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Session 2: An Accounting Structure for Ecosystems

This session discusses the development of an accounting structure for ecosystems, focusing on two models and their implications. It explores the objective, areas of agreement, starting points, and key considerations in integrating ecosystems into the economic model. The session also addresses the treatment of ecosystem services, distinguishing between cultivated and natural ecosystems, and the importance of recognizing degradation and accessible resources.

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Session 2: An Accounting Structure for Ecosystems

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  1. Session 2: An Accounting Structure for Ecosystems Discussant: Carl Obst Editor, UN System of Environmental and Economic Accounts (SEEA) 5 December, 2011 London, UK

  2. Papers • “Towards an integrated structure for SEEA ecosystem stock and flow accounts” • Vardon, Eigenraam, McDonald, Mount & Cadogan-Cowper • “Issue paper on an experimental framework for simplified ecosystem capital accounts” • Weber

  3. Overview • Definition and objective of an accounting structure • Areas of general agreement • What is the starting point? • Two characterisations of ecosystems in a national accounts framework • Other issues

  4. Objective of Accounting Structure • Organise data comprehensively with given boundaries • Systematically reflect changes over time • Must provide a relationship between stocks and flows that permits all stocks and flows of interest to be recorded • Do not need to imply judgement on whether a particular state or type of flow is good or bad • Generally all information will be needed to make an assessment of future trends (i.e. judgement is applied in the interpretation of the information) • Choice of scope and relationship can impact on the way in which information is considered

  5. Areas of Agreement • General objective of integrating ecosystems into the general economic model contained in the SNA. • Accounting structure to cover both ecosystem flows to the economy/humanity and changes in ecosystem capacity • Production account / supply and use table • Asset account • Sequence of accounts (link to income) • Ecosystems can be proxied using land cover related areas (units)

  6. Starting Point: Model A • Ecosystems as fixed assets providing capital services to economic units • Ecosystem services as output of a production function using traditional fixed assets, labour and ecosystems • Ecosystems effectively “owned” by the economy – or by government on behalf of society • The ecosystem asset can be degraded or restored (as per depreciation and investment) and there might be catastrophic loss • Concept of value embedded in the future stream of services

  7. Model A: Implications • Individual assets embedded within ecosystems (timber resources, fish stocks, etc) – all becomes one asset within a given spatial area • Lack of clarity in how services delivered to multiple users at the same time • Dealing with “remote” ecosystems – what is the production function • Ignores supporting services – thus how to recognise flows relating to soil formation and biodiversity, for example • Not a perspective from an ecosystem standpoint

  8. Starting Point: Model B • Ecosystem as an institutional and producing unit • Perspective from the standpoint of ecosystems • Ecosystem operates using all individual environmental assets and other environmental factors to generate ecosystem services (akin to a corporation) • Ecosystem effectively sells outputs of ecosystem benefits to economic units for their use as inputs to production or for final consumption (multiple users) • Account for supporting ecosystem services (own-account production) and trade in ecosystem services and link to notions of ecosystem structure, functions and processes

  9. Model B: Implications • No individual environmental assets within the balance sheet of traditional economic units – instead on the balance sheet of ecosystems • Point of recognition of ecosystem services less clear • In Model A effectively vertical integration so point of recognition less important • In Model B may imply no human involvement in the production of ecosystem services (focus on the growing of the trees rather than the timber produced) • Different notion of an asset account compared to SEEA Volume 1 and Model B.

  10. Model Requirements • Flows to the economy must be considered independently of changes in assets • A flow of ecosystem services does not imply degradation • Nor do lower (or higher) flows of ecosystem services imply degradation (or restoration) • Must recognise that ecosystems can renew or regenerate themselves without human intervention

  11. Other issues • Ecosystem services • Or “goods and services”; Or “benefits”; Or “contributions” • Treatment of sub-soil assets • Importance of distinction between cultivated and natural • Are ecosystems produced? • What are the accounting entries and the relevant aggregates • Degradation • Accessible resources • Links to EPEA

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