by international agencies, and by private researchers, the panel concludes that BEA should be commended for its initial efforts in developing a prototype set of environmental accounts for the United States. With very limited resources, it has prepared a set of useful subsoil mineral accounts. BEA's methodology is based on widely used and generally accepted principles, and the agency has relied on sound and objective measures in developing these prototype accounts.
5.3b Developing a full set of natural-resource and environmental accounts would contribute significantly to understanding of the interactions between economic activity and the environment in the United States. Improved accounts would allow a better understanding of productivity, sustainability, and the environment; they would facilitate better forecasting of future trends and allow the nation to plan for potential critical shortages or environmental problems; and they would enable better public and private decisions on managing the nation's resources.
5.3c Congress should authorize and fund BEA to recommence its work on IEESA development. At the same time, appropriate support for BEA's core activities is of paramount importance to the United States. Activities to develop environmental accounts should be incremental to ongoing activities and improvements and should not come at the expense of the agency's core activities.
4. Should the United States Pursue a Phased or Comprehensive Approach to Augmented National Accounts?
There are two major approaches to developing nonmarket and environmental accounts: a phased approach and a comprehensive approach.
BEA's proposal for the IEESA envisions a phased extension of the accounts. The work plan involves developing environmental accounts in three phases. Phase I, completed in April 1994, focused on subsoil mineral assets. The proposal for Phase II is to extend the boundary of the accounts to renewable resources such as timber, fish, and water. Phase III would extend the boundaries to environmental areas such as clear air and water and recreational assets. The new accounts were to be published in supplementary or satellite accounts and would not, in the near future, affect the core NIPA.
In the initial stages, the interactions covered under BEA's plan are those that can be linked to market activities and therefore valued at market prices or at proxies for market prices. This was the rationale for dividing the work plan into the three phases—beginning with subsoil