Environmental Accounting

1. SUSTAINABLE MACRO ECONOMIC
ACCOUNTING OF NATIONAL INCOME
AND WEALTH
JUSTIN JOY & SONIA GANDI
2013MAE004 2013MAE019

2. GREENING THE NATIONAL INCOME ACCOUNTS
NATURAL CAPITAL
The available
endowment of
land and
resources
including air,
water, soil,
forests,
fisheries,
minerals, and
ecological life-
Is standard measure of GDP and GNP a good
measure of well being?

3. Critics To Standard Accounting Measures…..
DEFENSIVE
EXPENDITURES
(APPROACH)
A pollution
valuation
methodology
based on the
expenditures
households take
to avoid or
mitigate their
Volunteer works are not accounted for.
Household production is not included.
No consideration is made for changes in
leisure time.
Defensive expenditures are included.
The distribution of income is not
considered.
Non-economic contributors are excluded.

4. System Of Environmental And Economic Accounts
SEEA
A guidebook
developed by the
united nations to
provide standards for
incorporating natural
capital and
environmental quality
into national
accounting systems.
SATELLITE ACCOUNTS
Accounts that estimate
the supply of natural
capital in physical,
rather than monetary,
terms; used to
supplement traditional
national income
Measuring the relationship between
the environment and economy in
both directions.
Measuring environmental economic
activities.
Environmental asset
accounts(Natural resource or
Satellite accounts)
Adjusting existing accounting

5. ENVIRONMENTALLY ADJUSTED NET DOMESTIC
PRODUCT(EDP)
GREEN ACCOUNTING
General term applied to
efforts to incorporate
natural resources and
environmental quality
into national accounting
techniques.
EDP
A national accounting
measure that deducts a
monetary value from net
domestic product to
account for natural
capital depreciation.
EDP = GDP – Dm – Dn

6. ADJUSTED NET SAVINGS(ANS)
NDS
A national accounting
measure equal To
gross domestic
savings less
Manufactured capital
depreciation.
ANS
A national accounting
measure developed
by the World Bank
which aims to
measure how much a
country is actually
saving for it future.

9. GENUINE PROGRESS INDICATORS(GPI)
GPI
A national accounting
measure that includes
the monetary value of
goods and services
that contribute to
well-being, such as
volunteer work and
higher education, and
deducts impacts that
detract from well-
being, such as the loss
of leisure time,
pollution, and
commuting.
It measures sustainable economic welfare rather than
economic activity alone.
Calculation of GPI
Weighing consumption by income inequality
Add in the value of household labour and parenting
Add in the value of higher education
Add in the value of volunteer work.
Add in the service value of consumer durables
Add in the service value from highways and streets
Subtract the cost of crime

10. Calculation Of GPI( Cont..)
NET INVESTMENT AND
DISINVESTMENT
The process of adding
to, or subtracting from,
productive capital over
time, calculated by
subtracting depreciation
from gross, or total,
investment.
Subtract the loss of leisure time.
Subtract the cost of underemployment
Subtract the cost of consumer durables
Subtract the cost of commuting and auto accidents
Subtract the cost of household environmental defensive
expenditures
Subtract the costs of pollution (air, water, and noise)
Subtract the value of lost wetlands, farmlands, and forests
Subtract the costs of depleting non-renewable energy
sources.
Subtract the damages from carbon dioxide emissions and
ozone depletion

15. BETTER LIFE INDEX(BLI)
HDI
A national accounting
measure developed by
the united nations,
based on three factors
GDP levels, education,
and life expectancy.
BLI
An index developed by
the OECD to measure
national welfare using
11 well-being
dimensions.
Income, Wealth, And Inequality
Jobs and Earnings
Housing Conditions
Health Status
Work and Life Balance
Education and Skills
Social Connections
Civic Engagement and Governance
Environmental Quality
Personal Security
Subjective Well-Being

17. ENVIRONMENTAL ASSET ACCOUNTING
ENVIRONMENTAL ASSET
ACCOUNTS OR (NATURAL
RESOURCE ACCOUNTS)
National accounts that
track the level of natural
resources and
environmental impacts in
specific categories,
maintained in either
physical or monetary units.
Critical natural capital
Elements of natural capital
for which there are no
good human-made
substitutes, such as basic
They provide a detailed picture of a country’s
natural capital levels and trends over time. A
particular focus can be on ensuring that levels of
critical natural capital are maintained.
They provide a means for assessing very strong
sustainability. Since each category of natural capital
is quantified in a separate account, policy makers
can determine whether the levels of each are being
maintained.
If we maintain these accounts solely in physical
units, we can assess very strong sustainability. If we
convert physical units to monetary values, we can
assess strong sustainability, but only to the extent

19. FUTURE OF ALTERNATIVE INDICATORS
Implementation part of discussed indicators are limited
There is no universally accepted measure of
environmental accounting
Commission on the Measurement of Economic
Performance and Social Progress. The commission was
chaired by Nobel Prize–winning economist Joseph
Stiglitz and the chair adviser was another Nobel laureate
economist, Amartya Sen.
To identify the limits of GDP as an indicator of
economic performance and social progress, to consider
additional information required for the production of a
more relevant picture, to discuss how to present this
information in the most appropriate way, and to check
the feasibility of measurement tools proposed by the
Commission

20. Reference…………………
ww.ase.tufts.edu/gdae/pubs/te/enre/3/ch8_n
ational_accounting.pdf
Official website of the World Bank
Human Development Report 1990
Beyond GDP: Measuring and achieving
global genuine progress Ida Kubiszewski -
Robert Costanza , Carol Franco , Philip
Lawn , John Talberth ,Tim Jackson ,
Camille Aylmer
http://geraldguild.com/blog/category/poverty/

21. Thank You