4655.0.55.001 - Towards an integrated environmental-economic account for Australia, 2010  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 25/11/2010   
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Environmental-economic accounts provide a conceptual framework for integrating the environmental and economic information systems. Over the last 50 years macro-economic policy has largely been based on information flowing from the SNA framework. The SNA is an international standard for compiling economic statistics, so it provides a set of internationally agreed concepts, definitions and classifications that ensure the coherence and accuracy of the statistics produced. The SNA is the main source of information for internationally comparable economic indicators and for economic analysis and modelling.
Importantly, the accounting framework contains a series of identities which can be used to check the consistency of data, and provide indicators of economic activity and wealth.

Similarly, organising environmental and economic information into an accounting framework has the capacity to improve basic statistics, and allows for the calculation of indicators which are precisely defined, consistent and interlinked.

Figure 1: The information pyramid

Environmental and economic information pyramid

The System of Integrated Environmental and Economic Accounting

The conceptual model adopted by the ABS and the international statistical community for environmental accounts is the United Nations’ System of Integrated Environmental and Economic Accounting (SEEA), which is due to become an international statistical standard in 2012. The SEEA is a satellite system of the SNA, meaning that accounts produced under this standard bring environmental and economic information together within a common framework. This allows for consistent analysis of the contribution of the environment to the economy, the impact of the economy on the environment, and the efficiency of the use of environmental resources within the economy.

The SEEA framework consists of four types of accounts:
    1. Flow accounts for products, natural resources, ecosystem inputs and residuals or wastes from economic activities. The flow accounts present supply and use tables that provide a comprehensive summary of the transactions during a period e.g. financial year. The change between opening stock and closing stock in the stock account represents the net effect of the flows over the period. Flow accounts can be presented in physical values (e.g. GL of water) and/or monetary values ($). When both physical and monetary values are presented, the account is known as a hybrid flow account.

    2. Stock accounts for environmental assets: natural resources, land and ecosystems. Stock accounts include the level of stock available and changes to stock within a given period due to both human and natural causes. Stock accounts can be presented using physical and/or monetary values.

    3. Accounts that explicitly identify environmental transactions in the SNA. For example Environmental Protection Expenditure (EPE) accounts disaggregate traditional National Account flows to show those monetary transactions that are relevant to environmental protection.

    4. Accounts that show how SNA aggregates can be adjusted to reflect the impact of economic activity on the environment. Depreciation of produced assets (termed consumption of fixed capital (COFC) in the national accounts) is deducted to derive various 'net' income measures in the national accounts such as net domestic product (NDP), net operating surplus (NOS), net national income and net saving. In the SNA, no similar deduction is made for non-produced environmental assets when they are depleted or degraded as a result of economic activity. These types of adjustments can give rise to an aggregate sometimes referred to as ‘Green GDP’.