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5 Transfer Models for Green Accounting: An Approach to Environmental Policy Analysis for Sustainable Development
5 Transfer Models for Green Accounting: An Approach to Environmental Policy Analysis for Sustainable Development
Pages 67-110
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From page 67... ...
Our transfer model approach' which emphasizes both stocks and flows, is a framework for giving meaning and context to green accounts. It also focuses upon biogeophysical measures These differences were clear in the intense discussions at the National Research Council workshop "Valuing Natural Capital in Planning for Sustainable Development," for which this paper was prepared.
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From page 68... ...
Improved natural capital accounts can help us to explore our current state of affairs and hypothesize about how we got here and what the future might hold. Consensus on the range of diverse issues is not necessary for directing policies in a more sustainable direction.
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From page 69... ...
It is important to recognize that Daly's guidelines are preliminary and not absolute. They are used to illustrate the efficacy of considering a biogeophysically based approach to natural capital accounting.
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From page 70... ...
Our goal is to suggest directions, and to illustrate the promise of this approach with some oversimplified schematic examples. The framework that we propose links physically based green accounts with "transfer models" to provide the meaning, context, and insight necessary to assess the health of the ultimate "golden goose" the global life support system.
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From page 71... ...
Such a view, however, might argue that improved natural capital accounts are necessary to insure that transition to substitutes occurs with minimal adjustment costs. A slightly less optimistic view was expressed in the Bruncltiand Commission's Report: Humanity has the ability to make development sustainable- to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs.
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From page 72... ...
By focusing upon the complementary nature of natural capital and man-macle capital, Daly makes a case for separate, biogeophysically based satellite accounts. A direct attack of the limits of technological innovation, linking concerns over sustainability directly to ethical issues, was put forth by Rajni Kothari: In the absence of an ethical imperative, environmentalism has been reduced to a technological fix, and as with all technological fixes, solutions are seen to lie once more in the hands of manager technocrats.
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From page 73... ...
And relatedly, how do we assess sustainable yields, develop appropriate conservation practices, support species diversity, etc.? · What is the role of technological innovation and what are the limits of substituting human capital for natural capital?
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From page 74... ...
In fact, conventional national accounting systems were designed to match a theoretical conception of how the economic subsystem works. National Income Accounts are an example.
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From page 75... ...
They extend the range of consideration to include marketed raw materials (natural capital in the traditional interpretation) , unmarketed goods, and waste assimilative services.
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From page 76... ...
We conclude that monetized natural capital accounts, while necessarily derivative of disaggregated biogeophysical data, are limited in their ability to reflect physical changes in the environment. The acIditional step of monetization reduces data certainty, inhibits application with alternative transfer models, constrains policy insights, and results in significant adcled cost.
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From page 77... ...
Traditional economic analysis is most useful for assessing which of a group of desirable choices or transition paths are most cost-effective. In the next two sub-sections we discuss two specific difficulties associated with monetized green accounts that directly or indirectly address the four "failures" discussed above.
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From page 78... ...
Once goals are set, monetary techniques are essential aids to determining the economically efficient routes toward} these goals. Analysis Based on Single Numeraires Most current national income accounts rely on the notion that all factors of importance can be expressed in terms of a single numeraire, usually monetary.
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From page 79... ...
The core Plea underlying Pearce and Turner's "sustainability principle" is the hypothesis that there exists in principle a scalar quantity, KN, which completely characterizes the "natural capital stock." They argue that keeping this single numeraire constant will ensure that both human ant! nonhuman life will thrive.
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From page 80... ...
(1989) discuss several approaches to revised national income accounts including the French and Norwegian physically based accounts, the monetized Japanese Net National Income approach, and the Indonesian Sustainable Income approach.
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From page 81... ...
An Alternative Transfer Model: MuIticriteria Techniques Approaches for analyzing green accounts that both take von Neuman and Morganstern's admonition to heart and are capable of considering multiple goals, measured with a variety of incommensurable units, already exist. The term "multiple criteria" or "multicriteria clecisionmaking" (MCDM)
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From page 82... ...
EXAMPLES OF ALTERNATIVE TRANSFER MODELS: RADIOACTIVE WASTE AND GREENHOUSE WARMING Radioactive waste disposal and greenhouse warming both operate on and must be analyzed using intergenerational time scales. We treat the first example, radioactive waste, descriptively.
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From page 83... ...
A review of public confidence in radioactive waste management by a Department of Energy (DOE) Committee emphasized the centrality of trust to the policy process (DOE Energy Advisory Board, 1992:91: In the realm of radioactive waste management problem-solving, public trust and confidence is especially salient because of the high degree of technical expertise required for unclerstancling, participation, anti sound decisionmaking.
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From page 84... ...
Accomplishing this goal will not be easy. We illustrate one way to proceed by presenting an illustrative, risk-based transfer model focusing on the impact on agricultural output of global warming.
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From page 85... ...
. At about this time careful work to explore global warming was beginning with the SMIC and SCEP studies pioneered by Carroll Wilson (SCEP, 1970; SMIC, 19711.
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From page 86... ...
1 950 1 960 2000 2030 Year 4.0 3.S ~ 3.0 2S I~ To LO a] Y ~ t 'l.S 1.0 0.5 O FIGURE 5-1 Estimates of the possible impact of anthropogenic carbon on globally average temperature.
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From page 87... ...
either contribute to stabilization, or amplify threats of global warming ~xosenteio and Botkin, 1989) , with the possibility of catastrophic collapse.
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From page 88... ...
finds the estimates} annual damage from global warming to the U.Ss economy to be $61.6 billion (1990 clollars) for a doubling of CO2 leading to 2.5°C temperature increase, and $338.6 billion (1990 clollars)
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From page 89... ...
A practical version of the methodology might use expert judgment to provide estimates of temperature as a function of both time and greenhouse gas input, using a particular mode} of analysis. Agricultural output is assumed to decrease logistically with global temperature increase.
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From page 90... ...
and agricultural output has been studied only very little, so this part of the transfer model is likely to be the most uncertain (e.g., Knox and Scheuring, 1991~. On the other hand, if anthropogenic gases do impact agriculture significantly, this part of the mode!
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From page 91... ...
t .¢ _ 1 / .~ J / , t / / 1950 2000 2050 2100 2150 2200 2250 year FIGURE 5-2 One scenario for the future growth of anthropogenic atmospheric carbon.
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From page 92... ...
~ ,~ / / Agricultural sector output (relative)
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From page 93... ...
TRANSFER MODELS FOR "GREEN ACCOUNTING" 93 |Carbon Input GT/Yr1 A__ Jacob- 90Perc% Centers Mean Bottom= 10Perc°/O Cell #'s on X-axis FIGURE 5-4 Inclusion of uncertainty changes the point calculations in Figure 5-2 to uncertainty bands.
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From page 94... ...
94 PA UL P CRAIG A ND HAR OLD GLA SSER 1 Temperature Shift, bimodal 1 0 9 8 7 6 5 4 3 2 1 Average warming, decgrees C O 1 985 1 .
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From page 95... ...
TRANSFER MODELS FOR "GREEN A CCOUNTING " alues inj LAgricultural Output, Logistic 10^-1 1 Output change due to warming 1 ~ ) 85 2085 2185 Top= 90Perc% Centem Mean Bottom= 10Perc% Cell #'s on X-axis 1 95 FIGURE S-6 Inclusion of uncertainty changes the point calculations in Figure 5-3 to uncertainty bands.
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From page 96... ...
Year= 2085 i 1 0009 0~08 r 1 13 0.071 '1 '' 1 2 3 4 5 ~ l |Degrees cl l 6 FIGURE 5-7 Uncertainty leads to a probability distribution of temperature in 2085. Normal probability distributions are used (see text)
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From page 97... ...
TRANSFER MODELS FOR "GREEN A CCOUNTING " 97 = i Expected Val ue= I 1 6~81 9E-01 1 ~ . 0~06 0~05 0~04 O 1,~ goO2 0.0 1 O ~ .e I ~ r Agricultural Output 2085 normal temperature distribution 0~35 0.45 0.55 Q.65 0.75 , IAgricultural output -- fraction of 'no warming' easel FIGURE 5-8 Probability distribution of agricultural output in 2085 relation of greenhouse gases to warming.
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From page 98... ...
When this probability is foIcled with the distribution on greenhouse gas emissions, the result for 2085 is bimodal but blurred (Figure 5-91. However, when one examines the agricultural output (Figure 5-10)
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From page 99... ...
R Ci 8j goO3 (] oO2 O ~ 0 1 o Expected Val ue= 3 1 Bimodal probability distribution of temperature dependence on carbt huh' 1 1 2 I\[L[~_ ,L Ha; 4 r |Degrees Cut 5 n 6 FIGURE 5-9 Temperature distribution when experts disagree.
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From page 100... ...
100 PAUL P CRAIG AND HAROLD GLASSER 1 Expected Value= 6~866E-01 O o 1 8 O o 1 6 O ~ 1 4 O o 1 2 0.1 R ~ t0 oG8 B 0006 O oO4 0002 o i Agriculture output, bi-modal tempt ~ _1 ..a~ll~ll~l~1 0.35 0.45 0.55 0.65 0.75 |Agriculture output, 2085~ 0.85 0.95 FIGURE 5-10 Probability distribution of agricultural output in 2085 using the bimodal temperature distribution.
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From page 101... ...
Approaches for analyzing green accounts must admit minority views, thereby recognizing that, not infrequently, today's minority position is tomorrow's reigning paradigm. · Green accounting systems should be dynamic and flexible.
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From page 102... ...
For now, what is neecled is a variety of different approaches for developing green accounts. These must be subjected to debate and tested by asking a variety of users whether transfer models which they consider important can easily make use of this data.
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From page 103... ...
times the number of agricultural workers, which is a fraction of the working population; nonagricultural sector output is the product of another technical factor times the number of nonfarm workers; agricultural output per capita is assumed to decrease as a result of greenhouse warming. In order to maintain total agricultural output, increasing numbers of persons must be shifted to the agricultural sector.
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From page 104... ...
Schematic of decline in nonagricultural sector output decline driven by climate-change-induceci loss of agricultural sector output.
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From page 105... ...
The Impacts of Global Warming on California. California Energy Commission, 1989.
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From page 106... ...
Introducing Natural Capital into the SNA. New York: UNEP-World Bank Symposium, 1989~.
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From page 107... ...
"Environmental Valuation under Sustainable Development." American Economic Review 82 (1992~: 473-477. Huffman, E
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From page 108... ...
"Sustainability! The Integral Approach." In Conservation of Biodiversity for Sustainable Development, ed.
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From page 109... ...
Rethinking High-Level Radioactive Waste Disposal. Washington DC: National Research Council Board on Radioactive Waste Management, 1990.
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From page 110... ...
W "Sustainable Economic Development: Economic and Ethical Principles" , in Economics and Ecology: New Frontiers and Sustainable Development, edited by E
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