Eva Milota – Statistics Austria Marco Orsini – ICEDD

Environmental Protection Expenditure Accounts (EPEA) European Statistical Training Programme (ESTP)
Eva Milota – Statistics Austria Marco Orsini – ICEDD Vienna, 05 – 07 April 2017 THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

Round table Please introduce yourself, your experience and expectations on the course! You, your institution, your role in dealing with EPEA Your experience in EPEA: Have you already collected/estimated data? Have you already gone through the Manuals (SEEA, Environment Expenditure Statistics handbooks for Industry, General Government and Specialised Producers)? Any experience in other modules of environmental (monetary) accounts? Knowledge of environmental protection expenditure and SERIEE? Knowledge of JQ-EPER? Knowledge of national accounts? Your expectations on the course

Overview of the course Point of the agenda Issue Day 2
Introduction to SEEA and its monetary environmental accounts modules 3 Overview on EPEA 4 Classification of Environmental Protection Activities and Expenditure (CEPA 2000) 5 EPEA questionnaire tables 1,2, 3 6 EPEA questionnaire table 4 (total supply of EP services) and 5 (households) 7 EPEA questionnaire table 6 (transfers) 8 EPEA questionnaire table 7.1 and 7.2 (total economy) 9 Distinction between the mandatory part of the EPEA questionnaire (according to Reg. EU No. 691/2011) and the voluntary part 10 EPEA questionnaire – checks and transmission of data 11 Main data sources for EPEA 12 Practical examples and exercises 13 AOB

Day 1 – point 2 of the agenda
Introduction to SEEA and its monetary environmental accounts modules

Outline SEEA and the green economy The SEEA conceptual framework
SEEA structure General principles SEEA Volume 1 SEEA Volume 2 SEEA Volume 3 SEEA Volume 1 - Monetary Modules Integrated Framework for Monetary Environmental Accounting (Eurostat)

SEEA and the Green Economy
The economy impacts on the environment and the environment impacts on the economy To understand these linkages we need to integrate environmental and economic information SEEA provides a comprehensive conceptual and accounting framework that can be used to create a database suitable for analysing and evaluating the interactions between the economy and the environment As such, SEEA may provide part of the solution in informing on the green economy

The SEEA Conceptual Framework
Environment Natural Resources (stocks) -Land -Water -Ecosystems -Soil -Etc. Natural Resource flows -Materials -Energy -Ecosystem services Economy Activities -Production -Consumption -Accumulation Instruments -Financial/Monetary -Taxes/subsidies -Financing -Resource rent -Permits Actors Enterprises Households Government Non-profit institutions Analytical and Policy Frameworks -Productivity analysis -Natural resource management -Climate change -Green Growth/Green Economy Land/ Resource use/ Ecosystems Emissions/waste Outside territory of reference Outside territory of reference Source: UNSD

Extensions and Applications (Volume 3)
SEEA Structure General Principles Concepts Classifications Accounting rules Valuation principles (where applicable) SEEA Volume 1 Volume 2 Extensions and Applications (Volume 3) Source: UNSD

General Principles SEEA is an organising framework for an integrated system of stocks and flows accounts from which policy relevant statistics and indicators can be derived that measure interactions between the economy and the environment and the quality of environmental assets The stocks and flows can be measured in both physical and monetary terms SEEA sets out the underlying concepts, definitions, classifications and accounting rules that underpin the stocks and flows accounts As such, SEEA can provide guidance in the setting up of a program of basic environment statistics in terms of scope, coverage and underlying concepts

General Principles: SEEA as an organizing framework
Indicators Accounts SEEA Basic data Econ. Stats|Env. Stats Source: UNSD

General Principles: SEEA accounts and aggregates
Asset accounts: record stocks and changes in stocks (flows) of natural resources such as land, forest, water and minerals Physical flow accounts: provide a systematic physical description of production and consumption processes, including their natural resource inputs, product throughputs and outputs i.e. wastes. Link the physical information to the economic accounts Monetary accounts: separately identify environmentally- related transactions presented in the existing SNA flow accounts in order to make them more explicit for analysis Environmentally-adjusted aggregates: combine modules of SEEA to form a full-sequence of accounts from which aggregates such as depletion-adjusted net domestic product and net saving can be derived.

SEEA Volume 1: The Central Framework
Measures in physical terms the flows of goods and services of energy, water and materials that cross between the economy and the environment and circulate within the economy Accounts for natural resources and their using up by the economy It uses standard national accounting concepts and classifications and expands on them to better measure the relationship between the economy and the environment The one extension to the SNA is that Volume 1 provides guidance on how to calculate measures of depletion of those natural assets that are within the asset boundary of the SNA (e.g. subsoil assets) As such, national accounts aggregates such as net domestic product and net national saving can be adjusted for the “using up” of those natural assets in the production process SEEA Volume 1 is predicated on established statistical standards embodied in the SNA. It complements the SNA by elaborating those concepts and classifications that better measure the relationship between the economy and the environment

SEEA Volume 2: Experimental Accounts
Volume 2 looks at the ecosystems in their capacity to provide services to current and future generations All assets discussed in the central framework as individual assets are seen as jointly producing services The concept of ecosystem services is well known in the scientific community, but there is little practical experience in measuring the concept among official statisticians Hence Volume 2 will aim to do no more than present the current state of thinking on these matters. As such, Volume 2 cannot be regarded as a statistical standard That said, statisticians may choose to use the Volume 2 framework to generate policy-relevant datasets, with the qualifications attaching thereto.

SEEA Volume 3: Extensions and Modifications
This Volume will describe the uses for, and applications of, SEEA-generated datasets The Volume may be no more than a website As SEEA is applied in practice, it is expected that additional materials will be generated

SEEA Volume 1: The Central Framework

Environmental Protection Expenditure Accounts (EPEA)
EPEA provide information on the output of environmental protection specific services produced across the economy and on the expenditure of resident units on all goods and services for environmental protection purposes. This module is quite well developed and is one of the three new modules of the regulation (EC) No. 538/2014 amending regulation (EC) No. 691/2011. Environmental Goods and Services Sector (EGSS) The EGSS provide information on the extent to which the economy may become more environmentally friendly and resource efficient. The types of environmental goods and services in scope of the EGSS are environmental specific services, environmental sole-purpose products, adapted goods und environmental technologies. This module is newly developed and is one of the three new modules of the regulation (EC) No. 538/2014 amending regulation (EC) No. 691/2011.

Environmental payments by government
Most of the following payments should be considered as part of environmental protection expenditure: Environmental payments by government Environmental subsidies and similar transfers An environmental subsidy or similar transfer is a transfer that is intended to support activities which protect the environment or reduce the use and extraction of natural resources. It includes those transfers defined by the SNA as subsidies, social benefits to households, investment grants and other current and capital transfers. There might be distinguished between environmentally beneficial or environmentally damaging payments. A definition of environmentally damaging subsidies is not included in the SEEA. Environmental subsidies is part of Eurostat's work programme, a voluntary pilot survey has been run.

Environmental payments to government Environmental Taxes
The decision as to whether a tax is environmental is based on the consideration of the tax base. Specifically, an environmental tax is a tax whose tax base is a physical unit (or a proxy of it) of something that has proven, specific, negative impact on the environment. Environmental Tax Accounts are part of Regulation (EC) 691/2011. Rents A rent is the income receivable by the owner of an environmental asset for putting the asset at the disposal of another institutional unit. It is paid on the use in production of non-produced assets such as land or mineral and energy resources. Sales of goods and services (fees) Fees are payments made by users of goods and services provided by government units. Fees can be as important as taxes to create an environmental inventive effect. In Austria they are presented in a subsidiary account to environmental taxes. Fines and penalties Fines and penalties are compulsory payments imposed on institutional units by law, related to illegal activities of interest e.g. fines for polluting water bodies

Environmental transfers by non-government institutional units
Besides flows that are receivable or payable by government units (taxes and subsidies) there can be transfers between other institutional units e.g. from households to conservation groups or between international organisations and resident institutional units. They are considered to be environmental if the primary intent is that the money is spent for environmental protection or resource management purposes. Permits to use environmental assets One mechanism for managing the interaction between the economy and the environment is the use of permits and licenses to access, extract or use environmental assets. This licenses or permits may relate to the physical removal of environmental assets (fishing licenses, mining licenses) or to the use of the environment as a sink for emissions.

Permits to extract and harvest natural resources
Mineral and energy resources Land resources Timber resources Aquatic resources Water resources Permits for the use of the environment as a sink, e.g. Sanitary landfill charges CO2 emission permits Generally those permits are to be categorised as taxes or fees.

Transactions concerning fixed assets used in economic activities related to the environment
There are no strict boundaries on which fixed assets may be of interest and no aggregate for environmentally related fixed assets is defined in SEEA, but three types of financial flows that should be considered: Consumption of fixed capital The using up of an asset over time through its use in production is accounted for by means of an allowance for consumption of fixed capital. This allowance should be deducted from income and recognized as a cost of production. Terminal costs Costs incurred to prevent environmental problems when production or operation ceases and use of fixed assets ends, e.g. Mines are closed and mining slag heaps are treated to minimize leaching Oil rigs and other mining equipment are dismantled and removed Landfills are sealed …

Remedial costs Costs of a remedial nature are often incurred after a site has been closed and the operator has left: Expenditure to restore land to allow its use for some other purpose Expenditure to ensure that no harmful emissions from deposits of pollutants or other residuals are able to leach into the surrounding environment and cause environmental damage

Implementing SEEA and resulting ideas:
Going one step further – building an integrated framework for monetary environmental accounts

Why further integrating the monetary modules?
The monetary environmental accounts (MEA) modules are linked and complement each other. They use in part the same classifications, concepts, terms and definitions. They use the same data sources. They form in principle an integrated system.

BUT! There are some areas of heterogenity between the MEA modules – for example:
Source: Eurostat

Comparison of EPEA, ReMEA and EGSS
Or in more detail: Comparison of EPEA, ReMEA and EGSS Source: Eurostat

What should it look alike?
Source: Eurostat

So what is needed? Common scope, even though a single module could cover only a part of it. Common definitions, wording and classification, i.e. a same “label” should identify always the same concept / variable for all the modules. Consistency with national accounts concept, definitions, classifications and methods

Questions?

EPEA Overview: EPEA in the SERIEE EPEA module

What is SERIEE? SERIEE = Système Européen de Rassemblement de l’Information Economique sur l’Environnement i.e. European System for the Collection of Economic Information on the Environment

SERIEE as a “system” includes…
… two satellite accounts… … and other statistics Environmental Protection Expenditure Account (EPEA) Qualitative perspective Protection against pollution and degradation phenomena Natural Resource Use and Management Expenditure Account, (RUMEA) Quantitative perspective Management and saving of the stock of natural resources against depletion phenomena integration of monetary and physical data, input-output tables for characteristic activities a recording system for eco- activities

SERIEE modules: state of the art and evolution
EPEA The most developed one in terms of accounting methodology, data sources and data collection processes; important country experiences, legal base RUMEA Developing module Shift of the scope from RUMEA to ReMEA integration of monetary and physical data Under development These areas are partially covered by NAMEA-type accounts input-output tables for characteristic activities recording system for eco-activities EGSS (Eurostat handbook and practical guide) legal base

Why SERIEE? The demand for economic data on the environment: main needs the need of policy makers to assess costs (and hopefully benefits) of environmental policies on the basis of sound data and analysis the need to monitor implementation of the polluter pays principle the growing need of assessing opportunities in terms of “green” growth The SERIEE is a system of functionally oriented satellite accounts which aim at calculating a number of economic aggregates having a twofold objective: To allow to answer to a number of questions concerning the economic efforts made by a country for protecting the environment as well as managing and using the natural resources To allow the link between physical and monetary data for several analysis purposes like e.g.: to calculate the unitary cost for certain activities for the analysis of the efficiency of the measures undertaken or the comparative cost of environmental policies; to relate monetary flows to the data on natural resources used and on pollution caused by the various industries or branches for assessing the degree of application of the “user pays principle“ or the "polluter pays principle“;

What is EPEA? EPEA = Environmental Protection Expenditure Account
The EPEA is as a functionally oriented satellite account to the national accounts. As a satellite account, it follows closely the principles of National Accounts as concerns the classification of units, valuation and categorisation of transactions. It allows for links between economic and physical accounts. In the DPSIR model’s perspective the EPEA describes responses of society to environmental problems

Why EPEA? To answer questions on economic efforts made by a country for EP How much does a country spend for protecting the environment? (use side) Which is the size of the sector of the economy which carries out EP activities? (supply side) Who finances the national expenditure for EP? (financing perspective) Who pays for EP? (cost born by each sector of the economy)

Why EPEA? In practice… Ensured linking physical and monetary data:
to calculate unitary cost of EP activities for comparative efficiency analyses to relate monetary flows to pollution phenomena by sector, branch for monitoring the implementation of the “polluter pays principle”

How does EPEA answer the questions?
Questions, e.g. How much does a country spend for protecting the environment Answers: EPEA aggregates, e.g. National expenditure for EP Accounting tables (Tables A, B, B1, C, C1) Basic data

EPEA aggregates (1) How much does a country spend for protecting the environment? (use side) NATIONAL EXPENDITURE FOR EP (by resident units) Domestic uses of EP products: either EP services (including in-house produced) or connected and adapted products final uses (by GG, Corporations and Households) intermediate consumption (Corporations) Domestic gross capital formation for EP, including net acquisition of land (by GG and Corporations) Transfers for EP (either current or capital): those that are not already reflected in the above categories of expenditure (by all institutional sectors)

EPEA aggregates (2) Which is the size of the sector of the economy which carries out EP activities? (supply side) PRODUCTION OF EP SERVICES (output of EP services and other aggregates related to the supply of EP services) Output of EP services (principal, secondary, ancillary) Labour input for the production of EP output Investments for the production of EP output (accounted for also in the National expenditure for EP) Stock of capital

EPEA aggregates (3) Which is the size of the sector of the economy which carries out EP activities? (supply side) PRODUCTION OF EP SERVICES (output of EP services and other aggregates related to the supply of EP services) Output of EP services (principal, secondary, ancillary) Labour input for the production of EP output Investments for the production of EP output (accounted for also in the National expenditure for EP) Stock of capital

EPEA aggregates (4) Who pays for EP? (cost born for EP) NET COST OF EP
(FINANCIAL BURDEN OF EP, cost of EP actually born by each institutional sector) Includes any other cost deriving from EP (e.g. interest on fixed capital used for EP production) Excludes any economic advantage deriving from EP expenditures (e.g. profits for EP producers, EP taxes for General Government)

Main characteristics of EPEA aggregates
Consistency with national accounts aggregates and their breakdown (institutional sector and NACE) this allows to calculate ratios to appropriate national accounts aggregates like e.g. GDP, Output, Gross Capital Formation, Employment, … all transactions that are components of core national accounts aggregates should be accounted for by applying same criteria (same accounting treatment, same price system, ...) Further breakdown typical of functional satellite accounts Breakdown according to the roles played in environmental protection by the different economic units, i.e. producers (characteristic, specialised, non-specialised), users, financers Breakdown by environmental domain (according to CEPA)

EPEA main concepts (1) EPEA adopts a number of concepts typical of functionally oriented satellite accounts: Characteristic activities and products Characteristic and non-characteristic producers Specific products Specific transfers In order to be consistent with the core system of national accounts, EPEA adopts its fundamental concepts: Economic activity Market vs non-market output

EPEA main concepts (2) Characteristic activities and products
Characteristic activities are economic activities whose purpose is environmental protection They are classified according to CEPA 2000 Output of characteristic activities are EP services (characteristic products) Characteristic and non-characteristic producers Characteristic producers : producer units of the national economy which execute characteristic activities; the following characteristic producers are distinguished: specialised producers, which execute a characteristic activity as their principal activity; specialised producers belonging to the institutional sectors GG and NPISHs are considered as a whole and distinguished from specialised producers belonging to other sectors non-specialised characteristic producers, which execute a characteristic activity as a secondary activity or as an activity which is ancillary to a principal non-characteristic activity; these producers are grouped according to their principal non-characteristic activity Non-characteristic producers: all other producer units of the national economy

EPEA main concepts (3) Specific products: all products whose use contributes to EP: Characteristic products, i.e. EP services produced through characteristic activities Connected products, i.e. products whose use by resident units directly serves an EP objective but which are not characteristic services. Examples: Air: catalytic converters, carburation regulation services. Water: septic tanks, biological products for septic tanks. Waste: trash bags, bins, rubbish containers. Noise: exhaust pipes, exhaust pipe adjustment services, noise reduction windows Adapted products, i.e. products that meet the following criteria: they are less pollutant, at the time of their consumption and/or scrapping, than equivalent normal products; equivalent normal products are those products which furnish similar utility, irrespective of the impact on the environment they are more costly than equivalent normal products; only these extra cost are considered as EP expenditure in the EPEA examples for adapted products may be: desulphurised fuels, lead-free gasoline, CFC-free products

EPEA main concepts (4) Specific transfers:
Unrequited payments received by resident or non-resident units which contribute to the financing of characteristic activities and uses of specific products or constitute a compensation for income or capital losses related to environmental protection. Current and capital transfers are distinguished. Examples: Subsidies on products, for lowering the price of specific products for the user (producer is the receiver, user is the beneficiary) Investment grants for GFCF for EP activities Voluntary transfers to NPISHs Specific taxes constitute specific transfers when their revenues are earmarked for environmental protection Remark: neither “environmentally-related” taxes constitute elements of national expenditure for EP nor they contribute to the financing of the same expenditure. These are e.g. taxes on emissions that are not earmarked for EP

EPEA main concepts (5) National accounts fundamental concepts adopted by EPEA (1): Economic activity An economic activity takes place when resources such as capital goods, labour, manufacturing techniques or intermediary products are combined to produce goods or services. Thus, an economic activity is characterised by an input of resources, a production process and an output of products (goods or services). Activity is a principal activity if it represents the largest part of the Gross Value Added of the producers. It is secondary when it is not principal and at the same time provides output sold on the market. It is ancillary when the output is for own use Market vs non-market output market output is output sold at economically significant prices. A price is an economically significant price when it covers at least 50% of the cost of production of a product. The corresponding producer units are market producers non-market output is output provided free or at prices that are not economically significant. The corresponding producer units are non-market producers. In the case of non-market producers revenues from non-market output may appear when output is sold at prices that are not economically significant. Such revenues are called partial payments

EPEA accounting tables and aggregates
1994 SERIEE Manual provides the set of 5 accounting tables to be adopted for EPEA accounts: The use of goods and services for EP (Table A: National expenditure for EP) The supply of EP services (Table B: Production of environmental services and related capital transactions and employment) The supply and use table of EP services (Table B1: EP supply and use table; transition table) The flows incurring among institutional sectors for financing the National expenditure for EP (Table C: Financing of National expenditure for EP) The net cost of born by each institutional sector for EP (Table C1: Environment-related financial burden) 2002 EPEA Compilation guide provides a slightly simplified version of the 5 accounting tables by highlighting the priority/most important figures to fill in

The EPEA tables: ‘magic formula’
Source: Eurostat (2002), SERIEE Environmental Protection Expenditure Accounts – Compilation Guide, Luxembourg.

Main components of national EP expenditure
Main components of national EP expenditure: kind of use (rows of Table A) uses of EP services by resident units (except specialised producers to avoid double counting), gross capital formation for environmental protection (including net acquisition of land), uses of connected and adapted products by resident units (except specialised producers), specific transfers for environmental protection (those transfers not already captured above). financing by the rest of the world is deducted in order to obtain a national aggregate

The EPEA module (1) The full EPEA framework is quite expensive in terms of resources to be set up, The EPEA module under Regulation 691/2011 significantly simplifies the full framework But it still allows compiling a measure of environmental protection expenditure for the whole economy comparable with national accounts aggregates!

The EPEA module (2) 7 tables: (1) General government and NPISH,
(2) Corporations as secondary and specialist producers of market EP services, (3) Corporations other (also covering the production of ancillary EP services), (4) Total supply of environmental protection services, (5) Households, (6) Environmental protection transfers and (7) Total economy.

Classification of Environmental Protection Activities and Expenditure - CEPA 2000

What’s CEPA? CEPA is the Classification of Environmental Protection Activities and expenditures The last version – CEPA 2000 – is published in 2002 EPEA compilation guide (Remark: 1994 SERIEE manual includes a old version of CEPA) CEPA 2000 is a generic, multi-purpose, functional classification for environmental protection. It is used for classifying activities but also products, actual outlays (expenditure) and other transactions (not only activities) CEPA is designed to classify transactions and activities whose primary purpose is environmental protection (main purpose) Classification structure: The level 1 structure of CEPA (1-digits) are the CEPA classes. CEPA classes 1 to 7 are also called (environmental) domains. The main function of most 2-digits and 3-digits in CEPA is to guide classification into the classes. Selected 2-digits and 3-digits may also be used for data collection and coding as well as for publication purposes

General classification principles
Classification should be made according to the main purpose taking into account the technical nature as well as the policy purpose of an action or activity. Multi-purpose actions, activities and expenditure that address several CEPA classes should be divided by these classes. Classification under the heading ‘indivisible expenditure and activities’ should only be made as a last resort. Classification of individual items cannot be based solely on the technical nature of the items. For example, the purchase of double-glazed windows in warm countries will typically relate to issues of noise protection, whereas in colder countries they will be a standard energy saving device. Measures against forest fires will be unimportant or purely serve economic purposes (and thus fall outside of CEPA) in some countries whereas in others the main aspect of forest fires will be an environmental one related to landscape and habitat preservation rather than protection of a natural resource. Classification of transversal activities and expenditure Transversal activities are R&D, administration and management as well as education, training and information. All R&D should be allocated to CEPA 8. Administration and management as well as education, training and information should, to the extent possible, be allocated to the ‘Other’ positions in CEPA 1-7. Ideally, transversal activities would be identified separately, as well as by CEPA class but primary data sources related to CEPA 1-7 often do not allow this. R&D, education and training or administration and management are often either not separable from other actions relating to another class (administration or training as part of waste management, for example) or cannot be split by class (R&D data collected by industry expenditure surveys, for example). If such identification problems are considered substantial, data on R&D, administration and management and on education, training and information should not be published at the 2-digit level.

CEPA2000 classification matrix: [type of activity] by [environmental domain]

CEPA 2000 items (1)

CEPA 2000 items (2)

A few operational remarks on CEPA
Main purpose To be used only for solving problems: everything that is already included in CEPA list and its explanatory notes and examples is included in EP scope by definition ‘Other activities’ (2-digit category of each class 1-7) It does not include things that ‘I don’t know where to classify’; it includes administration, information, education and training activities referring only or mainly to the domain of the class Indivisibile expenditure (9.3 category): It refers to activities and actions which have at the same time different purposes and which cannot be split or classified according to only one main purpose (e.g. prevention of risk of industrial accidents – Seveso directive, ...) It does not refer to statistical units that at the basic data level are ‘too much aggregated for me to easily compile the account’! Activities n.e.c. (9.4. category) It refers to activities which cannot be classified in any other position because they do not concern environmental domains 1-7!

EPEA questionnaire tables 1,2,3 – production of characteristic services

Cross-categorisation of producers

Main categories of producers
NACE Rev. 2 EP services/domain 37 Sewerage Wastewater management (specialised producers) 38.1 Waste collection 38.2 Waste treatment and disposal waste management 39.00 Remediation activities and other waste management activities Soil decontamination, cleaning up of soil (specialised producers) 38.3 Materials recovery (secondary producers) 36.00 Water collection treatment and supply waste water treatment services 46.77 Wholesale of waste and scrap 71 Architectural and engineering activities; technical testing and analysis Environmental consultancy, environmental testing and analysis (specialised and secondary producers) 72 Scientific research and development R&D for EP

From EPEA to EPEA module
Table 1 General government and NPISH Table 2 Corporations as specialist and secondary producers of market EP services Table 3(x) Corporations: other (also covering producers of ancillary EP services)

From EPEA to EPEA module

Main methods for calculation of EP output
Mains sources Producers Output as given by existing sources National accounts Production statistics Industrial survey Specialised (including GG) and secondary producers Output calculated via cost of production Analysis of finance statistics or of accounts of GG Specific surveys on EPE GG producers (including specialised producers) Ancillary producers Other methods, especially “price times quantity” Physical and price data Mainly (but not only) for producers of waste and wastewater management

Table 1 General government and NPISH
Table 1 should cover the expenditure for environmental protection of all units classified in the government sector (S.13) and NPISH sector (S.15) in the national accounts The institutional units classified in S.13 are non-market producers. However, they may have some secondary market output of EP services which is also to be reported in table 1.

General government vs Corporations as secondary and specialist producers: In countries where the national accounts data by industries and the supply and use tables are not based on institutional units but on the more detailed local kind-of-activity units (KAUs), it is possible that some units (local KAUs) belonging to the general government institutional sector engaged in environmental protection activities are classified in NACE Rev. 2 divisions 37, 38 or 39.

Transactions as producers of EP services ( P1.1 ) EP output ((P13.1) + (P11.1)) ( P11.1 ) EP market output (Includes P.11 (market output) of general government and NPISH local KAUs that are market producers) ( P13.1 ) EP non-market output (Includes P.131 (payments for non-market output)) ( P51G_NP.1 ) Gross fixed capital formation and acquisition less disposals of non-financial, non-produced assets Transactions as users of EP services ( P3_EPS.1 ) Final consumption of EP services ((P13.1) less P.131 (payments for non-market output))

A general government unit may recover part of its cost of production for output provided to other units through fees and charges. If the recovered part is less than 50% of the cost of production, the unit will be classified as a non-market producer. The ESA 2010 transaction ‘Payments for non-market output’ (P.131) consists of those fees and charges that partly recover the production costs for non-market output. In line with ESA 2010 the EPEA Table 1 includes P.131 under the heading “non-market output”. However, P.131 is not part of the final consumption of EP services by the general government.

All the mandatory variables should be filled in for : CEPA 2, 3, 6, sum of CEPA 1, 4, 5 & 7 and sum of CEPA 8 & 9. Relationship with COFOG

Sources of data for Table 1: national accounts – general government expenditure by function (COFOG) (Table 11 of the ESA transmission program) and in particular items classified in COFOG 5. Analysis of financial budgets and accounts analysis is useful for detailing EP expenditure activities already recorded in a more aggregated way under COFOG statistics (e.g. to split up COFOG 5.3). The calculation of more detailed data for the voluntary part may require appropriate estimation techniques, for example in the case of consumption of fixed capital which could be estimated from data on investments or from available data national accounts using appropriate ratios.

Table 2 Corporations as specialist and secondary producers of market EP services
Specialist producers of the corporations sector include: privately and publicly owned corporations and quasi-corporations. Quasi-corporations could for example be waste departments of large municipalities which charge economically significant prices and are considered to have autonomy of decision and where the municipalities' book-keeping systems allow having a full set of accounts for these units. Specialist producers can be found in particular in NACE Rev. 2 divisions 37, 38 and 39.

Transactions as producers of EP services ( P11.2 ) EP market output ( P2_EPS_SP.2 ) Intermediate consumption of EP services by corporations as specialist producers ( P51G_NP.2 ) Gross fixed capital formation and acquisition less disposals of non-financial, non-produced assets

The secondary output of EP services by corporations is included in Table 2. For example, in some countries an important part of market wastewater management services are produced by NACE Rev. 2 division 36 (water supply companies which e.g. also collect and treat wastewater) or division 35 (electricity, gas and steam supply companies which e.g. also treat waste).

All the mandatory variables should be filled in for CEPA 2, 3 and 4.

Main data sources for Table 2 are: national accounts - production and generation of income accounts (Table 3 of the ESA transmission programme) supply and use tables (Tables 15 and 16 of the ESA transmission programme). When information from supply and use tables is used, care is needed to establish which statistical units are the basis for compiling the supply and use tables.

Table 3(x) Corporations: other (also covering producers of ancillary EP services)
An ancillary activity is a supporting activity undertaken within an enterprise in order to create the conditions within which the principal or secondary activities can be carried out. Any production of environmental protection services for internal use (an ancillary environmental protection activity) should be recorded under the industry (NACE) where the unit undertaking the EP ancillary activity is classified.

Additional sub-tables for ancillary production of EP services (Tables 3a to 3e) allow for detailing the ancillary production of EP services by NACE sections and divisions according to the main activity of the unit. Mandatory sections and divisions are: mining and quarrying (3a), total manufacturing (3b), detailed manufacturing industries (3b_Add), electricity, gas and steam supply (3c) and water supply (3d). The rest of NACE divisions are grouped under table 3e “Other NACE divisions”, which is to be filled in only voluntarily.

The output of an ancillary activity is not intended for use outside the enterprise. Ancillary output is generally calculated summing up the costs of production. In order to reduce the response burden, for the calculation of ancillary output the inclusion of consumption of fixed capital and of taxes less subsidies on production is not mandatory.

All the mandatory variables should be filled in for CEPA 1, 2, 3, and the sum of CEPA 4 to 9.

Main data source for Tables 3 are: the Structural Business Statistics (SBS). The mining & quarrying, manufacturing, electricity, gas & water supply industries in their role as ancillary producers are covered by this legal framework. As the frequency of the reporting depends on the variable, some estimation could be necessary in the intervening years. The calculation of more detailed data for the voluntary part will require appropriate estimation techniques, for example in the case of consumption of fixed capital which could be estimated based on data on investments or from national accounts data using appropriate ratios.

EPEA questionnaire tables 4 – total supply of EP services and 5 - households

Table 4 Total supply of EP services
Table 4 summarises the output of EP services, intermediate consumption of EP services by specialist producers, imports and exports of EP services, VAT and other taxes less subsidies on EP services. EP output is calculated automatically. The header "Intermediate consumption of EP services by specialist producers" is the sum of "intermediate consumption of EP services by corporations as specialist producer" (to be reported in Table 2) and "market producers of the general government sector" (to be reported in Table 1). Import, exports and VAT and other taxes less subsidies on EP services should be filled in for CEPA 2, 3 and 4. This means that for P.7, P.6 and VAT and other taxes less subsidies on EP services in the obligatory table in column « Sum of CEPA » only CEPA 4 should be reported. These variables allow calculating the component of the national expenditure that corresponds to the domestic uses of environmental protection services.

Table 4 Total supply of EP services
The main data sources for Table 4 are: national accounts - production and generation of income accounts (Table 3 of ESA transmission programme) and national accounts - supply and use tables (Tables 15 and 16 of ESA transmission programme). Where no direct data on imports and exports are available from these sources, physical data could be used (e.g. the imports and exports of waste are recorded). In general, available data do not allow identifying imports and exports of EP services. However, most EP services are not internationally traded and imports and exports can be assumed to be zero. The main traded EP service is waste management (e.g. payments for waste treated in other countries). There are physical data available under the Basel convention for all countries concerning dangerous waste. Some countries also have data on cross-border flows of mixed household waste. There are no data for inert wastes but it can be assumed that the monetary values involved are very small given the low prices for the treatment of such waste and the high transport costs.

Table 5 Households In principle, the household sector consists of the institutional sector of households in the national accounts, considered in their capacity as final consumers. In principle, the households sector groups together those units that belong to the institutional sector of households in the national accounts, considered in their capacity as final consumers.

Table 5 Households Final consumption of EP services by households is households’ expenditure on EP services that are used for the direct satisfaction of individual needs (individual consumption). Final consumption of EP services by households is household expenditure on EP services that are used for the direct satisfaction of individual needs (individual consumption).

Table 5 Households Household expenditure includes all payments and fees for EP services purchased from the general government sector (e.g. municipalities) or corporations as specialist or secondary producers of EP services. These include mainly payments for the collection and treatment of waste and payments for the collection and treatment of wastewater. Payments for non-market output (P.131) are part of household final consumption expenditure for that part paid by households. Household expenditure include all payments and fees for EP services purchased from the public sector (e.g. municipalities) or public and private specialist producers of EP services. These include mainly: payments for the collection and treatment of waste and payments for the collection and treatment of wastewater.

Table 5 Households In the mandatory part of Table 5 household final consumption of EP services should be filled in for CEPA 2 and 3. In the mandatory part of table 5 household final consumption of EP services should be filled in for CEPA 2 and 3.

Table 5 Households Main data sources for Table 5 are supply and use tables which may provide final consumption expenditure of households for the most important EP services identified through CPA codes and household expenditure surveys. Depending on the country, items relating to the use of EP services may be separately provided by the source data or may be included in wider expenditure categories. For example, wastewater removal may be included in the water bills.

EPEA questionnaire table 6 – transfers

Tables 6 Transfers Environmental protection transfers are all current or capital transfers that are intended to support activities which protect the environment. They cover transfers in favour of the production and use of environmental protection services as well as transfers in favour of the production and use of adapted and connected products for environmental protection. Transactions classified as current (D.3 Subsidies and D.7 Other current transfers) or capital transfers (D.92 Investment grants and D.99 Other capital transfers) according to the ESA 2010 are included in this table as well as earmarked taxes. Tax abatements, interest reliefs, guarantees are excluded.

Tables 6 Transfers The table asks in its mandatory part for transfers paid and received by the general government and the rest of the world sectors. For households and corporations only received transfers are asked for.

Tables 6 Transfers Transfers should be filled in for CEPA 2, 3, 6, sum of CEPA 1, 4, 5 & 7 and sum of CEPA 8 & 9, i.e. for the breakdown as foreseen in COFOG.

Tables 6 Transfers Main source of data for transfers are COFOG 05 figures included under national accounts – general government expenditure by function (COFOG) (Table 11 of ESA transmission programme). Main source of data for transfers are COFOG 05 figures included under national accounts – general government expenditure by function (COFOG) (Table 11 of ESA transmission programme).

EPEA questionnaire tables 7 – total economy

Tables 7 Total economy Table 7 sums up the data filled in the mandatory part of the previous tables. It is automatically filled in. Two versions of table 7 are available: table 7.1 sums up total economy by CEPA (2,3 sum of CEPA 1 & 4 to 9) and table 7.2 sums up total economy, total CEPA by institutional sectors.

Tables 7 Total economy ( P1.7 ) EP output (P11.7 + P1_ANC.7 + P13.7)
( P11.7 ) EP market output ( P1_ANC.7 ) EP ancillary output ( P13.7 ) EP non-market output ( P2_EPS_SP.7 ) Intermediate consumption of EP services by specialist producers ( P7.7 ) Imports of EP services ( P6.7 ) Exports of EP services ( D21-D31.7 ) VAT and other taxes less subsidies on EP services ( SUP_NU.7 ) EP supply at purchasers' prices available for national uses (= P1.7 - P2_EPS_SP.7 + P7.7 - P6.7 + D21-D31.7) ( P51G_NP.7 ) Gross fixed capital formation and acquisition less disposals of non-financial, non-produced assets ( P3_EPS.7 ) Final consumption of EP service ( D3_D7_D92_D99_PAY.7 ) Current and capital transfers paid ( D3_D7_D92_D99_REC.7 ) Current and capital transfers received

Calculation of NEEP (1) Regulation (EU) No 691/2011, Annex IV, section 1, defines "national expenditure for environmental protection" (NEEP) as: The sum of uses of environmental protection services (EPS) by resident units; Plus gross fixed capital formation (GFCF) for environmental protection activities; Plus transfers for environmental protection which are not a counterpart of previous items; Less transfers from the rest of the world. Have a look at: Eurostat, EPEA - calculation of national expenditure for environmental protection, 2016

Calculation of NEEP (2)

Calculation of NEEP (3)

EPEA questionnaire: Mandatory and voluntary parts

EPEA questionnaire: Checks and transmission of data

EPEA questionnaire: Checks and transmission of data
Present the questionnaire’s check via excel

Data sources

Data sources: overview
National Accounts PRODCOM, STS COFOG EGSS Budget analysis Specific surveys Structural Business Statistics Other data sources

Figures that can possibly be taken from National Accounts

COFOG (1) In National Accounts the transactions of general government are classified by functions. One of these main functions is dedicated to environment. Most output of EP services of GG could be covered.

COFOG (2) Transactions are allocated based on the purpose. Environmental protection expenditure or multi-purpose activities can be classified under a different main function. Therefore other COFOG positions could also be relevant, e.g. Overall planning and statistical services Agriculture Multi-purpose development projects It could also be the case that COFOG is not detailed enough. In both cases it is necessary to carry out a specific analysis of the national accounts data. In any case a cooperation with national accounts experts is appreciated because they can provide necessary data in an adequate structure.

Budget Analysis An alternative to national accounts data which some disadvantages. Applying budget analysis implies the investigation of each budget line of the budgets of all government units (ministries, provinces, municipalities). But the classification of budget lines differs from National Accounts classification, often information about the purpose of transactions in not (sufficiently) available, budget lines can have several purposes (a split is necessary). So this work is quite difficult and time intensive and it is doubtful whether environmental protection expenditure of General Government can be compiled in a way which is fully compatible with National Accounts.

Structural Business Statistics (SBS) (1)
Based on surveys SBS provides data for the enterprises of the manufacturing and service industries (NACE rev. 2, sections B to N; excluding “Public administration, compulsory social security“, “Education”, “Human health and social work activities”, “Arts entertainment and recreation” and “Other service activities”). Main variables are: Demographic variables: Number of enterprises Input variables: persons employed, number of employees, personnel expenditure, investment Output variables: Revenues and income, turnover, production value, value added at factor costs, gross operating surplus

Structural Business Statistics (SBS) (2)
Important for EPEA: Investment in equipment and plant for pollution control and special anti-pollution accessories (mainly 'end-of-pipe' equipment) Investment in equipment and plant linked to cleaner technologies (”integrated technology”) Total current expenditure on environmental protection Each is broken down into protection of ambient air and climate, wastewater management, waste management and other environmental protection activities, but only for manufacturing industry. Output data for specialised producers of NACE 37 to 39 and non- specialised producers (estimation bases on shares) Legal base for SBS is Regulation (EC) No. 295/2008 of the European Parliament and of the Council concerning structural business statistics, amended by Regulations (EC) No. 250/2009 and 251/2009.

Industry commodity statistics (PRODCOM) – Short term statistics (STS)
Industry commodity classification PRODCOM allows for the identification of the production of environmental goods. This information is at least in Austria surveyed via the short term statistics surveys in industry and construction (NACE rev. 2, sections B to F). These results are used in Austria to estimate household environmental expenditure (among other statistical data sources) via purchase of environmental goods.

Specific surveys In addition to the already mentioned data sources it is possible and sometimes necessary to carry out specific surveys. Voluntary Austrian surveys: Survey on environmental protection expenditure of manufacturing industry Sample survey (3000 enterprises of NACE rev. 2, sections B to F) on current expenditure and investment for environmental protection. Survey on environmental protection expenditure of service industries Sample survey (3000 enterprises of NACE rev. 2, sections G to S except public sector) on current expenditure and investment for environmental protection. Survey on environmental services of service industries (producer of environmental services) Sample survey (3000 enterprises with focus on most probable industries)

Specific surveys

Specific surveys Survey on environmental services of service industries (producer of environmental services) At first trial to survey a broad list of service industries – limited success. Therefore focus on a short list of service industries, which were identified as relevant for environmental services, i.e. NACE 711, 712, 721 and 749. Questions: Main activity of the company Provision of environmental services Share of environmental services in turnover and employment Environmental exports Kind of environmental services (main activity, further services) Share of each environmental service in environmental turnover and environmental employment

Other data sources Analysis of business reports for covering specialised producers of the sector „Non profit institutions serving households“. Evaluation reports of organic farming support programmes

Practical exemples and exercises

Exercises EGSS and EPEA CEPA
Convert data into EPE categories (and tables) Production of EP services (tables 1 to 3 of EPEA module) From production to national expenditure (tables 4 to 7 of EPEA module)

Eva Milota – Statistics Austria Marco Orsini – ICEDD

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Eva Milota – Statistics Austria Marco Orsini – ICEDD

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