Beyond GDP: Ecosystem Accounting for Sustainable Development

1. Beyond GDP?Ecosystem Accounting EIONET - NRC Nature and Biodiversity Seminar “Towards an European Ecosystem assessment” 23-24 September 2008 European Environment Agency, Copenhagen “ Because National Accounts are based on financial transactions, they account for nothing Nature, to which we don’t owe anything in terms of payments but to which we owe everything in terms of livelihood.” Bertrand de Jouvenel 1968

2. CO2 Economy and ecosystem: the conceptual model Society Ecosystem Input of fossil energy, materials Ecosystem Economy Services Maintenance/restoration of ecosystem functions

3. Recurrent policy demand for ONE integrated indicator for • Assessing the costs and benefits of environmental protection and management, at the local, regional & national levels • Supplementing or mitigating GDP and National Income measurements of economic performance: Should relate to sustainability and human well being Can be physical, better in money Should include a clear bottom line Existing long lists of indicators don’t really work for that purpose Previous attempts (e.g. “green GDP”) have not been convincing… - November 2007: Beyond GDP International Conference in Brussels EEA: Ecosystem accounts of assets and services open a new way forward… Full costs of ecosystem maintenance and restoration Total benefits for human wellbeing, monetised as well as free

4. Ecological truth & market prices in the National Accounts • Risks of unsustainable use of the living natural capital are ignored: the negative impacts of over-harvesting, force-feeding with fertilisers, intoxication, introduction of species, fragmentation by roads, or sealing of soil by urban development have no direct immediate monetary counterpart in financial results (but consequences for the future). • The natural capital is not even amortised in accounting books of companies and in the national accounts – no allowance is made for maintaining ecosystems’ critical functions and services, as it is done for manmade capital. Therefore the full cost of domestic products is not covered in many cases by their price. • This is as well the case of the price of imported products made from degrading ecosystems: their full cost is not covered by their price. • Free ecosystem services enjoyed for free by people are not accounted (the market tells: price is zero).

5. Ignored Costs Ignored Benefits € Ecosystem Services Ecosystem Assets (Stocks, flows, resilience) € (B) Additional costs necessary to maintain & restore ecosystems up to policy objectives GDP (A) Final Use of Non-Market Ecosystem Services € + € (C) Full ecosystem cost of imports GDP ignores a range of ecosystem benefits and costs

6. Logic underlying the Millennium Ecosystem Assessment… Maintenance and restoration costs Economic and social values (sometimes market values). Biophysical structure or process (e.g. woodland habitat or net primary productivity ) Function (e.g. slow passage of water, or biomass) Service (e.g. flood protection, or harvestable products) Benefit (e.g. willingness to pay for woodland protection or for more woodland, or harvestable products) Limit pressures via policy action? Maintenance, restoration Σ Pressures Courtesy Roy Haines-Young

7. Land & ecosystem accounts are present in the UN system of economic-environmental accounts (SEEA2003) but not fully developed Implementation of land and ecosystem accounts in Europe: Land accounts 1990-2000 [2006], 24 countries; ongoing update for 2006 and 35 countrries; tests out of Europe [e.g. Burkina Faso 1992-2002]; Ecosystem accounts: ongoing tests [e.g. for Mediterranean Wetlands in the context of TEEB] Land and ecosystem accounts planned to be developed in SEEA2012/2013 revision Land & Ecosystem ACcounting (LEAC)

8. Volume 1 Statistical Standard Volume 2 Non Standard Accounts Volume 1 Statistical Standard NAMEA, expenditure, physical quantities, sub-soil, energy, land, value of economic assets Volume 2 Non Standard Accounts ecosystems, quality, valuation… RM HASSAN - UN The System of Environmental and Economic Accounting (UN 2003) - RANESA Workshop June 12-16, 2005 Maputo SEEA2003: enlargement of SNA1993 for a better description of the economy-environment relation Revision  SEEA2012 Impacts on ecosystems & related services/benefits Macro-ecological closure (non-linear feedback, spatial issues)

9. 2 - Non produced Assets/ Other Services Provisioning 1 – Produced & Non produced Assets/SNA: Resource & land Regulating Recreating Assets, services and values: 3 components Valuation, Payments for services [PES] Payments for using global ecosystem potential 3 – Ecosystem as a Public Good: non-transferable rights on ecosystem sustainable potential

10. Action level: local scale, site level, management, projects, case studies, business Accounting guidelines, charts Corporate accounts, costs & benefits, trade of ES PES: specific markets National & regional government:environmental agencies, ministries of economy, statistical offices, courts SEEA 2012 Framework Clearing house on [1] ES prices & [2] ecosystem mitigation costs Prices & costsreferencetables for legal compensation Beyond GDP Accounting Global scale: monitoring of International Conventions and framing & regulation of markets Simplified accounts Embedded into Global monitoring programmes & International statistics IPES: global trade of ecosystem permits Scale, governance and accounts

11. Markets need accounts, regulations [= control] Land ecosystems are spatially distributed => grid data [e.g. 1 km2] connect scales Globally, change matters [degradation or improvement of ecosystem functioning and attached cost or benefit], not the value of the stock Global multicriteria rating is possible based on a small number of ecological potentials [derived from ecosystem accounts]: Landscape ecological potential [LEP] Human Appropriation of the Net Primary Production Biodiversity rarefaction Exergy loss [river basins] Dependance from external inputs [material/energy, footprint]  losses/gains of “points of ecological potential”  computation of restoration costs [needed for compensating losses // or accumulated by gains of points] Rating can be detailed further on as necessary for policy [national, regional] and action scales [local, business] Simplified ecosystem accounts

12. Example of a first candidate: LEP Corine land cover map (derived from satellite images) Green Background Landscape Index (derived from CLC) Naturilis (derived from Natura2000 & CDDA) Effective Mesh Size (MEFF, derived from TeleAtlas and CLC) net Landscape Ecological Potential (nLEP) 2000, by 1km² grid cell nLEP 2000 by NUTS 2/3

13. … & accounts for connecting different scales Natural Park of Camargue (France) 1990 Change 1990-2000 • LEAC/ Landscape Ecological Potential1990-2000, 1km² grid • (Source: Ecosystem Accounting for Mediterranean Wetlands, an EEA feasibility study for TEEB)

14. LEP connects at the local level: e.g. effect of land cover change

15. Next steps • continuation in 2009 & beyond: • wetlands/ Mediterranean/Black Sea region • wetlands/ rest of Europe • grassland + agriculture mosaics [link to HNV] • other ecosystems ? forest? urban? sea? soil? • regional and or topic assessments in relation to Eureca • steps to the global picture: SEEA revision [cooperation with UNEP, FAO, UNSD]; GlobCorine with ESA; input to TEEB • international expert meeting on classification of ecosystem services with TEEB, UNEP, UNSD – EEA 10-11 Dec 2008