/ EUROPEAN COMMISSION
EUROSTAT
Directorate E: Sectoral and regional statistics
Unit E2: Environmental accounts and climate change /
Doc. ENV/ENACL/TF/04 (2012)
Point 7 of the agenda
Towards an integrated classification system for environmental activities and expenditure - specific problem areas and outstanding issues
Eurostat – Unit E2
Subgroup on environmental activity and expenditure classifications
(Subgroup of the Task Forces on environmental transfers and on RUMEA)
Meeting of 1-2 March 2012
Luxembourg, Room BECH A2/139

Meeting documents can be downloaded from the Environment statistics meetings CIRCA site at

Please note that, for environmental reasons, paper copies of meeting documents will not be available in the meeting room. The only exceptions will be documents that are not posted on CIRCA at least one week before the meeting.

1.Background

This document summarises issues that are relevant when considering an integrated classification system. This document complementssection 2 of the background document

The revised System of environmental-economic accounting (SEEA) is on the agenda of the UN Statistical Commission for endorsement or adoption at the meeting 28 February – 2 March 2012. This final draft presents a classification of environmental activities which consists of the CEPA (for EP) and the relevant part of the CRUMA (for RM).

Classification of Environmental Activities - Overview of groups and classes

Group / Classes
I: Environmental Protection (EP) / 1 Protection of ambient air and climate
2 Wastewater management
3 Waste management
4 Protection and remediation of soil, groundwater and surface water
5 Noise and vibration abatement (excluding workplace protection)
6 Protection of biodiversity and landscapes
7 Protection against radiation (excluding external safety)
8 Research and development for environmental protection
9 Other environmental protection activities
II: Resource Management (RM) / 10 Management of mineral and energy resources
11 Management of timber resources
12 Management of aquatic resources
13 Management of other biological resources (excl. timber and aquatic resources)
14 Management of water resources
15 Research and development activities for resource management
16 Other resource management activities

So far the CEPA has proven to be a good classification for actual outlays (expenditure) and EP activities and transactions. More difficulties come from the classifications of RM activities and expenditure. These difficulties are due to the fact that (1) the general principles the RM classifications are built upon are not clear/agreed on and (2) the current economic classifications (for activities and products) do not allow for a simple match with the RM classifications.

This document first explains the general principles which were assumed in building the current classifications for RM. Then it lists a number of possible issues for discussion at the SG meeting.

2.Outstanding issues of a resource management classification

The CRUMA, CReMA and CEA are all three built by cross tabulating the natural resources with the activities of interest, resource management activities in the case of the CReMA and RM and resource use activities for the CRUMA. The first layer of the RM classifications is determined by the resources to be protected plus transversal activities. This is coherent with the CEPA which combines as main headings (the classes) environmental domains (CEPA 1-7) and transversal activities (CEPA 8-9). However, in the case of the CEPA the environmental domains are not following a pure logic of the objects to be protected. The environmental domains combine environmental media (air water, soil) and environmental pressure types (waste, noise, radiation) in a pragmatic way.

In the case of the RM classifications, there is a complex relationship between the resources to be protected (e.g. fossil energy stocks) and the protection activities to be recorded (e.g. production of energy from renewable sources). Both aspects are addressed in turn below.

Coverage of RM (and RU) limited to non-produced natural assets

The CRUMA, CReMA and CEA (for the RM and RU parts) all refer to non-produced natural assets as the natural resources to be protected.

The 1994 SERIEE manual states: “Only those natural resources corresponding to non-produced natural assets whose use takes the form of goods, are dealt with in the natural resource use and management account. Hence, produced natural resources (livestock, plants) are excluded as well as those environmental services which result from uses of certain functions of natural assets (assimilation of pollutants, aesthetic value, etc.)” (SERIEE 1994 §§ 10043-10045). This principle has been taken over into the CRUMA, the CReMA and the CEA.

So far the main justification and usefulness of this restriction relates to the need of controlling and contrasting the possible depletion of natural resources. A similar need does not seem to exist for cultivated resources which, in principle, can be ‘continuously’ produced by the man.

In the case of cultivated resources what appears to be a major environmental issue is to limit the impact of their cultivation on nature (for example on soil, water, and biodiversity). In this case activities and actions related to the reduction of impacts of cultivated resources should fall in the EP categories.

Therefore, the following resources[1] are covered:

  • water, there are no limitations of coverage as all inland waters (rivers, lakes, groundwater bodies, floodplains, reservoirs, wetlands, and saline systems inland of the coastal zone) are included– including water in artificial reservoirs;
  • forests (timber resources), only natural forests are covered – cultivated forests are excluded. In the existing version of the classifications (CRUMA, CReMA) the IEEAF view of non-cultivated forests is adopted (as it was discussed at the TF meeting of Lisbon, 2010);
  • fish resources, only wild fish is covered – aquaculture is excluded;
  • other flora and fauna, only wild flora and fauna – cultivated plants and animals are excluded;
  • energy resources, includes all fossil energy sources;
  • minerals, there are no limitations of coverage and all of the resources are included.

Coverage of activities related to RM, i.e. the kind of activities to carry out for protecting natural resources

RM groups together all actions and activities that are aimed at preserving and maintaining the stock of natural resources and hence safeguarding against depletion. These activities are:

a)activities aimed at reducing withdrawals of non-produced natural assets, i.e. recovery, reuse, recycling, saving or substitutions of resources;

b)replenishment activities: increases/ recharges of natural resource stocks (for renewable resources, i.e. inland waters, forest and wild flora and fauna)

c)administration and regulatory activities and in general activities of natural resource management authorities,

d)monitoring, control and surveillance, data collection and statistics,

e)R&D activities, teaching, training, information and communication activities in the field of RM.

The type of activities to be included under RM seems to raise no problems at a general level. Problems arise in practice when the exact activities have to be determined that fall under each of these categories, in particular the first category.

Main purpose, i.e. how the establish whether an activity is an RM one or not

For including an activity in the scope of RM (or EP) one should not analyse all the possible positive or negative impacts of the activity, but whether the activity is carried out with the main purpose of RM (or EP).

The SEEA uses the following definitions (text extracted from paragraphs 4.11 – 4.14):

The scope of environmental activities is those economic activities whose primary purpose is to reduce or eliminate pressures on the environment or to make more efficient use of natural resources. These various activities are grouped into two broad types of environmental activity - environmental protection and resource management.

Environmental protection activities are those activities whose primary purpose is the prevention, reduction and elimination of pollution and other forms of degradation of the environment. These activities include, but are not limited to, the prevention, reduction or treatment of waste and wastewater; the prevention, reduction or elimination of air emissions; the treatment and disposal of contaminated soil and groundwater; the prevention or reduction of noise and vibration levels; the protection of biodiversity and landscapes, including their ecological functions; monitoring of the quality of the natural environment (air, water, soil, groundwater); research and development on environmental protection; and the general administration, training and teaching activities oriented towards environmental protection.

Resource management activities are those activities whose primary purpose is preserving and maintaining the stock of natural resources and hence safeguarding against depletion. These activities include, but are not limited to, reducing the withdrawals of natural resources (including through the recovery, reuse, recycling, and substitution of natural resources); restoring natural resource stocks (increases or recharges of natural resource stocks); the general management of natural resources (including monitoring, control, surveillance and data collection); and the production of goods and services used to manage or conserve natural resources.

Resource management activities may result in associated secondary environmental benefits such as protection and restoration of wildlife and natural habitats. However, activities specifically for biodiversity or landscape protection (for example, management of protected forests) and activities aimed at preserving certain functions or the quality of the natural environment should be treated as environmental protection.

So far while for EP and RU the definition based on the main purpose of the activities seems to work rather well, for RM some problems arise.

The main purpose criterion requires that classification should be made according to the main purpose taking into account the technical nature as well as the policy purpose of an action or activity[2].

For the RM activities listed above under points b) to e) it is clear from the technical nature (combined with the natural resource of interest) of the activity that the main purpose is RM.

For the RM activities under point a) the criterion based on the technical nature of the activities could show some limits in the identification of the RM activities. In these cases the policy purpose should then be taken into account.

Most of the activities under a) are carried out for providing the economy with products (drinkable water, electricity, heat, wooden products, fertilisers, etc.). Nevertheless these activities provide the economy with products whose production process reduced (and in some cases made no use of) the use of the natural resources inputs (water, gas, oil, timber resources, minerals, etc.).

When these activities would not have been carried out if the availability of natural resources raised no concerns they can be said to have as primary purpose the preservation and maintenance of the stock of natural resources.

A definition of RM based on the main purpose criterion allows for using the same criterion for defining EP, RM and RU activities. The advantage is thus that an EP, RM (and RU) activity classified according to its main purpose could fall only in one of the environmental domains/resources classes. The disadvantage of using the purpose criterion is that the same activity could have different purposes (EP, RM or RU) according to the specificities of the situation/country/historical moment.

In practice the question is how to produce internationally comparable statistics on this basis. A particular boundary issue concerns the classification of activities that can have different purposes. For example, the purpose of the production of energy from renewable sources and activities associated with energy saving will to a large extent depend on the structure of the energy supply in each country.

Some differences across countries are not considered as a problem in the context of CEPA. The CEPA explanatory notes state that according to its main purpose a same activity or action could be classified in different CEPA classes among countries (see e.g. the example of double glazed windows in the CEPA2000 explanatory notes[3]).

3.Specific boundary cases

Cross tabulating the natural resources and the activities described above tested against the main purpose criterion should be sufficient to include/exclude activities from the scope of RM and classify them by type of resources and type of activities.

Some boundary cases between EP and RUM activities have already been debated (see for example the boundary cases list from the London Group Outcome paper on issue 9 - CRUMA)[4].

A first set of problems raised so far concerns the activities substitutingnatural resources (is the substitution activity an RM activity?). A general rule to solve these problems is needed. In the next paragraphs an application of the main purpose principle for RM activities is operationalised in the cases of water desalinisation, aquaculture and forestry. This application of the main purpose criterion should be evaluated: does it provide a simple way to include/exclude activities in the RM scope? Does it raise any problem of comparability between countries and/or over time?

A second set of problems concern the feasibility of the data collection. This could be the case for example of data on maintenance and reduction of losses of water pipes which are hardly separable from water supply data. General government’s control activities related to natural forests are hardly separable from activities related to all forests. In the case of recycling, are there enough source data to split the recycling activities into the different resource categories (forest for paper, minerals for glass and metals, fossil energy for plastics etc.). To solve these issues, some practical indications are needed.

A third set of problem concern the comparability of data. Given the fact that the main purpose could differ across countries (or could change over time), the possibility of adopting ad hoc solutions for some cases should be discussed. This was the case in the CReMA when it was decided that renewable energy would be recorded under the CReMA even if the reduction of greenhouse gases was its main purpose.

In the following paragraphs the main problems raised so far for each RM class are discussed.

Management of water resources

A problem in this class comes from the inclusion of distribution of water. This activity does not fall under the activities listed under RM and so it has so far be excluded from RM and included under RU activities. However, as indicated above, a separation of RM and RU activities within water supply is difficult.

Desalinisation of water is a substitution activity since it could reduce the withdrawals of water which could be overexploited otherwise. The activity would not been carried out if there was availability of water from other sources and thus can be included under RM. If this was the only process for having water (for example desalinisation of water in small islands where no groundwater is available for extraction), then it should be only regarded as an RU activity.

Management of wild fish and other aquatic resources

The inclusion/exclusion of aquaculture is the main issue related to the management of wild fish and other aquatic resources. This is because the activity could reduce the withdrawals of non-produced natural assets (wild fish) which could be overexploited otherwise. (Much like production of renewable energy reduces pressure on fossil energy sources.)

Would the activity have been carried out if the availability of the natural resources (wild fish) raised no concerns? This could be tested having a look at some general features of the activity. If aquaculture would have been carried out even if the availability of wild fish raised no concern it should not have any RM purpose. But it could be the case that aquaculture developments were spurred by some restrictions to wild fish fishing. For example if a government sets a policy to reduce wild fish fishing which includes the development of (some specific) aquaculture activities, the policy purpose of aquaculture would be clearly RM. How should we treat situations where aquaculture developed because the market prices for fish increased due to a lack of wild fish?

Management of timber resources (natural forests)

As this class includes only non-cultivated forests, all the activities listed under points b) to e) are RM only for the part related to non-cultivated forests. As natural forests other than protected forests hardly exist in Europe, natural/non-cultivated forests are so far identified according to IEEAF criteria.

However, the possibility to enlarge the scope of forests to be included within the RM scope could be explored, in order to include some management activities carried out for forest areas that can be of particular relevance in some countries. As administrative management of forests is mainly aimed at a sustainable production of wood, one could include all the administrative services, no matter of the type of forests.

The production of wood and non wood products from cultivated forests (which accounts for most of the forestry activities) could be seen as substituting the wood and non-wood products which could come otherwise from natural forests. Would the activity have been carried out if the availability of the natural resources (non cultivated forests) raised no concerns? The production of wood and non wood products from cultivated forests responds to the demand of wood and other products (e.g. paper) and it is not driven by the concerns on the stock of natural forests. Thus forestry activities are not to be considered RM unless there is some specific reason for including them as RM activities.

Management of minerals and energy resources

Renewable energy is considered as the main alternative to energy produced using fossil fuels. That is the increase of production of energy from renewable sources is a policy objective aimed at substituting the use of fossil resources. Thus it is an RM activity. In a context of energy produced mostly by renewable sources (with no intervention from the government), the production of renewable energy would not be considered RM.

Energy saving activities fall in the RM because they aim at reducing withdrawals of fossil energy (which are by large the most important source of energy). In a context of energy coming mostly from renewables (and with no other relevant impact on the environment) and no concern on energy total demand, they would not be considered as relevant for RM since they would be implemented mainly for cost saving reasons. In this situation, the treatment of energy saving would depend on the specific structure of energy supply in the country.