SEEA: T HE I NTERNATIONAL S TANDARD FOR E NVIRONMENTAL - E CONOMIC A CCOUNTING N ATIONAL A CCOUNTING AND THE V ALUATION OF E COSYSTEM A SSETS AND THEIR S ERVICES Carl Obst Honorary Fellow Melbourne Sustainable Society Institute, University of Melbourne Co-authors: Lars Hein (Wageningen); Bram Edens (StatsNeth) Presentation to 2 nd SEM Conference Paris 22 July, 2015

C ONTENTS Background to the paper and development of the SEEA Environmental valuation for national accounting The ecosystem accounting model and the production boundary Key measurement issues

1. B ACKGROUND

D EVELOPMENT OF THE SEEA

2. V ALUATION IN N ATIONAL A CCOUNTING

V ALUATION FOR N ATIONAL A CCOUNTING In an environmental context, national accounting engagement with valuation generally limited to resource and depletion using NPV Specifically exclude externalities from the SNA Current environmental valuation discussion, including ecosystem services, led by environmental economists; accountants largely non-existent Problem of different purposes and different concepts

E XCHANGE V ALUES AND W ELFARE - E CONOMIC V ALUES

I MPLICATIONS OF E XCHANGE V ALUES Fundamental to national accounting - permits balancing accounts and integrating data Valuation of economic activity not welfare – implications for defining income and capital costs (degradation) Discussion needs to move beyond choice of technique – need to also consider fitness for purpose and choice of value concept Relevance of “near” and “far” market considerations

3. T HE E COSYSTEM A CCOUNTING M ODEL

T HE R OLE OF THE P RODUCTION B OUNDARY Defines scope of activity (and hence income and consumption) arising from the use of real assets Includes market and non-market activity Includes subsistence agriculture and fishing Measured in terms of output Excludes natural processes Implications for environmental assets SNA value only covers contribution to current measures of output – i.e. essentially income from extraction or harvest Cost of capital relates to loss of future extraction income Implicitly, a single user of capital to whom income accrues Economy and environment seen as separate systems

C ORE E COSYSTEM A CCOUNTING M ODEL Individual & societal well-being Ecosystem services ECOSYSTEM ASSET e.g. forest, wetland, coastal area, agricultural land Human inputs (e.g. labour, produced assets) Benefits : SNA & non-SNA Other ecosystem assets

C ORE E COSYSTEM A CCOUNTING M ODEL Ecosystem services ECOSYSTEM ASSET e.g. forest, wetland, coastal area, agricultural land Benefits : SNA & non-SNA Extended production boundary

I MPLICATIONS OF INCLUDING NON -SNA B ENEFITS Measures of output, consumption and income larger Potential value of environmental assets increases Cost of capital – degradation – must take into account loss of future income from non-extractive activity; if asset declines in condition Recognise multiple users and income streams from a single asset Provides a framework to assess trade-offs in alternative use patterns and to integrate with the standard accounts

4. K EY M EASUREMENT I SSUES

K EY M EASUREMENT I SSUES Accounting for low or negative rents Is the exchange value of the ecosystem services zero? How should degradation of underlying ecosystems be considered? Role of institutions in setting exchange values Treatment of disservices and externalities Achieving full integration with the SNA Allocation of degradation Counting environmental assets once only Treatment of restoration costs and ecological debts

N EXT S TEPS Preparation of further guidance and support on ecosystem accounting Development of full set of SNA accounts including ecosystem services and assets Ongoing engagement between economists and national accountants on valuation topics

T HANK Y OU

L INKS Obst, Hein, Edens (2015) “National Accounting and the Valuation of Ecosystem Assets and their Services”, Environmental and Resource Economics. DOI /s SEEA Central Framework SEEA Experimental Ecosystem Accounting