. "2 The National Income and Product Accounts: History and Application to the Environment." Nature's Numbers: Expanding the National Economic Accounts to Include the Environment. Washington, DC: The National Academies Press, 1999.
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control expenditures, and other factors in the slowdown of productivity growth in the United States after 1973. In addition, these data have been crucial inputs to studies of the cost of air pollution regulation and the benefits and costs of controlling air pollution conducted by the U.S. Environmental Protection Agency.
Two major issues arise in the design of augmented accounts. The first is where to draw the line when extending the accounts beyond the boundary of market transactions. The dilemma is similar to that faced by the little boy who said, "I know how to spell banana, but I don't know where to stop." Should the line be drawn at near-market activities—for example, home-cooked hamburgers, depletion of oil and timber resources, fish caught and consumed by anglers, and services of consumer capital such as automobiles and washing machines? Or should the accounts extend to all private goods, such as educational investments and the value of visits to Yellowstone National Park? Should the accounts attempt to measure the value of leisure time? Should they extend to include public goods such as the value of clean air and clear water? Should they include international concerns such as the damages from ozone depletion and global warming? These thorny questions are taken up later in this report, but we note here that they are pervasive in the design of augmented accounts.
The second major issue is how to measure nonmarket activities. Measurement involves collecting data that will support estimates of both quantities and prices. While data on market activities are often costly to collect, for the most part the elemental data exist in the form of individual transactions in which someone buys a banana, a computer, or a haircut—transactions that are generally recorded. Nonmarket activities pose difficulties because the physical activities involved are generally not recorded, and there are no objective records of the valuations. An example of the difficulty is a consumption service such as swimming in the Atlantic Ocean. No one records how many times Americans actually swim in the Atlantic Ocean in a given year. More difficult is the valuation of swimming: since swimming is generally free, except in congested areas, we do not know how to value the swims. There are numerous techniques available for estimating both the quantity and value of nonmarket activities such as swimming, but they almost always require gathering additional data and involve complex imputations of value where no market data are available.
We must not, however, forsake what is relevant and important merely because it presents new problems and difficulties. The economic light is brightest under the lamppost of the market, but neither drunks nor statisticians should confine their search there. In extending the accounts, we must endeavor to find dimly lit information outside our old boundaries of search, particularly when the activities are of great value to the nation.