Environmental Global Governance Plants & Environment Environmental Global Governance LESSON 4: “The concept and the attempts to measure Natural Capital and Ecosystems Services” 19th April 2019 Aldo Ravazzi Douvan aldo.ravazzi@tfambiente.it

Outline: The Italian Natural Capital Committee, the 2017 and 2018 reports and Italy-WB publication General Background The concept of Natural Capital (NC) SEEA Central Framework SEEA EEA

Central Framework and Experimental Ecosystem Accounting SEEA: Central Framework and Experimental Ecosystem Accounting

SEEA: enabler for the transformative agenda Enable integration of biophysical data, monitoring changes in ecosystem and linking those changes to economic and human activity SEEA Part 2 - Experimental Ecosystem Accounting SEEA Part 1 - Central Framework SNA Inform post 2015 development agenda and SDGs III. The need for SEEA to inform the SDGs   SEEA plays an important role in supporting the integrated approach of the sustainable development agenda The assessment of environmental sustainability is highly complex and necessitates an effort to the SEEA to capture the complex interactions of the economy, environment and well-being. Measuring sustainability requires integrated information on the economy, the environment, and social and human aspects. The SEEA Central Framework provides the measurement framework for linking the environment to economic activity and the SEEA Experimental Ecosystem Accounting adds the link to well-being. SEEA employs a systems approach of stocks and flows using definitions and classifications consistent with those of the SNA. The SEEA categorizes and analyzes stocks of individual environmental assets, the flows of resources into the economy, the exchanges of products within the economy and the return of residuals from the economy. It also provides a conceptual framework to measure ecosystems in a holistic manner, in particular focusing on ecosystem contributions to economic activities and human well-being as well as tracking the condition of ecosystems and their services. The relevance and utility of SEEA in the post 2015 era was widely recognized The SEEA represents an important contribution of the statistical community to provide the measurement framework to information integrated economic, environmental and social policies and evaluate trade-offs and synergies in a multi-dimensional framework. Its relevance and utility was widely recognized. The UN Statistical Commission recognized the SEEA as a useful measurement framework to inform several policy frameworks, including but not limited to green economy and green growth, sustainable development and various international initiatives, in the follow -up of the outcome document of the Rio+20 Conference, the formulation of the Sustainable Development Goals (SDGs) and the Post 2015 development agenda. The SDSN report proposes and indicators framework for the Post 2015 Goal framework consisting of 10 goals, 30 targets and 100 indicators. One of the proposed indicators in the goal “Transforming governance and technologies for sustainable development” and target “Government and major companies support to the SDGs”, is whether a country implements and reports to the SEEA SEEA enables integration of the national statistical system SEEA employs an accounting approach that can bring coherence and consistency across previously disparate sets of statistics and “big pictureEn” perspective. Its implementation can foster integration of the national statistical systems by reforming the silo-ed organizational structure and consolidating the statistical production process based on the internationally agreed standard information model. The modular approach of compiling SEEA accounts by countries on a continued, sustained basis will facilitate monitoring and international comparability, as well as a broad based, balanced and sustainable national statistical capacity building approach driven by country policy priorities Enable partnership at international, regional, sub-regional and national level.

SEEA Central Framework Territory of reference Environment Imports/Exports Economy Economic Units Enterprises Households Government Non-profit institutions Instruments -Financial/Monetary -Taxes/subsidies - Financing -Resource rent -Permits Activities -Production -Consumption -Accumulation Outside territory of reference Outside territory of reference Natural inputs Residuals (e.g., emissions, waste) Ecosystem services Individual Environmental Assets (e.g., land, water, mineral and energy, soil, aquatic) Ecosystem Assets Transboundary Environmental Flows

SEEA Central Framework Internationally agreed statistical framework to measure environment and its interactions with economy Adopted as international statistical standard by UN Statistical Commission in 2012 Developed through inter- governmental process Published by UN, EU, FAO, IMF, OECD, WB 6

The SEEA Central Framework Accounts Flow accounts: supply and use tables for products, natural inputs and residuals (e.g. waste, wastewater) generated by economic activities. physical (e.g. m2 of water) and/or monetary values (e.g. permits to access water, cost of wastewater treatment, etc.) Stock accounts for environmental assets: natural resources and land physical (e.g. fish stocks and changes in stocks) and/or monetary values (e.g. value of natural capital, depletion) Activity / purpose accounts that explicitly identify environmental transactions already existing in the SNA. e.g. Environmental Protection Expenditure (EPE) accounts, environmental taxes and subsidies Combined physical and monetary accounts that bring together physical and monetary information for derivation indicators, including depletion adjusted aggregates

SEEA Experimental Ecosystem Accounting Complements SEEA Central Framework Integrated statistical framework for accounting for ecosystem assets and associated ecosystem services Important first step in development of statistical framework for ecosystem accounting

EEA - Experimental Ecosystem Accounting - Background Complements SEEA Central Framework with focus on ecosystems perspective Developed as part of broader process of revising SEEA 2003 Integrated system of information on distinct stocks and flows Not a statistical standard but synthesizes current knowledge related to ecosystem services, ecosystem condition and related concepts “Experimental” because significant methodological challenges remain and further testing of concepts needed

Relationship to SEEA Central Framework Extends range of flows (production boundary) for accounting compared to SNA and SEEA in physical and monetary terms Many flows from Central Framework also included in Experimental Ecosystem Accounting (e.g. flows of timber), but extension of EEA is to attribute flows to spatial areas Some Central Framework natural input flows are excluded from Experimental Ecosystem Accounting (e.g. mineral and energy resources)

SEEA Experimental Ecosystem Accounting Ecosystem accounting is a tool to understand and monitor the contributions of ecosystems to economic and human activity Ecosystems include natural as well as man-dominated systems such as croplands or intensive pastures Requires a spatial approach (combination of maps and statistics)

SEEA Experimental Ecosystem Accounting Aims at measuring the contributions of ecosystems to economic activity in a national accounting framework – in physical and monetary units: Ecosystem conditions Ecosystem flows Provisioning services: the products that can be harvested or extracted from ecosystems Regulating services: the regulation of biological, hydrological and climate processes Cultural services: the non-material benefits of ecosystems e.g. related to tourism or cultural experiences

Linking ecosystem assets and well-being through ecosystem services Individual & societal well-being Benefits SNA & non-SNA Ecosystem services Human inputs (e.g. labour, produced assets) Ecosystem processes Inter-ecosystem flows Ecosystem characteristics Intra-ecosystem flows ECOSYSTEM ASSET 13

SEEA-EEA from an accounting perspective Small area geography: maps and tables Tables only Asset Account Ecosystem Condition Account (physical) Production Account Supply – Use Account (physical and monetary) Ecosystem service flows (physical) Ecosystem extent (physical) Values ($ and non-market) Biodiversity account (physical) Values ($ and non-market) Final Aggregates link to economic accounts (SNA, Balance Sheet) [ Future flows (Capacity)

Approach for developing SEEA Experimental Ecosystem Accounting 1 Land Cover Accounting 2 Land Use Accounting 3 Framing the Measurement of Ecosystem Conditions 4 Carbon Accounting 5 Biodiversity Accounting 6 Water Accounting 7 Accounting for Ecosystem Services 8 Integrating Ecosystem Accounting with National Accounts

SEEA-EEA integration framework Integration of ecosystem services in macroeconomic aggregates, like GDP and NDP Clean drinking water Food, Climate regulation Amenity Risks Ecosystem services in monetary and physical terms Biodiversity Nutrients Water account Carbon Land account Consistent physical and monetary asset accounts Forest Crops Statistics Vegetation Supply/use Water catchmets Land cover/use Accounting units Administrative reg., habitats, ecoregions Raw data collection, processing and harmonization 16

Hierarchical (nested-grid) aggregation 5/07/2019 Hierarchical (nested-grid) aggregation Country State Region Statistical Areas Parcel Grid cell (e.g. 20m x 20m or 100m x 100m) Ecosystem Accounting Unit (EAU) Land Cover/Ecosystem Functional Unit (LCEU) Basic Spatial Unit (BSU)

Answer 1 Ecosystem Accounting Unit (EAU) = a country, province or watershed for which an account is prepared Land cover/ecosystem functional unit (LCEU) = a homogeneous land cover or ecological unit e.g. ‘pine forest’ Basic Spatial Unit = a grid cell / pixel

Ecosystems conditions For each ecosystem “characteristic”: Vegetation Biodiversity (species) Soil Water Carbon Air Others? select appropriate indicators of quality 19

Water provisioning and water filtration services SEEA only accounts for the final ecosystem service of water provisioning

Carbon sequestration

What bundle of services could this lake be providing? Level 1: Questions What bundle of services could this lake be providing? What indicators of condition would you suggest for this lake? Is an increase in the measure good, bad or ambiguous? How might a 10% decrease in the condition indicators (getting 10% worse) affect each of the services? [5 minutes for questions and answers] 22

Level 1: Possible answers Services: fishing, drinking water, crane habitat, carbon Indicators: pH, temperature, pollutants (N, P, K, toxins), species diversity, species abundance (the fish), biomass production (algal blooms), turbidity, … Good/bad/ambiguous Ambiguous = pH, temperature, diversity, abundance (relative to natural condition) Good = diversity, abundance (to a point) Bad = pollutants, turbidity (again relative to a natural condition) 10% decrease in indicator E.g., abundance  small impact on fishing, no impact on drinking water, small impact on crane habitat 23

Matching SDGs with SEEA accounts Targets SEEA accounts Indicators 15.1 by 2020 ensure conservation , restoration and sustainable use of terrestrial and inland freshwater ecosystems and their services, in particular forests, wetlands, mountains and drylands, in line with obligations under international agreements Land accounts Proportion of land area covered by forests, wetlands, mountains and drylands Ecosystem assets accounts Degradation of designated terrestrial and inland freshwater ecosystems (Decline in the expected ecosystem service flows/conditions in designated terrestrial and inland freshwater ecosystems) 15.2 by 2020, promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests, and increase afforestation and reforestation by x% globally Proportion of land area covered by forests 15.3 by 2020, combat desertification, and restore degraded land and soil, including land affected by desertification, drought and floods, and strive to achieve a land-degradation neutral world Land used for maintenance and restoration of environmental functions Degradation of designated land area (Decline in the expected ecosystem service flows/conditions in designated land area)

Matching SDGs with SEEA accounts Targets SEEA accounts Indicators 15.4 by 2030 ensure the conservation of mountain ecosystems, including their biodiversity, to enhance their capacity to provide benefits which are essential for sustainable development Ecosystem assets accounts Degradation of designated mountain ecosystems (Decline in the expected ecosystem service flows/conditions in designated mountain ecosystems) 15.5 take urgent and significant action to reduce degradation of natural habitat, halt the loss of biodiversity, and by 2020 protect and prevent the extinction of threatened species Biodiversity accounts Species abundance indices disaggregated by ecosystem types Threatened species disaggregated by IUNC Red List categories Degradation of designated natural habitat area (Decline in the expected ecosystem service flows/conditions in designated natural habitat area) 15.6 ensure fair and equitable sharing of the benefits arising from the utilization of genetic resources, and promote appropriate access to genetic resources Ecosystem services accounts Provisioning services (genetic resources) provided by designated type of ecosystems

Matching SDGs with SEEA accounts

SEEA and TEEB TEEB focuses on answer specific policy questions in specific geographical areas Objective is to raise awareness of the issues through using valuation Broad ranges of types of projects Working with SEEA with UNSD taking the lead in supporting countries in the SEEA implementation in the countries of the project

SEEA and CBD Aichi Target 2 is about mainstreaming biodiversity into national accounts SEEA has been recognized as the statistical framework for measuring and monitoring ecosystems and biodiversity into an accounting approach CBD partner in the project

SEEA and Green economy initiatives OECD recognized the SEEA as the statistical framework for green growth indicators SEEA informs many of the green economy policies SEEA working in Mauritius with PAGE (Programe of Action for Green Economy)

Ban Ki-moon, Secretary-General of the UN (2007-2016) . You’re thinking about that! “ It is time to recognize that human capital and natural capital are every bit as important as financial capital ” Ban Ki-moon, Secretary-General of the UN (2007-2016) .