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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 www.wentworthgroup.org