Beyond the Market Designing Nonmarket Accounts for the United States (2005) / Chapter Skim
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8 The Environment
8 The Environment
Pages 163-178
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From page 163... ...
A previous report, Nature's Numbers, which describes and critiques the major environmental accounting efforts to date, identifies these benefits (National Research Council, 1999, p.
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From page 164... ...
Accounting efforts have encompassed both current accounting and capital accounting -- current accounting of the generation of pollutants or of the consumption of natural resources and capital accounting of changes in the stock of natural resources or the condition of the natural environment. For the most part, natural and environmental wealth excludes assets that are man made.
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From page 165... ...
Without fees, the value of waste disposal services provided by a water body or an air shed typically will not be fully reflected in the conventional economic accounts. The extent to which disposal services are reflected depends on who bears the costs -- that is, on whether the created externalities affect only other market producers (in which case it will be reflected in their input costs or output values)
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From page 166... ...
. The IEESA accounting of net investment in subsoil assets includes a negative entry for depletions or extractions of subsoil assets and a positive entry for additions to reserves.
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From page 167... ...
Although natural resource discovery and depreciation are not reflected in conventional economic accounts and while attempts to do so involve an interesting controversy, accounting for these activities would not represent nearly so quantitatively significant a change as most of the others discussed in this report. This is because, empirically, resource discoveries and resource depletions are largely offsetting.
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From page 168... ...
But, whether or not fees and charges reflect the true value3 of the air and water services provided (such as the positive value of waste disposal services or the negative value of the pollution associated with waste disposal) , a society that charges firms for the right to pollute will, by conventional market measures, look different from an otherwise similar society that is laissez faire regarding externalities.
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From page 169... ...
Concerns with the particular failure to measure nonmarketed environmental inputs and outputs has a history that parallels the concern with the failure of conventional economic output measures to reflect deteriorating environmental quality.4 There is widespread agreement that the conventional accounting systems, in spite of their neglect of environmental factors, have served their users well. Thus, 4Leontief (1970)
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From page 170... ...
The SEEA 2003 comprises four major components: flow accounts for pollution, energy, and materials; environmental protection and resource management expenditure accounts; natural resource asset accounts; and valuation of nonmarket flow and environmentally adjusted aggregates.5 In an effort to maintain exact SNA definitions of productive sectors, SEEA cannot cover nonmarketed productive services of the natural environment, such as those associated with recreation, flora and fauna support, or waste disposal. In addition, current implementations of SEEA measure environmental damage and resource depletion by the cost of restoration.
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From page 171... ...
Experience has shown that it is technically easier to develop accounts for specific natural-resource sectors, such as mining and forestry, than for more general areas of environmental concern, such as air and water quality. As a result, many environmental accounting efforts have taken a staged approach, concentrating first on sector-by-sector natural-resource accounting and then, if financial resources permit, shifting focus to more general areas of environmental quality.
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From page 172... ...
. The Nature's Numbers panel recognized, however, that many existing valuation techniques, such as the travel-cost method to value nonmarket recreation services, provide estimates that contain consumer surplus.
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From page 173... ...
Although policy has focused on the former, the environmental accounts have suggested that, for many pollutants, the major problem lies with the latter two sectors. Linkage with Other Nonmarket Accounting Efforts Efforts to build satellite environmental and natural-resource accounts have not typically been carried out alongside similar efforts in other areas of nonmarket accounting.
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From page 174... ...
Data Needs While the accounting objective requires monetary valuations, Nature's Numbers did discuss the need for more complete physical information, especially data 6See National Research Council (2002b) , which summarizes research that estimates the public health benefits of proposed air pollution regulations.
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From page 175... ...
For example, there are techniques that allow valuation of adverse health effects due to air and water pollution. Far less is known about the connection between any particular measured ambient air and water quality parameter and how this level of quality may affect human populations.
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From page 176... ...
The social environment produces an output commonly referred to as social capital (the term is defined and briefly discussed in Chapter 1)
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From page 177... ...
found that the percent change in the cost of living implied by the results from his hedonic regressions were similar to those from his discrete choice models. The hedonic and discrete choice models raise some of the same issues.
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