The Development of Regional Hybrid Environment Accounts Tsunenori Ashiya Data & Analysis division, Policy Planning & Coordination Office Hyogo Prefectural Government, JAPAN

CONTENTS 1.Establishment and Development of Regional Hybrid Accounting System 2.Framework and Features of Regional Hybrid Accounting System 3.Estimation Results for Regional Accounting System 4.Application of Regional Hybrid Accounting System

Profile of Hyogo Prefecture ・ Hyogo Prefecture contains a rich variety of communities ranging from large cities to rural villages. ・ Hyogo Prefecture has become known as a Japan in Miniature. ・ Hyogo has an overall area of 8,392 square kilometers, with a population of about 5.6 million as of January 2007.

Backgrounds １ The Japanese hybrid accounting system fails to specify the process for disposal of wastes from household and industry sectors as part of economic activities or a physical cyclulation. ２ A regional hybrid account system should be developed to detect emerging environmental problems and to plan effective environmental and economic policies.

The purposes of this study are to model the waste-disposal process in Hyogo Prefecture in a detailed way to develop a regional hybrid accounting system prototype (a Hyogo Prefecture pilot-case version)

The purposes of this study were to aim at helping prefectural government (statistical and environmental administration departments), researchers at universities, other institutes –to estimate a Hyogo Prefecture pilot-case version of the regional hybrid accounting system prototype to specify the waste disposal process.

Overview of research activities on environmental accounting in the Cabinet Office of Japan 2005 ～ 2007 １ Developing the common framework of Regional Hybrid Accounting System Prototype (research on interactions between economy and environment) ２ To estimate a Hyogo Prefecture pilot case version of the regional hybrid accounting system

Features of Japanese Hybrid Accounting System １ It attaches the stock accounts to the capital accounts and records the various social capitals and environmental protection plants. ２ It estimates the emission of pollutions not only by households, but also by the government. ３ It introduces the land use accounts. ４ It adds coal, forests, water, and fish to the category of natural resources. Note) “ The Development of Japanese NAMEA”

Outline of the common framework of Regional Hybrid Environment Accounts １ It is based on the original NAMEA estimates for 1990, 1995, 2000 and 2003 * NAMEA : National Accounting Matrix including Environmental Accounts. ２ It has twofold parallel structure: national accounting matrix (NAM) in the monetary term and environmental accounts (EA) in the physical term.

Figure 1 Concept of Basic Table for Regional Hybrid Accounting System

Structure of Basic Table for Regional Hybrid Accounting System NAM Prefecture NAM (recording economic activities) Attached NAM table Waste account (recording waste emissions) Air pollutants Water pollutants Goods for internal disposal Waste goods disposal Emitted environment accounts EA Quantitative account (recording wastes subjected to internal disposal) Table for accumulations in economy and environment (recording wastes for final disposal) feedback

Estimation Results for Hyogo pilot- case (Hybrid Accounting System) Environmental protection service supply and use tables –to allow viewers to see easily which parties provide sewage treatment, waste disposal, recycling and other environmental protection services –to see how these services are provided and utilized.

Feature 1 Quantitative illustration of waste disposal process 1.The table is designed to quantitatively record details of the process. 2.The process is as follows; Waste goods for disposal are emitted through economic activities. Waste goods are put into a recycling path or transported to incineration or final disposal sites.

Feature 2 Illustration of internal disposal operations 1.The table is designed to quantitatively record the process in which air and water pollutants emitted through economic activities are reduced by internal disposal operations. 2. This table would shed light on internal disposal activities before being emission. 3. These activities the efforts by producers and consumers to reduce environmental pollutions (they might be the results environmental policies).

Feature 3 Economic tabulation of waste disposal and internal operations The NAM includes a mechanism to specifically record the economic activities. That is on a monetary value basis.

Feature 4 Potential Applications The regional hybrid accounting system is different from the Japanese hybrid accounting system. The former fails to include ・ details of materials accounts, environmental problems, environmental indicators. ・ stock accounts.

Regional System of Integrated Environmental and Economic Accounting 1.Basic Table for Regional Hybrid Accounting System (Table 1) see page 4 2.Regional Environmental Protection Service-Supply Table (Table 2) 3.Regional Environmental Protection Service-Use Table (Table 3) see page 5

Framework of Regional Hybrid Accounting System Attached NAM table (on Quantitative basis ) １ Air pollution ： CO 2 、 Nitrogen oxide, Sulfur oxide 2 Water pollution: Chemical oxygen, Total phosphorus, Total nitrogen 3 Wastes: Goods for Internal disposal, Recyclable goods, Goods for incineration, Goods for Final disposal, Final waste disposal

Application of Regional Hybrid Accounting System １ The regional hybrid account system gives a prototype Environmental Efficiency Improvement Index 2 It is the SAM Multiplier Analysis Based on Regional Hybrid Accounting System 3 It is the comparison of Regional and Japanese Hybrid Accounting Systems

１ If NDP has larger growth rate than imputed environmental cost, EDP is increasing while the imputed environmental cost is increasing. Therefore, EDP is not adequate indicator for sustainability. ２ We need other indicators such as OECD’s decoupling indicator. What does EDP indicate?

EP: Environmental Pressures DF: Driving Forces ( ex. GDP ) Closing DF ／ Opening DF Closing EP ／ Opening EP ) X 100 EEII ＝（１ － EEII ≧ 0 ⇒ EP’s growth rate ≦ DF’s growth rate ⇒ ”Environmental efficiency is improving” EEII ＜ 0 ⇒ EP’s growth rate ＞ DF’s growth rate ⇒ ”Environmental efficiency is deteriorating” Environmental Efficiency Improvement Index (EEII)

Remarks on EEII １ EEII represents the relationship between economic activities and environmental pressures. ２ OECD calls this type of index "decoupling indicator." ３ EEII does not represent a strong sustainability because environmental pressures may be larger than sustainable flow level even if environmental efficiency is improving.

Remarks on EEII ４ EEII is flow a indicator and not a stock indicator. Stock of EP (environmental pressures) is increasing as long as EP occurs every year, even if EP’s growth rate is on the downward trend ( EEII is on the upward trend) year by year. ５ Therefore, the stock of EP might increases over the sustainable stock level of EP. EEII is efficiency indicator, not necessarily adequate indicator for sustainability. (continued)

Decoupling index improving: wastes final disposal volume deteriorating:CO 2,NOx,SOx emissions

Degree of Improvement in Environmental Efficiency Improvement Index The index is designed to measure the changes in pollution level for the environmental themes. 1 wastes : final waste disposal volume per unit GDP 2 greenhouse gas effects (global warming) 3 acidification or any other themes.

SAM Multiplier Analysis We can use for analyzing economic spillover effects in following situations. –greater export growth –greater internal-disposal activities –greater consumption of recycled products by households We use the model for simulation under following conditions. –a 10% increase in other goods and service –greater export growth case –industry for goods and services other than those specified below

SAM model analysis 1 We can analyze the case –greater export growth –greater internal disposal activities –greater consumption of recycled products by households 2 We can record –pollutants emitted through economic activities –waste disposal processes –waste accumulations

Result: SAM Multiplier Analysis of Greater Export Growth Case (FY 2000)

Comparison of Hyogo Prefecture and Japanese Hybrid Accounting Systems 1.Economic activities and their environmental pressures (Table 6) 2.Air pollutant emissions (Table 7) 3.Water pollutant emissions (Table 8) 4.Waste emissions (Table 9)

Table 6 Comparison of population,GDP Hyogo prefecture accounts for –4.4% of Japan’s population –4.0% of nation’s production value and GDP –3.8% of nationwide final consumption expenditure

Table 7 Air Pollutant Emissions 1)Production activities CO 2,NOx, SOx emissions: accounting for 6.0% of nationwide emissions 2)Final consumption NOx,SOx emissions: accounting for 6.0% of nationwide emissions

Table 8 Water Pollutant Emissions 1)Production activities COD and T-N emissions :accounting for 4.0% of Japan’s total T-P emissions : accounting for 4.8% of Japan’s total 2)Final consumption expenditure COD,T-N and T-P emissions : accounting for 4.0% of Japan’s total

Table 9 Waste Emissions 1) Production activities totaled 27,337,000 tons accounting for 6.4% of the national total 2) Final consumption expenditure totaled 1,806,000 tons accounting for 5.0% of the national total

Table 10 Recyclable Goods Emissions 1)Recyclable goods totaled 9,486,000 tons accounting for 4.9% of the national total 2) Recyclable volume per unit production value in recycling industry 10,761 tons per 100 million yen, equivalent to 87.6% of national level

Table 11 Emissions of Wastes for Final Disposal 1) Final waste disposal volume totaled 2,357,000 tons accounting for 4.2% of Japan’s total 2) Final disposal volume per production value in the waste disposal industry 1,599 tons per 100 million yen, equivalent to 97.6% of the national level

Examples of Regional Environmental Assessment Indexes

Research issues for the future １ The regional hybrid account system should include more regional specific features. ２ The account system fails to include details of materials accounts, environmental problems environmental indicators or stock accounts. Prefecture governments may be encouraged to add these contents to make their own hybrid accounts system.

I think that International exchange of information is extremely useful. Especially on this party, I would extend my best thanks to organizing this conference and giving me the opportunity of this presentation. Closing remarks

Thank You for Your Attention