Ecosystem Accounting Takes Off

Ecosystem Accounting Takes Off

The United Nations Statistical Commission, at its 52nd Session on 1-5 March 2021, is launching Ecosystem Accounting as an extension of its System of Environmental-Economic Accounting (SEEA). This represents a significant step forward in taking national statistics beyond GDP as a measure of progress or (assumed) wellbeing. The ecosystem accounting framework includes information on ecosystem extent, ecosystem condition, ecosystem services and monetary values of ecosystem services and assets, but it does not include the value of the wider social benefits of ecosystems, including their non-use values. The following are excerpts from the introduction to the final version as presented to the Statistical Commission. Even if the system cannot capture all the values of nature, as it itself admits, every effort should be made to push for its implementation as an important step forward.

It is well established that healthy ecosystems and biodiversity are fundamental to supporting and sustaining our wellbeing, our local communities and our economies. However, our environment is under pressure and there are consequential risks that we face in securing and improving our livelihoods. These challenges have been recognised at local, national and global levels. Global responses have been articulated clearly in the Sustainable Development Goals and other global agreements such as the Paris Agreement on limiting the effects of climate change and the Global Biodiversity Framework to conserve biodiversity.

In addition, there has been growing recognition that the degradation of nature is not purely an environmental issue requiring environmental policy responses. Thus, decision makers across all sectors need to consider their environmental context and the associated dependencies and impacts. Consequently, establishing agreed and ongoing measurement of changes in the state of the environment and the relationship to economic and other human activity is central to ensure that biodiversity and ecosystems are mainstreamed in decision-making processes, including those concerning our economic and financial systems.

Ecosystem Accounting

The System of Environmental-Economic Accounting—Ecosystem Accounting (SEEA EA) is a spatially-based, integrated statistical framework for organizing biophysical information about ecosystems, measuring ecosystem services, tracking changes in ecosystem extent and condition, valuing ecosystem services and assets and linking this information to measures of economic and human activity. It was developed by a multidisciplinary group of experts to respond to a range of policy demands and challenges with a focus on making visible the contributions of nature to the economy and people, and better recording the impacts of economic and other human activity on the environment. To this end, ecosystem accounting incorporates a wider range of benefits to people than captured in standard economic accounts and provides a structured approach to assessing the dependence and impacts of economic and human activity on the environment.

The SEEA EA complements the measurement of the relationship between the environment and the economy described in the SEEA Central Framework. The SEEA EA’s data on ecosystems can be combined with the data from the SEEA Central Framework accounts on environmental pressures, individual resource stocks and environmental responses in the form of expenditures, taxes and subsidies, to provide a comprehensive picture.

The SEEA EA applies the accounting principles of the 2008 SNA, the statistical framework for the measurement of the economy. By applying national accounting principles, the SEEA framework allows for a unique integration of environmental and economic data to support decision making. The harmonization of these data is intended to contribute to mainstreaming the use of environmental data on ecosystems in economic decision making and to supporting the use of economic data in environmental decision making.

The use of an accounting approach takes advantage of the inherent structure of accounts wherein both stocks and flows are part of a single recording system. In this context, the basic accounting principles are applied to the organisation of data in both physical and monetary terms to provide an integrated, coherent and consistent set of data. Further, the use of an accounting approach envisages comparable, regular and ongoing measurement.

Coverage and interpretation

The SEEA EA reflects the integration of the latest knowledge, methods and techniques in the measurement of ecosystems. Nonetheless, it is recognised that there are challenges in implementation and interpretation that will require ongoing attention. It is expected that the knowledge about ecosystem accounting, as well as understanding of the data sources and methods used to compile accounts, will evolve over time as a result of widespread implementation of these accounts. Consequently, as with all statistical methodology documents, it will be necessary to refine and revise it in the future and to continue the development of technical guidance and related material to support implementation and interpretation.

The SEEA EA is comprehensive in terms of its coverage of ecosystems, including all terrestrial, freshwater, marine and subterranean ecosystem realms. Further, in describing the connection between ecosystems and economic and human activity, it has a deliberate focus on ecosystem services reflecting the many direct and indirect uses of ecosystems. However, this coverage does not encompass all of the potential connections with ecosystems. Specifically, the measurement scope of the SEEA EA does not directly encompass the importance of ecosystems arising from their ongoing existence and only captures a portion of significant cultural and spiritual relationships we have with the environment.

In addition, in the context of monetary valuation, the SEEA EA applies the concept of exchange values in line with standard economic accounting principles and to support comparison to standard economic and financial data. While these values are useful in many contexts, they will not be equivalent to monetary values that incorporate the wider social benefits of ecosystems. Measurement of the economic value of these social benefits, while important, goes beyond the scope of the SEEA EA.

More generally, it is emphasised that monetary values from the accounts and the wider economic values just described will not fully reflect the importance of ecosystems for people and the economy. Assessing the importance of ecosystems will therefore require consideration of a wide range of information beyond data on the monetary value of ecosystems and their services. This will include data on the biophysical characteristics of ecosystems and data on the characteristics of the people, businesses and communities that are dependent on them.

While the SEEA EA does not incorporate all data that may be relevant in assessing the relationship between the environment and economic and human activity, it provides a structured framework for organising data that can support further analysis and place various perspectives in context.

The SEEA EA is a system conceived as an integrated, internally consistent series of accounts. Generally, the compilation of accounts in monetary terms will require the use of data in physical terms. To support interpretation, it is recommended that when monetary accounts are released, the associated data in physical terms, for example concerning changes in ecosystem extent and condition and flows of ecosystem services in physical terms, are also released. This will aid appropriate interpretation and application of the monetary data in policy and decision making. Interpretation and analysis of ecosystem accounting data will also be supported through the use of other data such as concerning environmental protection expenditure, industry value added, employment and population.

Source: System of Environmental-Economic Accounting – Ecosystem Accounting: Final Draft, Version 5 February 2021. 350 p. https://unstats.un.org/unsd/statcom/52nd-session/documents/BG-3f-SEEA-E…