Hybrid Economic-Environmental Accounts

Valeria Costantini, Massimiliano Mazzanti, Anna Montini

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781136575471
• Edition: 1
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

National Accounting Matrices of Environmental Accounts (NAMEA) tables are used to analyze a range of environmental pressures and economic data resulting from consumption and production patterns – helping us gain a far better notion of the consequences of individuals', households' and firms' actions for the world we live in. This book deals with the increasingly complex issues of hybrid environmental and economic accounts. The perspective of environmental accounting for the analysis of the relationships between the economic and environmental systems, especially regarding the satellite accounts like NAMEA, is relatively recent, and partly derives from the conceptual and applied deficits that have emerged during the setting up of green GDP or GNP measures as alternative measures of accounting.

NAMEA provides a comprehensive and integrated picture of the economic system in association with the environmental system (physical pressures such as emissions) by a sector classification. This book is an integrated collection of complementary papers that revolve around the issue of environment-economic accounting In the first part a historical background and empirical issues related to the NAMEA-type table definitions and estimations open the book, followed by some applications and analyses mainly applied to a sub-national level. The second part opens the window to international case studies for different EU countries and studies with methodological insights.

These policy-oriented, original works are primarily from an applied perspective, although theoretical aspects are also fully developed. The book should be of use to Environmental and Ecological economics students and researchers, as well as those studying the more general field of Environment studies.

Part I

The Foundations of NAMEA and Recent Developments

Methods and Analysis

1 Namea

From Pioneer Work to Regulation and Beyond

Angelica Tudini and Giusy Vetrella

Introduction

NAMEA (National Accounting Matrix including Environmental Accounts) is a statistical framework which extends the matrix presentation of national accounts (the NAM) to environmental flows. The term originates from the work conducted by the Dutch Statistical Institute in the 1990s.¹ Early versions of the Dutch NAMEA were very comprehensive on the NAM side and covered income generation, distribution and use accounts as well as accumulation accounts and changes in balance-sheet accounts; environmental flows mainly included the generation of air pollutants, solid waste, phosphorus and nitrogen by production activities and household consumption. Over time and with the United Nations handbook System of Integrated Environmental and Economic Accounting (SEEA²), in particular, the term NAMEA became used as a synonym for hybrid flow accounts i.e. a matrix framework which presents an economic module including national economic accounts in monetary terms, (the NAM) side by side with an environmental module including flow accounts in physical units (EA), both modules being based on common national accounts principles; the term hybrid refers to the joint use of monetary and physical units.

The second section of the chapter describes a Hybrid Flow Account where the economic module is in the form of monetary Supply and Use. On the environmental side, the development of NAMEA-type accounts started in most EU countries from air emissions, thanks to the availability of good and comparable statistical data sources. Now referred to as air emission accounts, they are one of the three modules for which the forthcoming EU Regulation on environmental accounts will make it compulsory to produce nation-wide yearly time series. The other two modules are economy-wide material flow accounts and environmentally related taxes by economic activity.

In Italy, the Italian National Statistical Institute (ISTAT) has been regularly releasing a time series of air emission accounts at national level since 2004; air emission accounts at regional (NUTS 2) level for 2005 are also available.

The emphasis given to the sub-national breakdown of data is more the result of national priorities than the directions agreed upon at EU level, where the foreseen short-term development for NAMEA-type accounts is not in the direction of a spatial or temporal breakdown, but aims to expand the set of environmental pressures, particularly with energy accounts (in the medium term), and possibly water accounts (in the longer run).

The compilation of NAMEA-type accounts on the basis of existing statistics, which were not traditionally designed to be consistent with monetary economic accounts, requires a number of steps, described in the third section of the chapter, mainly with reference to air emission accounts and energy accounts.

NAMEA Accounts and Tables

A widely known kind of hybrid flow account³ is based on the integration of a monetary supply-and-use table for the economic module and physical flow accounts for the environmental module. The economic and environmental components are described below, first as two separate entities (Figure 1.1 and Figure 1.2) and then merged in one single matrix framework (Figure 1.3).

Figure 1.1 Monetary Supply-and-use Table.

Figure 1.1 presents a monetary supply-and-use table, a standard framework in national accounts. It shows the monetary value of products – goods and services – made available in the economy by means of domestic production or imports by producing industry and the use of products; it also shows the intermediate costs of economic activities as well as their value added (output minus intermediate consumption). The first row/column pair presents the goods and services account: column-wise (supply – resources) the supply of goods and services is shown first, with a distinction made between domestic industry products⁴ and imports; the column also records trade and transport margins and net indirect taxes charged on products thus ensuring that supply and use totals match.⁵ Row-wise, the account shows all possible uses of available resources: intermediate consumption by industries, final consumption, gross capital formation and exports.

Figure 1.2 Physical Supply-and-use Tables.

Figure 1.2 presents a pair of physical supply-and-use tables (PSUTs); they describe the origin and the destination of three kinds of flows:⁶ (a) resources – minerals, energy resources, water and biological resources; (b) products – goods and services produced within the economic system and also represented in Figure 1.1; (c) residuals – solid, liquid and gaseous residuals.

The physical supply table shows the origin of all flows (row headings) that can occur between the economy and the environment: by definition, natural resources can only be supplied by the environment whereas products and residuals can only be supplied by the economy, either the domestic industry or the rest of the world (RoW) in the form of imports.⁷ The product flows portrayed in the table are the physical counterpart of monetary transactions in Figure 1.1. In the full tables, each flow category is broken down according to a suitable existing classification, for example, for energy resources, the breakdown follows the classification of energy resource assets proposed in the draft System of Environmental-Economic Accounting for Energy (SEEA–E⁸). Column headings may also be detailed, particularly for industries, broken down according to the standard industry classification, NACE (Statistical Classification of Economic Activities in the European Community, version Rev. 1.1).

The use table shows, row-wise, the uses of available flows by industry for intermediate consumption, final users including RoW (for exports) and the environment.

All flows are quantified in physical natural units (tonnes, cubic metres, etc.). As in monetary tables, total supply also equals total use (for each flow) in physical tables.

Figure 1.3 Supply-and-use-based NAMEA (source: United Nations et al., 2003, § 4.38).

The rationale of hybrid accounts is to represent the economy-environment interface by applying the framework of supply-and-use tables (which scores high in terms of analytical potential) to flows other than product flows while maintaining different units (monetary and physical) in the scheme.

Figure 1.3 is a hybrid flow account obtained by merging the monetary supplyand-use tables in Figure 1.1 (economic module) with the PSUTs in Figure 1.2 (environmental module).

The economic module presents one more element than Figure 1.1: household consumption according to heating, transport and a residual ‘other’ category; these items, representing an ‘of which’ of final consumption, are particularly meaningful in the case of air emission accounts and energy accounts since they show the specific household consumption items associated with air emissions and energy use.

The environmental module describes the origin (columns) and destination (rows) of ‘natural resources’ and ‘residuals’ in one single framework as in Figure 1.2; by contrast, physical flows of products are not included in Figure 1.3 since the description of the flows of goods and services within the economy is provided in monetary terms in the economic module.

For natural resources, the accounting framework describes their supply by the environment and their use by production activities (industries), consumption activities and exports.

As regards residuals, the accounting framework describes their origin/supply – production activities (industries), consumption activities (private households), capital and imports – as well as their destination/use, which includes their use as input for industries, as capital stock (residuals going to landfill) and as exports. The balance between residuals supplied by the economy and those used by the economic system itself is the quantity of residuals released to the environmental system.⁹

The joint presentation of Figure 1.3 is typical of the NAMEA framework with the environmental module reporting the environmental pressures generated by the economy (air emissions, use of natural resources, etc.) and the economic module accounting for the socio-economic parameters (production, value added, employment, etc.) corresponding to the economic activities (industries and households) that generate environmental pressures. With regard to industries, the framework identifies two joint results generated by the activity carried out for each economic sector: economic values (output, value added, etc.) and pressures exerted to generate the economic values themselves. As far as households are concerned, the pressures generated by selected consumption activities are compared with the expenses incurred by households to purchase products whose use is at the root of the environmental pressures themselves.

For both production activities and households, environmental pressures are allocated to who is directly responsible for their generation (due to production or consumption processes respectively for industries and households).¹⁰ Alternatively, NAMEA data can be further processed using input–output analysis to give a consumption perspective, in which air emissions are reattributed to the production chains of final products.¹¹

The acronym NAMEA is also used for data tables rather than matrix frameworks. Figure 1.4 presents a typical NAMEA-type table: columns cover the main socio-economic aggregates as well as environmental pressure data (e.g. air emissions, energy use, water use, waste generation) b...