This is an extract from the Australia State of the Environment 2016 Report.


“…Improved measures to account for ecosystem values

Ecosystem valuation that recognises the need for a resilient environment and the cost of degradation has the potential to become a valuable component of management. Since 2011, there have been significant efforts at national and international levels to improve valuation of, and accounting for, ecosystems, and more broadly the environment—and to incorporate these values into national economic accounts and decision-making.

Having a clear understanding of the implications of economic growth for the environment and the contribution of different sectors of the economy to particular environmental problems enables better analysis of environmental policy and management practices. This understanding requires reliable and accurate ways of organising and presenting information that shows the links and interactions between the economy and the environment. Environmental–economic accounts provide information and an improved understanding on a range of issues, including:

  • patterns of consumption of natural resources by industries and households
  • relationships between consumption of natural resources and gross value added by industry
  • relationships between the value of natural resources and consumption
  • patterns of depletion of natural resources and its effect on the environment (ABS 2016c).

At the international level, efforts to improve environmental accounting include:

  • the System of Environmental–Economic Accounting (SEEA), developed under the auspices of the United Nations, which contains internationally agreed standard concepts, definitions, classifications, accounting rules and tables for producing comparable statistics on the environment and its relationship with the economy (UNSD 2016)
  • the Economics of Ecosystems and Biodiversity global initiative, which has developed a structured approach to valuation that ‘helps decision-makers recognize the wide range of benefits provided by ecosystems and biodiversity, demonstrate their values in economic terms and, where appropriate, capture those values in decision-making’ (TEEB 2016)
  • the World Bank–led Wealth Accounting and the Valuation of Ecosystem Services, a global partnership that aims to promote sustainable development by ensuring that natural resources are mainstreamed in development planning and national economic accounts. Countries working in the partnership have been compiling accounts for natural resources such as forests, water and minerals, following SEEA, as well as experimental accounts for ecosystems such as watersheds and mangroves
  • the Natural Capital Protocol, developed by the Natural Capital Coalition, which is a framework to help generate trusted, credible and actionable information to support better business decisions by including specific consideration of how the business interacts with natural capital (Natural Capital Coalition 2016).

There are several Australian efforts to develop environmental–economic accounts and ecosystem accounts:

  • The Australian Bureau of Statistics, both by itself and with partners, has produced environmental accounts since 1996. For example, the Water Account integrates data from different sources into a consolidated information set, making it possible to link physical data on water to economic data, such as in Australia’s National Accounts (ABS 2014). The Water Account has been used in a range of applications, including modelling the impact of increased water prices on water use by irrigators, and investigating the impact of various restrictions on water availability; it has also been used in the Bureau of Meteorology publication Water in Australia 2014–15 (BoM 2016).
  • Victorian Experimental Ecosystem Accounts (Eigenraam et al. 2013) have been developed over the past 10 years to extend and apply market principles to the management of ecosystem assets. Models have been developed to represent the current levels of ecosystem flows and to predict the change in ecosystem flows resulting from changes in land use and management. This information, originally designed to assess the most effective management interventions, can also be used for the purposes of ecosystem accounting.
  • The Wentworth Group of Concerned Scientists developed a model set of Australian Regional Environmental Accounts, which measure the condition of environmental assets in several natural resource management regions. The approach focuses on physical measures of the condition of environmental assets; it does not directly assess ecosystem services or flows (Sbrocchi et al. 2015).

As the development and testing of environmental–economic accounting at national and subnational levels continue, this system is likely to provide more consistent and comparable information to support a better understanding of the links between natural capital and other parts of the economy, and the consequence of changes in natural capital on the flow of ecosystem services to society…”

Access the full report at: Australia State of the Environment 2016 Report.