-18, 1994. Maler, K.-G., 1991, National Accounts and Environmental Resources, Environmental and Resource Economics 1 : 1-15. McCarthy, P., 1994, Prospects for Environmental Satellite Accounts linked to the Australian National Accounts, meeting on National Accounts and the Environment, London, March 16-18, 1994. Meyer, C.A., 1993, Environmental and Natural Resource Accounting: Where to Begin? Issues in Development, November 1993, Washington: World Resources Institute. Moss, M. (ed), 1973, Studies in Income and Wealth, Vol. 38: The Measurement of Economic Performance, Columbia University Press, New York. Nordhaus, W., 1992, Is Growth Sustainable? Reflections on the Concept of Sustainable Economic Growth. Paper presented to the International Economics Society, Varenna, Italy, Oct. 1992. Nordhaus, W. and Tobin, J., 1972, Is Growth Obsolete? Economic Growth. Fiftieth Anniversary Colloquium V. New York: Columbia University Press. 46 Environment Department Papers References OECD, 1994, Natural Resource Accounts: Taking Stock in OECD Countries, OECD Environment Monographs No. 84, Paris. Parikh, K., J.Parikh., V.K.Sharma and J.Painuly, 1992, Natural Resource Accounting: a Framework for India, Indira Gandhi Institute of Development Research, Bombay. Pearce, D.W., and Atkinson, G., 1993, Capital Theory and the Measurement of Sustainable Development: An Indicator of Weak Sustainability, Ecological Economics 8 103-8. Pearce, D.W., Markandya A., and Barbier, E., 1989, Blueprint for a Green Economy, Earthscan Publications, London. Pemberton, M., Pezzey, J., and Ulph, D., 1995, Measuring Income and Measuring Sustainability, University College London, mimeo. Peskin, H., 1989, A Proposed Environmental Accounts Framework, in Ahmad op. cit. 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Sadoff, C.W., 1992, The Effects of Thailand's Logging Ban: Overview and Preliminary Results, Thailand Development Research Institute, Bangkok. Scott, A., 1956, National Wealth and Natural Wealth, Canadian Journal of Economics and Political Science 22, 3 (August): 373-378. Smith, P., 1994, The Canadian National Accounts Environmental Component: A Status Report, meeting on National Accounts and the Environment, London, March 16-18, 1994. Solorzano, R., de Camino, R., Woodward, R., Tosi, J., Watson, V., Vasquez, A., Villalobos, C., Jimenez, J., Repetto, R. and Cruz, W., 1991, Accounts Overdue: Natural Resource Depreciation in Costa Rica, World Resources Institute, Washington DC. Environmental Economics Series 47 Green National Accounts: Policy Uses and Empirical Experience Statistics Sweden, 1993, Environmental Accounts: Progress Report on a Swedish Government Commissioned Project to Develop Physical Natural Resources and Environmental Accounts, May 1993. United Nations, 1993a, System of National Accounts 1993, New York. United Nations, 1993b, Integrated Environmental and Economic Accounting. Series F No. 61, New York. Uno, K., 1989, Economic Growth and Environmental Change in Japan: Net National Welfare and Beyond, in Archibuji, F. and Nijkamp, P. (eds.), Economy and Ecology: Towards Sustainable Development. London: Kluwer Academic Publishers. van Tongeren, J., Schweinfest, S., Lutz, E., Gomez Luna, M., and Martin, G., 1993, 'Integrated Economic and Environmental Accounting: A Case Study for Mexico', in Lutz op. cit. Victor, P.A., 1972, Pollution: Economy and Environment, Allen and Unwin, London Weber, J-L, 1993, Environment Statistics and Natural Resource (Patrimony) Accounting, UNDP/UNSTAT Workshop on Natural Resource and Environmental Accounting, Beijing, Apr. 20-22 1993. Weitzman, M.L., 1976, On the Welfare Significance of National Product in a Dynamic Economy, Quarterly Journal of Economics (90) 156-62. 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