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Article

Jean-Louis Weber

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 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.

Article

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.

Article

Elisabet Lindgren and Thomas Elmqvist

Ecosystem services refer to benefits for human societies and well-being obtained from ecosystems. Research on health effects of ecosystem services have until recently mostly focused on beneficial effects on physical and mental health from spending time in nature or having access to urban green space. However, nearly all of the different ecosystem services may have impacts on health, either directly or indirectly. Ecosystem services can be divided into provisioning services that provide food and water; regulating services that provide, for example, clean air, moderate extreme events, and regulate the local climate; supporting services that help maintain biodiversity and infectious disease control; and cultural services. With a rapidly growing global population, the demand for food and water will increase. Knowledge about ecosystems will provide opportunities for sustainable agriculture production in both terrestrial and marine environments. Diarrheal diseases and associated childhood deaths are strongly linked to poor water quality, sanitation, and hygiene. Even though improvements are being made, nearly 750 million people still lack access to reliable water sources. Ecosystems such as forests, wetlands, and lakes capture, filter, and store water used for drinking, irrigation, and other human purposes. Wetlands also store and treat solid waste and wastewater, and such ecosystem services could become of increasing use for sustainable development. Ecosystems contribute to local climate regulation and are of importance for climate change mitigation and adaptation. Coastal ecosystems, such as mangrove and coral reefs, act as natural barriers against storm surges and flooding. Flooding is associated with increased risk of deaths, epidemic outbreaks, and negative health impacts from destroyed infrastructure. Vegetation reduces the risk of flooding, also in cities, by increasing permeability and reducing surface runoff following precipitation events. The urban heat island effect will increase city-center temperatures during heatwaves. The elderly, people with chronic cardiovascular and respiratory diseases, and outdoor workers in cities where temperatures soar during heatwaves are in particular vulnerable to heat. Vegetation and especially trees help in different ways to reduce temperatures by shading and evapotranspiration. Air pollution increases the mortality and morbidity risks during heatwaves. Vegetation has been shown also to contribute to improved air quality by, depending on plant species, filtering out gases and airborne particulates. Greenery also has a noise-reducing effect, thereby decreasing noise-related illnesses and annoyances. Biological control uses the knowledge of ecosystems and biodiversity to help control human and animal diseases. Natural surroundings and urban parks and gardens have direct beneficial effects on people’s physical and mental health and well-being. Increased physical activities have well-known health benefits. Spending time in natural environments has also been linked to aesthetic benefits, life enrichments, social cohesion, and spiritual experience. Even living close to or with a view of nature has been shown to reduce stress and increase a sense of well-being.