/ EUROPEAN COMMISSION
EUROSTAT
Directorate F: Agricultural, environmental, food and regional statistics
Unit F-3: Environment and sustainable development /
Doc. ENV/WG/028/8.1 (2003)
Original in EN, available in FR and DE
Point 8.1 of the agenda

The European Strategy for Environmental Accounting

Report to the Statistical Programme Committee

Final draft

Joint Meeting of the
Working Groups "Environment Statistics" and
"Environmental Accounts"
Joint Eurostat/EFTA group
Meeting of 10 – 12 September 2003
BECH building – Room Quetelet

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ENV/WG/028/8.1 (2003)

EXECUTIVE SUMMARY

  1. Recommended actions

The SPC is invited to:

  • endorse the strategy for environmental accounting summarised below and in detail in the main report,
  • recommend that national statistical institutes maintain and expand their work on environmental accounts,
  • and consider whether legislation for environmental accounts should be pursued.

The environmental accounting strategy aims at satisfying effectively and efficiently user demand for statistics needed for integrated economic and environmental policy making. It builds on existing structures in Member States and creates enhanced use of existing data in areas where the statistical system has a comparative advantage. It focuses EU-wide implementation on a core set of common priority areas where methods and data sources exist. The recommended common priority areas are accounts for: air emissions and energy use; water supply and use; economy-wide material flows; environmental expenditure and taxes; timber and subsoil assets. Recommendations for the further development of other environmental accounts modules are also made, classified by priority according to policy demand and feasibility.

  1. Background

Environmental accounting integrates existing environmental and natural resource related data with the national accounts. Work areas range from accounts for natural resources such as forests to material use and emissions data fully integrated with the national accounts. The environmental accounts are already used for policy assessment, modelling and for deriving sustainable development indicators.

Over the past 7 years, all Member States and Eurostat have been investing in supplementing the national accounts with environmental data. DG Environment has provided substantial financial support to national statistical services. Environmental accounting results are now published regularly in several Member States, often in conjunction with the annual national accounts data.

A new international handbook onintegrated environmental and economic accounts (the SEEA 2000) was prepared by the London Group and approved by the UN Statistical Commission in March 2002. The SEEA will be published jointly by UN, Eurostat, IMF, OECD and World Bank.

At its 31 May 2000 meeting in Porto, the SPC discussed environmental and sustainability issues in the Statistical System including actions to ensure that environmental accounts set up in Member States form a regular part of environmental and national accounts work. Following this, the SPC created in December 2000 by written procedure a high-level Task Force ‘European Strategy for Environmental Accounting’ (the ESEA Task Force).

The ESEA Task Force (see main report – Section 1) focused on identifying user needs and developing recommendations for environmental accounts that satisfy user needs through efficient use of available data in priority areas.

  1. Policy context

The Task Force report analyses EU and national user needs in Section 2. Following the Amsterdam Treaty, environmental and sustainability policy moved up the political agenda, focusing on the integration of environmental and economic policy making and on integrating environmental concerns into other policy areas. At EU level, key policy initiatives important for environmental accounts include the 6th Environmental Action Programme, the EU Sustainable Development Strategy and various sectoral policy initiatives related to the Cardiff process. Key areas specified in these documents include climate change, sustainable transport, nature and biodiversity, health and the environment, natural resource use and waste management and the international dimension of sustainable development. The structural indicators, designed to monitor progress towards the Lisbon objectives, have been extended by adding environmental indicators.

The policy needs relevant for environmental statistics and accounts increasingly require integrated data sets:

-Increasingly, policy focuses on longer-term problems that require regular observation of changes over time and in structure.

-Policy targets more and more aim at good environmental quality. Designing policies to achieve such targets relies on integrated analysis of the economic activities, the environmental pressures these activities generate and the remedial actions.

-The demand for integrated assessment of policies is growing (cost – benefit analyses, joint assessment of economic, social and environmental consequences).

-More and more the focus is on theme-specific reporting, on the contribution of economic development and structural change as key drivers of environmental change and on international aspects.

In terms of statistical policy, Sections 3 and 4 of the main report show that the environmental accounts:

-are sufficiently mature so that a harmonised and focused EU-wide approach will be beneficial,

-provide a framework for satisfying new demands such as integrated policy making or sustainable development and other indicator sets that require consistent and linked data integrating several areas of statistics,

-provide positive feedback and quality assurance, structure and extra uses for several areas of statistics including the national accounts themselves.

  1. Consequences of the proposal for the NSIs

A key element of the recommendations in Section 5 is to focus implementation work on a core set of common priority areas where data sources exist and where accounts should be produced regularly and in a timely fashion. Resource requirements for environmental accounting are quite small. Key environmental accounting areas are now largely developed, a large part of the initial investment has been made and human resources are already in place in many countries. The value added of environmental accounting is however considerable through making best use of environmental statistics and other data and significantly enhancing analytical uses of statistical data.

Primary data for environmental accounting, alongside the national accounts, are environment, energy, transport, forestry and other statistics as well as other data held by ministries, specialised institutions and environmental agencies. Environmental accounts do not generally require new data collection but create additional uses for national accounts data (e.g. supply-use and input-output tables), for environment statistics and other areas of statistics.

  1. Outstanding problems

User demand will continue to evolve requiring flexible multi-purpose systems within an integrated accounting framework. Some Member States have requested a legal basis for environmental accounting to be able to effectively work in this area. Estimating ‘green GDP’ type indicators should be left to modellers outside statistical offices.

  1. Risk assessment

Failure to provide EU-wide data for international purposes would have several consequences. Accounts and indicators that are needed to inform policy makers will be compiled outside the Statistical System in ad-hoc ways, less well co-ordinated with socio-economic statistics, without the use of agreed standards, and delivering less reliable and less comparable results. The benefits from a European approach (common standards, sharing of best practices, comparable data etc.) will not materialise whereas environmental issues are often of an international nature. Failure to implement a systems approach towards integrating economic and environmental data sets will make regular data collection less efficient and will permit less use of existing data. The substantial investment in environmental accounting would not be utilised fully.

  1. Next steps

If the SPC approves the environmental accounts strategy, steps to further harmonise data across countries should be considered. Data for the core set of accounts should be regularly collected and published. Development work should continue according to the proposed priorities. Legal backing and procedure for periodic reviewing by the SPC would also have to be considered.

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ENV/WG/028/8.1 (2003)

The European Strategy for Environmental Accounting

Main report of the ESEA Task Force

Contents

1.The Task Force ‘European Strategy for Environmental Accounting’......

2.User needs and policy demand......

3.Value added and limits of environmental accounting......

4.The state of the art......

5.Recommendations for an EU-wide environmental accounting strategy......

5.1.Environmental accounts that should be implemented EU-wide......

5.2.Priorities for further development......

5.3.Organising EU-wide implementation......

Annex 1: Environmental accounts modules - summary descriptions and policy demand......

1.The Task Force ‘European Strategy for Environmental Accounting’

In December 2000, the SPC created by written procedure a high-level Task Force ‘European Strategy for Environmental Accounting’ (the ESEA Task Force). Participants came from the statistical services of Denmark, Germany, Greece, France, Italy, the Netherlands, Sweden, Finland and the United Kingdom as well as from DG Economic and Financial Affairs, DG Environment and the European Environment Agency. Eurostat acted as the secretariat of the Task Force.

The mandate of the ESEA Task Force was to ensure that European environmental accounting contributes fully and efficiently to the political information requirements on environmental and sustainability issues. The SPC requested the ESEA Task Force to:

  • Review policy uses and user needs and identify the areas where environmental accounts can contribute most to the longer-term political objectives in Europe.
  • Contribute to harmonising environmental accounts results European-wide, including good links to indicator systems and other areas of statistics as well as harmonised production of environmental accounts and improved comparability and timeliness.
  • Review the world-wide SEEA 2000 handbook[1], and select and specify the modules most relevant for Europe.
  • Develop recommendations, including a common core set of environmental accounts for Europe.

With this, the SPC reacted to several challenges:

  • The increased demand for environmental information integrated with economic and other statistics, including in the context of sustainable development indicator sets and frameworks.
  • Following 7 years of development it is appropriate to review environmental accounting work where the phase of conceptual development and practical testing is approaching completion and regular production has started in several areas.
  • The contribution that environmental accounting could make to meet the need for a systems approach towards providing integrated sets of statistics on environmental and economic issues.

The ESEA Task Force met 3 times in 2001 and 2002 to develop recommendations for environmental accounting and communicated by e-mail between the meetings. The focus was on identifying user needs and improving the links between policy needs and European environmental accounting to be achieved through efficient use of available data in priority areas where the statistical system has a comparative advantage.

2.User needs and policy demand

The ESEA Task Force undertook a comprehensive review of uses and user needs at EU and national level. Identification of EU user needs was facilitated by the participation of DG Environment, DG Economic and Financial Affairs and the European Environment Agency in the work of the Task Force.

Identifying precise user needs for statistics (variables, frequency, etc.) is not easy. Expressions of demand are usually of a general nature that indicate a lack of information on a topic. What can be identified quite clearly are the purposes to which users want to put the data. Whether environmental accounts (and statistics at large) are the best way to satisfy this demand has to be assessed separately.

Understanding user needs requires that statisticians identify the longer-term visions of policy, translate these into specific data requirements and develop data sets for this demand. In practice many concrete uses can only develop once the data are available.

The policy trends relevant for environmental statistics and accounts include:

-Increasingly, policy focuses on problems that require longer-term attention and where regular observation of changes over time and in structure is important (e.g. energy use and climate change, transport, resource productivity), including observing sectoral developments over time (e.g., eco-efficiency of industries in time series).

-Policies are moving towards using State of the environment indicators as targets in some areas (e.g., biodiversity, water quality) thus requiring integrated data-sets that link the economic actors, the environmental pressures, the societal actions and the state of the environment,

-Integrated assessment of policies increases in importance (cost – benefit analyses, joint assessment of economic, social and environmental consequences of policies).

-The concepts of decoupling, eco-efficiency and resource productivity receive increased attention.

-New policy fields focusing on products are evolving, such as Integrated Product Policy, analysis of the impacts of international trade and chemicals policy.

-Increasingly, the focus is on theme-specific reporting (transport and environment, waste and natural resource use, etc.), on the contribution of economic development and structural change as key drivers of environmental change and on international aspects such as the environmental burden displaced through imports and exports. All these require integrated data sets.

Summary results and indicators should be linked to more detailed data sets that enable analysis for policy preparation and evaluation and better understanding of what indicators mean and how they can be used. Better information on structures is becoming more important, including to better understand differences in levels and trends across countries. As long as primary statistics are incomplete, environmental accounting can play a useful role by providing a framework and estimation procedures for missing data, e.g. based on non-statistical sources.

Users put much emphasis on analysis and applications of environmental accounts in modelling and forecasts/outlooks, both for preparing policy proposals and reporting on policy implementation and impacts. Examples are the design of taxation policies related for instance to climate change and energy uses, or the assessment of the effects of international trade on emissions and resource use.

In several countries, government commissions or advisory bodies are in place that aid the development of environmental accounting, facilitate exchange with users and are a source of official demand for environmental accounts. Recent changes in the organisation of Ministries of the Environment (e.g. France, Italy) reflect a growing need for integrated economy-environment and sustainable development analysis.

A pro-active approach towards users is essential as environmental accounts develop. The different user groups have quite different needs that should be taken into account in communication. Products should be tailor-made for different user groups. The 6th Environmental Action Programme calls for policy making based on participation and sound knowledge. This may lead user institutions to more systematically defining information needs and maximising the contribution of data providers to policy making.

Policy demand and priorities

The development of integrated economic and environmental and sustainability policy and the integration of environmental concerns into other policy areas increased the demand for indicators for monitoring progress as well as for integrated economic-environmental data-sets for analysing and designing policies. Key recent EU policy initiatives important for environmental accounts include the 6th Environmental Action Programme, the EU Sustainable Development Strategy and the sectoral policy initiatives related to the Cardiff process.

Key areas of policy interest in all these documents include climate change, sustainable transport, nature and biodiversity, health and the environment, natural resource use and waste management and the international dimension of sustainable development (including the effects of international trade).

User needs may differ somewhat across countries reflecting national endowments with natural resources and environmental assets or specific national policy priorities but the key standard components of environmental accounts are similar: selected natural resources accounts, air emissions and energy accounts, material flows accounts, environmental expenditure, activities and taxes. Priorities for future development include the environmental domains water and waste including ‘environmental capital’ (water quality, land and ecosystems, air quality).

Regional(ised) accounts are in high demand, as well as analyses of policy sectors (e.g. agriculture, transport or energy). Supporting such regional or sectoral dimensions may require introducing some extra detail and disaggregation into the accounts and set up sectoral reporting modules.

Environmentally adjusted national accounts aggregates (e.g. ‘green’ GDP) as well as valuation and monetisation of environmental damages sporadically receive some attention. These issues are typically not the task of statistical offices as it is very difficult to achieve good quality and robust monetisation results. However, statistical offices could provide environmental accounts datasets to research institutes for experimental estimates or modelling exercises.

Based on a sound analysis of policy demand and users needs, the ESEA Task Force identified those environmental accounts modules that directly respond to key user needs and where methods are sufficiently mature and data are available so as to allow immediate implementation EU-wide A summary overview of this core set of environmental accounts recommended for implementation and its relation to user needs is given in the following table.

Environmental accounts recommended for EU-wide implementation / Key EU user needs
Air emission and energy accounts / Climate change, air quality and health, resource and energy efficiency, assessment of trends in emissions, international aspects of sustainability, assessment of the direct and whole-economy costs of planned policies
Water flow accounts (supply and use) / Water framework directive, sustainable use of resources, economic assessment of policy proposals
Economy-wide material flow accounts / Sustainable use of natural resources, decoupling economic growth and resource use, eco-efficiency and resource productivity analysis
Environmental protection expenditure and environment industry accounts / Water framework directive, waste and resource management, economic analysis of policy proposals, assessment of environmental activities and employment
Environmental taxes / Climate change, modelling of green taxation and fiscal policy, economic instruments and economic assessment,
Natural resource accounts for forests and subsoil assets / Sustainable use of natural resources, climate change, nature and biodiversity

3.Value added and limits of environmental accounting

The value added of environmental accounting