Environmental Management: Principles and practice

Environmental accounts
Environmental auditing has been applied to: eco-audits (see chapter 4), stock-taking,
eco-review, eco-survey, etc. State-of-the-environment accounts, environmental quality
evaluations and environmental accounts systems collect data on the environment
and resources to try and show the state of an area (or sea like the Baltic or Aegean).
Most of these accounting procedures treat the environment as natural capital and try
to measure its depletion or enhancement. Valuing environmental features in monetary
terms can be difficult.
The foundation for these procedures has often been the UN model of Standard
National Accounts, usually with ‘satellite accounts’ added for environmental items—
some call these ‘environmentally adjusted national accounts’ (UN, 1993). Such
accounts seek to establish the stocks of resources, value of environmental features,
and their use over time (Newson, 1992:92). National environmental accounts systems
(new systems of national accounts, green accounts, patrimonial accounts, or state-
of-the-environment accounts) have been developed to assist with data gathering and
storage and to value environment and natural resources (Pearce et al., 1989:93–
119). Canada, Denmark, Norway, France, Japan, USA, The Netherlands and the
World Bank have developed national state-of-the-environment accounts since the
early 1970s and the UNEP has been promoting this type of accounting in developing
countries (Schramm and Warford, 1989:30; Alfsen and Bye, 1990; Hartwick, 1990;
Common and Norton, 1994; McGillivray, 1994). Most follow the Dutch model,
comparing output of each sector of the economy with how much it depletes finite
resources such as fossil fuel. Some countries are moving to include water pollution,
radioactive waste and other factors in their accounting.
These accounting systems seek to set out a region’s environmental, social
and economic assets, and can be used to assess whether economic development is
consistent with sustainable development, or help ensure optimal use of natural
resources and environment (Ahmad et al., 1989; Hamilton et al., 1994). For
example, a natural resource accounting system can help a manager establish what
percentage of, say, mineral exploitation profits to invest in long-term sustainable
development so that a region or country does not suffer boom and decline. In
practice, being able to make such investments depends on the type of government,
people’s attitudes and the persuasiveness of environmental management. Natural
resource accounts can show the linkages between the environment and the economy,
may be useful for forecasting, and can establish which habitats, etc., are of
importance. They should make land use more rational, and are an improvement on
the use of indicators like GNP (Thompson and Wilson, 1994:613) but stop short of

---

ECONOMICS
81
encouraging a crucial change in people’s and administrators’ attitudes towards
environmentally sound development.
In the mid-1990s the UK Office of National Statistics produced national
environmental accounts to try to measure the country’s economic performance,
assessing the environmental impact of each industry, using 1993 statistics. These
accounts show for various economic sectors the percentage contribution to the national
economy against percentage of total: greenhouse gas emission; responsibility for
acid deposition; and smoke emission (New Scientist 4 September 1996:11).