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Accounting for Nature
A Model for Building the National Environmental Accounts of
Australia
Why do we need environmental
accounts?
• Our environmental assets account for more than
40% of the total value of Australia.
• Australian governments currently spend over $8
billion a year on the environment.
• We have no accounting system in place to know if
these investments are improving or maintaining
our natural capital.
• The lack of an environmental accounting
framework is a fundamental weakness of
Australian environment policy.
Lessons from economic policy
• It was not until 1945 that Australia produced its first
set of economic accounts.
• They have been progressively improved over the
last six decades.
• Economic accounts present a statistical picture of
the structure of the economy that guides policy
and informs investment plans.
• These accounting systems evolved when our
focus was on managing the industrial revolution
An environmental accounting
system
Australia needs an environmental accounting system
that:
• Provides annual national, state/territory-wide and
regional (catchment) scale reports
• Underpins the long-term catchment management
and land use planning decisions
• Improves the cost effectiveness of public and
private investments in environmental management
and repair
Design Principles
1.
Regional data collection and reporting
framework
2.
Five environmental assets (land; water;
atmosphere; marine and coastal resources; and
towns and cities)
3.
Annual accounts, with a common scaling
standard
4.
Scientific measurements of specific indicators
5.
Regional scale
6.
Indicators may vary from region to region
7.
National Environmental Accounts Advisory
Council
8.
National Environment Accounting Standards
Australia’s environmental assets
The first set of accounts should report on five major
environmental asset classes:
• Land (native vegetation; native fauna; soil
condition)
• Water (volume; quality)
• Greenhouse Gas Emissions (the National
Greenhouse Gas Inventory)
• Marine and Coastal Resources (fish stocks;
habitats)
• Towns and cities (air quality; consumption; waste
management; water use)
National Accounting Standards
• National Environment Accounts need to be built
on scientific measurement, just as our national
economic accounting system is based on
measurable financial information.
• A universally accepted definition that a healthy
ecosystem has three attributes:
– vigour
– organisation
– resilience
Indicators
• Indicators for each asset class would be
selected in each region
• Benchmarks are then defined for each
indicator
• These benchmarks become a standard for the
environmental asset in a ‘healthy’ condition.
National Environmental Accounts
Advisory Council
The Council, comprising independent experts,
would:
• accredit monitoring and reporting standards
• oversee regional capacity building in
environmental monitoring
• oversee audits of data collection
• provide expert assessment
• approve the annual National Environmental
Accounts for public release
Regional Reporting
• Built from a regional framework
• Aggregated upwards into a standardised,
national environmental accounting framework.
• Each NRM region would produce an annual
report
• Many data sets will be collected nationally (eg.
satellite monitoring of vegetation)
• The Regional Report Cards would report on the
health of each environmental asset, as well as
the change in condition of those assets over
time.
A Common Currency
• A common metric (a scale of 0 to 1).
• A rating system for each environmental asset in each
region:
– A, at or above the benchmark;
– B, at or above 84% of the benchmark;
– C, between 67% and 83% of the benchmark;
– D, between 50% and 66% of the benchmark; and an
– F, for an indicator less than 50% of benchmark.
• A positive change in condition, for example from a C +
to a B - would score a B - with a  - or a  - it’s
getting better! If the condition changes in the negative,
for example, from a C+ to a C, it would score a C
with a  - or a  . No change, no smile:  .
SEQ – An example of regional reporting
Guiding Investments
• The National Environmental Accounts would
eventually become a cost benefit analysis tool
• A simple formula:
Cost Effectiveness = Change in
environmental health/ Project cost ($).
COAG Agreement
Agreement by COAG is required.
• National Environmental Accounts Advisory Council
• National Environmental Accounting Standard
• National legislation
• Aligned Commonwealth and state/territory data
sets
• Tied future Commonwealth funding
Staging
• Phase 1 (2008)
– COAG agreement
• Phase 2 (2009)
– National Environmental Accounts Advisory Council
– Accounting standards
– Trials in 6 regions
• Phase 3 (2010)
– Completion of the regional trials
– Release of 6 report cards
– Environmental accounting units.
• Phase 4 (2011)
– 56 regional report cards
– Release of Australia’s first National Environmental
Accounts report.
If you can’t measure it, you can’t
manage it!
A 21st century economy needs
to account for nature
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