National Accounts Environmental Accounting How to “educate” the users to the potential of using environmental accounts for development policies: the case of Italy Cesare Costantino 10 th London Group Meeting United Nations Headquarter Complex New York, June 2006

C. Costantino - Istat “Educating” the users: a special issue for environmental accounting SEEA: Chapter 11 examples what can reasonably be done by statistical offices on their own and what they would have to undertake in collaboration with other agencies Issues included in the research agenda need for “educating” the users to the potential of using the accounting approach for analysis and policy making (on applications and policy uses)

C. Costantino - Istat The Italian experience  Promotion how to make users’ aware about the potential of using environmental accounts still a crucial issue in Italy  Adoption of high level decisions  Discussion in the Parliament

C. Costantino - Istat Joint work by Istat and the Ministry of Economy and Finance follow up launched in spring 2006 national knowledge management program adopted by the CIPE aimed at identifying ways in which environmental accounting can improve the design, monitoring and evaluation of development policies project launched in autumn 2004 Difficulties in managing the financial resources obtained

C. Costantino - Istat Istat’s partner in the project technical support to public administrations. Specific tasks include to help improve effective spending and to favour better performance of European structural funds evaluations of various aspects of investment programmes and development projects Public Investment Evaluation Unit (UVAL) Department for Development and Cohesion Policies Public Investment Technical Evaluation and Monitoring Unit Ministry of Economy and Finance (MEF) UVAL provides: especially interested in regional environmental accounts

C. Costantino - Istat Main results of the Istat - Ministry of Economy and Finance joint project defined a framework disseminated a methodological document: “Development policies and the environment: using environmental accounts for better decision making” (htpp:// Specific objectives reached: identified a subset of environmental accounting aggregates especially important for development policies calculated, on an experimental basis and by way of example, regional estimates of some of the aggregates identified as especially important; formulated general hypotheses in order to start up a system of periodic production of selected environmental accounting data on a regional scale

C. Costantino - Istat Main steps of the joint work  concept of development policy in operational terms  UVAL experts aware about the features of environm. accounting and the specific outputs stemming from it  priorities for further work on environmental accounting at Istat  examples of policy-makers’ questions concerning environmental issues, to which environmental accounting data can provide proper answers  generalising of the policy-makers’ demand and the corresponding supply by environm. accountants

C. Costantino - Istat Operational definition of the development policy concept government decisions aimed at either directly or indirectly helping to conserve and increase the stock of public and private capital focus on capital enlarged concept of capital produced capital, human capital, natural capital, knowledge capital, social capital the natural capital according to the SEEA concept and guidelines (e.g. & 1.23 of the handbook on the different functions of the natural capital)

C. Costantino - Istat Main features of development policies objectives target groups instruments conservation/ growth of the capital stock (different forms) conservation/ growth of the stock of a given form of cap (specific components) reduction of territorial disparities concerning capital stock different institutional sectors, different industries, different social groups public expenditure fiscal system regulation public help for capacity building focus on allocation of expenditure to stocks of capital, sectors, territories

C. Costantino - Istat Allocative decisions by kind and related policy-maker questions kind of allocation examples of questions among different forms of capital Which share of the materials used in production and consumption processes ends up in residuals and which share is turned into produced capital? To what extent is the natural resources’ intake needed to satisfy the key economic sectors’ requirements?

C. Costantino - Istat Allocative decisions by kind and related policy-maker questions kind of allocation examples of questions among different target groups What is the relationship between the economic performance and the environmental performance of various production activities? Are the economic activities that pollute the most the same ones that spend the most on environmental protection?

C. Costantino - Istat Allocative decisions by kind and related policy-maker questions kind of allocation examples of questions among distinct territories Are there significant differences among territories in terms of the availability of various natural resources and their quality? Are the territories with the greatest pollution and degradation the same ones that spend the most on environmental protection?

C. Costantino - Istat Answers from environmental accounts focus on examples how based on data regularly produced by Istat framework SEEA and ESEA stress on main topics addressed, main phenomena described and their type, stage of the DPSIR circuit at issue environmental accounting modules for which handbooks, compilation guides, standard tables are available within the ESS: EW-MFA, NAMEA, EPEA, asset accounts - direct use of empirical evidence provided by env. accounts - indirect use of data provided by env. accounts as an input for modelling

C. Costantino - Istat Questions-answers: a framework

C. Costantino - Istat The potential of using env. accounts at the individual decision stages allocation of resources among forms of capital the information provided by environmental accounts for the different forms of natural capital is of crucial importance, because the degradation of the natural resources in question can, in the medium- to long-term, compromise the prospects for development of key economic sectors Choice of objectives allocation of resources among territories the information makes it possible to take into account the differences in the respective environmental situations deemed capable of impacting on the gaps in development

C. Costantino - Istat The potential of using env. accounts at the individual decision stages choice of mechanism (expenditure, fiscal and/or regulation policies) Choice of policy instruments choice of target groups the information provided by environmental accounts is deemed reduced the information appears especially important. Environmental accounts can also provide indications for the fine-tuning of the parameters of intervention tools (for example, determination of the price changes needed to bring about changes in behaviour)

C. Costantino - Istat Value added of the individual environmental accounts able to provide information not otherwise available from other sources environmental accounts able, by their very nature, to provide useful support for some decisions, not for others able to provide useful support by favouring the reading of certain information at times and the reading of other information at other times: they can be read at various levels and for various objectives In relation to allocative decisions able to provide more complete and/or more detailed information compared with other sources

C. Costantino - Istat Value added of the individual environmental accounts the potential of using environmental accounts appears to be reduced, due to the difficulty of distinguishing the effects of the public intervention and effects originating from other causes For purposes of ex post evaluation of development policies

C. Costantino - Istat A prioritisation exercise key factors: importance for development policies, feasibility

C. Costantino - Istat The case of Italy: some lessons learnt after all, despite the Ministry’s willingness to pay, the society on the one hand and the statistical system on the other hand are not really engaged in developing environmental accounts and their use money for the project obtained from a public fund for the enhancement of knowledge in general, not from a budget specific for environmental issues examples of policy-makers’ questions concerning environmental issues to which environmental accounting data can provide proper answers  Users’ interest  Users’ capacity to understand environm. accounting  Funding users’ willingness to assess the potential of using environmental accounts due to their involvement in public expenditure calculation of indicators identified as especially important focus on data regularly produced

C. Costantino - Istat questions/points for discussion are there specific users’ interests (e.g. improving public expenditure) on which it is advisable to focus on?  How to arouse users’ interest focusing on the need to integrate environmental and economic aspects as a standing alone point, or making a major effort to address knowledge issues with reference to overall sustainable development?  Finding best ways to dialogue with users to make use of a “questions-answers framework”? to concentrate on environmental accounts/aggregates deemed especially important? to start discussion from those accounts that are already produced on a regular basis? what else? to avoid controversial issues, starting discussion from those accounts for which handbooks, compilation guides, standard tables are available,?

C. Costantino - Istat questions/points for discussion  To develop “methodological” documents specifically aimed at “educating” users?  Can an action aimed at “educating” users help to elevate the SEEA to an international statistical standard? and if so, how?  How to make the society and the statistical system actually engaged in developing environmental accounts and their use?

C. Costantino - Istat Thank you for your kind attention