Integrated framework for environmental activity accts Arturo de la Fuente Eurostat

Background There are many environmental activity accounts They have drifted apart because development over many years Specialised approaches optimisation case-by-case other factors We debate about this matter in Europe since 2013

Scope of the integration sought Environmental goods and services sector account (EGSS) Environmental protection expenditure account (EPEA) Resource management expenditure account (ReMEA) Environmental subsidies and other transfers account (ESST) Environmental taxes account (ETEA) Clean Technology Satellite Account, Bio-economy, Circular Economy,…

'Solution' proposed: modular approach ETEA ESST 3 core accounts: EGSS, EPEA, ReMEA ESST narrow and deeper: specific topic, more variables, more breakdowns ETEA is less integrated than the others

Accounting framework: production account (based on EGSS)

Accounting framework: expenditure account (based on EPEA & ReMEA)

Integrated framework: What do we need? Clear and unified terminology 1 term = 1 concept Adjustments in Definitions of some variables Certain valuation rules Groupings of classifications (CEPA & CReMA) Adjustments in some accounts

Terminology Environmental protection & Resource management Characteristic & non-characteristic activities (*) Specific products, cleaner products, resource efficient products (*) Specific fixed assets, cleaner fixed assets, resource efficient fixed assets (*) Specialist producers, secondary env producers, ancillary env producers (*) (*) = changed item

Proposed EGSS Coverage: Variables: Valuation rules (unchanged) EP & RM Characteristic & non-characteristic activities Environmental goods and services Variables: Output, GVA, employment & exports Intermediate consumption, compensation of employees, gross fixed capital formation (for the production of environmental products)(*) Imports (*) Valuation rules (unchanged) Breakdowns: SIC, CEA, type of products (specific, cleaner, resource efficient), type of output (market, non-market, ancillary, for own final use) Focus on product breakdowns rather than institutional units EGSS provides the information for a production account for environmental products. It also provides the information for a supply table and parts of a use table of environmental products (see Annex 3). As compared to EPEA, EGSS has a focus on product breakdowns, types of output (market, non-market, etc.), analysis of production and NACE breakdowns of producer units. Instead there are no breakdowns by institutional sector. Those breakdowns are not needed for a supply table, but they are needed for a production account. It may be possible to add institutional sector breakdowns with a rough mapping which would also help to complete the link between EGSS and EPEA. EGSS, and to a lower extent EPEA, are closely related to the Clean Technology Satellite Account under development in Canada. Allocation of output and other variables to sectors can start from mapping market output to corporations, non-market output to government & NPISH and output for own final use to households, as a starting point.

Proposed EPEA Coverage Variables: Characteristic & non-characteristic activities (*) Environmental goods and services (*) Variables: Final consumption Intermediate consumption by specialist producers Transfers (with RoW) Variables coming from EGSS (*): intermediate consumption (of env products), GFCF, employment Valuation rules: double valuation for cleaner products (*) Breakdowns: institutional sector, CEA, type of products (specific, cleaner, resource efficient) (*) Re-focus on expenditure and transfers. Drop supply (*) EPEA, at least the simplified version currently in the EU, does not collect systematically all the environmental transfers across institutional sectors. Instead it focuses on transfers between the national economy and the rest of the world (as they are necessary to calculate the national expenditure on EP) and the transfers between the government sector and the other sectors in the country, as those are the biggest in size and easiest to estimate from available data sources. Transfers between sectors not involving the government are secondary.

Proposed ReMEA Idem as EPEA but for resource management Same accounting framework Simplifications OK because of fewer data sources Some breakdowns may be dropped Some secondary variables may be dropped flows (air emissions, materials, energy and water) and one is about stocks and changes in stocks (land accounts). It was decided to distinguish flows from stocks (including inflows, outflows, opening stocks, closing stocks, etc.), and supply from use with the same approach as in the DSDs for national accounts

Proposed ESST (subsidies) Scope: EP & RM More transfers than EPEA: Subsidies on products (SNA D.31) Subsidies on production (D.39) Other transfers in SNA (D.6, D.7, D.9) Other transactions beyond SNA: potentially environmental damaging subsidies, tax abatements, other support measures Systematic collection all transfers across institutional sectors Breakdowns: ISIC, CEA, institutional sector Other transactions outside the scope of SNA and other core modules, e.g. potentially environmental damaging subsidies (PEDS, see SEEA CF 4.147), tax abatements and other type of support measures (price support, regulatory support mechanisms, etc.)

Proposed ETEA Scope: taxes on all production activities, income taxes, capital taxes Variables: taxes on production and imports (SNA D.2) current taxes on income, wealth, etc. (D.5) capital taxes (D.91) Breakdowns: ISIC, type of tax (energy, transport, pollution, resource)

Questions for London Group Do you agree with modular approach? Core of 3 modules: EGSS, EPEA, ReMEA? ESST as specialised module supplementing the core modules? ETEA as specialised module separate? Having a conceptual overall accounting framework ? not reporting tables for data collections Do you have comments to the details in paper for each of the modules?

Thank you! arturo.de-la-fuente@ec.europa.eu