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MEGS Working Committee Meeting Statistics Canada RH Coats building 7, Ottawa 13 January 2012 Development and Implementation of Simplified Ecosystem Capital Accounts by the European Environment Agency Jean-Louis Weber Special Adviser to Economic Environmental Accounting European Environmnent Agency [email protected] Background • Europe: – European Strategy for Environmental Accounting 2003/2008 includes ecosystem accounts (under EEA responsibility) – EEA-MB/ Eurostat-DIMESA Seminar, Luxembourg, 24 November 2009: Fast Track Implementation of Simplified Ecosystem Capital Accounts – Demand by the European Parliament for further inclusion of ecosystems in the new environmental accounting regulation • Request from UNCEEA at its 5th meeting (June 2010) for UNSD, World Bank and EEA to report back with a broad outline and road map for ecosystem accounts • 6th UNCEEA meeting: endorsement of the outline and roadmap of SEEA part 2 on experimental ecosystem accounts to be presented at UNSC 2013 Policy Demand • Europe: – GDP and Beyond process – Resource Efficiency Flagship Initiative 2020 – Water Framework Directive – Environment Liability Directive of 2004 – Forthcoming ecosystem assessment 2014 • International (as expressed at the UNCEEA meeting of 15-17 June 2011) – Wide range of emerging measurement/monitoring initiatives require an ecosystems perspective of sustainability and information on the links between ecosystems and human well-being – Millennium Ecosystem Assessment (MA) 2015 under preparation; – World Bank’s WAVES partnership – At the UNCEEA, demands by UNEP (Green Economy), OECD, CBD (AichiNagoya Strategy), FAO (SEEA Agri), the UN Coordinator of the Rio+20 Conference... • EEA asked to deliver first (physical) accounts by MAY 2012 Simplified ecosystem capital accounts • Make it feasible NOW – keep it simple • Don’t miss important issues: needs a good narrative and checklist • All ecosystems need to be addressed: land/sea/atmosphere, and for land: urban, agriculture, forest, other natural and soil. • Basic accounts of biomass/carbon, water and landscape/biodiversity combined with diagnoses (instead of mere additions): ref. to the “ecosystem distress syndrome” approach of David J. Rapport integrated into an accounting framework • Physical accounts first (2012), stocks, flows (natural flows and economic use), accessible surplus and integration; ecosystem capital potential/ capacity and degradation measured with a composite equivalent-unit. • Physical accounts followed by valuation of selected ecosystem services and of ecosystem restoration costs. No valuation of ecosystem stocks. The “fast tract implementation of ecosystem capital accounts” in Europe, based on land accounts. Nov. 2011: publication of an experimental framework based on the EEA experience in land accounting, assessments and valuation (in particular in the context of TEEB) and the tests carried out in 2010-2011. Characteristics of ecosystem capital accounts • • • Top-down approach Compiled at the European scale; member countries involved progressively on a voluntary basis Geo-referenced approach to 1) detect issues and hotspots and 2) connect global/EU to national to local scales – 1km2 EU standard grid to integrate multiple dimensions – Small analytical functional units: “Land cover functional units”, “Socio-ecological systems” or “socio-ecological production landscapes” or proxies… – Reporting units: countries, regions/provinces, catchments… • • Meet the policy demand: annual updates for t – 1; first time serie for 2000-2010 Deep rooted in the best available datasets: – Socio-economic statistics – Monitoring by satellites (land use, biomass, climate variables…) – Best available in situ monitoring data • • • Necessary additional estimations transparent and reproducible Relevance matter more than accuracy Measure ecosystem capital degradation Ecosystem capital approach: narrative and practicalities 1. Narrative: an ultra-short version by 3 Japanese students 2. Narrative: additional details 3. Practicalities: focus on statistical units 1. Ultra-short story The background of Ecosystem Capital Accounts: Ecosystem capital potential (& degradation) can be measured by combining measurements of 3 ecosystem services: biomass/carbon, freshwater and systemic services there is little or no compensation or tradeoff between them; the use of one should not reduce the use of the others biomass/carbon, freshwater are based on conventional balances systemic services (regulating, socio-cultural…) are measured indirectly in relation to ecosystem integrity. carbon systemic services water The simplified ecosystem capital accounting circuit Ecosystem capital depreciation Ecological debts Calculating economic aggregate Healthy ecosystem benefit Adapted from Aoyama Yukiko, Oguro Michio, and Yano Tohru, Tohoku University, Sendai, Japan, November 2011 Ecosystem degradation Land cover, landscape units, 1km2 grids and calculation of ecosystem capital 6 5 10 8 2 4 “+” 4 3 Water surplus 4 1 6 4 Landscape integrity, biodiversity “+” “=” 12 10 20 15 Carbon surplus 12 10 20 15 Total ecosystem capital potential (or capacity) 12 10 Improvement Capital2 Capital1 _ 9 11 20 15 12 12 Time 1 Time 2 = -3 +1 -8 -3 Degradation Capital1 – Capital2 = Change in capital Adapted from Aoyama Yukiko, Oguro Michio, and Yano Tohru Tohoku University, Sendai, Japan, November 2011 2. More detailed narrative a. b. c. d. e. f. g. h. i. Accounting for the performance(s) of 2 co-evolving systems: resources, productivity and health Ecosystems deliver altogether multiple services Ecosystems deliver altogether services which are private, common and public goods Only a surplus from ecosystem services is accessible for human use Ecosystem capital produces altogether 3 broad types of services between which there is little or no tradeoff: biomass/carbon AND freshwater AND functional services. Ecosystem capital potential (& degradation) can be measured by combining measurements of these 3 broad services (accessible resources). Estimation of ecosystem capital depreciation can be derived from physical degradation The integrated ecosystem capital framework Ecosystem Capital should not be valued as a stock; ecosystem services can be valued one by one but are not fully additive (functional analysis) To address multiple scales, ecosystem capital accounts need to integrate geographical information The narrative behind Ecosystem Capital Accounts: a. Accounting for the performance(s) of 2 co-evolving systems: resources, productivity and health Economic system Economy performance Fossil energy & materials Biomass/carbon Ecosystem Water Economic growth Use of natural resources Land functional services Products & economic assets Trade Value-added, income, profit… Consumption Investment Wealth (non-financial and financial assets) Economic health (net savings, assets and debt quality, accountability, prices, well-being, knowledge) Ecosystem potential (capacity to deliver services) Ecosystem productivity Flows Accumulation Stocks Ecosystem health (biodiversity, integrity, resilience, interdependence) Capital maintenance (to remediate degradation) The narrative behind Ecosystem Capital Accounts: b. Ecosystems deliver altogether multiple services Source: Gilbert Long, 1972 A propos du diagnostic écologique appliqué au milieu de vie de l'homme. Options Méditerranéennes, 13 , CHIEAM, Montpellier, Juin 1972 The narrative behind Ecosystem Capital Accounts: c. Ecosystems deliver altogether services which are private, common GDP, or public goods consumption, trade... 2 - Non valued services: mostly common goods, tradable, transferable rights Services valuation, payments for services 1 – ES incorporated into commodities & economic assets: mostly private goods, market prices Payments for restoring ecosystem potential 3 – Ecosystem good state: health, sustainable capacity of delivering services, life-support functions, Public Good: nonrival, non-exclusive use, non-transferable rights, taxes or lease with covenants are possible Jean-Louis Weber, CBD Conférence, Libreville, 16 Septembre 2010 The narrative behind Ecosystem Capital Accounts: d - Only a surplus from ecosystem services is accessible for human use Ecoproduct (of cycling and reproductive systems/ capital) are produced by means of other ecoproducts. The ecosystem production function includes a surplus ecoproduct that can be used by the economy. (from Anthony Friend 2004) Non-basic ecoproduct Surplus accessible for harvest/abstraction Basic ecoproduct Sources: Kling/U Michigan_2005 & Friend/ISEE_2004 Necessary for ecosystem reproduction (conservation of ecosystem health, integrity, functions & services) Economy The narrative behind Ecosystem Capital Accounts: d - Only a surplus from ecosystem services is accessible for human use Challenge = maximise yields while maintaining natural functions and biodiversity Possible compensation = artificial input (irrigation, energy, fertilizers, infrastructures…) Non-basic ecoproduct Surplus accessible for harvest/abstraction Non-sustainable harvest/abstractio n Basic ecoproduct Sources: Kling/U Michigan_2005 & Friend/ISEE_2004 Necessary for ecosystem reproduction (conservation of ecosystem health, integrity, functions & services) Economy Natural resource: availability, appropriation, accessibility • Available resource: the total resource (actual stocks and flows) which can be used in principle (but should to be shared between economy and nature…). • Appropriated resource: the share of the total potential resource flows (flows which would be available in an ecosystem in the absence of human activities or flows from managed ecosystems) which is used (abstracted, harvested or destroyed during harvest). N.B.: Once used, the resource is considered as appropriated in total, even though one part is returned to the ecosystem. • Accessible resource: the surplus (actual stocks and flows) which can be used considering 1) physical constraints (timeliness and location, cyclical risks, biochemical quality) & 2) the amount to be left to nature for ecosystem reproduction. N.B.: When returned to the ecosystem (leftovers in agriculture or forestry, water returns…) the resource destroyed or modified during the production process becomes accessible again. Ecosystem capital accounts refer to accessible resource and intensity of use. Accessible resource: carbon/biomass, freshwater, systemic services Accessible resource = Stocks (soil, forests, aquifers, reservoirs, landscapes…) Plus/minus change in stocks (from the previous year) Minus inaccessible stocks Physical inaccessibility (deep aquifers …) Inappropriate quality (salted or polluted water, non arable land…) Plus flows (NPP, effective rainfall…) Minus inaccessible flows Physical inaccessibility (most of flood water, distance, non transportable resource, timeliness issues, water evaporated by irrigation…) Inappropriate quality (polluted water) Maintenance of stocks (soil carbon, forests, aquifer level, dilution of pollutants in rivers…) Plus/minus adjustment for stress, risk Example of accessible water adjustment: occurrence of soil water stress Number of days when no water was available for plants in 2001, 1 km^2 grid Source: Blaz Kurnik, EEA, 2011 The narrative behind Ecosystem Capital Accounts: e. Ecosystem capital produces altogether 3 broad types of services between which there is no compensation or tradeoff: biomass/carbon AND freshwater AND systemic services. Ecosystem capital potential (& degradation) can be measured by combining measurements of these 3 broad services (accessible resources). Accessible carbon Total Ecosystem Capital surplus Potential/Capacity Accessible & ecosystem functional Ecosystem Capital services Improvement/Degradation Accessible water surplus Ecological debts in physical units Depreciation (money) & adjustments The narrative behind Ecosystem Capital Accounts: f. Estimation of ecosystem capital depreciation can be derived from physical degradation Assets j t1 j t2 Flows j j (-) Physical accounts of E-services Calculation of unit costs Valuation of E-services € € NPV & addition Assets € j Account of pressures responsible of degradation j Valuation of E-services € NPV & addition (-) t2 - t1 Jean-Louis Weber Degradation of ecosystem capital Physical accounts of E-services j € t2 - t1 € Estimation of ecosystem capital depreciation… …based on remediation costs …based on assets values € EEA Scientific Committee Workshop 5 October 2011 Assessment of remediation costs by issues & € addition The narrative behind Ecosystem Capital Accounts: g. The integrated ecosystem capital accounting Non-paid costs needed framework to remediate ecosystem degradation (€) Ecosystem degraded by over-use (j) Healthy ecosystem deliver services to the economy & to the public well-being Ecosystem assets/capital (j) Jean-Louis Weber j Ecological debts National Income, Adjusted capital consumption Final demand at full priceat Final Consumption Adjusted net domestic product (or Purchasers’ price net national income) ES based economic benefits (€) j j Adjusted macro GDP, economic aggregates ES based economic benefits (€) ES based economic benefits (€) Economic system (including natural assets & ecosystem services (j and €) The narrative behind Ecosystem Capital Accounts: h.Ecosystem Capital should not be valued; ecosystem services can be valued one by one but are not fully additive (functional analysis) National Accounts = the macro-economic picture adjusted for natural capital depreciation Benefits & Costs Assessments = accounts for projects, sectors… Ecosystem capital Stocks & flows Land cover Biomass/Carbon Soil Biodiversity Water catchments Sea Atmosphere Health Vigour Organisation Resilience Autonomy Healthy populations 1 2 3 4 5 n Ecosystem services valuation Bottom-up, individual preferences, market and shadow prices, Costs-Benefits Analysis, General Equilibrium model Service n Service n value ?? Operation costs E.S n Service 5: e.g. existence Service 5 value ? Operation costs E.S 5 Service 4: e.g. water regulation Service 4 value Operation costs E.S 4 Service 3: e.g. eco-tourism Service 3 value Operation costs E.S 3 Service 2: 2: e.g. e.g. fish fish provision provision Service Service 2 value Operation costs E.S 2 Service 1: e.g. timber provision Service 1 value Operation costs E.S 1 Ecosystem / public good protection (all services) Ecosystem restoration costs Top-Down, collective preferences, multi-criteria decision (economic & social values, long term targets…), Consumption of Ecosystem Capital Ecological Taxes, Subsidies, Tradable Offset Certificates / Depreciation... The narrative behind Ecosystem Capital Accounts: i. To address multiple scales, ecosystem capital accounts need to integrate geographical information Global scale: International Conventions Simplified accounts Markets framing & regulation National & regional government: Environmental agencies, Ministries of economy, Statistical offices, Courts SEEA 2013 Framework Site level, case studies, Projects, Business Beyond GDP Accounting Sector accounts Green taxes Clearing house mechanisms on [1] ES prices & [2] ecosystem mitigation costs Impacts assessments, costs & benefits Action level: Local scale, management, Global trade of ecosystem permits, IPES Programmes assessment (e.g. REDD+) International financial standards (for loans…) Country contribution to international organisations Accounting guidelines, norms, geographical data Local government, Agencies assessment Corporate accounting results, rating, trade Markets of specific ecosystem services, PES Ecosystem physical degradation, sustainable benefits from ecosystem services and non-paid maintenance costs Consumption of ecosystem capital (nonpaid costs) Degradation Mean restoration prices Economic statistics & national accounts Sustainable benefits (Value Added (income from from key key ecosystem ecosystem services) Sustainable use coefficients Improvement An experimental framework for ecosystem capital accounting in Europe EEA Technical report No 13/2011 http://www.eea.europa.eu/publications/an-experimentalframework-for-ecosystem The draft framework Analytical and reporting units, classifications Tables by Ecosystem Units Countries and biophysical geographical breakdowns or administrative regions Tables by Economic Units Countries and administrative regions or biophysical geographical breakdowns Ecosystem statistical and accouting units: socio-ecological landscape units, elementary functional units (land cover, river reaches…), ecosystem assets, ecosystem service units Economic statistical and accouting units: institutional units, establishments, economic assets, commodities [A] Land cover stocks and flows basic account : Gross and Net Land Cover Change Land use statistics Physical supply and use tables & economic assets accounts. Agriculture, forestry & fishery statistics [B] Ecosystem Capital Carbon/biomass Account: Basic accounts Basic accounts Net Ecosystem Carbon Balance (NECB) & Net Ecosystem Accessible Carbon Surplus (NEACS) [C] Ecosystem Capital Water Account: Total Ecosystem Accessible Fresh Water (TEAW) & Net Ecosystem Accessible Fresh Water Surplus (NEAWS) Physical supply and use tables & economic assets accounts. use statistics Water [D] Landscape green infrastructure accounts : Landscape Ecosystem Potential (LEP), Green Accessible Landscape Infrastructure (GALI) & Rivers Ecosystem Potential (REP) [E] Ecosystem Capital Biodiversity Account: Synthesis tables in physical units Ecosystem Total Potential Biodiversity Infrastructure Integrity (BII) & Ecosystem's Biodiversity Rating (EBR) [F1] Ecosystem Total Potential Account, Net Change & Ecosystem Capital Degradation (ECD), in Ecosystem Potential Unit Equivalents (EPUE) [F2] Account of Territorial Ecosystem Capital Degradation (TECD) by Stress Factors (in EPUE) Polluting emissions and waste generation by sectors Agriculture, forestry & forestry statistics, Land use accounts [G] Demand and Accessibility to Ecosystem Services : Ecosystem Carbon/biomass per capita, Ecosystem Fresh Water per capita, Green Infrastructure Neighbourhood Ecosystem Services (GINES) Ecosystem Depreciation [H] Ecosystem Physical Balance Sheet: Stocks and Change of Physical Assets & Physical Liabilities, in EPUE Monetary accounts [I] Estimation of unit costs of ecosystem capital restoration by Stress Factors Environmental protection and management expenditure (part) [J] Ecosystem Capital Depreciation: Territorial Consumption of Ecosystem Capital in money [K] Account of Ecosystem Capital Degradation & Depreciation Embedded into Imports and Exports, in EPUE & in money [L] Account of Macro-economic Benefits induced by Sustainable Ecosystem Services : Degradation-Adjusted Total Induced Value Added (by SELU & ISIC) [M] Economic aggregates and additional adjustments for CEC, in money: Gross Domestic Consumption of Ecosystem Capital (GDCEC), GDCEC Adjusted Net Domestic Product, Final Consumption at Full Price (including GDCEC) [N] Ecosystem Financial Balance Sheet: Change of Financial Assets and Stocks and Change of Financial Liabilities Jean-Louis Weber 22 September 2011 The basic accounts by ecosystem units by economic sectors The synthesis tables by ecosystem units by economic sectors The monetary accounts by ecosystem units by economic sectors N From economic-ecological theory to statistical practice and accounts statistical units & classifications Source: Joel de Rosnay, The Macroscope http://pespmc1.vub.ac.be/MACRBOOK.html From theory to statistics and accounts Theoretical background (very incomplete…): – – – – – – – – – – – – – – – Georgescu-Roegen (The Entropy Law and the Economic Process (1971), Odum (emergy) Resource depletion: Hotelling, El Serafy System approach : Joel de Rosnay (The macroscope, 1975) Dissipative structures: Prigogine (The New Alliance, 1986) L'économique et le vivant: René Passet (1977) Natural resource economy: Naredo (1987) Urban metabolism: Duvignaud Global biotic regulation: Gorshkov Co-evolving systems: Norgaard Ecosystem services: Long (1972), Costanza and De Groot, Millennium Ecosystem Assessment (2003) Interaction between scales: Hollin (“panarchy”) Landscape ecology (UK) Ecosystem units: socio-ecological systems (Gallopin, Carpenter, Rockström, MA2003…) Ecosystem health (D. J. Rapport), resilience (the Resilience Alliance) from economic-ecological theory to statistical practice and accounts : statistical units and classifications From theory to statistics and accounts Theoretical background (very incomplete…): – Georgescu-Roegen (The Entropy Law and the Economic Process (1971), Odum (emergy), Hollin (panarchy,interaction between scales) – Co-evolving systems (Norgaard) – Ecosystem services: Long (1972), Costanza and De Groot, Millennium Ecosystem Assessment (2003) – Landscape ecology (UK) – Ecosystem units: socio-ecological systems (Gallopin, Carpenter, Rockström, Stockholm Resilience Centre, MA2003…) – Ecosystem health (D. Rapport), resilience (the Resilience Alliance) from economic-ecological theory to statistical practice and accounts : statistical units and classifications Main relations between classifications & accounting units Ecosystems: Socio-ecological landscape units (SELU) (terrestrial, marine & atmospheric) Land Cover: biophysical land units Monetary Statistics of Products Land Functions & Ecosystem Services (from UNCEEA 2009 – EEA & FAO) Physical Statistics of Products Land Use: productive land functions Institutional & Production Units Land Ownership (sectors & industries) (private & public) Ecosystem accounting and statistical units SNA statistical units don’t record ecosystem degradation need for other units… Theoretical units vs. observation units (proxies for collecting data) • Theoretical units: characteristic systems into which natural and socioeconomic elements interact to transform ecosystem functions into goods and services: – Functional units producing elementary services – “Socio-ecological systems”, “socio ecosystems” or “Socio-ecological production landscapes” (the Japanese satoyama and satoumi) • Observation units: – For which we can collect data in a systematic way – Mostly surface units: “geo-systems”, land cover units, functional administrative units, ownership units… Japan Satoyama Satoumi Assessment, 2010. Satoyama-Satoumi Ecosystems and Human Well-being: Socio-ecological Production Landscapes of Japan – Summary for Decision Makers. United Nations University, Tokyo, Japan. Theoretical units vs. observation units Theoretical analytical unit Candidate observation units Modeled SES/ SEPL Basic land cover systems SES / SEPL ? Topographic unit (eg. catchment) Administrative or cadastral unit Land cover functional units: example of Europe Land cover units are homogenous considering production of ecosystem services: crops, timber, water… Land cover functional units & Socio-ecological landscape units (SELU) Dominant land cover types (more than 50% criteria) In grey are areas where no land cover type is dominant Relief and river basins limits The SELU map/database SELU classified by landscape types ZOOM: SELU in Central Europe ZOOM: Land cover functional units by SELU The land/ landscape account Land cover balance, by land cover types (S = 0) Stock t0 - Consumption of land land cover + Formation of land cover = Stock t1 Ecosystem landscape balance (S ≠ 0) Stock t0 - Decrease in LEP + Increase in LEP = Stock t1 Urban and infrastructure land development "1990" - 2000 - EUR23 - ha/year Land uptake by transport netw orks & infrastructures Land uptake by industrial & commercial sites Land uptake by housing, services and recreation 0 10000 20000 30000 40000 Origin of artificial land uptake as % of total, "1990"- 2000, EUR23 6% 1% 9% 50000 60000 Arable land & permanent crops Pastures & mixed farmland Forests and transitional woodland shrub Natural grassland, heathland, sclerophylous vegetation 48% Open spaces with little or no vegetation Wetlands 36% Water bodies Mean annual urban and infrastructures land take as % of Artificial land cover "1990" 3.5 3.0 2.5 2.0 1.5 1.0 0.5 si sk E U uk R2 3 pt ro lv nl pl lt lu it ie fr gr hu ee es cz de dk at be bg 0.0 Mean annual urban and infrastructures land take as % of total Europe-23 urban land take 25.00 20.00 15.00 10.00 5.00 uk si sk ro pt pl nl lv lu lt it ie hu fr gr es dk ee cz de bg 0.00 at be Sprawl of artificial areas 1990-2000 Land uptake by mines, quarries and w aste dumpsites From Land Cover to Landscape Ecological Potential (LEP) Corine land cover map (CLC is derived from satellite images) Green Landscape Index (derived from CLC) Nature Value (Naturilis, derived from Natura2000 designated areas) and Landscape Ecological Potential (LEP) 2000, by 1km² grid cell LEP 2000 by NUTS 2/3 Fragmentation (Effective Mesh Size (MEFF) derived from TeleAtlas Roads and CLC) Land cover flows 1990-2006 and mean Landscape Ecosystem Potential (LEP) by ecosystem landscape unit Land cover flows are measured according to the EEA LEAC methodology based on Corine land cover (J-L Weber and E. Ivanov, 2011) Landscape Ecological Potential change 1990-2006, by ecosystem landscape unit (J-L Weber and E. Ivanov, 2011) Conventional DMC DMC Carbon Atmosphere/ Climate Fossil energy TEP Air Biomass/ Biomass/carbon acccountsBiomass/ Carbon (agriculture, forestry, …) Carbon DMC other Metal Biodiversity Chemicals DMC Sand/ gravel Sand, gravel DMC Water Water Decoupling (1) from material/energy inputs GDP Landscape Water accounts Decoupling (2) from environmental impacts TEP Land Water Sea Total Ecosystem Potential Total material Input Import-Export TEP Sea Resource efficiency: TMI/DMC-Carbon & TEP Land Conclusion: biodiversity & finance, a few questions… • • • • • Back to the first quotation by Bertrand de Jouvenel, 1968: “Because National Accounts are based on financial transactions, they account nothing for Nature, to which we don’t owe anything in terms of payments but to which we owe everything in terms of livelihood.” We certainly owe nothing to Nature, but by degrading biodiversity and ecosystem don’t we create debts to future generations? These ecological debts don’t they come in addition to conventional debt, private and public - which will have to be repaid one day, one way or another? Should not the international financial and monetary system take into account(s) ecological debts, in addition to conventional debt? Can ecosystem capital accounts contribute to this endeavour? Jean-Louis Weber, CBD Conférence, Libreville, 16 Septembre 2010