Item 4.2 of the agenda
B1 - National accounts methodology,
statistics for own resourcesLuxembourg, November 1999
The 1999 survey on industry and services EPE in Italy
Or : how you may end up choosing the theoretically LEAST favouredoption
Federico Falcitelli, Angelica Tudini
ISTAT
Environmental Accounting Unit
Joint meeting of the
Working Party ‘ECONOMIC ACCOUNTS FOR THE ENVIRONMENT’
and the Sub-Group ’Environmental Expenditure Statistics’
Meeting of 6 and 7 December 1999
BECH building – Room ‘Quételet’
The 1999 survey on industry and services EPE in Italy
Contents[*]
Preamble and introduction______1
1- Identifying ISTAT surveys for the collection of business expenditure data.______1
1.1 ISTAT surveys which collect data on business environmental expenditure using EPEA-independent criteria_2
1.1.1 The SCI (Business accounts survey)______2
1.1.2 The R&D inquiry______3
1.1.3 The survey of business administration costs______5
1.2 ISTAT surveys considered for collecting business environmental expenditure using the EPEA criteria_____6
1.2.1 The PRODCOM survey______6
1.2.2 The Intermediate Census of Industry and Services______6
2 Surveying business environmental expenditure within the scope of the Intermediate Census of Industry and Services 8
2.1. The questionnaire used for the pilot survey______8
2.2 The pilot survey______10
2.3 Arrangement of the actual survey______14
3 Conclusions and working hypotheses for the future______16
Annex 1 - Final questionnaire for the intermediate industry and services census on environmental-protection expenditure 18
Bibliography______20
The 1999 survey on industry and services EPE in Italy
Preamble and Introduction
This paper is concerned with the work which made it possible to undertake the first statistical survey in Italy of data on business expenditure for environmental protection that met the requirements of the European layouts for environmental accounting.
As the starting point for organising the survey we used the documents produced by Eurostat in connection with the construction of satellite accounts on expenditure: the EPEA (Environmental Protection Expenditure Account)[1] as a model for the method, and the guidelines in the “intermediate system” relating to the business sector[2] as the instrument to convert the theoretical approach of the EPEA into instructions on the collection of data which could be used for operational purposes. The list of the variables to be surveyed has been taken from the questionnaire used for the voluntary collection of data on business environmental expenditure conducted by Eurostat from the National Statistical Offices of Member Countries in 1996[3];
We also took account of the requirement for statistical information set out in the Regulation on structural business statistics[4], but only as regards the variables on environmental expenditure.
During the stage of setting up the survey, a number of alternative options were considered, and this is reported in section 1. Of the options considered, only the Intermediate Census of Industry and Services provided the opportunity of really putting questions to undertakings on environmental expenditure. The questions on expenditure for environmental protection which were included in the questionnaire for the Census, and the stages whereby we came to define these, are described in section 2.
1- Identifying ISTAT surveys for the collection of business expenditure data
This section discusses the ISTAT surveys considered for the purposes of collecting environmental expenditure data.
The surveys considered are of two types:
1.regular or occasional surveys which include one or more questions on environmental expenditure but without considering the specific purposes of environmental accounting at the stage of organising the actual inquiry;
2.inquiries for which there was explicit consideration of the possibility of collecting environmental expenditure data using the EPEA methodology.
In the former, the variables being surveyed are a “given” and the purpose of the work was essentially to check the compatibility of the data collected with the aim of constructing satellite accounts for environmental expenditure (§ 1.1).
In the latter, however, it was possible to check whether it was appropriate to include questions on business expenditure for environmental protection in the context of a survey which in fact had a separate purpose (§ 1.2). In one case, that of the business-accounts survey, both objectives were being pursued, by asking both whether the existing questions met the requirements of environmental accounting and whether such an inquiry could be used to include further questions on expenditure.
This phase of the work covered five ISTAT surveys in all, and for each of these we describe the work done and the part which each of these is able to play with a view to a periodical survey of business environmental expenditure.
1.1 ISTAT surveys which collect data on business environmental expenditure using EPEA-independent criteria
1.1.1 The SCI (Business accounts survey)
The SCI (the annual survey of business economic accounts) is of particular interest in collecting environmental expenditure. For the years 1989-92, the survey covered undertakings with 20 employees or more and found within branches 0 to 8 of the ATECO81 classification of economic activities[5] (excluding sub-classes 042, 043, 81, 82, 831, 831 [sic] and 841). From 1992, the survey covers undertakings with 20 employees or more in sections C, D, E, F, G and I of the new classification ATECO91[6] and undertakings with 10 employees or more in some divisions of sectionK.
For the purposes of our task, this survey is of interest in two ways. Firstly, it is useful in evaluating the possibility of using environmental expenditure data already collected by the questionnaire for the construction of accounting layouts. Secondly, it is useful in checking if it is possible to introduce further questions on environmental protection expenditure into the scope of the survey.
On the first of these aspects, the question on environmental expenditure which has been in the survey since 1989 asks about “expenditure for waste disposal, waste water treatment and air-emission abatement”. Many features of the data collected in the ISTAT survey on business accounts by means of this single question mean that the data are not sufficient to reconstruct the aggregates of expenditure for environmental protection. The source of the problem is, firstly, that the expenditure found is incomplete in that it relates only to current expenditure and it is restricted to three environmental sectors. We also find insufficient detail, because the only datum at present surveyed relates to total expenditure and therefore does not allow an analysis by environmental sector. Lastly, the data on expenditure are not sufficiently representative, since they are not subjected to the integration process, with appropriate imputations for non-responses, that is applied to the other data collected in the survey; the data are therefore not included in ISTAT’s official publications[7].
Clearly, the data are insufficient in terms of the requirements of the Community Regulation on structural business statistics, both as regards the variable which must be surveyed (expenditure on “end-of-pipe investments”) and as regards the variables in the pilot studies (“expenditure on investments in integrated plant” and “current environmental expenditure”).
On the basis of the above considerations, we considered surveying business environmental-protection expenditure as part of the SCI survey, by introducing new questions; two options in particular were considered:
1.introducing the single variable which the Regulation requires to be surveyed, that on “investments in end-of-pipe plant and equipment”;
2.inclusion of a separate questionnaire containing all the variables of environmental expenditure to be surveyed for the EPEA, to be annexed to the survey questionnaire.
The first hypothesis was ruled out because the experience of other countries has shown that collecting a single environmental variable as part of a general survey on economic accounts generally does not produce satisfactory results.
The second hypothesis was also abandoned, considering it preferable not to tamper with the structure of a survey that was already working but to leave the collection of new variables to surveys that were still at the definition stage (see § 1.2).
1.1.2The R&D inquiry
The usefulness of ISTAT’s statistical inquiries into scientific research and experimental development (described here as “R&D survey”) stems from the fact that one of the phenomena which this reveals – expenditure on R&D activities by business and by public institutions/bodies – falls within the field of analysis of the EPEA..
Therefore, in order to establish whether the information collected with the R&D survey meets the EPEA’s need for information and is therefore able to contribute to constructing the “Account of other activities for environmental protection”, we have to consider the two aspects below:
•the variables on which the data are collected, in order to establish whether these are consistent with the content of the accounting tables to be implemented;
•the classification of the expenditure data collected, in order to establish whether, from the complex of R&D expenditure, it is possible to extract that incurred for environmental protection purposes to be recorded in the appropriate EPEA sub-account.
This section appraises these aspects of the survey from the viewpoint of the EPEA’s need for information.
The object of the survey is expenditure incurred for R&D activities by undertakings and public institutions/bodies, plus other information regarding such activities (financing received; personnel employed; structures used; any national and international research programmes under which the activity falls; any collaborators with whom the activity has been pursued; etc). In particular, as regards the expenditure data, a single survey is used to find the outturn expenditure for a given reference year and the forecast expenditure for the two years following.
In practice, the survey comprises two inquiries: one is aimed at business (questionnaire RS1) and one at public institutions/bodies (questionnaire RS2).
As regards the variables (and ignoring the aspects relating to classification) the data collected in the R&D survey include information which can be used for constructing the EPEA accounts tables. However, for the potential possibility of using certain variables for the purposes of the EPEA to become a real possibility, these variables must be capable of covering only R&D expenditure linked with the aim of environmental protection: we must therefore have regard also for the classification adopted for the “purpose of the research”. From this standpoint, only the information collected in one part (certain “tables”) of the questionnaire sent to public bodies is classified with reference to a classification (NABS) where we can extract the R&D expenditure intended for environmental protection (the content of Chapter 3: “Control and protection of the environment” of this classification is compatible with the definition of environmental protection in the SERIEE and the EPEA). However, the information collected in the corresponding “tables” of questionnaire RS1,
sent to undertakings, is so classified that it is not possible to extract R&D expenditure intended for environmental protection.
The only information collected in questionnaire RS1 that can be linked directly with environmental protection is that on expenditure for R&D activities pursued in-house and intended, in particular, for “Environmental Technologies” (table 15). Such expenditure falls within the field of environmental protection, since “Environmental Technologies” include technologies intended for the prevention, reduction or elimination of pollution and also of any other cause of environmental damage, but not technologies intended for economy in or rational use of natural resources which, by contrast, as arranged in the SERIEE, relate to the field of use and management of natural resources. Where the “Environmental Technologies” come within the EPEA field of analysis, we can use the data found in table 15 to calculate the total amount of the production costs and capital expenditure for in-house R&D activities intended for such technologies. It should be stressed that, to be able to record this information in the EPEA accounting tables, it has to be disaggregated as regards the variables (various items of production cost and investment expenditure). Furthermore, even if the datum is disaggregated, the information does not necessarily account for all expenditure on R&D activities for environmental protection which the respondent undertaking has incurred: in addition to conducting research within the field of environment-protection technologies, it may also (for example) be engaged in R&D activities for the identification and analysis of sources of pollution, of mechanisms of dispersion of pollutants in the environment, and their effects on the well-being of man, of animal and plant species and the biosphere or, more generally, R&D activities to prevent and eliminate all forms of pollution.
The foregoing shows that – for reasons of classification – only very limited information which can be used for EPEA purposes can be brought out directly by the RS1 questionnaire sent to undertakings. However, information on R&D expenditure for environmental protection incurred by undertakings can be derived indirectly from the data collected by means of the RS2 questionnaire sent to public bodies: the arrangement of some of the expenditure data requested from public institutions is capable of showing the identity of a range of expenditure on R&D for environmental protection incurred by business.
The information which can be used for this is:
1.the expenditure incurred by each public institution/body for R&D projects commissioned from outside structures, recorded by “objective”. The external structures which can be identified include companies and, hence, the expenditure incurred by institutions/bodies in commercial commissions for undertaking R&D projects on “objectives” which come under NABS Chapter 3 represents expenditure incurred by these undertakings to engage in characteristic R&D activities for environmental protection.
2.the expenditure (likewise recorded by “objective”) which is incurred by each institution/body for R&D activities pursued in-house, by the source of finance covering it. Among the sources of finance, we can identify some forms of finance coming from business (agreements, contracts, orders, sale of goods and services, etc). Hence, the expenditure incurred by institutions/bodies and financed by business for R&D projects on “objectives” coming under NABS Chapter 3 represents expenditure incurred by those undertakings to finance characteristic R&D activities for environmental protection.
Briefly, most of the information produced by the R&D survey which can be used to quantify the expenditure incurred by undertakings for R&D for environmental protection can be derived from the RS2 questionnaire sent to public bodies.
However, it should be stressed that such information alone is not sufficient to account for all the expenditure on R&D for environmental protection incurred by undertakings and shown in the “Account of other environmental-protection activities”. Questionnaire RS2, in fact, catches only the business expenditure relating to dealings with institutions/bodies; the undertakings may however be incurring expenditure on R&D for environmental protection that does not involve any transaction with institutions/bodies. Furthermore, in some cases neither the information which can be extracted from questionnaire RS2 nor that which can be extracted from questionnaire RS1 presents a level of disaggregation as required by the EPEA accounting tables.
We have therefore looked at the working hypothesis of using and processing the information currently collected in the R&D survey together with any further information – to be traced separately – to give at least the overall scale of the expenditure incurred by business for R&D activities (conducted in house and commissioned from external structures) for the purpose of environmental protection (that is, coming within NABS Chapter 3). It is in connection with this working hypothesis that, as we shall see later (see § 2 below), in the context of the latest intermediate census of business and services, in the section on environmental-protection expenditure, that a question has been included to ask undertakings to report expenditure for “in-house” and “out-house” R&D activities for environmental protection.
1.1.3The survey of business administration costs
Among the surveys which reveal some business environmental-protection expenditure, but without regard for the specific requirements of environmental accounting, we find the survey conducted by ISTAT and the Italian Union of Chambers of Commerce on the costs incurred by undertakings for administrative tasks in the year 1996[8]. The administrative action covered in the survey related to these areas: fiscal and administrative; human-resource management; environmental protection; import/export activities; statistical surveys; innovation. As regards the environmental area in particular, the first four of the eleven questions asked are potentially relevant for the purpose of surveying environmental-protection expenditure. The first question asked undertakings to state whether in 1996 they had had to produce reports, declarations, communications or notifications under any name (or whether they had applied for authorisations, registrations or certifications) for environmental purposes. If the answer was yes, Question 2 asked them to state the number of reports, declarations, communications or notifications produced, separately for the “requirements” of: production/disposal of waste or residues, abstraction of water, discharge of water, gaseous emissions, risks of serious incident, fire prevention, other (for the undertaking to identify). Next (Question 3) it asked them to give the total of man-days devoted by in-house personnel to the production of such documents and the total costs of the man-days employed on the task. Lastly, where outside support (consultants, consultancy studies, agencies, trade associations) had been used to perform administrative activities of an environmental nature, they were asked to quantify the total cost of the outside work. The remaining questions in the questionnaire are not directly relevant for the purposes of the present analysis. In appraising the compatibility of the expenditure found and the type of expenditure which is surveyed by the environmental accounts, it is useful to examine the “list of activities of interest” which is given at the start of the environmental section of the questionnaire. According to this list, the following come within the scope of analysis of the survey:
•communications, self-certifications and declarations to the bodies competent for environmental protection;
•authorisations for disposal of waste;
•payment of taxes and keeping of registers of loading and discharge of waste;
•quantification and regulation of noise levels (Presidential Decree 277/91).
Of the activities listed, the last does not represent expenditure for environmental protection according to the definitions of the environmental accounts, since these activities relate to the field of health in the working environment[9]. Therefore, the results from this survey cannot be used to construct environmental-accounts layouts, since the data collected relate without distinction to the external environment and the working environment.