fort to both improve and extend the NIPA. (Recommendation 5.1)1
There are two possible approaches to developing nonmarket and environmental accounts: a phased and a comprehensive approach. BEA's proposal for developing the IEESA envisions use of the phased approach, adding satellite accounts for natural-resource and environmental assets in three phases—starting with subsoil mineral assets, expanding to renewable and other natural resources such as timber in forests, and only then addressing nonmarket environmental assets such as clean air and water. Under the comprehensive approach, a broad set of nonmarket accounts would be developed in parallel with the near-market accounts. BEA would develop accounts not only for the minerals and near-market sectors, but also for nonmarket activities and assets.
If the phased approach is undertaken, a useful initial step would be to refine the initial estimates of subsoil minerals. Constructing forest accounts, focusing initially on timber, is a natural next step for integrated environmental and economic accounts. Other sectors that should be high on the priority list are those associated with agricultural assets, fisheries, and water resources.
Although recognizing the value of the phased approach, the panel finds that developing comprehensive nonmarket accounts is of the greatest substantive importance for augmented accounting and for policy purposes. The panel does not, however, underestimate the challenges involved in developing nonmarket accounts. The process will require resolving major conceptual issues, developing appropriate physical measures, and valuing the relevant flows and stocks.
The panel concludes that developing a set of comprehensive nonmarket economic accounts is a high priority for the nation. Developing nonmarket accounts to address such concerns as environmental impacts, the value of nonmarket natural resources, the value of nonmarket work, the value of investments in human capital, and the uses of people's time would illuminate a wide variety of issues concerning the economic state of the nation. (Recommendation 5.2)
At present, BEA does not plan to redefine the core NIPA to include flows or investments in natural resources and the environment. Natural-resource and environmental flows will instead be recorded in satellite or supplemental accounts. Satellite environmental accounts serve the basic functions of a national accounting system: they provide the raw material