4603.0.55.001 - Discussion paper: Towards an Environmental Expenditure Account, Australia, August 2014 Quality Declaration 
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EXPLANATORY NOTES


INTRODUCTION

1 This publication Discussion Paper:Towards an Environmental Expenditure Account, Australia seeks feedback from stakeholders on the content and format of a proposed Australian Environmental Expenditure Account (EEA), which could form part of the ABS environmental-economic accounts programme.

2 The publication consists of tables and graphs which present:

  • supply and use (collectively referred to as flow tables) for selected environmental protection and natural resource management services
  • production of environmental protection and natural resource management services
  • national expenditure on environmental protection and natural resource management
  • financing of national expenditure on environmental protection and natural resource management.

3 The estimates presented in this paper explore the concepts and methods of EEA and assess the quality and limitations of available data sources. The production of a regular EEA will be determined in consultation with stakeholders and is dependant upon the availability of resources and reliable data.


ENVIRONMENTAL ACCOUNTING FRAMEWORK

4 The tables presented in this publication were developed using the United Nations System of Environmental-Economic Accounts (SEEA), which is a measurement framework that provides a range of metrics that link information on the environment and the economy. The SEEA was first published by the United Nations in 1993 and was adopted as an international statistical standard in 2012 by the United Nations Statistical Commission. For further information on the SEEA and the ABS environmental accounts programme please see ABS Completing the Picture - Environmental Accounting in Practice, 2012 (cat. no. 4628.0.55.001), ABS Australian Environmental-Economic Accounts, 2014 (cat. no. 4655.0) and the ABS Information Paper: Towards the Australian Environmental-Economic Accounts, 2013 (cat. no. 4655.0.55.002).


Scope

5 The scope of this publication follows the Classification of Environmental Activities (CEA), which was developed as part of the SEEA. The CEA is a functional classification used to classify environmental activities, environmental products and environmental expenditures and other transactions (see Figure 1). It covers environmental protection and natural resource management activities.

Figure 1: Classification of Environmental Activities (CEA)

Group Class

i. Environmental Protection (EP) 1. Protection of ambient air and climate
2. Waste water management
3. Waste management
4. Protection and remediation of soil, ground water and surface water
5. Noise and vibration abatement (excluding workplace protection)
6. Protection of biodiversity and landscapes
7. Protection against radiation (excluding external safety)
8. Research and development for environmental protection
9. Other environmental protection activities
ii. Natural Resource Management (NRM) 10. Management of mineral and energy resources
11. Management of timber resources
12. Management of aquatic resources
13. Management of other biological resources (excluding timber and aquatic resources)
14. Management of water resources
15. Research and development activities for resource management
16. Other resource management activities




TABLES 2.1 - 2.8: SUPPLY AND USE OF ENVIRONMENTAL PROTECTION AND NATURAL RESOURCE MANAGEMENT SERVICES

6 Tables 2.1 to 2.8 present aggregates in monetary ($m) terms of the supply and use (consumption expenditure) of selected environmental services in the Australian economy for the financial years 2009-10 and 2010-11.


Coverage

7 Coverage for environmental protection and natural resource management activities in the supply and use tables includes the following:
  • Protection of ambient air and climate (including renewable energy production)
  • Waste management services (confined to solid waste management that includes recycling of solid waste)
  • Waste water management services (includes sewerage, drainage and storm water management services)
  • Other environmental protection services (includes protection and remediation of soil, ground water, surface water, noise and vibration abatement, protection of biodiversity and landscapes)
  • Management of water resources
  • Other natural resource management services (includes management of marine environments, management of mineral resources, management of forests, national parks and other biological resources)
  • Research and development related to environment protection and natural resource management.

8 The industry classifications used for the supply and use tables follow the ABS Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0). The categories used in the tables are:
  • Agriculture, Forestry and Fishing (ANZSIC06 Division A)
  • Mining (ANZSIC06 Division B)
  • Manufacturing (ANZSIC06 Division C)
  • Electricity, Gas, Water and Waste Services (ANZSIC06 Division D)
      • Water Supply (Division D Subdivision 28 Class 2811)
      • Sewerage and Drainage Services (Division D Subdivision 28 Class 2812)
      • Waste Collection, Treatment and Disposal Services (Division D Subdivision 29)
  • Construction (ANZSIC06 Division E)
  • Local Government Administration (Division O Subdivision 75 Class 7530)
  • All Other Industry (ANZSIC06 Divisions F to S excluding Division O Subdivision 75 Class 7530).

9 All Other Industry consists of the following industries:
  • Wholesale Trade
  • Retail Trade
  • Accommodation and Food Services
  • Transport, Postal and Warehousing
  • Information Media and Telecommunications
  • Financial and Insurance Services
  • Rental, Hiring and Real Estate Services
  • Professional, Scientific and Technical Services
  • Administrative and Support Services
  • Public Administration and Safety (excluding Division O Subdivision 75 Class 7530)
  • Education and Training
  • Health Care and Social Assistance
  • Arts and Recreation Services
  • Other Services.


Data Sources

10 The estimates were drawn using a range of ABS and non-ABS data sources, including:

METHODOLOGY

Supply - Output generated by the provision of environmental protection and natural resource management services

11 The output estimates for Waste water and Waste management services were directly sourced from the ABS Water Account, Australia (cat. no. 4610.0) and the ABS Waste Account, Australia (cat. no. 4602.0.55.006). Estimates for the total output of Research and Development services were obtained from the ABS Research and Development collection.

12 Output for the protection of Protection of air and climate, Other environmental protection and natural resource management and Water management were estimated based on:
  • ABS Economic Activity Survey, data on income from sales of environmental goods and services
  • ABS Local Government Authorities finance data collection
  • Annual financial and budget report data for the Commonwealth and State/Territory departments delivering environmental services.


Use - Expenditure on the consumption of the environmental protection and natural resource management services

13 Intermediate consumption expenditure by industries, Final consumption expenditure by Households and General government for Waste water management, and Waste management services were directly sourced from the ABS Water Account, Australia (cat. no. 4610.0).

14 Total intermediate consumption expenditure on environment related research and development by all industries were sourced from the ABS Research and Development data collection. Industry allocations were based on data from ABS Research and Experimental Development, Businesses, Australia (cat. no. 8104.0). Final consumption expenditure on Research and development services by Households, Non-profit institutions serving households and General government were sourced from the ABS Research and Development data collection.

15 The intermediate consumption expenditure of Protection of air and climate, Other environmental protection and natural resource management, and Water resource management services were allocated on the basis of indicators derived from each ANZSIC industry division on the basis of the ABS Economic Activity Survey.

16 Final consumption expenditure by Households, Non-profit institutions serving households and General government were also estimated using the ABS Economic Activity Survey.


DATA QUALITY AND LIMITATIONS

Supply side

17 Supply side data are generally more reliable than use side data as they are mainly sourced from published data, particularly for Waste water management and Solid waste management. Supply side data are also typically provided by specialist producers of these services who maintain good information on sales activity.

18 Market and non-market output from government departments delivering environmental services were sourced from published financial reports of these agencies. Government department estimates are likely to be slightly understated as only major departments were included in the estimates.


Use side

19 For Air and climate change, Other environmental protection and natural resource management and Water resource management services, estimates were aligned with the supply estimates (based on the principle that total supply equals total use).


TABLES 3.1 - 3.4: OUTPUT OF ENVIRONMENTAL PROTECTION AND NATURAL RESOURCE MANAGEMENT SERVICES

Coverage

20 Tables 3.1 - 3.4 present the output of specific environmental services by service provider (Specialist and Non-specialist producers).

21 The coverage of environmental protection and natural resource management activities in the production tables includes the following three major environmental domains:
  • Solid waste management services (includes recycling)
  • Waste water management services (includes sewerage services, drainage services, storm water management services)
  • Other environmental protection including Air and climate protection, Natural resource management services and Research and development services.

22 The production tables cover the following service providers:
  • Specialist producers - Government
  • Specialist producers - Other
  • Non-specialist producers.

23 Specialist producers are establishments whose primary activity is the production of environmental protection specific services. Specialist producers - Government are government funded programs with environmental protection as the primary activity. Specialist producers - Other are those non-governmental businesses providing these specialised environmental services as their primary activity. They include both private sector businesses and public trading enterprises. Non-specialist producers are those establishments that produce environmental protection specific services as secondary output but have a different primary activity.


Data sources

24 The estimates were drawn using a range of ABS and non-ABS data sources, including:

METHODOLOGY

Output of environmental services

25 Estimates for Waste management and Waste water management services were directly sourced from the ABS Water Account, Australia (cat. no. 4610.0), ABS Waste Account, Australia (cat. no. 4602.0.55.006) and ABS Australian Industry (cat. no. 8155.0).

26 Estimates for the Specialist producers - Government for Other environmental protection and natural resource management, Water management and Research and Development, were sourced from the ABS Local Government Authorities finance data collection and annual financial reports of government departments.

27 Output for Specialist producers - Other and Non-specialist producers for Other environmental protection and natural resource management, Water management and Research and Development were modelled based on estimates from the ABS Waste Management Services, Australia, 2009-10 (cat. no. 8698.0).


Intermediate consumption expenditure

28 Intermediate consumption expenditure has two components: intermediate consumption expenditure on environmental services and intermediate consumption expenditure on other goods and services.

29 Intermediate consumption expenditure for Waste management and Waste water management services were directly sourced from the ABS Water Account, Australia (cat. no. 4610.0), ABS Waste Account, Australia (cat. no. 4602.0.55.006) and ABS Australian Industry (cat. no. 8155.0). Intermediate consumption expenditure on Other goods and services for the Waste management services industry were estimated from ABS Waste Management Services, Australia, 2009-10 (cat. no. 8698.0), and for Waste water services from ABS Australian Industry (cat. no. 8155.0).

30 For Specialist producers - Government, estimates for intermediate consumption on Other environmental protection and natural resource management, Water management and Research and Development were sourced from the ABS Local Government Authorities finance data collection and government departments' annual financial reports. For Specialist producers - Other and Non-specialist producers, intermediate consumption expenditure on Other environmental protection and natural resource management, Water management and Research and Development were estimated from the ABS Waste Management Services, Australia, 2009-10 (cat. no. 8698.0).


Gross value added

31 Gross value added was calculated using the formula: "Gross value added = Output - Intermediate Consumption".


Compensation of employees, Taxes and subsidies on production and Consumption of fixed capital

32 Waste management services information on Compensation of employees, Taxes and subsidies on production and Consumption of fixed capital were sourced from ABS Waste Management Services, Australia, 2009-10 (cat. no. 8698.0) and ABS Australian Industry (cat. no. 8155.0). Estimates for Waste water management services were sourced from ABS Australian Industry (cat. no. 8155.0).

33 For Air and climate, Other environmental protection and natural resource management, Water management, Research and Development, Compensation of employees, Taxes and subsidies on production and Consumption of fixed capital, data were only available for Specialist producers - Government from the ABS Local Government Authorities finance data collection and government annual financial reports.


Data quality and limitations

34 There were no data sources for environmental services for Non-specialist producers. Output and intermediate expenditure for waste management were estimated from the ABS Waste Management Services, Australia , 2009-10 (cat. no. 8698.0).

35 Government departments providing only small amounts of environmental protection and natural resource management services were not included in the estimates.

36 Estimates were not made for Non-Specialist producers - Compensation of employees, Taxes, subsidies and Consumption of fixed capital data.


TABLES 4.1 - 4.2 NATIONAL EXPENDITURE ON ENVIRONMENT PROTECTION AND NATURAL RESOURCE MANAGEMENT SERVICES

Coverage

37 Tables 4.1 - 4.2 present National Expenditure on environmental protection and natural resource management services related to Intermediate consumption, Final consumption and Gross fixed capital formation. Expenditure for environmental protection purposes is not limited to the use of environmental related services but covers expenditure on all goods and services used for environmental related activities. This includes:
  • expenditure on environmental protection and natural resource management services
  • expenditure related to environmental protection and natural resource management connected products
  • expenditure on adapted goods.

38 Total national expenditure on environmental protection is defined as:
  • Final consumption, intermediate consumption, and gross fixed capital formation on all environmental protection and resource management related goods and services (specific services, connected products and adapted goods), except intermediate consumption and gross fixed capital formation for characteristic activities
  • plus Gross fixed capital formation (and acquisition less disposal of non-produced non-financial assets) for environmental protection characteristic activities
  • plus Environmental protection/resource management related transfers by resident units not captured in the items above
  • plus Environmental protection/resource management related transfers paid to the rest of the world
  • less Environmental protection/resource management related transfers received from the rest of the world.

39 Coverage for environmental protection and natural resource management activities in the National Expenditure tables includes the following major environmental domains:
  • Solid waste management services (includes recycling)
  • Waste water management services (includes sewerage services, drainage services, storm water management services)
  • Other environmental protection including air and climate protection, natural resource management services and related connected/adapted goods
  • Water resource management services and related connected/adapted goods
  • Research and development related to environment protection and natural resource management.


Data sources

40 The estimates were drawn using a range of ABS and non-ABS data sources, including:

METHODOLOGY

Environmental specific services

41 Intermediate consumption expenditure, Final consumption expenditure and Gross fixed capital formation on environmental services for each environmental domain were sourced from the Use of Environmental Services tables 2.2, 2.4, 2.6 and 2.8.


Connected products and adapted goods

42 Environmental protection and natural resource management related connected products were estimated using the ABS Economic Activity Survey data on sales income from environmental goods and services. The allocation to ANZSIC industry division were modelled using industry estimates from the ABS Australian System of National Accounts (cat. no. 5204.0).

43 Recycled/recovered waste material are considered to be adapted goods under management of natural resources such as minerals (recycled/recovered glass, metal) and biological resources (recycled/recovered organics, paper and cardboard). Estimates were derived for expenditure on Environment related Connected/adapted goods from the ABS Waste Account, Australia (cat. no. 4602.0.55.006).


Gross fixed capital formation for Environmental protection characteristic activities and Environment specific transfers

44 Gross fixed capital formation (and acquisition less disposal of non-produced non-financial assets) for environmental protection characteristic activities related to Solid waste management were sourced from ABS Waste Management Services, Australia, 2009-10 (cat. no. 8698.0). Data was not available to estimate the other domains.

45 Environmental protection transfers paid to the rest of the world were sourced from government departmental financial reports and the ABS Non-Profit Institutions Survey, 2006-07. No data was available for environmental related transfers received by Australia governments.


Data quality and limitations:

46 Estimates for Other environmental protection and natural resource management (including protection of air and climate) and Water resource management related goods (connected products and adapted goods) are based on the ABS Economic Activity Survey experimental data on income from environmental goods and services. It should be considered as indicative information only.

47 The estimates for Gross fixed capital formation for Environmental protection characteristic relate only to Solid waste management services.


TABLES 5.1 - 5.2 FINANCING OF NATIONAL EXPENDITURE ON ENVIRONMENT PROTECTION AND NATURAL RESOURCE MANAGEMENT SERVICES

48 Tables 5.1 - 5.2 presents information on the Financing of National Expenditure on environmental protection and natural resource management services to show which sectors are directly responsible for the expenditures and which directly bear the costs of financing. For both current and capital transfers related to environmental protection and natural resource management services, the sector making the transfer has an increase in expenditure and the unit receiving the transfers has a corresponding reduction.


Coverage

49 The coverage for financing environmental protection and natural resource management activities includes the following environmental domains:
  • Solid waste management services (includes recycling)
  • Waste water management services (includes sewerage services, drainage services, storm water management services)
  • Other environmental protection including air and climate protection, natural resource management services and related connected products and adapted goods
  • Water resource management services and related connected products
  • Research and development services.


Data sources

50 The estimates were complied using a range of ABS and non-ABS data sources, including:
  • ABS Sources:
  • Non-ABS Sources:
      • Annual Financial Reports and Budget Reports for State/Territory and Commonwealth government departments delivering environment related goods and services
      • Australia's International Development Assistance: Statistical Summary, Department of Foreign Affairs and Trade.


METHODOLOGY

51 Estimates of Government grants (both current and capital) for Solid waste management were obtained from the ABS Waste Management Services, Australia, 2009-10 (cat. no. 8698.0).

52 For the Private sector Waste water management services, Government grants (both current and capital) received were sourced from ABS Australian Industry (cat. no. 8155.0). Grants (both current and capital) received by Public sector service providers (mainly Local Government Authorities) were sourced from the ABS Local Government finance data collection.

53 The current and capital grants and subsidies provided by Commonwealth and State/Territory governments for Other environmental protection and natural resource management programmes were recorded from their annual financial and budget reports. Financing for Air and climate protection, Other environmental protection and natural resource management, Water resource management and Research and development was estimated from total government grants and subsidies on environmental protection and natural resource management projects. The agencies that provided data for this item were:
  • Commonwealth government: Department of Environment, Department of Agriculture, Department of Industry, National Water Commission and the Bureau of Meteorology.
  • State/territory governments: relevant jurisdictional departments for water, environment, waste, energy and resources.

54 There were no reports on Australia obtaining any overseas funding for environment related projects, and these cells were left blank.

55 Environment related overseas grants by Governments were sourced from annual financial reports for Commonwealth Department of Environment, Department of Agriculture, Department of Industry and Department of Foreign Affairs and Trade. Overseas grants from Australian non-profit organisations were estimated using the ABS Non-Profit Institutions Survey, 2006-07.


Data quality and limitations

56 Information on Government funding is not consistently reported across Commonwealth and State/Territory agencies. There is no common definition of environmental protection and natural resource management across government and this makes it difficult to allocate projects to the environmental sector. Machinery of Government changes can also result in inconsistency of reporting over time.

57 Estimates for the overseas funding by Australian non-profit institutions were estimated from the ABS Non-Profit Institutions Survey, 2006-07.