Integrated Environmental and Economic Accounting and Water Resource Accounting

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Integrated Environmental and Economic Accounting
and Water Resource Accounting

• Alessandra Alfieri
• United Nations Statistics Division

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Outline

• Recent international developments in
  environmental-economic accounting
• Objectives of the SEEA
• Water resources accounting modules
• Uses of water accounting
• Considerations on challenges and advantages in
  implementation

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Recent international developments

• Completion of the manual on Integrated
  Environmental and Economic Accounting (UN,
  Eurostat, IMF, OECD and World Bank) in
  cooperation with the London Group
• Elaboration of a manual on water resources
  accounting (UNSD) final draft to be completed
  in Fall 2005

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Recent international developments

• United Nations Statistical Commission approves
  the creation of the UN Committee on
  Environmental-economic Accounting, whose main
  objective is to mainstream environmental
  accounting in official statistics
• Areas of responsibility of the UN Committee
• Coordination
• Promotion of environmental accounting
• Methodological development
• Technical cooperation
• Data harmonization

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UNSD Strategy in water accounting

• Finalization of the handbook of water accounting
  for submission to the UN Committee (July 2005)
• Develop an implementation strategy of water
  accounting and statistics with the objective of
  promoting the implementation in countries
• Harmonize environment statistics and accounting
• Promote water accounting
• UNSD will organize an international meeting
  bringing users and producers of water accounting
  and statistics next year
• Organize international workshops

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SEEA

• Satellite system of the SNA to better measure the
  interrelationship between the economy and the
  environment
• It is a flexible data system that allows
  presentation of environmental and economic
  information, in physical and monetary terms, in a
  common data framework, thus facilitating
  integrated analysis

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Objectives of the SEEA

• Develop a consistent data system for economic and
  environmental data
• Provide a common system to derive indicators and
  measure sustainable development
• Provide a better measure of national wealth to
  include not only produced capital but also
  natural capital

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Objectives (contd)

• Assess availability of natural resources, their
  use in production and final consumption and the
  cost of depletion
• Assess the level and cost of emissions and other
  waste from production and consumption
• Identify monetary flows related to the
  environment which are already within the SNA
  (e.g. expenditures on environmental protection,
  environmental taxes and subsidies, etc.)

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Why an accounting approach?

• Encourages the adoption of standards
• Introduces accounting concepts to environmental
  statistics thus improving economic and
  environmental statistics by encouraging
  consistency
• Implicitly defines ownership and hence
  responsibility for environmental impacts
• Encourages the development of comprehensive data
  sets
• Facilitates international comparisons

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Water Resources Accounting

• A tool for integrated water resources management
• Describes the relationships between the water
  resources system with the economy
• Facilitates the design of economic and water
  policies and the analysis of the impacts of these
  policies

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What does it measure?

• Stocks of all water assets and their quality
• Flows of water between the economy and the
  environment (use and returns of water by industry
  and households)
• Emission accounts
• Cost of abstraction, distribution, purification
  and treatment of water
• Financing of water related activities (taxes and
  subsidies)
• Water management expenditures (by whom)
• Asset accounts
• Quality accounts

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Flows between the economy and the environment
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Physical and monetary flow accounts

• Comprehensive description of the use of water in
  the economy (industries and households)
• Description of returns of wastewater to the
  environment by economic agents
• Emission accounts identification of wastewater
  treated and discharged directly into the
  environment

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Monetary information in the flow accounts

• Cost of extraction, purification and distribution
  of water
• Financing of the costs of water (who is paying
  for the services)
• Investment in water assets
• Expenditures for water management and protection

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Indicators

• Water abstraction by sector and by sources
• Water discharge by sector
• Water abstraction/GDP by sector
• Water abstraction/number of employee
• Water abstraction per capita
• Water consumption by sector
• Cost recovery Is the government recovering the
  costs of collection, purification, distribution
  and treatment of water through the fees charged?

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Index of water use in Botswana 1993 1.00
Pula of GDP per m3 water
Volume of water
Per capita water use
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Water use by natural source in Botswana
57
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20
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Env-Eco Profiles water use, VA, employment by
industry
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Value-Added per m3 water use
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• WATER USE IN NAMIBIA, SOUTH AFRICA, BOTSWANA IN
  1996

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• RANDS of VALUED-ADDED per M3 of WATER, 1996 (7
  rands US1 in 2000)

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Emission accounts

• They describe the amount of pollutants
• added to water by an economic activity
• removed from water by an economic activity
• discharged back into the environment
• Emission from point sources, although efforts are
  being made to describe also emissions from
  agriculture as well as landfill sites
• Describe who pollutes and how much and where
  (surface or ground water)
• Look at concentration of pollutants in incoming
  and outgoing flows, emissions is the difference
  between incoming and outgoing pollutants

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Emission accounts - Indicators

• Pollution intensity ratios by industry (with
  reference to environmental data, value added or
  employment)
• Environmental themes
• Analysis with environmental expenditures over
  time give an indication of the effectiveness of
  these expenditures

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Asset Accounts
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Water resources

• EA.13 Water Resources
• EA.131 Surface Water
• EA.1311 Reservoirs
• EA.1312 Lakes
• EA.1313 Rivers
• EA.1314 Soil water
• EA.1315 Snow and ice
• EA.132 Groundwater

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Main flows within the physical water resource
system
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Indicators - Water asset accounts

• Total renewable resources per capita
• Total water available per capita
• Abstraction/Total renewable resources
• gt1 not sustainable
• gt0.4 water stress
• Depletion of ground and surface water

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Quality Accounts

• They are very important as the quality of water
  limits its use
• Define quality classes according to their
  relevance in the region/country (i.e. salinity
  level, BOD, etc.)
• Result of modeling exercises more removed from
  the conventional accounting approach

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Quality accounts
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Quality accounts - Issues

• How to define the quality classes?
• How to aggregate across pollutants? How to
  aggregate across stretches of rivers?
• Is it relevant at the national level? Is it
  relevant for the accounting period? Or should the
  information be collected more frequently?
• There are solutions being proposed in the
  handbook!

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Water Accounts Challenges in implementation

• Data is dispersed and often not available in the
  form needed
• Hydrological year and accounting period may not
  coincide
• Spatial and temporal variability
• No common language between hydrologists and
  national accountants/statisticians
• Big task!

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Why should we bother? Uses

• MONITORING
• state of the water resources
• progress toward meeting goals identified in
  policies and strategic plans
• HOW?
• Indicators of sustainability, macroeconomic
  water related
• Indicators of impact of the economy on
  environment
• Indicators of progress toward meeting specific
  environmental goals

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Why should we bother? Uses (2)

• ANALYSIS
• To design better regulations and environmental
  instruments
• To design better water management policies
• To integrate water issues into mainstream
  economic decision making
• To assess alternative development paths
• To design policies to achieve sustainable
  development

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Final remarks

• Do it in steps
• Establish priorities and delineation of the
  framework
• Institutional aspect a key element in the
  implementation
• Cross-training between national accountants and
  water experts to speak the same language