Environmental-economic accounts

23.86    This section describes the underpinnings of the environmental-economic accounts produced by the ABS. Those accounts follow the recommendations of the United Nations' System of Environmental-Economic Accounting. The SEEA is an international statistical standard that had its genesis as a satellite system of the SNA. As a result, it uses concepts, structures and methods that are largely consistent with those used in the SNA, allowing the SEEA to integrate environmental and economic information within a single framework.

23.87    Over the past 50 years, macroeconomic policy has largely been based on information flowing from the SNA framework and the aggregates it produces. However, gross domestic product and national income fail to capture many vital aspects of national wealth and well-being, such as changes in:

• the quality of health, extent of education, social connection, unpaid household work
• the quality and quantity of natural resources.

Further, GDP includes ''defensive expenditures'' such as spending on household security, health and environmental protection. This is because the SNA measures activity within ''the market''.

23.88    It is understood that much of what maintains and enhances well-being occurs outside the market. While the SNA includes certain non-market activities—such as government services and household production for own use—many environmental assets, like ecosystems, remain outside the production boundary. These assets often provide free inputs to production (e.g., clean air, water filtration, pollination) without any explicit cost to producers, so they are not recorded in the core accounts. 

23.89    This situation was summarised in the 1989 World Resources Institute report, Wasting Assets: Natural Resources in the National Income Accounts, with the following statement:  "A country could exhaust its mineral resources, cut down its forests, erode its soil, pollute its aquifers, and hunt its wildlife to extinction, but measured income would not be affected as these assets disappeared".

23.90    A key limitation of the standard economic information system is that it cannot answer some of the higher order questions policymakers (and society) are asking. In particular, it does not appropriately describe the relationship between the environment and economy.

23.91    Therefore, a comprehensive analysis of environmental issues, and the policy responses to deal with these, must be informed by socio-economic information about drivers, pressures, impacts and responses. This information should be integrated with the associated bio-physical information so that relationships and linkages can be properly understood.

23.92    Environmental-economic accounts provide a conceptual framework for integrating the environmental and economic information systems. 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, as illustrated in the figure below: