1. Environmental Goods and Services
Sacha Baud
Directorate Spatial Statistics
Vienna
September 2012

2. Historical Development (I)
Starting in 1970s the environment received growing interest on the European level. At that time focus was on limiting pollution by introducing minimum standards, especially for waste management, water pollution and air pollution. In the next decades sustainable development became a core task of the European Community. It aims at a “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. In the 1990s (and up to present time) the economic opportunities related to environmental protection moved into the centre of interest. This development was inter alia initiated and still is accompanied by political initiatives on the European level. The increased focus on the environment also affected the European Statistical System which led to the development of new statistical products concerning the environment and its interaction with the economy (the society).

3. Historical Development (II)
In 1995 OECD and Eurostat proposed the collection of information on the Environment Industry as part of the SERIEE system.
In 1999 publication of the joint OECD/Eurostat „The Environmental goods and services industry – Manual for data collection and analysis“.
Definition: The environment industry consists of activities which produce goods and services to measure, prevent, limit or correct environmental damage to water, air and soil as well as problems related to waste, noise and eco-systems.
No European data collection.
Economy
Resource Use and Management Accounts
Environmental Protection Expenditure Accounts
Collecting and processing of basic data:
e.g. Environment Industry
Environment

4. Historical Development (III)
In 2006 the Eurostat Task Force on EGSS started to improve data collection on integrated technologies and clean goods and to include resource management activities. In 2009 the Eurostat data collection handbook “The Environmental Goods and Services Sector” was published. Also in 2009 Eurostat carried out a first voluntary pilot data collection on Environmental Goods and Services Sector to test the questionnaire. In 2011 Eurostat carried out the first voluntary data collection among all countries of the European Statistical System. Since 2012 the EGSS methodology is a worldwide standard as part of the System of Environmental-Economic Accounting (SEEA), volume I Central Framework. Near future: EGSS is one of the modules for the extension of Regulation (EU) 691/2011 on European environmental economic accounts. Obligatory data transmission to Eurostat in the next few years possible.

5. EGSS in the context of SERIEE (I)
SERIEE consists of three pillars:
Environmental Protection Expenditure Accounts
Resource Use and Management Accounts
Intermediate systems for collecting and processing of basic data: These systems shall provide the data for compiling EPEA. Focus is on the output of the environment industry – EGSS.
Economy
Resource Use and Management Accounts
Environmental Protection Expenditure Accounts
Collecting and processing of basic data:
e.g. Environment Industry
Environment

6. EGSS in the context of SERIEE (II)
Therefore, definitions and classifications of EGSS have to be consistent with SERIEE and thereby with EPEA and Resource Use and Management Accounts. But EPEA and EGSS are focused on environmental activities from different perspectives so there are important differences.

7. EGSS in the context of SERIEE (III)
Source: SEEA Central framework, p. 106

8. Definition of EGSS (I)
The EGSS - Environmental Goods and Services Sector consists of a heterogeneous set of producers of technologies, goods and services that:
Measure, control, restore, prevent, treat, minimise, research and sensitise environmental damages to air, water and soil as well as problems related to waste, noise, biodiversity and landscapes. This includes “cleaner” technologies, goods and services that prevent or minimise pollution.
Measure, control, restore, prevent, minimise, research and sensitise resource depletion. This results mainly in resource-efficient technologies, goods and services that minimise the use of natural resources.
These technologies, goods and services must satisfy the end purpose criterion, which is in this case environmental protection or resource management.
Technologies, goods and services which have a favourable impact on the environment but another main purpose are NOT INCLUDED in EGSS.

9. Definition of EGSS (II)
Environmental protection (EP) includes preventive and remedial technologies and products:
to prevent, reduce, eliminate and treat air emissions, waste and wastewater, soil and groundwater contamination, radiation, noise and vibration,
to prevent, reduce and eliminate soil erosion, salinity and other kinds of degradation, to preserve biodiversity and landscapes, and
to monitor and control the quality of environmental media and waste.
Resource management (RM) includes technologies and products:
to manage and/or conserve the stock of natural resource against depletion, including preventive and restoration activities,
to monitor and control the levels and uses of natural resources stocks
Both environmental protection and resource management also comprise administrative activities, education, training, information and communication activities, research and development.

10. Coverage of EGSS The Environmental Sector comprises:
Environmental technologies, goods and services for every kind of use (intermediate or final consumption, gross fixed capital formation)
Only EGS, which are produced for the environment (“main purpose criterion”)
EGS produced by corporations and the general government
EGS produced as principal, secondary or ancillary activity
Market and non market activities

11. Goods, services and technologies (I)
environmental
technologies
end-of-pipe
integrated
environmental goods
connected
adapted
environmental services
env. specific
connected
ancillary activities

12. Goods, services and technologies (II)
Environmental technologies are technical processes, installations and equipment (goods), methods or knowledge (services) whose technical nature or purpose is EP or RM. There are two types:
End-of-pipe technologies are mainly technical installations and equipment to measure, control, treat and restore or correct pollution, environmental degradation and resource depletion. They operate independently or are identifiable parts at the end of production or consumption cycles.
Examples: Wastewater or waste treatment facilities, filters, equipment to recover materials.
Integrated technologies are technical processes, methods or knowledge used in production processes (=integrated) which are less polluting and resource intensive than the equivalent average technology in a given country.
Examples: Organic farming, wind mills, combined heat and power, solar panels, dry ovens in cement industry.

13. Goods, services and technologies (III)
Connected products are goods or services whose use directly serves an environmental protection or resource management objective but which are not characteristic activities,
e.g. catalytic converters, rubbish containers, noise reduction windows, EP maintenance services for septic tanks, RM services such as installation of renewable energy production technologies.
Adapted products are less polluting or more resource efficient than equivalent normal products which furnish a similar utility. Their primary use is not EP or RM,
e.g. mercury-free batteries, cars with lower air emissions, recycled paper, renewable heat and energy, water-saving devices, resource-efficient appliances.
Environmental specific services are the “characteristic” environmental protection or resource management activities. Their purpose is EP or RM,
e.g. waste management or wastewater management activities, energy and water-saving activities, activities to reduce water leaks and water losses.

14. Producers and activities (I)
For EGSS only the producer of the final environmental technology, good or service (= main producer) is taken into account.
Suppliers of components which are not used exclusively in environmental technologies and distributors of environmental technologies and goods are not part of EGSS.

15. Producers and activities (II)
Corporations
General Government
Principal
Secon-dary
Ancillary
Market
Non market
Market
Non market
Market
Non market
Non market
Source: Based on EGSS handbook, page 40

16. Producers and activities (III)
The General Government consists of central, regional and local governments, authorities, communities and government agencies relating to administration, planning, legislation, supervision, control, information etc.
Environmental services are provided more or less free of charge (= non-market services), e.g. regulatory, administrative or control activities related to EP or RM, like biodiversity, forestry, agriculture and public energy agencies.
Public corporations carrying out market activities are excluded from general government sector.
Also public corporations, providing non-market services, e.g. waste and wastewater treatment services, are classified in the Corporations sector.

17. Producers and activities (IV)
Corporations refer to activities considered in NACE rev. 2 classes A to Q.
Data should be collected on the LKAU level (local kind of activity unit = establishment). It is the smallest unit of a corporation with book-keeping. If the environmental activity of a corporation is not the primary but secondary activity it should be allocated to the NACE category of the establishment and not of the corporation.
Corporations can carry out market and non market activities.
Market activities are sold on the market at economically significant prices, i.e percent or more of the production costs are covered by the price.
Non market activities are provided free of charge or at economically insignificant prices (less than 50 percent).

18. Producers and activities (V)
The principal activity is the activity of a unit producing most of the revenue. If no revenue data are available other key figures must be used to determine the most important activity, e.g. employment or turnover.
In the case of a non market producer the principal activity is responsible for most of the costs of production.
Secondary activities are all other activities of a unit provided for use by other units.
Ancillary activities are technologies and goods where the producer is also the beneficiary, i.e. they are not provided for use by other units but to support the main productive activities of the own unit, e.g. autoproduction of renewable energy (deviation of NACE rev. 2 rules).

19. Data transmission to Eurostat

20. Classifications (I)
Classification of Environmental Protection Activities (CEPA):
Protection of ambient air and climate
1.1.2 of which for the protection of climate and ozone layer
Wastewater management
Waste management
Protection and remediation of soil, groundwater and surface water
Noise and vibration abatement
Protection of biodiversity and landscape
Protection against radiation
Research and development
8.1.2 R&D for the protection of climate and ozone layer
Other environmental protection activities

21. Classifications (II)
Classification of Resource Management Activities (CReMA):
Management of waters
Management of forest resources
11 A. Management of forest areas
11 B. Minimisation of the intake of forest resources
Management of wild flora and fauna
Management of energy resources
13 A. Production of energy from renewable sources
13 B. Heat/energy saving and management
13 C. Minimisation of the intake of fossil resources as raw material for uses other than energy production
Management of minerals
Research and Development
Other natural resource management activities

22. Structure of EGSS Goods – Technologies – Services
Adapted goods
Connected goods
End-of-pipe technologies
Integrated technologies
Specialized services
Connected services
Ancillary
activities
Environm. protection activities (CEPA)
Resource management activities (CReMA)
Prot. of ambient air and climate
Waste manage-ment
Noise and vibration abatement
R&D
Management of waters
Management of fossil energy res.
Management of wild flora and fauna
Wastewater management
Soil, groundwater, surface water
Biodiver-sity and landscape
Other
Management of forest resources
Manage-ment of minerals
R&D
Others
Industries (NACE digit level)

23. Data generation (I) 1. step: Identification of the EGSS population
As there is no standard classification of environmental technologies, goods and services, the first and most important step must be the identification of the EGSS population.
It is not possible to do this task with a single approach, so a mix of methods and data sources has to be applied.
The EGSS handbook provides practical examples and guidance on how to identify the environmental technologies, goods and services but this can just be a support because your specific methodology depends on the data source you are able to use.
Main data source should be your official statistics, supplemented by further data sources, registers, studies, internet or literature research etc.

24. Data generation (II)
Source: EGSS handbook, page 72

25. Data generation (III)
2. step: Allocation of activities to domains of EP and RM
Once all environmental technologies, goods and services are identified and allocated to industries they have to be assigned to the appropriate environmental protection or resource management domain.
In most cases the assignment is straightforward because of the purpose of the activity, e.g.:
NACE 37 Sewerage is classified in CEPA 2 Waste management
ÖPRODCOM Renovating, maintenance and restoration work for one- and two-dwelling buildings … is classified in CREMA 13 B. Heat/ energy saving and management
ÖPRODCOM Retreaded pneumatic tyres, of rubber is classified in CREMA 13 C. Minimisation of the intake of fossil resources as raw material for uses other than energy production

26. Data generation (IV)
2. step: Allocation of activities to domains of EP and RM (cont.)
But technologies and goods can also be related to more than one domain of EP, of RM or both EP and RM. In such cases the activity shall be allocated to the main domain which is identified via the main purpose, the technical nature as well as the intention of the producer. e.g.:
Renewable energy serves two purposes – prevention of both air emissions and natural resource depletion. Producers of renewable energy are classified in 13 A. Production of energy from renewable sources.
Reason: By convention all activities aiming at the protection of ambient air and climate through the reduction of natural resource use shall be classified as a resource management activity.
Recycling consists of two steps – the collection of waste and the transformation of waste into secondary raw materials or final goods.
Collection/treatment of waste is classified in CEPA 3 Waste management, secondary raw materials (and final goods) in RM (class depends on material)

27. Data sources
Source: aligned with EGSS handbook, page 120

28. Data sources
Source: aligned with EGSS handbook, page 120

29. Data sources
Source: aligned with EGSS handbook, page 120

30. Data sources
Source: aligned with EGSS handbook, page 120

31. Country example (I) Data sources used in Austria:
Short term statistics (STS) – Industrial commodity statistics
Structural business statistics (SBS)
Environmental protection expenditure accounts (EPEA)
Energy balances
Business register
Survey on environmental services of service industries
Direct data collection from companies engaged in EGS by telephone
Association of Austrian Social Security Institutions (employees)
Market statistics on renewable energy technologies (photovoltaics, solar thermal energy, heat pumps and biomass)
Green report (Ministry for Agriculture and Forestry)
Specialized literature
Expert information
Internet research

32. Country example (II)
For data collection a mix of methods is applied as it is not possible to cover all aspects of the environment related economy with a single source.
Basically, a supply-side approach is taken; only in exceptional cases demand-side elements is included (e.g. energy balances).
Data are collected both by product groups (from short term statistics (STS) or structural business statistics - SBS) as well as by individual companies (primarily in the case of technology).
Preferably data of official statistics are used, otherwise other data sources.
Some EGS are classified together with non-environmental products - the shares of the environmentally relevant products are estimated (e.g. services)
If only one of the two variables (turnover or employment) is available the other is estimated compliant with the EGSS manual. These estimates are based on data from STS as well as SBS, assuming an average ratio of turnover per employee or vice versa.
If only physical data are available, turnover and employees are estimated (e.g. turnover and employees related to fuelwood production)

33. Country example (III) Short term statistics:
NACE are fully taken into account in EGSS; for explicit environmental goods and services identified by PRODCOM, energy balances or eco labels production value is taken from STS; if necessary number of employees in FTE is calculated using per capita average productivity of a relevant NACE 4-digit.
Examples: air filters, renewable energies, eco textiles, eco paints, eco cleaning agents, eco furniture, eco matresses, recovered paper, hydro turbines, devices for filtering or purification of gases, liquids or air (about 70 positions in PRODCOM).

34. Country example (IV) Structural business statistics:
SBS data are used together with other data sources to calculate environmental turnover and employment.
Examples:
NACE 10: Share of production of organic milk, bread and meat (publ. of Ministry for Agriculture and Forestry on food).
NACE 452: Share of costs for servicing of nuisance, e.g. exhaust gases, as well as costs for correcting deficiencies (Association of Automotive Technicians).
NACE 55 and 56: Share of companies with Austrian eco label for tourism.
NACE 691, 702, 749: Environmental share of legal activities, management consulting activities, other professional, scientific and technical activities n.e.c. (EPEA and survey on environmental services of service industries).

35. Country example (V) Structural business statistics (cont.): Examples:
NACE 711, 712, 721: Environmental share of architectural and engineering activities and related technical consultancy; technical testing and analysis as well as research and experimental development on natural sciences and engineering (survey on environmental services of service industries).
NACE 812, 813: Environmental share of cleaning activities (mainly chimney sweepers) and landscape service activities (survey on environmental services of service industries).

36. Country example (VI)
Environmental protection expenditure accounts for the public sector:
Expenditure are classified by CEPA, with data from other sources and assumptions it is also possible to allocate data to resource management activities.
Attention: Take care of reclassifying market production of the public sector to corporations.
Market statistics on renewable energy technologies:
Study of TU Vienna comprising data on turnover and employment of production, installation and R&D of photovoltaic and solar thermal systems, heat pumps and biomass systems.

37. Country example (VII) Further companies:
1. These have to be identified as potential suppliers of EGS (data sources: Network Environmental Technology, studies, environmental newspapers and internet research).
2. Environmental turnover and employment data calculated on the basis of STS, telephone interviews, Association of Austrian Social Security Institutions and SBS.
Green report (Ministry for Agriculture and Forestry):
Data on revenues and employment of certified organic farms.
Energy balances:
Production of renewable electricity. Data on turnover and employment from STS.

38. Country example (VIII)
Lowest energy /passive houses, energetic dwelling renovation:
Definition of environmental turnover and employment of construction industry difficult.
Pragmatic approach: Production value and employment calculated on the basis of housing subsidies (criteria energy savings and thermal rehabilitation); data source is a study.
Recycling products:
Calculated on the basis of input of scrap.
Paper: Environmental share of production value and employment calculated on the basis of used waste paper in paper production (Association of Austrian Paper Industry).
Plastic: Recycling of waste plastics classified in NACE 38, therefore covered by STS. But correct allocation to CReMA 13 C. Minim. of the intake of fossil res. as raw material for uses other than energy production not possible.

39. Country example (IX) Recycling products (cont.):
Metals: Calculation of environmental turnover and employment on the basis of input of scrap in steel production as well as aluminium recycling products (one company in Austria).
Glass: Recycling of glass packaging carried out by a small number of companies, all of them are taken into account.
Research institutes, universities, environmental protection organisations, natural and national parks:
Employment in environmental technology research at universities based on a study of the Austrian Federal Environment Agency; further companies engaged in environmental research, but also environmental protection organisations, natural and national parks are identified by business register and internet research.

40. Country example (IX) Ancillary activities:
Small amount of ancillary activities (own generation of renewable energies, environmental ancillary activities in agriculture); data sources are energy balances and green report.