Environmental accounting is an attempt to broaden the scope of the accounting frameworks used to assess economic performance, to take stock of elements that are not recorded in public or private accounting books. These gaps occur because the various costs of using nature are not captured, being considered, in many cases, as externalities that can be forwarded to others or postponed. Positive externalities—the natural resource—are depleted with no recording in National Accounts (while companies do record them as depreciation elements). Depletion of renewable resource results in degradation of the environment, which adds to negative externalities resulting from pollution and fragmentation of cyclic and living systems. Degradation, or its financial counterpart in depreciation, is not recorded at all. Therefore, the indicators of production, income, consumption, saving, investment, and debts on which many economic decisions are taken are flawed, or at least incomplete and sometimes misleading, when immediate benefits are in fact losses in the long run, when we consume the reproductive functions of our capital. Although national accounting has been an important driving force in change, environmental accounting encompasses all accounting frameworks including national accounts, financial accounting standards, and accounts established to assess the costs and benefits of plans and projects. There are several approaches to economic environmental accounting at the national level. Of these approaches, one purpose is the calculation of genuine economic welfare by taking into account losses from environmental damage caused by economic activity and gains from unrecorded services provided by Nature. Here, particular attention is given to the calculation of a “Green GDP” or “Adjusted National Income” and/or “Genuine Savings” as well as natural assets value and depletion. A different view considers the damages caused to renewable natural capital and the resulting maintenance and restoration costs. Besides approaches based on benefits and costs, more descriptive accounts in physical units are produced with the purpose of assessing resource use efficiency. With regard to natural assets, the focus can be on assets directly used by the economy, or more broadly, on ecosystem capacity to deliver services, ecosystem resilience, and its possible degradation. These different approaches are not necessarily contradictory, although controversies can be noted in the literature. The discussion focuses on issues such as the legitimacy of combining values obtained with shadow prices (needed to value the elements that are not priced by the market) with the transaction values recorded in the national accounts, the relative importance of accounts in monetary vs. physical units, and ultimately, the goals for environmental accounting. These goals include assessing the sustainability of the economy in terms of conservation (or increase) of the net income flow and total economic wealth (the weak sustainability paradigm), in relation to the sustainability of the ecosystem, which supports livelihoods and well-being in the broader sense (strong sustainability). In 2012, the UN Statistical Commission adopted an international statistical standard called, the “System of Environmental-Economic Accounting Central Framework” (SEEA CF). The SEEA CF covers only items for which enough experience exists to be proposed for implementation by national statistical offices. A second volume on SEEA-Experimental Ecosystem Accounting (SEEA-EEA) was added in 2013 to supplement the SEEA CF with a research agenda and the development of tests. Experiments of the SEEA-EEA are developing at the initiative of the World Bank (WAVES), UN Environment Programme (VANTAGE, ProEcoServ), or the UN Convention on Biological Diversity (CBD) (SEEA-Ecosystem Natural Capital Accounts-Quick Start Package [ENCA-QSP]). Beside the SEEA and in relation to it, other environmental accounting frameworks have been developed for specific purposes, including material flow accounting (MFA), which is now a regular framework at the Organisation for Economic Co-operation and Development (OECD) to report on the Green Growth strategy, the Intergovernmental Panel on Climate Change (IPCC) guidelines for the the UN Framework Convention on Climate Change (UNFCCC), reporting greenhouse gas emissions and carbon sequestration. Can be considered as well the Ecological Footprint accounts, which aim at raising awareness that our resource use is above what the planet can deliver, or the Millennium Ecosystem Assessment of 2005, which presents tables and an overall assessment in an accounting style. Environmental accounting is also a subject of interest for business, both as a way to assess impacts—costs and benefits of projects—and to define new accounting standards to assess their long term performance and risks.
Leon C. Braat
The concept of ecosystem services considers the usefulness of nature for human society. The economic importance of nature was described and analyzed in the 18th century, but the term ecosystem services was introduced only in 1981. Since then it has spurred an increasing number of academic publications, international research projects, and policy studies. Now a subject of intense debate in the global scientific community, from the natural to social science domains, it is also used, developed, and customized in policy arenas and considered, if in a still somewhat skeptical and apprehensive way, in the “practice” domain—by nature management agencies, farmers, foresters, and corporate business. This process of bridging evident gaps between ecology and economics, and between nature conservation and economic development, has also been felt in the political arena, including in the United Nations and the European Union (which have placed it at the center of their nature conservation and sustainable use strategies). The concept involves the utilitarian framing of those functions of nature that are used by humans and considered beneficial to society as economic and social services. In this light, for example, the disappearance of biodiversity directly affects ecosystem functions that underpin critical services for human well-being. More generally, the concept can be defined in this manner: Ecosystem services are the direct and indirect contributions of ecosystems, in interaction with contributions from human society, to human well-being. The concept underpins four major discussions: (1) Academic: the ecological versus the economic dimensions of the goods and services that flow from ecosystems to the human economy; the challenge of integrating concepts and models across this paradigmatic divide; (2) Social: the risks versus benefits of bringing the utilitarian argument into political debates about nature conservation (Are ecosystem services good or bad for biodiversity and vice versa?); (3) Policy and planning: how to value the benefits from natural capital and ecosystem services (Will this improve decision-making on topics ranging from poverty alleviation via subsidies to farmers to planning of grey with green infrastructure to combining economic growth with nature conservation?); and (4) Practice: Can revenue come from smart management and sustainable use of ecosystems? Are there markets to be discovered and can businesses be created? How do taxes figure in an ecosystem-based economy? The outcomes of these discussions will both help to shape policy and planning of economies at global, national, and regional scales and contribute to the long-term survival and well-being of humanity.
David A. Robinson, Fiona Seaton, Katrina Sharps, Amy Thomas, Francis Parry Roberts, Martine van der Ploeg, Laurence Jones, Jannes Stolte, Maria Puig de la Bellacasa, Paula Harrison, and Bridget Emmett
Soils provide important functions, which according to the European Commission include: biomass production (e.g., agriculture and forestry); storing, filtering, and transforming nutrients, substances, and water; harboring biodiversity (habitats, species, and genes); forming the physical and cultural environment for humans and their activities; providing raw materials; acting as a carbon pool; and forming an archive of geological and archaeological heritage, all of which support human society and planetary life. The basis of these functions is the soil natural capital, the stocks of soil material. Soil functions feed into a range of ecosystem services which in turn contribute to the United Nations sustainable development goals (SDGs). This overarching framework hides a range of complex, often nonlinear, biophysical interactions with feedbacks and perhaps yet to be discovered tipping points. Moreover, interwoven with this biophysical complexity are the interactions with human society and the socioeconomic system which often drives our attitudes toward, and the management and exploitation of, our environment. Challenges abound, both social and environmental, in terms of how to feed an increasingly populous and material world, while maintaining some semblance of thriving ecosystems to pass on to future generations. How do we best steward the resources we have, keep them from degradation, and restore them where necessary as soils underpin life? How do we measure and quantify the soil resources we have, how are they changing in time and space, what can we predict about their future use and function? What is the value of soil resources, and how should we express it? This article explores how soil properties and processes underpin ecosystem services, how to measure and model them, and how to identify the wider benefits they provide to society. Furthermore, it considers value frameworks, including caring for our resources.
Marcello Hernández-Blanco and Robert Costanza
“The Anthropocene” has been proposed as the new geological epoch in which we now live. We have left behind the Holocene, an epoch of stable climate conditions that permitted the development of human civilization. To address the challenges of this new epoch, humanity needs to take an active role as stewards of the integrated Earth System, collaborating across scales and levels with a shared vision and values toward maintaining the planet within a safe and just operating space. In September 2015, the United Nations adopted the 2030 Agenda for Sustainable Development, which has at its core 17 Sustainable Development Goals (SDGs). These goals built on and superseded the Millennium Development Goals (MDGs). Unlike the MDGs, they apply to all countries and represent universal goals and targets that articulate the need and opportunity for the global community to build a sustainable and desirable future in an increasingly interconnected world. The global health crisis caused by COVID-19 has been a strong hit to a vulnerable development system, exacerbating many of the challenges that humanity faces in the Anthropocene. The pandemic has touched all segments of the global populations and all sectors of the economy, with the world’s poorest and most vulnerable people the most affected. Understanding the interdependence between SDGs is a key area of research and policy, which will require novel approaches to assess and implement systemic global strategies to achieve the 2030 agenda. Global society requires a new vision of the economy, one in which the economy is recognized to be a subsystem of the broader Earth System (a single complex system with reasonably well-defined states and transitions between them), instead of viewing nature as just another source of resources and sink for wastes. This approach will require acknowledging the value of nature, which, although it has been widely recognized in the scientific literature, has been often ignored by decision-makers. Therefore, there is a need to replace the static, linear model of gross domestic product (GDP) with more dynamic, integrated, natural, and human system models that incorporate the dynamics of stocks, flows, trade-offs, and synergies among the full range of variables that affect the SDGs and human and ecosystem well-being. The SDGs will only be achieved if humanity chooses a development path focused on thriving in a broad and integrated way, rather than growing material consumption at all costs. Achieving the SDGs is a future where society reconnects with the rest of nature and develops within its planetary boundaries. The new economics and the visions and strategies are aimed at achieving these shared global goals.
Edward B. Barbier
Globally, around 1.5 billion people in developing countries, or approximately 35% of the rural population, can be found on less-favored agricultural land (LFAL), which is susceptible to low productivity and degradation because the agricultural potential is constrained biophysically by terrain, poor soil quality, or limited rainfall. Around 323 million people in such areas also live in locations that are highly remote, and thus have limited access to infrastructure and markets. The households in such locations often face a vicious cycle of declining livelihoods, increased ecological degradation and loss of resource commons, and declining ecosystem services on which they depend. In short, these poor households are prone to a poverty-environment trap. Policies to eradicate poverty, therefore, need to be targeted to improve the economic livelihood, productivity, and income of the households located on remote LFAL. The specific elements of such a strategy include involving the poor in paying for ecosystem service schemes and other measures that enhance the environments on which the poor depend; targeting investments directly to improving the livelihoods of the rural poor, thus reducing their dependence on exploiting environmental resources; and tackling the lack of access by the rural poor in less-favored areas to well-functioning and affordable markets for credit, insurance, and land, as well as the high transportation and transaction costs that prohibit the poorest households in remote areas to engage in off-farm employment and limit smallholder participation in national and global markets.
Human activities in the Anthropocene are influencing the twin processes of biodiversity generation and loss in complex ways that threaten the maintenance of biodiversity levels that underpin human well-being. Yet many scientists and practitioners still present a simplistic view of biodiversity as a static stock rather than one determined by a dynamic interplay of feedback processes that are affected by anthropogenic drivers. Biodiversity describes the variety of life on Earth, from the genes within an organism to the ecosystem level. However, this article focuses on variation among living organisms, both within and between species. Within species, biodiversity is reflected in genetic, and consequent phenotypic, variations among individuals. Genetic diversity is generated by germ line mutations, genetic recombination during sexual reproduction, and immigration of new genotypes into populations. Across species, biodiversity is reflected in the number of different species present and also, by some metrics, in the evenness of their relative abundance. At this level, biodiversity is generated by processes of speciation and immigration of new species into an area. Anthropogenic drivers affect all these biodiversity generation processes, while the levels of genetic diversity can feed back and affect the level of species diversity, and vice versa. Therefore, biodiversity maintenance is a complex balance of processes and the biodiversity levels at any point in time may not be at equilibrium. A major concern for humans is that our activities are driving rapid losses of biodiversity, which outweigh by orders of magnitude the processes of biodiversity generation. A wide range of species and genetic diversity could be necessary for the provision of ecosystem functions and services (e.g., in maintaining the nutrient cycling, plant productivity, pollination, and pest control that underpin crop production). The importance of biodiversity becomes particularly marked over longer time periods, and especially under varying environmental conditions. In terms of biodiversity losses, there are natural processes that cause roughly continuous, low-level losses, but there is also strong evidence from fossil records for transient events in which exceptionally large loss of biodiversity has occurred. These major extinction episodes are thought to have been caused by various large-scale environmental perturbations, such as volcanic eruptions, sea-level falls, climatic changes, and asteroid impacts. From all these events, biodiversity has shown recovery over subsequent calmer periods, although the composition of higher-level evolutionary taxa can be significantly altered. In the modern era, biodiversity appears to be undergoing another mass extinction event, driven by large-scale human impacts. The primary mechanisms of biodiversity loss caused by humans vary over time and by geographic region, but they include overexploitation, habitat loss, climate change, pollution (e.g., nitrogen deposition), and the introduction of non-native species. It is worth noting that human activities may also lead to increases in biodiversity in some areas through species introductions and climatic changes, although these overall increases in species richness may come at the cost of loss of native species, and with uncertain effects on ecosystem service delivery. Genetic diversity is also affected by human activities, with many examples of erosion of diversity through crop and livestock breeding or through the decline in abundance of wild species populations. Significant future challenges are to develop better ways to monitor the drivers of biodiversity loss and biodiversity levels themselves, making use of new technologies, and improving coverage across geographic regions and taxonomic scope. Rather than treating biodiversity as a simple stock at equilibrium, developing a deeper understanding of the complex interactions—both between environmental drivers and between genetic and species diversity—is essential to manage and maintain the benefits that biodiversity delivers to humans, as well as to safeguard the intrinsic value of the Earth’s biodiversity for future generations.