Forum Explores Establishing National Environmental Accounts

Oct 24: The Government Accountability Office (GAO) released a report entitled, Measuring Our Nation's Natural Resources and Environmental Sustainability: Highlights of a Forum Jointly Convened by the Comptroller General of the United States and the National Academy of Science (GAO-08-127SP, October 24, 2007). GAO indicates that one of the greatest challenges facing the United States in the 21st century is sustaining our natural resources and safeguarding our environmental assets for future generations while promoting economic growth and maintaining our quality of life. To manage natural resources effectively and efficiently, policymakers need information and methods to analyze the dynamic interplay between the economy and the environment.

Enhancing the information to make sound decisions can be facilitated by developing national environmental accounts. These accounts provide a framework for organizing information on the status, use, and value of natural resources and environmental assets, as well as on expenditures on environmental protection and resource management. While many countries have developed and are using environmental accounts, the United States lags behind. GAO and the National Academy of Sciences (NAS) convened a forum to discuss developing accounts in the United States. Participants included U.S. Federal agency officials and national and international statistical, energy, environment, and natural resource experts.

Participants suggested four broad criteria to use in determining what components of environmental accounting should be developed. These criteria were identifying the objective of the accounts, considering the availability and quality of data, ensuring that accounts provide information on current natural wealth, and considering the timeliness and regularity with which accounts can be produced. Participants generally agreed that pollution and material flow accounts, which provide industry-level information about the generation of pollutants and solid waste and energy and material use, are most critical for the United States to develop first.

Participants broadly agreed that the greatest challenge to developing environmental accounts in the United States is the need for support from policymakers and others. Other key challenges include institutional differences based on agencies’ varying missions; the need for funding; data availability, compatibility, and reliability; and methodological uncertainty. Participants suggested the following strategies, among others, for overcoming these challenges: • Identify policymakers, experts, and others who support the effort. • Build an economic business case for environmental accounting. • Use an incremental approach. • Take the time necessary to develop high quality accounts.

In terms of general observations and next steps, participants generally agreed that developing environmental accounts is important for both our nation’s environmental and economic sustainability. Several participants offered to be partners in an effort to develop U.S. environmental accounts but noted that they would need congressional support and a designated lead agency to spearhead the effort.

The United Nations (UN), the Organization for Economic Co-operation and Development (OECD), and other international institutions have recommended that countries develop environmental accounts. Environmental accounts provide a framework for collecting and organizing information on the status, use, and value of the nation’s natural resources and environmental assets, as well as on expenditures on environmental protection and resource management. To support the development of such accounts, the UN, European Commission, International Monetary Fund, OECD, and the World Bank issued a handbook in 2003 for use by both national and international agencies for compiling environmental accounts reflecting their information needs and priorities.

Many industrialized countries, such as Australia, Canada, and France, and some developing countries, including Namibia and the Philippines, have developed some components of environmental accounting and continue to refine their accounts. For example, to better understand how to make the most of Australia’s limited water resources, the Australian Bureau of Statistics and the National Water Commission have produced three water accounts since 2000 that track the supply and use of water in the Australian economy. In addition, since the early 1990s, Canada has annually produced environmental accounts, which have been used, among other things, to develop environment-economy indicators such as urban-rural land use change and annual stock estimates for timber, energy, and mineral resources. The United States, however, lags behind these and other countries.

Access the complete 38-page report (click here). [*All]