Concepts and Methods
Among the above-mentioned indicator frameworks and index calculations, two systemic approaches appear to have become widely accepted standards for assessing the environmental sustainability of growth and development. They are the physical material flow accounts (MFA), developed for particular commodities by the US Bureau of
Mines over a period of decades (USBM 1970, 1975, 1985) and generalized to the national level by the Wuppertal Institute for Climate, Environment and Energy (Bringezu 1997a, 1997b; Schmidt-Bleek et al. 1998; Spangenberg et al. 1999) and the physical and monetary System of Integrated Environmental and Economic Accounting (SEEA) of the United Nations (1993a). For a summary description, see Bartelmus (1999). The SEEA is designed as a 'satellite' system of the worldwide adopted System of National Accounts (SNA) (United Nations et al. 1993) with which it maintains greatest possible compatibility. Such compatibility with a standard accounting system has not yet been achieved for the MFA. It is addressed in the revision of the SEEA by the so-called 'London Group' of national accountants through link-up with physical accounting approaches. For the present status of the revision process, see the home page of the London Group, http:www.statcan.ca/citygrp/london/publicrev/intro.htm
Figure 14.1 illustrates in a simplified manner the approach to material flow accounting. Material throughput through the economy is shown as inputs of material flows from abroad and the domestic environment, and outputs of residuals discharged into the environment and of materials exported to the rest of the world. This balance of inputs into, accumulation of materials in, and outputs from the economy includes also so-called 'translocations' or 'ecological rucksacks' which are indirect flows that do not become part of a product but which are concomitant to its production (Spangenberg et al. 1999, pp. 15-16). The MFA assess the use and movement of materials by means of one key indicator, the total material requirement (TMR) and several derived indicators, notably the material intensity (MI) of the economy, measured as TMR per capita and per year, material intensity per unit of service (MIPS) and the material productivity of the economy, GDP/TMR. The MIPS analysis was developed by Schmidt-Bleek (1992a, 1994a). An overview is given by Liedtke et al. (1998).
The SEEA, on the other hand, attempts to incorporate the key functions of natural capital, that is resource supply, waste absorption and use of space, into the asset and production accounts of the national accounts. Figure 14.2 shows how the SEEA is derived from the standard national accounts as an expansion of conventional stock (asset) and flow (supply and use) accounts. Environmental components are added by incorporating environmental assets and asset changes in the shaded vertical column of the asset accounts. At the same time, natural resource depletion and environmental quality degradation represent additional environmental costs in the use accounts, as indicated in the shaded row of natural asset use. Environmental costs reflect the consumption of natural capital and are therefore recorded in both the asset and flow accounts. In this manner important accounting identities, and hence the system character of the accounts, are maintained. Finally, expenditures for environmental protection are shown as 'thereof' elements of conventional aggregates (see Figure 14.2; they represent a social response to environmental impacts.
The inclusion of natural assets and asset changes in national accounts generates environmentally modified monetary indicators. Summing up the rows and columns of Figure 14.2 yields most of these indicators. They include, in particular:
1. environmentally adjusted value added (EVA), generated by industries and calculated by deducting environmental (depletion and degradation) cost incurred by industries from their (net) value added;
2. environmentally adjusted net capital formation (ECF), obtained by deducting environmental cost from conventional (net) capital formation; and
3. environmentally adjusted net domestic product (EDP), obtained by deducting environmental cost from net domestic product (NDP) or calculated as the sum of final consumption, ECF and the balance of exports and imports.
Note that these indicators comply with the accounting identities of the conventional national accounts. EDP can thus be calculated as the sum of final demand categories
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