1. Developing accounts for natural capital – scene setting
Anton Steurer, Eurostat Unit E2 - Environmental statistics and accounts; Sustainable development
MAES delivery workshop December 2015, Brussels

2. Accounting: creating knowledge
Interpretations of accounting
making accounts as a system of structured tables with a rigorous internal logic (ideally based on exhaustive observation of each transaction - e.g. business accounting)
accounting as a process to integrate different data sources to generate a coherent big picture (requires use of multiple sources, models, estimation procedures)
Today's frontiers: big data incl. geospatial, open and linked data, SDGs 2

3. What is environmental accounting
Presents environmental information in a way that is compatible with national accounts using the same concepts and classifications
Integrates existing data in a coherent system
Allows analysis and modelling of environmental effects of economic activities and of policy measures
Basic frameworks are supply-use tables (=what goes in comes out) and balance sheets (=opening stock plus changes gives closing stock)
Main areas:
Physical flow accounts (air emission, energy…)
Monetary environmental accounts (taxes, outlays…)
Asset accounts (physical and monetary)
Recently research in ecosystem accounting 3

4. 2014 amendment adds three more - obligatory from 2017:
Regulation (EU) No 691/2011 on European environmental economic accounts
Three modules with data transmission obligatory for EU Member States, Iceland and Norway since 2013:
Air emissions accounts -> carbon footprint
Environmental taxes
Material flow accounts -> resource productivity
2014 amendment adds three more - obligatory from 2017:
Environmental protection expenditure accounts
Environmental goods and services accounts -> employment
Physical energy flow accounts

5. Modelling based on air emissions accounts: footprints
Uses domestic technology (= EU emissions avoided by importing products) to find the EU emits more to export to others than it "avoids" by importing. Multi-regional input-output tables might show the EU "induces" more emissions abroad as EU technologies are better than those used in some other parts of the world. 5

6. Comparison of actual material flow indicators with material flow indicators expressed in raw material equivalents (RME), EU-27, 2012 (tonnes per capita)
Source: 6

7. Development of key indicators for the environmental economy and the overall economy, EU-28, 2000–2012 (2000 = 100)
Environmental jobs
All jobs 7

8. International & EU guidance documents
United Nations, European Commission, FAO, IMF, OECD and World Bank (2013): System of Environmental-Economic Accounting – Central Framework. (International Statistical Standard)
United Nations, European Commission, FAO, OECD and World Bank (2014): System of Environmental-Economic Accounting Experimental Ecosystem Accounting.
European Commission (2013): Mapping and Assessment of Ecosystems and their services wledge/ecosystem_assessment/pdf/MAESWor kingPaper2013.pdf 8

9. What do we need for ecosystem accounting in the EU?
We need biophysical accounts
for direct use
as a basis for valuation studies, upscaling
We need an EU data layer of accounts
reference frame for countries
data foundation for responding to EU policies
We need stepwise approach towards a common methodology 9

10. What is the potential solution ?
A system of datasets within a common framework;
Integration of existing initiatives – assessment of ecosystems, modelling ecosystem services…;
Use of models to transfer data into accounts and fill data gaps
Farm Structure Survey
Forest statistics
Copernicus Land monitoring
In situ coordination
LUCAS
Natura
2000/CDDA
Ecosystem mapping (extent)
Ecosystem condition (state)
Biodiversity
assessments (monitoring)
Land
use/cover
data
Ecosystem data
Environmental reporting 10

11. Project KIP INCA
Knowledge Innovation Project on Integrated System for Natural Capital and Ecosystem Services Accounting in the EU
Project developed by a partnership of European Commission services (DG ENV, DG CLIMA, DG JRC, DG ESTAT, DG RTD and EEA)
Objective to strengthen the knowledge base for the implementation of the 7th EAP
Knowledge Innovation Projects (KIPs) have the ambition to address gaps in environmental knowledge, using an innovate approach
Feasibility and design phase till mid-2016, then if "go ahead" implementation phase till 2020 11

12. EEA:
Principal information provider on the state of the environment in Europe
Long-term experience in ecosystem accounting, involved in MAES
Operates data centres on water and biodiversity
Responsible for CORINE land cover and Copernicus data
The main data processing partner
Eurostat (leader in phase 1):
Experience with geospatial-statistical data integration
Operates LUCAS
Lead service for geospatial information in the EU
Statistics on land use/ land cover, forest, agriculture
Environmental-Economic Accounts (SEEA)
KIP INCA partners
DG Environment:
Provides policy context and is the principal user of KIP INCA outputs
Responsible for MAES
Follows Natural Capital Accounting initiatives (private and global)
"owns" administrative reporting obligations
DG RTD:
Runs research programs on ecosystem services and biodiversity, e.g. ESMERALDA
Coordination between INCA and research activities
EC Joint Research Centre:
Operates data centres on forest and soil and information systems on agriculture, ecosystems and water
Vast modelling experience on ecosystem services 12

13. Integrating 3 basic layers of data to measure ecosystems and their services
Satellite images (incl. aerial photos, maps);
Statistics (ideally regional) depicting economic activity and uses of nature
Point information (e.g. LUCAS, forestry inventories, observation of species, scientific assessments regularly required under EU legislation)
Needs common frame to upscale and downscale the data layers to a common frame using models
Key ecosystem services:
Provisioning (crops, fodder, wood, drinking water.…)
Regulating (carbon sequestration, flood and erosion prevention, air purification….)
Cultural (recreation, scientific, spiritual…)
Key accounts: ecosystem extent, condition, services supply and services use – first physical then potentially monetary estimates 13

14. Components of ecosystem accounting
This figure shows the key components of an ecosystem accounting system as described in the SEEA experimental ecosystem accounting handbook published by the European Commission, the OECD, FAO, World Bank and the UN in The physical core accounts are in green: accounts for ecosystem extent, condition, ecosystem service supply and ecosystem service use. There are thematic accounts that describe water or carbon. And there are monetary accounts, shown in blue. The later depend on reliable methods for valuation which is a major challenge and are a satellite extension to the standard national accounts. 14

15. Existing potential input layers: MAES activities (ecosystem extent)
(Source: EEA)

16. Existing potential input layers - MAES activities (ecosystem services)
11 November 2018
(Source: JRC)

17. From maps to accounting tables… (…from accounting tables to better policies)

18. Summary on KIP INCA
Data integration allows making use of existing sources
Expertise and data available through collaboration of key partners, incl. accounting, monitoring, analysis and modelling
Gradual adjustment of existing data collections (e.g. LUCAS 2018, 2021) towards better contributing to ecosystem accounting
EU level data sets are integrated by EU-level bodies – no extra work for EU member states but an opportunity to "plug in"
KIP INCA is the EU response to clear EU policy targets of the 7th EAP and current international developments
Experimental valuation is possible once the physical accounts are set up – division of labour between statistics and research 18

19. Issues for discussion
What are the approaches and practical issues in building natural capital accounts?
How to best build on existing work?
What are the benefits, risks and challenges for policy makers, statisticians and researchers? 19