APPENDIX A - FRAMEWORKS AND INDICATORS

Environmental reporting involves a range of physical, chemical, biological and/or socioeconomic indicators that represent the key elements of complex ecosystems or environmental issues.

Selecting which indicators to focus on depends on which model or framework is used to examine environmental issues or progress. Many different approaches are used to observe environmental trends depending on the context and purpose. There is no universal set of environmental indicators and the selection of different indicators varies by country and by region. For example, a country whose economy relies heavily on fisheries will focus on trends such as level of fish stocks and marine pollution levels, while a landlocked country will be more interested in trends such as agricultural land use and air pollution.

Environmental indicators are often grouped into different types including:

• state of the environment indicators, which reflect the quality of the environment
• sustainable development indicators, which are long-term measures
• environmental economic and accounting indicators, which evaluate cost-benefits.

Some of the most common approaches are outlined below.


PRESSURE - STATE - RESPONSE MODEL

A popular environmental model is the Organisation for Economic Co-operation and Development's (OECD's) pressure–state–response (PSR) framework. The PSR framework is based on the linkages between human activities, the state of the environment and the societal and economic responses to environmental change.

Using this approach, indicators are classified according to whether they signal:

• Pressure indicators – which describe the pressures from human activity that affect the natural environment.
• The state (or condition) indicators – which measure the quality of the environment and the functioning of important environmental processes.
• Response indicators – which identify the efforts by society to address the pressures.

The OECD warns that the PSR model tends to suggest linear relationships in the human activity-environment interaction, which may obstruct the view of more complex relationships in ecosystems and in environment-economy interactions.

State of the Environment reporting

The OECD's PSR model provides the basis for the Australian Government's State of the Environment (SoE) reporting. Described as a national stocktake of the Australian environment, SoE reports have been released five-yearly, starting in 1996. SoE 2006 features a comprehensive suite of key environmental indicators, developed by independent experts, for each of its environmental themes – Atmosphere, Land, Inland Waters, Coasts and Oceans, Biodiversity, Human Settlements, Natural and Cultural Heritage, and Australia's Antarctic Territories.

Most state and territory governments in Australia prepare SoE reports on a regular basis and it is a legislative requirement in New South Wales, the Australian Capital Territory, Tasmania, Queensland and South Australia.


SUSTAINABILITY REPORTING FRAMEWORKS

The indicators used for sustainability reporting differ from SoE reporting as they are based on different models that combine social, economic and environmental trends, and the inter-relationships between these systems. The OECD has taken special responsibility for leadership in sustainable development reporting. Most OECD governments have national sustainable development strategies in place, prepared as part of the United Nations Programme for Action for Sustainable Development, Agenda 21, signed at the Rio Earth Summit in 1992.

Australian Headline Sustainability Indicators

Australia developed its National Strategy for Ecologically Sustainable Development (NSESD) in 1992 to address many key areas for action identified in Agenda 21. The NSESD defines ecologically sustainable development as “using, conserving and enhancing the community's resources so that ecological processes, on which life depends, are maintained, and the total quality of life, now and in the future, can be increased”.

In 2001, Commonwealth Ministers endorsed a set of headline sustainability indicators for Australia, selected to collectively measure its national performance against the core objectives of the NSESD. The 2002 publication Are We Sustaining Australia: A Report Against Headline Sustainability Indicators for Australia was the first report against these headline sustainability indicators. Comparing successive sets of indicators will help to determine Australia's progress towards sustainability. The report is available from the Department of Environment and Heritage web site at: <http://www.environment.gov.au/esd/national/indicators/report/index.html>.

Other sustainability reporting frameworks include The Natural Step (discussed below), as well as those developed for specific industries and agendas such as The Montreal Process for the Conservation and Sustainable Management of Temperate and Boreal Forests <http://www.mpci.org>, and Agricultural Sustainability Indicators for Regions of South Australia <http://www.pir.sa.gov.au/pirsa/communities>.

The Natural Step

The Natural Step (TNS) Framework is a science and systems-based approach to organisational planning for sustainability. It provides a practical set of criteria that can be used to direct social, environmental, and economic actions. More information is at: <http://www.naturalstep.org>.

Decoupling indicators

Decoupling indicators monitor the extent to which economic growth is becoming decoupled from pressures on the environment, in order to make an assessment of whether levels of growth are sustainable in the longer term. An example of this might be when a developed nation experiences economic growth without a corresponding increase in its greenhouse gas emissions. This sort of assessment is relatively straightforward in some cases, such as the sustainability of fish stocks. In other cases, such as the emission of air pollutants, government targets can be used as a proxy for the environmental limit. In other cases, such as resource use, further research is needed before either limits or targets can be established. Caution is required when reporting on decoupling indicators, which may appear to convey a positive message although in practice the cumulative impact of the pressure on the environment is unsustainable at a national, local or seasonal level. For example, the link between water use and its impact on the environment is extremely sensitive to when and where the water is extracted, as well as the total amount extracted. For example, taking water out of the Murray-Darling Basin, which lowers the water level at certain times can affect the breeding patterns of fish and birds that live in or near those rivers.

Community environmental reporting – Local Agenda 21

Local Agenda 21 provides the opportunity for local governments to work with their local communities to create ecologically sustainable development (ESD) agendas for the 21st century. It recognises that local governments and their wider communities can serve as leaders to achieve ecologically sustainable development through integrating environmental, social and economic goals.

In South Australia, councils have developed a practical guide for using community indicators to monitor the strategic directions of a local government area or region or to measure progress and sustainability of a local council. See <http://www.onkaparingacity.com/>.


MEASURES OF AUSTRALIA'S PROGRESS MODEL

The ABS' Measures of Australia's Progress (MAP) provides 14 headline indicators to measure economic, social and environmental progress.

MAP 2006 environmental headline indicators are:

• threatened birds and mammals
• annual area of land cleared
• salinity, assets at risk in areas affected, or with a high potential to develop salinity
• water management areas, proportion where use exceeded 70% of sustainable yield
• fine particle concentrations, days health standards exceeded, selected capital cities
• net greenhouse gas emissions.

The headline indicators are concerned with assessing dimensions of Australia's progress, rather than explaining the underlying causes of change. MAP's supplementary indicators are intended to supplement the information provided by the headline indicators. For the environment, they included trends in threatened species, mammalian extinctions, species-threatening invasive animals, weeds of national significance distribution, native forest area, water diversions in the Murray-Darling Basin and days when ozone concentrations exceeded guidelines.


COMPOSITE (OR AGGREGATED) INDICATORS

Composite indicators combine disparate measures of progress into just one number. For example, to measure the quality of life in a nation, approaches such as the Genuine Progress Indicator (GPI), attempt to adjust traditional measures of economic activity, such as gross domestic product (GDP), to account for changes to environmental and social capital. For example, a GPI might begin with GDP and then make allowances such as taking out spending to offset social and environmental costs and accounting for longer term environmental damage and the depreciation of natural capital. The Australia Institute has calculated a Genuine Progress Indicator for Australia. Details are available at: <http://www.gpionline.net>. Another example of a composite indicator is the Ecological Footprint.

Composite indicators are valued for their ability to integrate large amounts of information into a single ranking that can be easily understood. However, because their construction is not straightforward they can provide misleading information.

The Ecological Footprint

The Ecological Footprint framework varies from SoE reporting and sustainability reporting in that it acknowledges ecological limits by suggesting whether a population is living within its ecological means. It also places less emphasis on the social and economic aspects of sustainability. Expressed as an area of land, the Ecological Footprint is a measure of how much individuals, organisations, cities, regions and nations, or humanity as a whole, consumes and compares this amount to the available resources.
The more natural resources consumed per head of population and the more waste that is produced, the larger the 'footprint' (area of land). Ecological footprint estimates are based on assumptions that may not be applicable to all places.

The Powerhouse Museum has developed a Footprint calculator calibrated to Australian data to give individuals a rough estimate of their footprint. More information is available at: <http://www.powerhousemuseum.com/education/ecologic/resources.htm>.


ACCOUNTING FRAMEWORKS

SEEA and SESAME

The System of National Accounts (SNA 1993) is an international framework for economic accounting. Australia’s national accounts record the essential elements of the Australian economy: production; income; consumption; assets and liabilities; and wealth. The System of Integrated Environmental and Economic Accounting 2002 (SEEA) complements the SNA by providing an international standard for incorporating environmental and social effects into a national accounting framework. SEEA describes techniques for valuing environmental goods and services that are not part of the market economy, for example, accounting for stocks and flows of natural resources.

The Dutch Government has compiled a System of Economic and Social Accounting Matrices and Extensions (SESAME), which is also an extension to the standard national accounts framework. Key features are data integration and multiple classifications, which provide links (both conceptual and numerical) between monetary and non-monetary units. SESAME can be used to analyse the links between the structure of an economy, people and the environment. Countries such as Canada and Norway use a “capital” approach to measure sustainability where the focus of measurement is on the stocks and flows of different national assets.

Triple bottom line

Triple Bottom Line (TBL) became popular in the late 1990s and describes reporting that goes beyond a financial “bottom line” to also include assessing and reporting environmental and social outcomes. This notion of reporting against economic, social and environmental performance is directly tied to the concept of sustainable development. A number of companies in Australia produce TBL reports. The Department of the Environment & Heritage web site has many Public Environmental Reports available electronically at: <http://www.environment.gov.au/settlements/industry/finance/>.

The CSIRO report, Balancing Act, applies the principle of triple bottom line reporting at a national economic sector level for 135 sectors of the Australian economy. The analysis merged the System of National Accounts input-output tables published by the ABS, with a range of social and environmental indicators. More information is available at:
<http://www.cse.csiro.au/research/balancingact/index.htm>.

The Department of the Environment & Heritage publishes Australian guidelines for environmental reporting of organisations in Triple bottom line reporting in Australia: a guide to reporting against environmental indicators (2003), available at: <http://www.environment.gov.au/settlements/industry/corporate/reporting/>.