Environmental data are typically observed, collected and compiled with a particular scientific, regulatory, statistical or administrative purpose in mind, and often use a variety of concepts, methods, classifications, frequencies and time references. As a result, environmental statistics that are derived from the data are sometimes not well integrated with one another, or with economic and social data.
An accounting approach brings greater discipline to the organisation of environmental data and their integration with economic and social data. In particular, the accounting approach:
- presents comparable information in a systematic fashion, using standard definitions;
- encourages the development of comprehensive and consistent data sets over time; and
- provides a framework from which a range of indicators can be produced.
The notion of accounting for the environment is becoming increasingly popular and the term can be used in a number of ways to mean a variety of things. Some examples include:
Whilst each of these examples relate to reporting on, or an account of, environmental data, they do not necessarily take an accounting approach when organising that data.
As mentioned above, an accounting approach has a number of general benefits. Additional benefits can be obtained by using an environmental-economic accounting approach. Specifically, Environmental-Economic Accounts:
- enable the relationships between the environment and the economy to be analysed and understood, including understanding environmental and economic dependencies and outcomes;
- present environmental data using a framework that is consistent with broader economic data, such as those compiled in accordance with the widely used economic accounting framework, the System of National Accounts;
- show the distribution of environmental resources across different parts of the economy, which supports more targeted policy development;
- follow internationally accepted guidelines and facilitate international comparisons; and
- provide a system into which monetary valuations of environmental assets and environmental-related flows can be incorporated with physical data, so that monetary implications of environmental actions can be considered.
The most widely known economic accounting framework is the System of National Accounts (SNA) which is used to compile the main economic accounts of all major developed countries, including Australia. The SNA has a number of satellite frameworks, one being the System of Integrated Environmental and Economic Accounting (SEEA). SEEA is the de facto international standard for Environmental-Economic Accounts and is used by many countries, including Australia.
The Appendix includes a list of some reports that use an environmental-economic accounting approach.
How are Environmental–Economic Accounts used?
There has been a shift in policy focus away from considering the economy, society and the environment as separate issues, to a more integrated approach to decision-making. While general measures of environmental phenomena help guide certain aspects of environmental policy, many of the solutions that are promoted to address environmental issues also have significant economic and social effects. In addition, decisions made regarding economic and social policy have impacts on the environment which need to be understood in order to put relevant environmental policies in place. There is also an emerging need to be able to model and forecast what these impacts may be.
Environmental-Economic Accounts provide a framework for an integrated information system to support this broader policy focus. They bring together environmental and economic information in a common framework to measure the contribution of the environment to the economy, the impact of the economy on the environment, and the efficiency of the use of environmental resources within the economy.
Households are a key component of an Environmental-Economic Accounts framework. Social indicators such as average per capita water use, or household consumption of energy, can be derived from an Environmental-Economic Accounts framework, and this information can be linked to expenditure, income and demographic information for socio-economic analyses.
Environmental-Economic Accounts can complement what others are producing. For example, Australia’s National Greenhouse Accounts may be combined with a range of economic information, consistent with the SNA, to produce Environmental-Economic Accounts.
Environmental-Economic Accounting can allow the analysis of the effectiveness of specific environmental/economic policies, such as an emissions trading scheme. In Denmark, Statistics Denmark utilised existing information held by their Ministry of Climate in the CO2 emissions permit registry to describe the flow of CO2 permits within the Danish economy based on the Environmental-Economic Accounting framework. This link to the economy enables analyses of the relationship between CO2 permits and economic activity eg output, gross value added, and employment.
In Australia, the Australian Bureau of Statistics has used data from a variety of sources to describe the flow of water in the Australian economy using an Environmental-Economic Accounting framework. Statistics from Water Account, Australia and An Experimental Monetary Water Account for Australia can be used for determining efficient water allocation, achieving cost recovery for water infrastructure assets and analysing trade-offs between alternative water and economic policies.
Other presentations of environmental data
Environmental data is also often presented and reported using organising frameworks other than an accounting framework. One very common approach is thematic reporting on a set of indicators that cover an area of concern, whether it is the whole of the environment or a particular aspect such as water or greenhouse gas emissions. The Appendix includes a list of a few reports of this type.
There is a wide variety of environmental information produced in Australia for a diverse range of purposes. The scope and definition of environmental accounting in Australia is also quite broad and varied. At its broadest the concept refers to the implementation of consistent, standardised and reliable methods of accounting for Australia’s natural resources and ecosystem processes; and the provision of a framework to better integrate the information about the economy, environment and society to underpin sound decision-making.
Any presentation of environmental information, whether through an accounting approach or thematic reporting, is highly dependant on sound information sources. An organising framework for an environmental information system can provide the structure to enable meaningful presentation and comparison of data, over time and across different geographic dimensions.
Increasing understanding of the notion of environmental accounting has never been more relevant than now, with Australian governments, business and communities facing major issues such as climate change and increasingly scarce environmental resources.