1. United Nations Headquarters, New York
Definition and delimitation of the Environmental Goods and Services Sector according to the 2009 Eurostat handbook
Cesare Costantino
Italian national statistical institute
Environmental accounting
Federico Falcitelli
Ministry of the Economy and Finance
State General Accounting Department
Expert Group meeting on International economic and social classifications
United Nations Headquarters, New York
1-4 September 2009

2. Summary
Background
Definition and delimitation of EGSS according to the 2009 Eurostat handbook
Definition of EGSS and relationship with the scope of the satellite accounts on environmental expenditure
Delimitation of EGSS, definitions and classifications with specific reference to:
Environmental purposes
Products
Producers
Overview
Concluding remarks

3. Need for an international handbook
Background
Strong policy interest in measures targeted to the environmental goods and services sector
need to have good quality, comparable, coherent data on e.g. EGSS’ turn-over, value added, etc., while minimising the burden on national statistical offices
The international guidelines available - “The Environmental Goods & Services Industry. Manual for data collection and analysis” (OECD/Eurostat, 1999) – need to be improved
leave open a number of issues on the definition, classification and identification of the sector
do not deal with all operational aspects
are endorsed within the SEEA2003, which currently is undergoing a revision process with a view to becoming an international statistical standard

4. Eurostat’s initiative for developing the handbook
Background
In 2007 Eurostat launched an ad hoc Task Force for developing a handbook on the Environmental Goods and Services Sector - EGSS
The handbook was finalized and was approved in march 2009 by the Eurostat Working Group on Environmental Expenditure statistics
The approach developed by Eurostat was considered by the London Group and is taken into account for the on-going revision of the SEEA

5. Structure of the handbook:
The Eurostat handbook
Background
Structure of the handbook:
Ch. 1 background information on EGSS
Ch. 2 definition, delimitation and classification of the sector
Ch. 3 guidelines to identify and classify the population
Ch. 4 methodologies for data collection, reporting and analysis
Ch. 5 Standard tables for data collection and process for their compilation
Ch. 6 Recommendations and examples on presentation and interpretation of figures

6. Definition of EGSS
Definition
The Environmental Goods and Services Sector consists of a heterogeneous set of producers of technologies, goods and services aimed at:
measuring, controlling, restoring, preventing, treating, minimising, investigating and sensitizing to environmental damages to air, water and soil as well as problems related to waste, noise, biodiversity and landscapes. That includes “cleaner” technologies, goods and services that prevent or minimise pollution.
measuring, controlling, restoring, preventing, minimising, investigating and sensitizing to resource depletion. That mainly results in resource-efficient technologies, goods and services that minimise the use of natural resources.

7. SUPPLY USE Environmental Goods and Services Sector statistics
Supply side perspective: EGSS statistics and satellite environmental accounts
Definition
SUPPLY
USE
Environmental Goods and Services Sector
statistics
SEEA and SERIEE satellite accounts (EPEA+RUMEA)
EPEA
Environmental Protection Expenditure Account
Goods
Services
Goods
Services
Environmental protection
Environmental protection
RUMEA
Resource Use and Management Expend. Account
Goods
Services
Goods
Services
Resource use and managament
Resource use and management

8. Defining and delimiting the EGSS
Definition and delimitation
EGSS is defined and delimited by answering three main questions
What does it mean “environmental”?
Environmental purposes covered
Which kind of environmental technologies, goods and services?
Products covered
Which kind of producers?
Producers covered

9. Types of environmental purposes covered
EGSS includes the provision of environmental technologies, goods and services that respond to two types of environmental purposes:
Environmental Protection (EP): technologies and products suitable for both preventive and remedial purposes, i.e. for the prevention, reduction, elimination and treatment of air emissions, waste and wastewater, soil and groundwater contamination, noise and vibration as well as radiation, the prevention, reduction and elimination of soil erosion and salinity as well as other kinds of degradation, the preservation of biodiversity and landscapes as well as the monitoring and control of the quality of the environmental media and waste
Resource Management (RM): technologies and products suitable for managing and/or conserving the stock of natural resources against depletion phenomena, including both preventive and restoration activities as well as the monitoring and control of the levels and uses of natural resource stocks.
remark 1: in both cases EGSS includes
Administative activities, education, training, information and communication activities
Research and development activities
remark 2: EGSS’ output is for every kind of use, i.e. intermediate and final consumption as well as gross capital formation

10. Activities not included in EGSS
Environmental purposes
Not included in EGSS:
Activities related to natural hazards and natural risk management (nevertheless, e.g. the protection of soil against erosion for reducing the risk of landslides and floods are included, given the primary aim of protecting the soil)
Extraction, exploitation and mobilisation of non-renewable resources (Resource Use - RU)

11. What is crucial is the “main purpose”
Environmental purposes
How to establish whether a product responds to an environmental purpose
The environmental purpose at issue has to be the “main purpose” for the product
How to identify the main purpose
mainly on the basis of the technical nature of the activity or the producer’s intention, i.e. regardless of the intention of the users
The selection criterion based on the producer’s intention should however be applied for handling cases that are not already solved according to the technical nature of the activity
In practice, producer’s intention means:
the awareness of the producer about the environment-friendly characteristics of its output;
the awareness of the producer about the use of its output;
the environment-related markets to which the producer addresses its output
(e.g. producers of renewable energy technologies, clean cars or eco-efficient devices).
Does EGSS include whatever product beneficial to the environment?
All products whose main purpose (according to the technical nature or the producer’s intention) is not an environmental purpose are not included in the EGSS even if the product has a favourable impact on the environment (e.g. electronic delivery of documents). Hence, excluded from the EGSS are products that, while beneficial to the environment, primarily satisfy technical, human and economic needs or requirements for health and safety.

12. Types of environmental products
Types of products
Environmental protection (EP)
Resource management (RUM)
Environmental specific services
are the output of Environmental Protection (EP) or Resource Management (RM) “characteristic” activities
EP services: waste management, wastewater management, and any other kind of service according to CEPA
RM services: water or energy saving, production of energy by means of renewable sources, and any other kind of service according to CReMA
Connected products
have no use except for supporting the execution of EP or RM specific services
may be services or goods (durable or non-durable goods)
e.g. maintenance services for septic tanks, trash bags, septic tanks, and all components that are used specifically and exclusively for environmental protection technologies
e.g. tap filters, differentiate systems for flushing the toilet, and all components that are used specifically and exclusively for resource management technologies
Adapted products
equivalent normal products have to exist (at least theoretically)
their primary use is not for EP or RM
they may be durable or non-durable goods
“cleaner” products: e.g. mercury-free batteries, cars or buses with lower air emissions, biodegradable soaps, ecological paints
“resource efficient” products: e.g. recycled paper, recycled glass, efficient refrigerators and washing machines, renewable energy, heat from heat pumps and solar panels
End-of-pipe technologies
treat pollution that has been generated or resources that have already been withdrawn, or measure the level of pollution or resources use (monitoring)
e.g. filters, incinerators, wastewater management facilities
e.g. plants and methods for producing recycled products
Integrated technologies
decrease material inputs, reduce energy consumption, minimise waste and/or reduce emissions compared to the national current standard
“cleaner” technologies: e.g. organic farming which reduces the impact of agriculture on soil quality
“resource efficient” technologies: e.g. plants and methods for producing renewable energy such as through windmills, solar panels, hydroelectric turbines, combined heat and power

13. Institutional sectors
Kinds of producers
Producers
Institutional sectors
General Government
Corporations
activities
Market/non market activities
Principal/secondary/ancillary activities

14. Environmental purposes and classifications to be used
Environmental prot. (EP)
CEPA 2000
remark: CEPA 2000 is an international standard
EGSS environmental purposes
Resource manag. (RM)
CReMA (Classification of Resource Management Activities)
remark: CReMA is derived by the draft CRUMA 2009 (Resource Use activities not included)

15. CReMA (Classification of Resource Management Activities)
10: Management of waters
11: Management of forest resources
11 A: Management of non-cultivated forest areas
11 B: Minimisation of the intake of forest resources
12: Management of wild flora and fauna
13: Management of energy resources
13 A: Production of energy from renewable sources
13 B: Heat/Energy saving and management
13 C: Minimisation of the intake of fossil resources as raw material for other use than energy production
14: Management of minerals
15: Research and development
16: Other natural Resource Management activities

16. Summary of main concepts
Overview
Economic variables
Turn over
Value added
Employment
Exports
Environmental purposes
Environmental protection
CEPA 2000
Resource management
CReMA
Products
Env. Specific services
Connected products (goods and services)
Adapted goods (cleaner and resource-efficient)
End of pipe technologies
Integrated technologies
Producers
Principal / secondary
Non market
Corporations
NACE 2 digit level
Market
Ancillary
General Gov.
Administrative level

17. Definition and delimitation of EGSS: major achievements
Concluding remarks
The EGSS concept according to the 2009 Eurostat handbook is consistent with the one developed within the 1999 OECD/Eurostat guidelines
As concerns definition and classification issues, the main “value added” of the 2009 Eurostat handbook is represented by having:
enhanced the consistency with the internationally agreed satellite accounting systems SEEA and SERIEE
provided an improved classification for resource management activities (less developed in the 1999 guidelines, leading to overlapping with CEPA)
clarified a number of issues left opened in the 1999 guidelines (e.g. concerning cleaner goods and technologies)
made the definition and delimitation of the sector more operational, by providing the users of the handbook with practical instructions

18. Questions to the Expert Group
What is your opinion on the criteria to delimitate the EGSS?

19. Thank you for your attention