EUROSTAT
Directorate E: Sectoral and regional statistics
Unit E2: Environmental accounts and climate change /
Background document to item 6 of 16October agenda
TOWARDS A EUROPEAN CLASSIFICATION OF ENVIRONMENTAL ACTIVITIES AND TRANSACTIONS
Integrated classification framework for European data collection on environmental activities and expenditures – initial draft
This document was prepared by: ICEDD / Federico Falcitelli
Eurostat – Unit E2
Task forces on environmental transfers and ReMEA
Joint meeting of 16 October 2012
Luxembourg BECH building, Room B2/464
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This paper details a draft classification of environmental activities, following the discussions at the first meeting of the subgroup on classifications. This document should be regarded as an initial draft for further discussion and should not be cited.
1Background
The task forces (TFs) on environmental transfers and on the resource use and management expenditure account (RUMEA) met in Stockholm on 18-20 October 2011. On 19 October, the TFs reviewed existing classifications of environmental activities and expenditure (CEPA, CEA, CReMA, CRUMA) as point 4 of the agenda.
The TFs discussed in particular:
- the need to ensure that the classifications are efficient tools in practice for data collection, data coding and presentation of results for related statistical areas, in particular for environmental protection (EP), resource management (RM) and the environmental goods and services sector (EGSS);
- the conceptual basis for the classifications, in particular purpose versus effect as main classification principle and the inclusion of only non-produced environmental assets or also produced assets;
- The differences between CReMA (used for EGGS) on the one hand and CRUMA and CEA on the other hand - these concern in particular renewable energy, energy saving and recycling;
The TFs decided to create a subgroup (SG) to review the classifications and deal with the issues raised. This SG should review:
- the classifications in which the source data are available in practice;
- the uses of the existing environmental activity classifications and whether efficiency could be increased by bringing the main headings closer to existing sources;
- the inclusion only of non-produced assets (forests, fish) in existing classifications, whether land should be included as a resource under RM and more generally which resources or resource aspects should come under EP and RM (e.g. water, soil….);
- whether it is necessary and possible to split between EP and RM for activities such as energy saving, renewable energy and recycling on the expenditure side, whereas on the supply side (EGSS) this distinction is difficult to make;
- the main purpose principle currently proposed for RM (where RM comprises activities aimed primarily at the protection of natural resource stocks against depletion) and how this fits with main uses of data e.g. for climate change issues.
The SG should develop a clear framework for the classifications. Ideally, an integrated set of classifications would cover EP and RM expenditure as well as the EGSS and possibly environmental subsidies and similar transfers.
The SG should also review the explanatory notes of existing environmental activity classifications with a view to updating them.
The SG met on 1 and 2 March 2012 in Luxembourg. Participants at the meeting were Mr Anton Steurer (chair) and Ms Marina-Anda Georgescu (Eurostat); Ms Irina Piradashvili and Ms Gesine Petzold (DE); Mr Samuel Balmand (FR); Ms Carolina Ardi (IT); Mr Cor Graveland (NL); Mr Sacha Baud (AT); Mr Federico Falcitelli, Ms Céline Martin and Mr Marco Orsini (ICEDD).
The SG discussed several issues related to classifications (see minutes).
In particular the SG agreed that in the short term, a good solution may be to define pragmatic reporting categories matching the main categories in which source data are available. Where activities are indistinguishably included in the source data there may be no need to separate them out. For example, some renewable energy production, recycling and energy saving activities are reported in surveys to enterprises and are classified in government budgets as environmental protection expenditure. There is probably no basis and also no need to estimate and reallocate these expenditure.
A first draft of such a classification was attached as Annex 1 to the minutes of the SG meeting. These minutes have been presented to the March 2012 Working Group on Environmental Expenditure Statistics as a background document.
This document builds on this tentative classification and presents a first draft of a full set of explanatory notes for each class.
The task forces are asked to:
- Comment on this first draft
- Consider the best way forward on this issue (taking into account both the minutes of the first SG meeting and this document)
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European Classification of Environmental Activities and transactions
Integrated classification framework for European data collection on environmental activities and expenditures
Draft 1.0, 2012.09.04
Table of contents
Part I Introductory guidelines
1Objective and background
1.1Purpose of the European classification of environmental activities and transactions
1.2Overview of existing classifications
2Scope and characteristics
3Classification units and criteria
3.1Classification units
3.2Classification criteria
Part II Structure of the classification
4Broad structure of the classification
4.1Classes of ECEA
4.2Classification of transversal activities
5Detailed structure of the classification
6Relations with other classifications on environmental activities and transactions
Part III Explanatory notes
7Environmental protection activities
8Resource management activities
List of tables
Table 1 – “Classes” of the European Classification of Environmental Activities (one-digit level)
Table 2 – Detailed structure of the of the European Classification of Environmental Activities (1, 2, 3-digit levels)
Table 3 – Relations with the classifications adopted for European statistics on Environmental Goods and Services Sector (EGSS), i.e. CEPA+CReMA and the CEA
Part I Introductory guidelines
1Objective and background
1.1Purpose of the European classification of environmental activities and transactions
Environmental activities are those economic activities whose primary purpose is to reduce or eliminate pressures on the environment or to make more efficient use of natural resources. Examples of these activities are restoring polluted environments, conservation and resource management, and investing in technologies designed to prevent or reduce pollution. These various activities are grouped into two broad types of environmental activity: environmental protection (EP) and resource management (RM).
Environmental protection activities are those activities whose primary purpose is the prevention, reduction and elimination of pollution and other forms of degradation of the environment. These activities include, but are not limited to, the prevention, reduction or treatment of waste and wastewater; the prevention, reduction or elimination of air emissions; the treatment and disposal of contaminated soil and groundwater; the prevention or reduction of noise and vibration levels; the protection of biodiversity and landscapes, including their ecological functions; monitoring of the quality of the natural environment (air, water, soil, groundwater); research and development on environmental protection; and the general administration, training and teaching activities oriented towards environmental protection[1].
Resource management activities are those activities whose primary purpose is preserving and maintaining the stock of natural resources and hence safeguarding against depletion. These activities include, but are not limited to, reducing the withdrawals of natural resources (including through the recovery, reuse, recycling, and substitution of natural resources); restoring natural resource stocks (increases or recharges of natural resource stocks); the general management of natural resources (including monitoring, control, surveillance and data collection); and the production of goods and services used to manage or conserve natural resources.[2]
The purpose of the European classification of environmental activities and transactions (ECEA) is to offer an integrated framework for the collection and reporting of data on environmental activities and transactions, both for existing non-mandatory monetary environmental accounts data collection frameworks(e.g. JQ, EGSS, EPEA) and for the existing and future mandatory modules of the Regulation (EU) 691/2011 on European environmental economic accounts.
1.2Overview of existing classifications
Although as specified by the SEEA 2012 (4.8) there is no international agreed classification to help in the identification of environmental activities, a number of functional classifications related to the environment are relevant for monetary environmental accounting. These classifications are:
- Classification of environmental protection activities and expenditure (CEPA 2000)
- Classification of resource management activities and expenditure (CReMA 2008)
- Classification of environmental activities (CEA[3])
Only the CEPA 2000 is an internationally agreed classification[4], included in the family of international standard classification[5]. CreMA is used in Europe for classifying producers of the environmental goods and services sector.
Also other classifications are relevant for monetary environmental accounting, as they allow for the identification and data collection of relevant environmental activities, products, employment, expenditures, etc. These classifications are:NACE Rev. 2, CPA 2008, COFOG 1999, PRODCOM 2011, HS 2012, ISCO 2008, NABS 2007, NST 2007[6].
1.2.1CEPA 2000
The CEPA 2000 (or CEPA for short) is a generic, multi-purpose, functional classification for environmental protection (EP). It is used for classifying activities but also products, actual outlays (expenditure) and other transactions whose primary purpose is the prevention, reduction and elimination of pollution as well as any other degradation of the environment.
The classification unit is often determined by the units of the primary data sources that are being classified and by the presentation formats used for results. For example, the analysis of government budgets and accounts requires the coding of items of government environmental protection expenditure into CEPA. Some of these expenditure items will be transfers such as subsidies or investment grants whereas others will be inputs into an environmental protection activity (e.g., wages and salaries).
The compilation of environmental expenditure accounts requires determining environmental protection activities and their output of environmental protection services by categories of CEPA.
The use and management of natural resources (e.g., water supply) and the prevention of natural hazards (landslides, floods, etc.) are not included in CEPA.
The CEPA structure is the following (highest level, i.e. 1-digit categories):
CEPA 1 Protection of ambient air and climate
CEPA 2 Wastewater management
CEPA 3 Waste management
CEPA 4 Protection and Remediation of soil, groundwater and surface water
CEPA 5 Noise and vibration abatement (excluding workplace protection)
CEPA 6 Protection of biodiversity and landscapes
CEPA 7 Protection against radiation (excluding external safety)
CEPA 8 Research and development
CEPA 9 Other environmental protection activities
1.2.2CReMA 2008
The CReMA 2008 (or CReMA for short) has been developed by Eurostat for data collection and analysis on the Environmental Goods and Services Sector (EGSS)[7]. It isbased on a 2007 version of the Italian classification CRUMA, developed by the National Statistical Office (Istat) and currently adopted in Italy[8]. It includes only the resource management (RM) part, i.e. the preservation and maintenance of the stock of natural resources, which has been adapted to the purpose of compiling European statistics on the EGSS.
The CReMA was built consistently with the SERIEE framework and the structure and classification principles of the CEPA. Categories are built complementarily with CEPA and without overlapping with CEPA classes (the numbering of the CReMA classes follows the CEPA’s one).
The CReMA classes are as follows:
10Management of water
11Management of forest resources
11A Management of forest areas
11B Minimization of the intake of forest resources
12Management of wild flora and fauna
13Management of energy resources
13A Production of energy from renewable sources
13B Heat/energy saving and management
13CMinimisation of the intake of fossil resources for raw materials for uses other than energy
14Management of minerals
15Research and development activities for natural resource management
16Other natural resource management activities
Thus, although developed in the context of the EGSS, the CReMA was thought to be a generic, multi-purpose, functional classification for RM. Its aim is to be used for classifying activities but also products, actual outlays (expenditure) and other transactions whose primary purpose is RM.
1.2.3CEA
The CEA is a functional classification used to classify environmental activities, environmental products, and environmental expenditures and other transactions. The CEA was discussed within the context of the SEEA 2003 revision[9].It covers environmental protection and resource management activities.
The structure of the first group – Environmental Protection – mirrors the structure of the CEPA 2000. In this group the activities are classified by environmental domain such as air, waste, and water. The structure of the second group – Resource Management - is based on the different types of resources such as mineral and energy resources, timber resources and aquatic resources. Within both groups, activities that are broad ranging, such as those relating to management and research, are allocated to classes at the end of each group.
Detailed classes and associated definitions for Group I are consistent with the CEPA. Detailed classes and definitions for activities in Group II have been included in Annex 1 of SEEA 2012 to provide a starting point for the compilation of relevant statistics. For the EP part the CEA “mirrors the structure of the existing Classification of Environmental Protection Activities (CEPA)” and “Detailed classes and associated definitions for Group I (the EP part) are consistent with the CEPA. Detailed classes and definitions for activities in Group II (the RM part) have not been developed to international standard”.
The CEA classes are as follows:
CEA Group I
1 Protection of ambient air and climate
2 Wastewater management
3 Waste management
4 Protection and remediation of soil, groundwater and surface water
5 Noise and vibration abatement (excluding workplace protection)
6 Protection of biodiversity and landscapes
7 Protection against radiation (excluding external safety)
8 Research and development for environmental protection
9 Other environmental protection activities
CEA Group II
10 Management of mineral and energy resources
11 Management of timber resources
12 Management of aquatic resources
13 Management of other biological resources (excl. timber and aquatic resources)
14 Management of water resources
15 Research and development activities for resource management
16 Other resource management activities
2Scope and characteristics
The European classification of environmental activities is a generic, multi-purpose, functional classification for environmental protection and resource management. It is used for classifying activities but it can be also used for classifying products, actual outlays (expenditure) and other transactions.
The European Classification of environmental activities described thereafter has been developed taking into account:
- the availability of data at European level,
- the fact that the distinction between EP and RM is not always easy in practice,
- the need of ensuring comparability of data across the UE.
The European Classification of environmental activities has been developed based on:
- the CEPA for the EP part, with few minor adjustments and more detailed explanations;
- some homogenous group of activities which refers to a maximum extent to the existing NACE categories for the RM part. This allowssolving most of the boundary cases between EP and RM but leaves these groups of activities as “mostly” related to RM. In fact the NACE categories could include also some activities which are not RM following the primary purpose principle.
3Classification units and criteria
3.1Classification units
As a classification framework for the economic data on the environment, the ECEA is intended as a classification of activities and transactions as well as products, producers and any other unit of analysis related to EP and RM.
3.2Classification criteria
Classification should be made according to the main purpose taking into account the technical nature as well as the policy purpose of an action or activity. Multi-purpose actions, activities and expenditure that address several ECEA classes should be divided by these classes. Classification under the heading ‘indivisible expenditure and activities’ should only be made as a last resort.
The purpose of an activity or action is different from the effect of an activity or action. Actions and activities undertaken for other than environmental purposes can have positive environmental effects and the corresponding expenditures should not be included. Thus the environmental protection (EP) and resource management (RM) concepts does not encompass all activities and expenditures that have a positive effect on the environment, but only those whose main purpose is to protect the environment or to manage the natural resources. An activity or action which has a positive effect on the environment does not necessarily have EP or RM as its main purpose. As a consequence, to apply the main-purpose criterion does not mean to assess whether an activity or action has a positive effect on the environment or not.
The main purpose must be identified first by taking into account the technical nature. The emphasis on the technical nature of an activity implies that the main purpose has to be identified regardless of the intention of the actor that carries out the activity. For example the investments carried out by a private producer specialised in depuration of wastewater have EP as their main purpose because this kind of activity matches the definition of EP, i.e. reduces a type of pollution; the intention or purpose of the producer is certainly to gain money. Hence the purpose of an activity or action does not necessarily correspond to the intention/purpose of the actor.
Sometimes to consider the technical nature is not sufficient for classifying an activity or action. In such situations, the policy purpose should be considered as well, which in practice means to consider the policy relevance of the activity in the context where it is carried out. This does not mean to consider, for example, the intention/purpose simply declared by the policymaker, but to consider the relevance of the activity according to e.g. the territorial characteristics of the country or the legislation. For example, the purchase of double-glazed windows in warm countries will typically relate to issues of noise protection, whereas in colder countries they will be a standard energy saving device. Measures to reduce fertiliser use may primarily fall under ECEA 4 (protection of groundwater), ECEA 2 (prevention of runoff to protect surface waters) or ECEA 6 (prevention of nutrient enrichment to protect biotopes) depending on the main purpose of measures and policies. Measures against forest fires will be unimportant or purely serve economic purposes (and thus fall outside of ECEA) in some countries whereas in others the main aspect of forest fires will be an environmental one related to landscape and habitat preservation rather than protection of a natural resource.