accurately (1) if the list of consumption and asset categories is incomplete, (2) if there are technological changes or similar processes that are not captured in investment data, (3) if there are revaluation effects not calculated in the accounts, or (4) if there are market imperfections such as imperfect foresight. The significance of each of these issues is discussed in Appendix A. Even though the conditions under which the correspondence principle applies are quite stringent, the basic insight is of great value for the designing of environmental accounts.

Alternative Approaches to Environmental Accounting

General Issues in Environmental Accounting

Over the last quarter-century, official statistical agencies and individual researchers have responded to the deficiencies in current accounting approaches by developing alternative approaches and novel systems of accounts. The first approaches, by individual researchers, tested wholly new frameworks that often included major aspects of nonmarket activities. Later, official statistical agencies began to take incremental steps toward including some activities that are near-market in nature. The differences in approach generally reflect varying emphasis on the deficiencies discussed earlier, differing views on the functions of national accounting, and differences in what are considered the appropriate functions of official statistical agencies.

An important difference among alternative approaches is the relative importance assigned to economic as opposed to physical accounting. Many approaches emphasize the importance of developing economic accounts, which, as discussed in the last section, are useful for both scorekeeping and management. Other approaches emphasize physical indicators, stressing the development of detailed information on physical flows and human exposures and impacts. Such an approach would be emphasized, particularly by official agencies, when construction of economic aggregates depended heavily on controversial analytical methods and imputations and when collection and dissemination of objective data was the primary goal.

One major issue involved in decisions about how far to extend the boundary of augmented and environmental accounts concerns data quality. As the accounts move further away from the current market boundary line, the quality of the data becomes increasingly suspect, and the cost of obtaining the data becomes increasingly large. Such market or near-market data as volumes and values of petroleum reserves or timber stocks can be estimated with an accuracy reasonably comparable to that of mar-

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