Environmental-economic accounting (EEA) is a holistic framing of value for society’s development.
EEA extends beyond economic value to consider the societal value provided by the natural environment and interactions between the economy and the environment. Ultimately it strengthens our ability to recognise the benefits of protecting and investing in the environment.
Recognising the underlying stock of environmental assets
The intention of EEA is to ensure economic and societal prosperity can be sustained into the future, by recognising the status of the underlying stock of environmental assets on which the economy and society depends (acknowledging the costs of economic growth such as pollution, habitat loss etc.).
EEA provides decision makers with an understanding of the total societal value provided by the natural environment.
Worldwide accounting for the natural environment
EEA gained momentum at the 1992 Rio “Earth Summit” which recognised the need for holistic indicators of society’s development beyond economic output (i.e. Gross Domestic Product - GDP) to include broader social and environmental indicators.
The United Nations System of Environmental Economic Accounting (SEEA) framework is consistent with the international standard of System of National Accounts (i.e. GDP) to report on the interactions between the economy and the environment nationally.
Worldwide, governments including Australian Commonwealth, state and territory governments, have begun developing and implementing EEA to inform public policy development. The Australian Government has a National Strategy and Action Plan for a common approach to EEA, endorsed by Environment Ministers in April 2018.
Ecosystem accounts are a type of EEA that take stock of current ecosystem assets – in terms of their extent, location, and condition – and quantify and value the flow of ecosystem services that these assets generate for people, who enjoy benefits from them.
The interactions between the economy and the environment are reported on in ecosystem accounts by isolating the contribution of the environment to goods and services that are captured in conventional economic (GDP) accounts.
The accounting framework includes broader (“non-market”/public good) values that are supported by the environment (and delivered by government), but which are not captured within GDP accounts. This broader framing of value provides decision makers with an understanding of the total societal value provided by the natural environment.
Ecosystem accounts in Victoria
In Victoria, the Department of Environment, Land, Water and Planning (DELWP) is developing accounting applications based on the SEEA framework. These will provide better, integrated and more consistent information and analysis on environmental assets. Information will include how assets have been maintained, restored or destroyed, which are improving or declining in condition, and how the health of these assets affects our wellbeing as a society.
EEA will support government policy, planning and investment decisions affecting the environment. It also strengthens the ability of local government, business, not-for-profit and community stakeholders to recognise benefits of protecting and investing in the environment.
Existing ecosystem accounts developed for Victoria are a snapshot of ecosystem status and productivity and developed for much of Victoria’s land and water area. Examples include a baseline account is under development for the marine and coastal ecosystems of the Great Ocean Road region.