Environmental protection expenditure accounts
Encyclopedia
Environmental Protection Expenditure Account (EPEA) is a statistical framework that describes environmental activities in monetary terms and organises these statistics
into a full set of accounts, just like that of the national accounts
. The EPEA results in a net national total expenditure for environmental protection
of an economy
. The statistics are usually presented by economic sectors (government, industries, households) and by what environmental domain has been protected, i.e. water
, air, biodiversity
etc..
The main types of statistics that feed into the framework are investment statistics, statistics on current outlays, government statistics on subsidies and investment grants, all with bearing on protection of the environment.
The statistics cover actual outlays
. This means that, for example, losses of income are not seen in the statistics with the exception of specific transfers (or subsidies) that are designed to compensate any economic losses. Neither do the statistics cover all activities that might have a beneficial environmental impact. There is a distinction between the purpose of the activity and the effect of the activity. For example, new production equipment that is installed solely for the purpose of increasing productivity and reducing costs may use energy and materials more efficiently, and as a side effect reduce environmental discharges. The expenditure for this new equipment would not be included in EPE.
The main aim of the statistics is to provide indicators to show the response of society to reduce pollution. The statistics can be used in different types of analysis. One type of analysis determines whether the "polluter pays" principle holds, i.e. whether those who pollute are also the ones who pay for remediation and clean-up. It can also be used to analyse the effects on enterprise competitiveness, for cost-effective analysis related to propositions of new regulations and policies.
on environmental protection expenditure (EPE) an international definition has been agreed upon.
"Environmental protection groups together all actions and activities that are aimed at the prevention,
reduction and elimination of pollution as well as any other degradation of the environment. This includes measures taken in order to restore the environment after it has been degraded due to the pressures from human activities".(1994 SERIEE §
2006)
This definition delimitates the area so that hygiene and security are excluded as well as management of natural resources.
The full sequence of EPEA are compiled through five different tables that interact with one another. The tables are established, just like the national accounts
on a double-entry bookkeeping system
. They were developed this way so that consistent indicators with the national accounts could be ensured. The tables cover statistics on production of environmental protection activities, the use of of environmental protection services (e.g. waste management
or waste water management services), how the financing of environmental protection happens and a supply and use tables and net cost of environmenal protection (what is the final expenditure and who is bearing the expenditure.)
Current international statistics of Eurostat
presents statistics on investments and current expenditure for the protection of the environment. In 2006 Europe spent around 1.8 percent of Gross Domestic Product
on treating and preventing environmental pollution through investments and current expenditure.
To know who spent how much and on what has its advantages, it provides an insight on how the area is perceived comparing one sector to another. It also show which sectors are under more pressure to undo the damage to the environment that their specific production are creating. However, the statistics becomes much more interesting when comparing the amount spent to the environmental burden the sector is having. For example, are the highest investments made in for example the reduction of air pollution made by the sector that has the largest emission of for example green house gases
? Eurostat made an attempt at showing this for some of the European countries. The publication shows that this is not always the case.
Another study, based on Swedish statistics show that enterprises that has internal research and development (R&D) departments which also work on environmental R&D are more likely to invest in environmental protection then if they have not.
The manual presented a conceptual statistical framework for a monetary description of environmental protection activities and to some extent resource management activities.
After the publication of SERIEE European statistical offices started to test and develop this new type of statistics. Much due to the adoption of variables on pollution prevention (integrated) investments, pollution treatment (end-of-pipe) investments and current expenditure on environmental protection in the Structural Business Statistics Regulation 58/97 in 2002 part of the EPEA were developed faster.
The evaluation of SERIEE were focused on the EPEA framework and several countries provided pilot studies on the topic. Examples are Belgium, France, and Germany among other countries.
At the same time, the System of Integrated Environmental and Economic Accounting (SEEA)
were being developed. The manual SEEA 2003 manual adopted the EPEA as part of their work and environmental protection expenditure statistics became recognised world wide.
Throughout this time Eurostat
and the OECD has collected data in this field in a joint data collection scheme, by gentlemen's agreement. This means that the countries receiving the questionnaire are not obliged to answer under any legal obligation but do so out of voluntary agreement. A simplified EPEA has been the requirement and investments, current expenditure, revenues and subsidies/transfers for environmental protection has been the targeted variables of statistics. These variables are often also considered official statistics
.
Recent discussions in the statistical community are the proposal to include the EPEA tables in full or in a simplified form in the adopted Regulation (EU) No 691/2011 of the European Parliament and of the Council of 6 July 2011 on European environmental economic accounts.
A few countries have found the compilation of the EPEA feasible and can provide results that are viable. For example, Italy and Belgium produce the accounts on a regular basis.
The general approach is, however, not to complete the full EPEA but to show, specifically, investments and current expenditure for environmental protection by the environmental domain the activity has been implemented in.
Statistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
into a full set of accounts, just like that of the national accounts
National accounts
National accounts or national account systems are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. These include detailed underlying measures that rely on double-entry accounting...
. The EPEA results in a net national total expenditure for environmental protection
Environmental protection
Environmental protection is a practice of protecting the environment, on individual, organizational or governmental level, for the benefit of the natural environment and humans. Due to the pressures of population and our technology the biophysical environment is being degraded, sometimes permanently...
of an economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
. The statistics are usually presented by economic sectors (government, industries, households) and by what environmental domain has been protected, i.e. water
Water
Water is a chemical substance with the chemical formula H2O. A water molecule contains one oxygen and two hydrogen atoms connected by covalent bonds. Water is a liquid at ambient conditions, but it often co-exists on Earth with its solid state, ice, and gaseous state . Water also exists in a...
, air, biodiversity
Biodiversity
Biodiversity is the degree of variation of life forms within a given ecosystem, biome, or an entire planet. Biodiversity is a measure of the health of ecosystems. Biodiversity is in part a function of climate. In terrestrial habitats, tropical regions are typically rich whereas polar regions...
etc..
The main types of statistics that feed into the framework are investment statistics, statistics on current outlays, government statistics on subsidies and investment grants, all with bearing on protection of the environment.
The statistics cover actual outlays
Full cost accounting
Full cost accounting generally refers to the process of collecting and presenting information - about environmental, social, and economic costs and benefits/advantages - for each proposed alternative when a decision is necessary. It is a conventional method of cost accounting that traces direct...
. This means that, for example, losses of income are not seen in the statistics with the exception of specific transfers (or subsidies) that are designed to compensate any economic losses. Neither do the statistics cover all activities that might have a beneficial environmental impact. There is a distinction between the purpose of the activity and the effect of the activity. For example, new production equipment that is installed solely for the purpose of increasing productivity and reducing costs may use energy and materials more efficiently, and as a side effect reduce environmental discharges. The expenditure for this new equipment would not be included in EPE.
The main aim of the statistics is to provide indicators to show the response of society to reduce pollution. The statistics can be used in different types of analysis. One type of analysis determines whether the "polluter pays" principle holds, i.e. whether those who pollute are also the ones who pay for remediation and clean-up. It can also be used to analyse the effects on enterprise competitiveness, for cost-effective analysis related to propositions of new regulations and policies.
Scope
In order to create the statisticsStatistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
on environmental protection expenditure (EPE) an international definition has been agreed upon.
"Environmental protection groups together all actions and activities that are aimed at the prevention,
reduction and elimination of pollution as well as any other degradation of the environment. This includes measures taken in order to restore the environment after it has been degraded due to the pressures from human activities".(1994 SERIEE §
2006)
This definition delimitates the area so that hygiene and security are excluded as well as management of natural resources.
The full sequence of EPEA are compiled through five different tables that interact with one another. The tables are established, just like the national accounts
National accounts
National accounts or national account systems are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. These include detailed underlying measures that rely on double-entry accounting...
on a double-entry bookkeeping system
Double-entry bookkeeping system
A double-entry bookkeeping system is a set of rules for recording financial information in a financial accounting system in which every transaction or event changes at least two different nominal ledger accounts....
. They were developed this way so that consistent indicators with the national accounts could be ensured. The tables cover statistics on production of environmental protection activities, the use of of environmental protection services (e.g. waste management
Waste management
Waste management is the collection, transport, processing or disposal,managing and monitoring of waste materials. The term usually relates to materials produced by human activity, and the process is generally undertaken to reduce their effect on health, the environment or aesthetics...
or waste water management services), how the financing of environmental protection happens and a supply and use tables and net cost of environmenal protection (what is the final expenditure and who is bearing the expenditure.)
Interpreting the statistics
The basic message of the statistics is to show how much money has been spent on protecting the environment from human activities in past years. If the statistics is presented within the accounting framework of EPE then the statistics also show who has spent the money and who has financed the spending.Current international statistics of Eurostat
Eurostat
Eurostat is a Directorate-General of the European Commission located in Luxembourg. Its main responsibilities are to provide the European Union with statistical information at European level and to promote the integration of statistical methods across the Member States of the European Union,...
presents statistics on investments and current expenditure for the protection of the environment. In 2006 Europe spent around 1.8 percent of Gross Domestic Product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
on treating and preventing environmental pollution through investments and current expenditure.
To know who spent how much and on what has its advantages, it provides an insight on how the area is perceived comparing one sector to another. It also show which sectors are under more pressure to undo the damage to the environment that their specific production are creating. However, the statistics becomes much more interesting when comparing the amount spent to the environmental burden the sector is having. For example, are the highest investments made in for example the reduction of air pollution made by the sector that has the largest emission of for example green house gases
Greenhouse gas
A greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
? Eurostat made an attempt at showing this for some of the European countries. The publication shows that this is not always the case.
Another study, based on Swedish statistics show that enterprises that has internal research and development (R&D) departments which also work on environmental R&D are more likely to invest in environmental protection then if they have not.
History
Statistics on environmental protection expenditure follows the recommendations of the Chapter XXI of the 1993 System of National Accounts. Eurostat, national statistical offices and experts gathered to develop a whole new type of statistics. The result became a manual called European System for the Collection of Economic Information on the Environment (SERIEE).The manual presented a conceptual statistical framework for a monetary description of environmental protection activities and to some extent resource management activities.
After the publication of SERIEE European statistical offices started to test and develop this new type of statistics. Much due to the adoption of variables on pollution prevention (integrated) investments, pollution treatment (end-of-pipe) investments and current expenditure on environmental protection in the Structural Business Statistics Regulation 58/97 in 2002 part of the EPEA were developed faster.
The evaluation of SERIEE were focused on the EPEA framework and several countries provided pilot studies on the topic. Examples are Belgium, France, and Germany among other countries.
At the same time, the System of Integrated Environmental and Economic Accounting (SEEA)
System of Integrated Environmental and Economic Accounting
System of Integrated Environmental and Economic Accounting is a framework to compile statistics linking environmental statistics to economic statistics. SEEA is described as a satellite system to the United Nations System of National Accounts . This means that the definitions, guidelines and...
were being developed. The manual SEEA 2003 manual adopted the EPEA as part of their work and environmental protection expenditure statistics became recognised world wide.
Throughout this time Eurostat
Eurostat
Eurostat is a Directorate-General of the European Commission located in Luxembourg. Its main responsibilities are to provide the European Union with statistical information at European level and to promote the integration of statistical methods across the Member States of the European Union,...
and the OECD has collected data in this field in a joint data collection scheme, by gentlemen's agreement. This means that the countries receiving the questionnaire are not obliged to answer under any legal obligation but do so out of voluntary agreement. A simplified EPEA has been the requirement and investments, current expenditure, revenues and subsidies/transfers for environmental protection has been the targeted variables of statistics. These variables are often also considered official statistics
Official statistics
Official statistics are statistics published by government agencies or other public bodies such as international organizations. They provide quantitative or qualitative information on all major areas of citizens' lives, such as economic and social development, living conditions, health, education,...
.
Recent discussions in the statistical community are the proposal to include the EPEA tables in full or in a simplified form in the adopted Regulation (EU) No 691/2011 of the European Parliament and of the Council of 6 July 2011 on European environmental economic accounts.
Implementing the EPEA
The studies in late 1990's indicated that the EPEA were difficult to compile, i.e in the sense that numerous types of statistics were required and the gaps of information in the tables provided results that were uncertain at best. Even more recent studies have concluded the same thing.A few countries have found the compilation of the EPEA feasible and can provide results that are viable. For example, Italy and Belgium produce the accounts on a regular basis.
The general approach is, however, not to complete the full EPEA but to show, specifically, investments and current expenditure for environmental protection by the environmental domain the activity has been implemented in.
SEEA modules
- Economy-wide material flow accountsEconomy-wide material flow accountsEconomy-wide material flow accounts is a framework to compile statistics linking flows of materials from natural resources to a national economy . EW-MFA are descriptive statistics, in physical units such as tonnes per year....
- System of Environmental and Economic Accounting for WaterSystem of Environmental and Economic Accounting for WaterWater accounting is a recently created discipline that seeks to provide relevant information for water policy design and evaluation. Based on the experience of more than fifty years of national accounts, the discipline that provides the elements to calculate the Gross Domestic Product , the United...
- System of Integrated Environmental and Economic AccountingSystem of Integrated Environmental and Economic AccountingSystem of Integrated Environmental and Economic Accounting is a framework to compile statistics linking environmental statistics to economic statistics. SEEA is described as a satellite system to the United Nations System of National Accounts . This means that the definitions, guidelines and...
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