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C. Developing database

State of environment

State of Environment (SOE) is a document which depicts a holistic picture of a country’s environmental status and also indicates its future trends. Thus, it assists the policy-makers to a great extent in the process of policy formulation and decision making. In many countries, the environmental legislative framework incorporates SOE and delegates the responsibility of preparing it to an apex environmental body of the country. For example in Nepal, though environmental legislation is silent about SOE, Ministry of Population and Environment (MoPE) has been publishing State of Environment since 1999.

The main aim of the SOE is to provide guidelines for formulating environmental action plan, policy setting, and resource allocation for the future, based on sound analysis of the state and trend of the environmental condition. United Nation’s Environment Program (UNEP) has recommended a format for SOE, which is composed of four parts:

Part I: is an executive summary of the status of the environment including environmental developments and key environmental issues.

Part II: is an overall national overview of the major developments and trends of environmental resources.

Part III: addresses five key priority issues in a Pressure-State-Impact-Response, “P-S-I-R” Analytical Framework.”

Part IV: is the conclusion, highlighting the key findings, emerging environmental issues, and major information gaps.

SOE presents a holistic environmental information which are intended to provide a comprehensive knowledge on the environmental condition of a country. In the first hand, SOE provides an overall overview of the environmental settings of a country, and deals with its major environmental issues. The commonly presented issues are as follows:

Media and resources

• Air quality
• Climate change
• Fish resources
• forest resources
• Nature and biodiversity
• Ozone layer
• Soil and land resources
• Waste
• Water resource

Cross-cutting concerns

• Acidification
• Hazards and accidents
• Health
• Noise
• Radiation
• Toxic substances
• Spatial systems
• Coastal and marine areas
• Urban settlements

Example:

China: Land use, Natural resources, Energy resources, Living condition, Pollution abatement... see China's National Environmental Statistics Report with coordination between Environmental Protection Office and the National Statistics Bureau (NSB)

Environmental / resource accounting

The economic decision-makings are carried out based on national accounting. National accounting is a system of economic valuation of commodities which are traded in the market i.e. which have market value. Historically, the gains in human welfare are recorded in monetary terms in the national accounts whereas gains from environmental policy do not show up in the form of immediate monetary gain. Those benefits are to be found more in the quality of life than in any increment in the nation’s economic output. In other words, the national accounts measure gains to economic sector in which property rights have been well defined, and the third party effects of economic activity – noise, air pollution, water pollution, etc. – do not show up in the accounts mainly because these resources have no market value or not counted as the nation’s wealth.

(See also Environmental accounting for decision making)

The conventional national accounting system has a major limitation as an decision making based on economic terms alone since it fails to account the environmental costs of an economic activity. More precisely:

• it neglects the depletion of the natural resources, which is the environmental expenditure for undertaking of economic activities;
• it inadequately treats the cost involve in the measures to correct the damages the economic activities result to the environment;
• it fails to account for the degradation of environmental quality and its effects to the human health and welfare.

A system of environmental accounting was developed in order to incorporate the environmental accounting in the economic decision making. For example, system of environmental accounting would explicitly demonstrate the economic importance and value of environmental policies and encourage decision makers to adequately consider environmental dimensions into the economic policy-making processes.

Environmental accounting can be catagorized into three types: adjustment of national account, satellite account, and natural resource and environmental account. (More..)

This is an attempt of incorporating environmental dimension into the framework of the national account. This is a modified version of national accounting, which also considers accounting of the values of environmental damages, environmental services, stock of natural capital and environmental expenditure.

Advantage:

• Adjustment of national accounts to include environmental costs, benefits and the net change in all assets, including natural resources would be used to arrive at a "green" national product

Disadvantage

• No international consensus exists on the matter.
• The problem of the coverage of the new aggregates remains (i.e. which natural assets and which damages done to the environment should be incorporated?).
• There is the question of the economic and accounting treatment of environmental data (e.g. should defensive expenditure be treated as intermediate or final consumption?). Methodological problems with the valuation of natural resources

In this context, where economic research for valuation of environmental commodities is still insufficient, it seems hazardous to disrupt consistency of the well-established SNA system without being sure of obtaining reliable and meaningful results. As an alternative, a separate accounting framework is recommended in the form of Satellite account.

This model is a separate accounting framework, which records environmental matters without integrating them into the core account. The satellite account is a complement to the system of national accounting (SNA) without modifying it. Satellite accounts combine physical information from environmental statistics and natural resource accounts with economic information from national accounts to provide a holistic economic valuation of the environmental dimensions of economic activities.

Three principal functions of satellite accounts:

• disaggregation of SNA with regard to environmental aspects;
• valuation of stocks of natural resources and of non-market services of the environment;
• valuation of environmental damage due to economic activities.

This is an accounting of stocks of natural resource, both in monetary and physical terms, independently from the national account.

Natural resource and environmental accounts aims at collecting, within a consistent framework, quantitative and qualitative information on both the state of natural resources and their evolution. Primarily in physical terms, they describe the stocks and flows of resources, the flow of resources between the environment and the economy and the flow of resources within the economy.

The general purpose:

• to provide policy-makers with an information base on natural resources;
• to contribute in raising awareness on the environmental issues at each level of decision-making.

Applications of natural resource account as a tool for decision-makers:

• Resource management;
• Policy analysis;
• Indicator development.

Use and limits of environmental accounting for decision-makers

Use as a tool for resource management:

For natural resource accounts to be suitable for comprehensive resource management purposes, they must provide extensive and detailed information. In the context of resource management, natural resource accounts tend to require well-developed and large statistical bases and a relatively sophisticated accounting system, often with an information-intensive spatial component.

Use as a tool for policy analysis:

Direct use of physical natural resource accounts for policy analysis:
Where natural resource accounts trace the flow of natural resources from the environment to the economy and within the economy, they provide information about the impacts of sectoral economic activities on the resource flows and stock and vice versa. A physical input-output table, proposed in the forest pilot account, traces the production, transformation and utilisation of forest resources throughout the economy. It provides, for instance, an analytical tool to assess the impact of sectoral economic activity on the different types of forestry resources.

Indirect use of atural resource accounts for policy analysis:
Natural resource accounting information of a physical nature can be linked to economic information in the context of satellite accounts. Thus, it provides an important base for the development of satellite accounts which in turn are an important instrument of policy evaluation.

Use as a tool for the development of environmental indicators:

The construction of selected and/or aggregated indicators of natural resources use is least demanding in terms of information requirements. However, the information is quantitative and thus little inference can be drawn as to the quality of the natural resource under consideration.

(Reference, OECD, Natural Resource Accounts: Taking Stock in OECD Countries, Environment Monographs N° 84, OCDE/GD(94)17, Paris 1994)

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