Nature's Numbers Expanding the National Economic Accounts to Include the Environment (1999) / Chapter Skim
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1 Introduction
1 Introduction
Pages 11-18
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From page 11... ...
The idea of including environmental assets and services in the national economic accounts is part of a larger movement to develop broader economic indicators. This movement reflects the reality that economic and social welfare does not stop at the market's border, but extends to many "near-market" and nonmarket activities, such as household production, leisure activities, and environmental quality.
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From page 12... ...
economic accounts should be extended to include activities involving natural resources and the environment. It will be useful at the outset to explain what is meant by "accounting" and by the "national income and product accounts." In its most general sense, the purpose of accounting is to provide economic information about a household, organization, or government.
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From page 13... ...
Indeed, the NIPA's omission of many nonmarket activities particularly those involving natural resources and the environment along with the potential distortion in measures of national output and wealth stemming from that omission, is the very concern that led to the environmental accounting addressed in this report.2 History National accounts were first developed by Sir William Petty in 1665, with estimates being primarily the work of individual scholars until World War I.3 There was little appreciation during this period of economic statistics as a public good. Moreover, although there were sporadic federal efforts to develop estimates of national income and output, the impetus for systematic development of the accounts came during the Great Depression.
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From page 14... ...
AUGMENTED NATIONAL ACCOUNTS Background As noted earlier, the traditional national accounts include primarily the final output of marketed goods and services that is, of goods and services that are bought and sold in market transactions. Notwithstanding the importance of the traditional accounts, it has long been recognized that limiting them to market transactions distorts them as a measure of economic activity and well-being.
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From page 15... ...
Augmented national economic accounts are designed to provide better measures of final output including what consumers currently enjoy in the way of goods and services, as well as the accumulation of capital, of all kinds, that will permit the future production of goods and services. A set of well-designed augmented accounts can overcome the recognized shortcomings of the current market-based accounts.
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From page 16... ...
Congressional concerns about environmental accounting were raised shortly after the initial publication of the draft IEESA. As a result, in the committee report accompanying appropriations for the Department of Commerce in fiscal year 1995, Congress directed that the department suspend further work on the IEESA until the methodological issues involved had been reviewed: The Committee is concerned about the Administration's initiative on "Green GDP" or "Integrated Environmental-Economic Accounting," which seeks to provide a measurement of the contribution of natural resources to the Nation's economy.
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From page 17... ...
CHARGE TO THE PANEL 17 In response to the above congressional mandate, the Commerce Department asked the National Academy of Sciences to undertake a review of environmental accounting. The Panel on Integrated Environmental and Economic Accounting, working under the aegis of the Committee on National Statistics, was established to perform this review.
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From page 18... ...
in which BEA addressed environmental matters; it is an area about which Congress has expressed concern; and it provides an excellent introduction to the questions and problems associated with the IEESA. The extension of the IEESA to renewable and other natural resources, as proposed by BEA for its Phase II effort, is covered in Chapter 4.
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