Glenn-Marie Lange Environment Department, The World Bank The World Bank’s Work on Statistics for Green Growth International Seminar on Green Economy and Official Statistics July 6-8, 2011 Seoul, South Korea Glenn-Marie Lange Environment Department, The World Bank

World Bank’s Ongoing Work on Statistics for Green Growth (1) Program on Adjusted Net Savings (or, Genuine Savings) and Comprehensive Wealth Accounting for past 15 years Work on Comprehensive Wealth rooted in concept that “green growth”, i.e., sustainable growth, is a process of building wealth and managing a diverse portfolio of assets: Produced capital Natural capital (subsoil assets, agr land, forests, protected areas) Human and social capital

World Bank’s Ongoing Work on Statistics for Green Growth (2) Adjusted Net Savings (ANS) is calculated annually, available online and in annual publications Little Green Data Book (started in 2000) Adjusted Net Savings, Adjusted Net National Income World Development Indicators Resource Rents, Adjusted Net Savings, and Adjusted Net National Income

World Bank’s Ongoing Work on Statistics for Green Growth (3) Comprehensive Wealth Accounts updated less frequently, data available for years: 1995, 2000, 2005 Flagship Reports: Where is the Wealth of Nations? Measuring Capital for the 21st Century (2006) The Changing Wealth of Nations Measuring Sustainable Development in the New Millennium (2011)

Wealth Accounting and Valuation of Ecosystem Services (WAVES) Going forward, after 15 years of work, the World Bank started a new Global Partnership: Wealth Accounting and Valuation of Ecosystem Services (WAVES)

WAVES expands on Comprehensive Wealth in several ways More useful for policy analysis—go beyond the ‘scorekeeping’ function of accounts--macroeconomic indicators like ANS-- to the detailed statistics, both physical and monetary, that are needed for management. Focus on natural capital—environmental accounting (SEEA)— where a lot of progress has been made and the policy need for these accounts is greatest World Bank’s recent report on wealth indicates that natural capital is especially important in low income countries, averaging 36% of wealth and in some resource-rich countries more than 50% Support implementation of SEEA core environmental accounts, but attempt to cover the ‘missing’ natural capital—ecosystems and ecosystem services Partnership is open to any country, including Partnership Forum – annual meeting to exchange experiences, ideas, technical info and new development After 15 years of work in this area, the World Bank has started a new Global Partnership that builds on this conceptual approach, expanding it in several critical ways: Accounts must be expanded to more useful for policy analysis—go beyond the ‘scorekeeping’ function of accounts--macroeconomic indicators-- to the detailed statistics that are needed for management. Promote implementation at the country level—estimates by the WB for a country will be crude at best. It’s as if the WB were trying to estimate GDP for every country. In the long term, we need countries to implement environmental accounting Focus on natural capital—environmental accounting—where a lot of progress has been made and the policy need for these accounts is greatest (we have SNA, human capital is still experimental and it is not so clear what contribution to policy these accounts will make) In addition, the recent report on wealth accounts indicates that for the WB client countries, natural capital is especially important. In low income countries, natural capital accounts for 36% of wealth and in some resource-rich countries more than 50% Support the basic environmental accounts but push the frontier for the ‘missing’ natural capital—ecosystems and ecosystem services.

Components and Structure of WAVES Major Components Implementation of environmental accounting, physical and monetary, in 6-10 countries: Colombia, Botswana, Madagascar, Philippines, India, Costa Rica (possibly Namibia and countries of Greater Mekong Sub-region) Australia, Norway, UK, Canada (Japan) Incorporate environmental accounts in policy analysis and development planning Contribute to methodology for ecosystem accounting for the revised SEEA Promote adoption of natural capital accounting beyond the pilot countries 5 year program, $15 million— currently we are in 1-year Preparation phase through Dec 31, 2011 full implementation in 2012

WAVES in pilot countries Ensure that the ‘core’ environmental accounts (those proposed as a statistical standard next year) are in place Expand to ecosystem accounts, i.e., National accounts data for a geographic area defined by an ecosystem concept rather than administrative or political boundary, e.g., watershed include some of the ‘regulating’ services identified by the Millennium Ecosystem Assessment-- that are largely already in national accounts, but not explicit, such as hydrological services of forests Accounts need to be based on physical accounts for land spatially explicit Monetary accounts need to use appropriate valuation methodology include distribution of benefits to different stakeholder groups Take a scenario approach to asset accounts—that require projections about the future state of natural capital and its economic value— considering the stocks and their value under alternative futures, such as climate change or alternative management regimes WAVES will use the SEEA in its country work and will work closely with the organizations established by the UN Statistical commission (the UNCEEA and the London Group), both during implementation of environmental accounting in ‘pilot’ countries, and for the development of methodology. Make sure that the ‘core’ environmental accounts—what will be proposed as a statistical standard next year—are in place in pilot countries Expand this to ecosystem accounts where relevant This means we will include both physical and monetary accounts, where feasible. Land (and seascape) accounts are the key to ecosystem accounts Spatially explicit accounts For asset accounts—that require projections about the future state of natural capital and its economic value—we are likely to take a scenario approach, considering the stocks and their value under alternative futures, for example, as affected by climate change or different management regimes

Ecosystem Accounting: Key Challenges A Policy and Technical Experts Committee will be established to address the following issues: Scaling up: ecosystem services are often very site-specific, how do we generalize/scale up from local case studies of ecosystem services and their value to the regional or national level? Ability to implement: Assessment of our ability to (credibly) measure and value ecosystem services Assessment of the availability of data to measure and value ecosystem services Compile evidence of the policy relevance of environmental/ecosystem accounts Key challenges include Maintain spatial specificity but generalize/scale up from local case studies of ecosystem services and their value to the regional or national level an assessment of our ability to (credibly) measure and value ecosystem services—for example, methods for measuring and valuing biomass carbon are widely accepted, but methodologies for other ecosystem services and the availability of data for credible measurement and valuation at scale vary widely Treatment of public lands, the high seas Other issues

WAVES Partnership Partnership includes: UNEP, UNDP, other UN agencies, governments, NGOs, academic institutions, others Annual Partnership meetings for training, sharing experiences, presenting new developments in environmental accounting and policy applications —open to all organizations that are interested and have something to contribute, including other countries that may not be supported by WAVES, but are doing work on environmental accounting Website: www.worldbank.org/programs/waves We will be developing a new website to support partnership activities

Future Work for World Bank In addition to WAVES country-level work, we would like to begin the following work on Comprehensive Wealth Accounting and ANS over the next 5 years: Include missing natural capital: Beginning with fisheries and water (at least physical measures of resources and depletion) Parallel Physical Accounts: Recognizing limitations to Comprehensive Wealth Accounts, we will additionally explore the use of appropriate physical accounts. Platform for interacting with countries and agencies in order to improve the quality and timeliness of the WB database. While a useful conceptual demonstration, the data are often not adequate for decision-making at the country level. Next stage: Incorporate asset accounting done by national statistical offices Undertake a new benchmarking exercise for other countries Develop better methods for updating ANS and Wealth Accounts. You will hear in the next presentation how the revised SEEA is planning to address ecosystem accounting. In addition to the country-level work supported by WAVES, how will this affect the World Bank’s on-going work on Comprehensive Wealth Accounting and ANS? Over the next 5 years we would like to begin the following: Missing natural capital; begin to develop measures in the WB’s global database beginning with Fisheries Water (at least physical measures of resources and depletion) Parallel Physical Accounts: While Comprehensive Wealth is a sound economic concept, there is much that we don’t know and cannot measure or value well, especially for natural capital. We will explore the use of appropriate physical accounts along with Comprehensive Wealth Accounts. A platform for interacting with countries and agencies in order to improve the quality and timeliness of the WB database. As mentioned before, many heroic assumptions need to be made to compile a database that is consistent for 150 countries from publicly available data. These data are a useful demonstration of concept but are often not adequate for decision-making at the country level. Having 10-15 years to demonstrate the concept, we now need to move to the next stage—incorporating asset accounting done by national statistical offices, undertaking a new benchmarking exercise for other countries, and developing better methods for updating ANS and Wealth Accounts. The Wealth Accounts in particular need to be available on a more timely basis.