Item 4.3.1 of the agenda
B1 - National accounts methodology,
statistics for own resources Luxembourg, November 1999
Conclusions from recent applications of the SERIEE’s Environmental Protection Expenditure Account
Anton Steurer
Eurostat B1
Joint meeting of the
Working Party ‘ECONOMIC ACCOUNTS FOR THE ENVIRONMENT’
and the Sub-Group ’Environmental Expenditure Statistics’
Meeting of 6 and 7 December 1999
BECH building – Room ‘Quételet’
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During 1999, new reports related to the application of the SERIEE’s Environmental Protection Expenditure Account (EPEA) have become available for Belgium, Denmark, Germany, France, Italy, Austria and Norway. Also other countries, such as Japan, the Czech Republic and Australia, have made applications of the EPEA.
This note is to summarise key findings with a view to methodological developments and trends in environmental protection expenditure accounting. This note is for discussion at the 6-7 December 1999 meeting of the Working Party ‘Economic Accounts for the Environment’.
1. A summary of main conclusions from recent applications
Belgium
The report (ACCT-EXP/99/4.2.1) provides a very substantial amount of data for several levels of government as well as industries and households. The report shows that a proper understanding and integration of primary data requires an analysis of the ways environmental protection is organised in a country. This is true in particular for a correct interpretation of the funding flows among sectors of the economy and among the sub-sectors of general government.
Denmark
The report (ACCT-EXP/99/4.2.2) is an excellent example for an approach of extracting environment-related information from the national accounts database. In Denmark this allows to generate very comprehensive and detailed EPEA accounts. Results suggest that about ¾ of total environmental expenditure can be captured in this way using available national accounts data.
France
Two reports are presented. The first (ACCT-EXP/99/4.2.3a) presents the results of an expenditure account for water abstraction and distribution using the SERIEE methodology. This account is part of an overall description of the water cycle. The account for water abstraction and distribution complements the account for waste water management, which is already being compiled regularly. An account for in-situ uses of water and the management of water bodies is under development.
The second report (ACCT-EXP/99/4.2.3b) is a summary of results of the environmental expenditure account (including a time series 1990-1997). Results presented also include data on the environment industry and on environmental employment as well as on environment-related expenditure (on recycling, water supply, etc.).
Germany
The report (ACCT-EXP/99/4.2.4) presents the 1995 results of an extension in coverage (inclusion of the New Länder, inclusion of more environmental domains) and of a sizeable statistical improvement in capturing specialised producers. While data on specialised producers (NACE 90) are still incomplete, the overall result of these extensions and improvements is a substantial increase in total environmental expenditure from 2.1 % of GDP (1991) in an earlier study to 2.9% of GDP. While the improved statistical basis makes strict comparisons with the earlier study impossible, the results also imply a marked shift in the structure of expenditure – the focus has shifted away from air protection and towards waste management. The report includes a description of the Capital Stock Account used to estimate the consumption of fixed capital and operating expenditure for ancillary activities. Several new surveys are under way which will greatly improve the statistical basis for environmental expenditure accounts.
Italy
The report (ACCT-EXP/99/4.2.5) presents in detail the system developed for deriving expenditure data from public budgets using the method of budgetary analysis. The system provides for an operational approach towards budgetary analysis that allows standardisation of the data extraction and inter-temporal comparability of the results obtained.
Austria
The report (ACCT-EXP/99/4.2.6) includes the results for 1995 and 1996 of a full application of the SERIEE’s environmental expenditure account. Compared to earlier compilations, the results are based on a much-improved statistical basis, including as concerns specialised producers. This improvement resulted in total environmental expenditure representing 3.3% of GDP in 1996 (a marked increase from the 2.6% of GDP in 1991 resulting from an earlier study). Further, results show a very pronounced shift of the focus of expenditure away from air protection and towards waste management.
Norway
The report (ACCT-EXP/99/4.2.7) provides a first overview and analysis of several data sources for the environmental protection expenditure account. Data sources include national accounts data. Integration would be possible with other data sources and surveys (e.g. on research and development, a survey of treatment plants by the Norwegian Pollution Control Authority, etc.). Currently, regular compilation of an environmental protection expenditure account is hampered by ongoing developments of the statistical system, including a shift towards electronic data exchange for local government units and ongoing improvements of the business register.
2. Key issues arising from recent applications
Several main lines of developments and trends can be derived from the recent reports. They are summarised below.
The statistical basis for environmental protection expenditure accounts is complex…
As illustrated by most reports, a comprehensive description of environmental expenditure requires the integration of a substantial number of different data sources in order to arrive at comprehensive, complete and balanced accounts. This underlines the importance of an accounting approach (including, as the Belgian report illustrates, an analysis of the organisation of environmental protection in a country). The Danish report shows that much of the data can be directly extracted from the national accounts.
… and improving
The primary data needed for environmental protection expenditure accounts are improving in many countries. Improvements include better business registers, electronic data exchange, revised national accounts, introduction of the new COFOG, new and improved surveys.
… this improvement may be rather slow
The downside of this development is that a systematic implementation of environmental protection expenditure accounts based on established data flows from other parts of the statistical system cannot be done in a very cost-effective way at present. In some countries the system to generate expenditure accounts will require continuous revision and adjustment to the changing statistical system.
… and may lead to marked increases in spending levels (and possibly changes in structure)
The German and Austrian results suggest that improvements of the statistical basis lead to marked increases in the level of expenditure. Proper primary data sources for specialised producers appear to be of particular importance. Such improvements require special attention and revision of earlier compilations so as to avoid breaks in time series. However, such revisions are not always possible which puts a constraint on the correct interpretation of changes in the structure of expenditure. For example, while the shift in the focus of expenditure towards waste management as observed in Germany and Austria is clearly a result of changes in policy focus, the impact of policy cannot be easily disentangled from the effect of better primary data on specialised producers.
Methodological developments
Methodological developments can be observed along several lines.
· The introduction of the concept of ‘environment-related expenditure’ as demonstrated by the first French report. This concept allows countries to tailor national publications towards national policy needs by adding to environmental protection expenditure those natural resource-related expenditure that are considered particularly relevant (e.g. recycling, water supply, management of forests, management of water bodies, urban amenities, energy savings, etc.). This approach (which was endorsed by the London Group – see separate document ‘Conclusions of the London Group’) allows to satisfy the expectations of policy and of the public at large nationally while maintaining full consistency with international standards
· Developments towards implementing the Resource Use and Management Accounts of the 1994 SERIEE system, as demonstrated by the second French report.
· Standardisation of data collection and extraction – illustrated inter alia by the Italian report – is important to obtain results that are independent of changes in staff.
· Capital Stock Accounts are a very helpful tool, important for the calculation of the consumption of fixed capital but also useful as a framework for estimating missing data.
· Particular attention must be given to capture changes over time correctly so as to maximise the usefulness of the results of expenditure accounts. Experience suggests that changes in policy focus may interact with changes in organisation of environmental protection (e.g. outsourcing by private businesses, privatisation or sub-contracting by public entities, etc.) and with improvements in the statistical basis. Studies and systems applications of expenditure accounts should be designed to facilitate revision of results obtained previously and to maintain – to the extent possible – consistency of the accounts over time.
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