The European Strategy for Environmental Accounting (ESEA)

/ EUROPEAN COMMISSION
EUROSTAT
Directorate E: Agriculture and environment statistics; Statistical cooperation
Unit E3: Environmental statistics and accounts /
Doc. ENV/ESEA/07(2008)
Original in EN
Point 7 of the agenda

The European Strategy for Environmental Accounting

Draft Strategy from the ESEA Task Force

to be discussed in theEnvironmental Accounts Working Group

Task force on the ESEA
Meeting of 9 – 10 April 2008
BECH building – Room B2/404

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ENV/WG/028/8.1 (2003)

1.The 2007-2008 Task Force on revising the ESEA

The European Strategy for Environmental Accounting (ESEA) was adopted by the Statistical Programme Committee in 2003. The ESEA was described in a detailed report to the SPC which was the outcome of the work of a high-level Task Force ‘European Strategy for Environmental Accounting’ meeting on several occasions in 2001 and 2002. In the ESEA-2003, it was foreseen that the strategy would need to be revised within five years.

In 2007 a Task Force on revision of the ESEA was created and met for a first time. The mandate of the ESEA Task Force was approved by the meetings of the Working Group on Environmental Accounts and subsequently the DIMESA (Director's meeting on Environment Statistics and Accounts) in 2007.

The main objective of the work of the task force was to perform a review of the European Strategy for Environmental Accounts from 2003 giving special attention to the:

• use of Environmental Accounts in the EU and EFTA countries;
• the readiness and ability in the countries to compile Environmental Accounts;
• further developments of Environmental Accounts (which direction should be taken, to what extent can future demands be included/anticipated).

The task force was also asked to considera possible legal basis for the area of Environmental Accounting.

The recommendations in this report are focussing on these objectives.

2.Environmental Accounting in Europe, State of Play

In 1994, the European Commission identified the main lines of action for the development of a Green National Accounting framework based on satellites to National Accounts. Since then, Eurostat, in collaboration with Member States’ statistical offices and DG Environment’s financial support, has developed and implemented different accounting modules that cover almost all types of accounts of the System of Environmental and Economic Accounting (SEEA) and in the European Strategy for Environmental Accounting (ESEA 2003).

In the context of revising the ESEA in 2008, Eurostat commissioneda study in 2006 to assess the progress made by European countries in the compilation of Environmental Accounts from 2000 onwards in order to facilitate the strategic planning for the further development of Environmental Accounts in Europe towards 2010 and beyond. This assessment is based on the examination of 135 reports on pilot studies, as well as on an interview survey to experts in charge of Environmental Accounts in the European countries[1].

The assessment done and the corresponding draft report finalised in December 2007 is a key element for elaborating a revised version of the ESEA and drafting an implementation plan for Environmental Accounts at EU level. The implementation plan is a complementary document to the ESEA enumerating the steps which are necessary to ensure data availability on three core areas of environmental accounts within the period 2008-2009, and to also increase the data availability in a number of other important areas.

3.Environmental Accounting worldwide

At theinternational level, a handbook onintegrated environmental and economic accounts (SEEA) was prepared by the London Group and a draft version was approved by the UN Statistical Commission in March 2002 (SEEA 2003).

The United Nations Committee of Experts on Environmental-Economic Accounting (UNCEEA) was established by the United Nations Statistical Commission at its 36th Session inMarch 2005. The overall objectives of the UNCEEA are (a) to mainstream environmental-economicaccounting and related statistics; (b) to elevate the System of integrated Environmentaland Economic Accounting (SEEA) to an international statistical standard; and (c) toadvance the implementation of the SEEA in countries.

The SEEA (2003 draft) is currently being revised by UNSD in conjunction with the London Group under the auspices of UNCEEA. The aim of the revision is to prepare a statistical standard covering all aspects of environmental accounting to be approved by the UN Statistical Committee in 2011.

On the other hand, other important work is being done by other partners. OECD is developing a comprehensive set of documents on Material Flow Accounts, some of which in close cooperation with Eurostat. EEA is playing an important role in developing ecosystem and land use accounts, as well as performing analyses of existing data from environmental accounts to identify patterns of sustainable consumption and production.

In preparing this ESEA 2008, the ongoing revision of the SEEA (2003 draft), as well as the other international initiatives referred to above,have to be taken into account.

4.Environmental Accounting, user needs and policy demands

During its 15-16 June 2006 meeting, the European Council adopted “an ambitious and comprehensive renewed EU Strategy for Sustainable Development.” In the renewed Sustainable Development Strategy it is stated that: “For better understanding of interlinkages between the three dimensions of SD, the core system of national income accounting could be extended by inter alia integrating stock and flow concepts and non-market work and be further elaborated by satellite accounts e.g. environmental expenditures, material flows and taking into consideration international best practices.”

In 2007, during a high level conference on “Beyond GDP” held in Brussels, the European Commission announced that a policy communication would be presented in 2008 developing the ideas of going “beyond GDP” into a roadmap for action. Improvement and development of integrated accounting in the social and environmental spheres were part of this announcement. This communication is expected to be issued by September 2008.

Seen in this light, the policy requirements for relating to Environmental Accounts might change in the near future. It may be necessary to revise the draft 2008-ESEA based on the changes in user needs and policy demands formulated at the European Community level.

5.Assessment of the ESEA

The ESEA Task Force has observed the following concerning the 2003 ESEA:

In general, the document is of good quality and is still reasonably up-to-date. Environmental accounts are a flexible, multi-purpose system for answering long term political questions and informing about strategic direction.

However, some adjustments to the ESEA are needed to reflect recent environmental and economic changes and political priorities. Main adjustments needed are:

• The existing ESEA-2003 is a comprehensive document. As a first step, this proved to be very helpfulsince it constituted an exhaustive inventory of all modules of environmental accounts and the recognition of the huge variety of work the environmental accounts encompass. However, data collection in all areas proved to be very difficult (or even impossible) especially under the current gentlemen’s agreement regime. It would be preferable to concentrate effort in collecting data in some limited modules rather than dispersing our energy in all modules with little visibility.
• Data collected on a gentlemen’s agreement proves not to be of sufficient quality with regard to harmonisation, as seen by poor coverage of countries, years and modules of environmental accounts. It seems necessary to go one step forward and adopt an EU regulation for data collection on environmental accounts.
• To make the accounts politically relevant they have to have broad coverage of data.
• Increasing focus on products and sustainable consumption patterns, product policies and green procurement rather than just on production and industries. Methodologies to include this focus need to be developed.
• It is important to give higher visibility to environmental accounts using them as the data source for indicators and analysis. The promotion of environmental accounts to decision makers, researchers and the public is an important vector of development.
• Ecosystem accounts were identified as a rapidly developing field attracting increasing interest.

This revision of the ESEA is to be valid for a period of 5 years. A new review of the strategy should then be made, recommending appropriate revisions.

6.The Renewed European Strategy for Environmental Accounting

The Task Force identified the following main objectives for the ESEA-2008:

• At European level, to give priority to regular production of a core set of accounts.
• At national level, that NSIs maintain and potentially expand their work on environmental accounting, with the main objective of providing harmonised, timely data with reasonable quality.

In line with the diagnosis described in section 5 and with the intention of reaching the objectivesenumerated above, the Task Force agreed on a set of recommendationsfor the renewed European Strategy for Environmental Accounting.This set of recommendations is presented below under points 6.1 – 6.5.

The recommendations are based on the recognition that the strategy approved in 2003 provides an excellent base for future work.The Task Force also recognises the importance that Environmental accounts developed and compiled in Europeneeds to be concordantwith the SEEA and the ongoing revision of this manual. International cooperation (UNSD, UNECE, UNEP, OECD, etc.) and cooperation with the main actors in Europe (DG Environment, EEA and JRC) is also vital for the use and further development of environmental-economic accounts.

This strategy will help to assure the availability of core environmental accounts data from all European countries and will enable these data to be harmonised, timely and of adequate quality, in order to facilitate their use in developing and informing policy. In addition, the strategy will also encourage the further development of environmental-economic accounts as a statistical area.

The recommendations are the following.

6.1.Setting priorities between the 4 main types of environmental accounts

The System of Economic and Environmental Accounts (SEEA, 2003 draft) describes 4 main types of accounts:

1. Physical flow accounts including hybrid (NAMEA) accounts
2. Environmental protection and resource management monetary accounts
3. Natural resource asset accounts
4. Adjusting national accounts aggregates and valuation of degradation

In 2007 the Task Force re-affirmed the 2003 strategy that the valuation of environmental damages and degradation and adjusted national accounts aggregates (such as "green" GDP) are not given any priority within official statistics. However, if such exercises are undertaken by research institutes, then the national statistical institutes are encouraged to contribute with their expertise and by providing environmental accounts data.

In addition, the Task Force recommended that natural resource asset accounts are also given a lower priority at the European level. Some asset accounts are important for some countries and the implementation of asset accounts in countries with substantial natural resources is encouraged. National wealth calculations and indicators requiring natural resource asset data will also not be considered a high priority at this time. Therefore, coordinated, European-wide data collection of asset accounts will not be given as high a priority as it was in 2003.

The priority for environmental accounts will therefore include hybrid (NAMEA) accounts, physical flow accounts (MFA) and environmental protection expenditure and resource management monetary accounts. More specific recommendations for these accounts are described in the next section.

6.2.Regular production of a core set of accounts

Some of the environmental accounts are advanced enough with regard to methods and also to data availability in the European countries that regularly reported data to Eurostat can be expected. These modules can be implemented in the near future (1 year). They include some types of environmental expenditure accounts, NAMEA air emission accounts and economy-wide material flow accounts.

The development in the medium term(1-3 years):data collection for the areas of NAMEA energy and NAMEA waste accounts, and environmental taxes according to industry breakdowns could be considered.

In the longer run (4-5+ years) – after the development of adequate methodologies and data availability – the data collection could be extended to includethe Environmental Goods and Services Industry, MFA according to industry breakdowns and potentially NAMEA water accounts.

The Task Force recognises that further developments of Environmental Accounts are necessary than the above mentioned areas. By supporting the ongoing revision of the SEEA which is contributed to by the London Group, the European countries and Eurostat will ensure that the development of accounts that meet policy requirements is taking place.

Cooperation with the European Environment Agency (EEA) in the area of eco-system accounts and land use is foreseen as well as close cooperation in the use of environmental accounting data for analytical and research purposes. The work being done by the OECD and UNEP with regards to material flows, resource productivity and efficiency will also be important areas in which Eurostat and European countries need to participate and contribute.

6.3.Legal base for Environmental Accounts

In order to assure full data coverage and harmonisation, it is recommended to initiate the formulation of a legal base for environmental accounts. This means that, under a framework regulation, the EuropeanMemberStatesand EFTA countries will be obliged to transmit data on a number of modules of the environmental accounts. Only modules where the methods are well described and accepted among the MemberStatesand EFTA countries will be included in a first stage. Other modules can be added as they are esteemed to be mature enough to be included.

The legal basis is expected to ensure the means to reach the objectives. It will help ensure that adequate resources for the establishment of data compilation systems, for the development of environmental-economic accounts, for the regular production of timely, quality statistical environmental accounting data become available at the NSIs.

6.4.Providing harmonised, timely data of reasonable quality

In complement to the legal basis, and in order to assist in the establishment of these national environmental-economic accounting systems, Eurostat will continue to develop manuals, compilation guidelines, handbooks, etc and provide trainings to help facilitate the compilation of environmental accounts in European countries that are harmonised and internationally comparable. If possible Eurostat will also help countries establish systems for environmental accounts through available financing programs such as grants.

The existence of an agreed set of compilation methods and manuals is vital for improving data quality, coverage and harmonisation. The task force recommend that adequate resources are allocated both in Eurostat and also in the European NSIs to ensure the development of methodologies and manuals.

Together with ensuring data availability, better timeliness of the data is crucial. In the medium run, Eurostat in cooperation with the European countries will develop methods to estimate more recent data which can be useful for policy purposes. The efforts should focus on areas where methods are mature enough and compilation methods and harmonisation already have been obtained.

6.5.Promotion of Environmental Accounts to decision makers and the public

Currently, the dissemination of environmental accounts is taking place in several countries and at theEU level with the work of Eurostat. This takes different forms fromsimple dedicated websitesectionsto the contribution of Environmental Accounts to Structural and Sustainable Development Indicators.

DG Environment, EEA, JRC and Eurostat are developing so-called Environmental Data Centres. Eurostat is responsible for the Data Centres for Natural Resources and Products. One of the important data sources for this data centre will be environmental accounts.The link to the new focus on products and sustainable consumption patterns, product policies and green procurement described in point 5 above is also expected to be done through the Data Centres. In the future, the data centresare expected to be an excellent tool for disseminating environmental accounts.

The formulation of a strategy for disseminating Environmental Accounts is a core part of the work of the UNCCEA (UN Committee of Experts on Environmental - Economic Accounting). The ESEA should follow this work very closely and adjust when deemed necessary.

6.6.Next revision of the European Strategy for Environmental Accounts (ESEA)

Having in mind a quickly evolving world where economic, environmental, social and political priorities change rapidly, it is proposed to revise the ESEA on a 5 year basis.

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[1] Environmental accounts - State of play of recent work. Report to Eurostat, 2008. Carried out by Jean-Louis Pasquier, KRD-Services. The full report will be available on Eurostat’s Website in the dedicated section for environmental accounts (