SEEA-CF research agenda: Ew-MFA and PSUTs by Aldo Femia and Claudio Paolantoni London Group on Environmental Accounting XXXIII meeting San Josè de Costa Rica 17-20 October 2017

The SEEA-CF Research Agenda - “implementation issues” From Schenau, S., “The Research agenda for the SEEA CF”, 2016, page 9

Differences in treatment of Ew-MFA and PSUTs Ew-MFA are “well aligned with the PSUT” (SEEA CF , Section 3.6.6, §3.280) But – due to their specific “macro purpose” and consequent focus on the overall mass of materials and residuals – “practical choices on treatment have been made so that flows within the Ew-MFA system can be estimated more straightforwardly”. These choices would imply some “Differences in treatment between EW-MFA and PSUT” (SEEA CF subtitle, under 3.6.6, page 92). SEEA CF points out two differences. These concern: international trade (§3.282), flows associated with (cultivated) biological resources (§3.283).

SEEA CF §3.282 “EW-MFA estimates of physical flows of imports and exports are typically based on international trade data. While some adjustments are made to account for significant items such as fuel purchases abroad by resident economic units, a full adjustment of the trade data to a residence basis of recording as used in the PSUT is not currently attempted in EW-MFA accounts. It is noted that in comparing the PSUT with EW-MFA, it is necessary to consider the treatment of goods for processing, goods for repair, and merchanting, as described in section 3.3.”

1. International trade (SEEA CF §3.282) “EW-MFA estimates of physical flows of imports and exports are typically based on international trade data”. Is this not the case for SUTs as well? “While some adjustments are made … for … fuel, …a full adjustment … is not currently attempted in EW-MFA accounts”. Is it in SUTs? Residence principle explicitly adopted in Ew-MFA methodology Fuels used in international transport by far the most important item Ew-MFA compilers can adjust for goods other than fuels if they wish “consider the treatment of goods for processing, for repair, and merchanting” deviation from SNA principles established by the SEEA CF => international trade data are ok for PSUTs Ew-MFA does not deviate from this deviation! Suggestion in the paper: delete §3.282 of the SEEA CF But be aware of SEEA CF § 3.126 on storing of fuel abroad!!!

2. Cultivated plants (SEEA CF, §3.283) - 1 “the flow from the environment to the economy is recognized at the point of harvest rather than as growth occurs”. “the different boundary is appropriate for Ew-MFA purposes”. PSUTs: mechanically coherent with SNA. Ew-MFA: pragmatic. Difference in treatment  different system boundary for cultivated plants Note that: Ew-MFA system boundary is internal to that of PSUT. All other system boundaries coincide the overall Ew-MFA system is non-external to the PSUT one. Ew-MFA system is a sub-system of the wider one of the PSUT.

2. Cultivated plants (SEEA CF, §3.283) – 2 Harvested biomass as inputs; Seeds and fertilizers and pesticides incorporated into plants as outputs Internal flows in the PSUT Exchange flows with the outer world (cross-boundary) in Ew-MFA Water, Inputs from soil and from air to cultivated plants; Oxygen and other residuals output to the environment by cultivated plants Cross-boundary flows in the PSUT Not considered in Ew-MFA: completely external.

Our proposal: Ew-MFA as a subsystem   Natural environment Used biomass (products) Seeds, fertilizers and pesticides incorporated in plants Ew-MFA Subsystem Cultivated SEEA CF System Water (1.1.6) Inputs from soil (3.1) Inputs from air (3.2) Unused harvested biomass (residuals) Seeds, fertilizers and pesticides NOT incorporated in plants Unused unharvested biomass (residuals) Oxygen and water vapour plants Harvested biomass   Sub- system

Nothing new under the sun Karl Schoer, LG, 10 years ago

Nothing new under the sun The OECD, 2008 «Reconciliation table» in

Terminology issues “unused biomass”: in the SEEA CF limited to “resources over which the extractor has no ongoing interest”, excluding “losses during extraction” and “reinjections” (SEEA CF §3.50), which are part of “unused” materials in Ew-MFA; The part of cultivated plants that is harvested but not incorporated into products is part of “unused biomass” in Ew-MFA. Not a “natural resource residual” (SEEA classification of natural inputs and list of residuals groups), but “vegetable wastes”, component of “solid waste”. Domestic Extraction (DE) of Ew-MFA often said to measure Natural Resources extraction. But items composing DE are not natural resources: even if very similar to the “natural” resources, they represent and measure something that has been extracted or harvested, and selected, i.e. products. the very data sources we use provide production data and use classifications of products.

Conclusions Ew-MFA is an application (a derived account) of the more general PSUT scheme concerning: primary products, as for the DE, products tout court as for DMC. Its only difference with PSUT boundary concerns cultivated plants Ew-MFA can be dealt with in the CF as a subsystem of the economy as represented in the PSUT, by way of reconciliation tables, or even by including in the PSUTs a column for “cultivated plants” and some rows for their specific flows. Some attention is required: to the treatment of unused flows to terminology, especially concerning the way Ew-MFA is presented