1. THE GLOBAL PARTNERSHIP ON Wealth Accounting and the Valuation of Ecosystem Services Technical Workshop on Tools and Measures to Inform Inclusive Green Economy Approaches Beyond GDP Natural Capital Accounting for Sustainable Development and Poverty Eradication Measuring and Managing Natural Resources for Development John M. Matuszak Agriculture and Environmental Services Department-SDN, World Bank

2. Sustainable Development and Wealth We don’t judge a company solely on the basis of its income statement—look at both income and balance sheet. Increasing assets (wealth) support long-term growth. In the short term, income can appear to grow by liquidating assets, but this undermines long-term growth. Why do we assess country economic progress on the basis of national income, GDP alone? (J. Stiglitz, Nobel prize, economics) The source of income and well-being is wealth, broadly defined to include – Manufactured capital, Natural capital, ‘Intangible’ capital (human capital and social capital)

3. Accounting for Natural Capital— Are National Economic Accounts up to the Job? Key information about natural capital is missing or invisible in the System of National Accounts (GDP): Depletion of natural capital – minerals, forests Use of materials and energy not fully represented Environmental degradation – air & water pollution, loss of soil productivity Ecosystem services – carbon storage, flood mitigation Filling the information gap—SEEA, System of Environmental and Economic Accounting

4. Why do Natural Capital Accounting ? Better indicators for monitoring sustainable development : Wealth Accounting: is GDP growth sustainable or are we just “living off our natural capital?” Resource Productivity (water, energy, pollution)— improving over time? Better tools for managing natural capital to promote growth and poverty reduction-- Detailed statistics to Designing development strategies that optimize scarce resources Weigh tradeoffs among competing users for water, forests, land use Prioritize investments in natural capital like water resources, protected areas Impacts of resource pricing schemes; design sustainable financing

5. Where has Natural Capital Accounting been most useful? 1.Indicators for monitoring sustainable development 2.Water accounting: managing a scarce resource 3.Energy and air pollution: cleaner, more efficient production 4.Stocks of minerals & energy: fiscal rules, managing mineral revenues for long term growth 5.Land and ecosystems: balancing the needs of tourism, commercial and subsistence agriculture, water supply, soil erosion, and other uses Where has Natural Capital Accounting been most useful?

6. WAVES Implementation and Funding Partnership Core Implementing Country Partners: receiving substantial technical support from WAVES multi- donor Trust Fund (5 countries so far) Contributing Donor Partners: UK, Japan, Norway, France, the Netherlands, Germany, EC, Denmark, Switzerland Participating Partners: countries with other sources of funding who have endorsed the NCA communique, UN & international organizations, NGOs, private sector, academics and others Governance WAVES Secretariat and management in World Bank HQ Global Steering Committee: UNEP, UNDP, UNSD-UNCEEA, donors, WAVES-supported partner countries Country work managed by National Steering Committees 2-phased approach 1-year preparation phase through June 2012 4-year implementation phase through 2016+ Funding $22 million hybrid MDTF, additional funds being raised for the ’50/50’ NCA campaign launched on the basis of the Gaborone Declaration May 2012

7. What to expect from WAVES as Participating Country Partners Regional training workshops to explain Natural Capital Accounting, how it can be used to support decision-making, and the SEEA Diagnostic to assess readiness and priorities, and short term technical support to assist countries implement the diagnostic paid for by WAVES Secretariat Training materials for Natural Capital Accounting including on-line resources and e-learning courses (in preparation) Assistance in identifying resources for additional technical support through WAVES Partnership, or programs of partners Join a global ‘community of practice’ to share experiences, report results, learn from each other, and receive training on specialized topics

8. Current WAVES countries Botswana: work plan approved for water, minerals & energy, land & tourism, indicators of sustainability, first results on updated water accounts presented to President at high-level economic advisory council; Madagascar: work plan approved for minerals, forests & protected areas, tourism, watershed pilot accounts, mangroves, indicators of sustainability, work underway, mineral accounts expected end of 2013, preliminary results for the rest of accounts in 2014 Philippines: work plan approved for minerals, mangroves, pilot land/ecosystem accounts for 2 sites TORs being drafted for implementation Colombia: work plan approved for watershed ecosystem accounts for water, forests in 3 pilot watersheds, TORs being drafted for implementation Costa Rica: work plan for water and forests accounts under final discussion water accounts under construction

9. How did the process work in Botswana? National Steering Committee, chaired by Ministry of Finance and Development Planning 3 multi-stakeholder workshops on WAVES (July &Nov 2011, Jan 2012) Scoping out study commissioned, Policy priorities based on NDP10, EDD, other documents Review of data availability, gaps, lessons from earlier NRA program Work plan adopted by Steering Committee, March 2012 Presentation to BEAC (chaired by President), May 2012, endorsed by BEAC Updated Water Accounts presented to BEAC, Nov 2012 Country Coordinator hired, sits in MFDP

10. Botswana: achieving growth-diversification-poverty reduction Optimizing natural resource use is the key… …but the necessary economic information is often incomplete or missing. NCA supports environmental accounting to fill that information gap and improve economic decision-making in 2 ways: 1. Information to Optimize use of Botswana’s Natural Capital Water accounts Mineral and Energy accounts Land/Ecosystem accounts & the role of tourism 2. New macroeconomic indicators: a new way of measuring economic growth—beyond GDP—that takes Natural Capital into account

11. ObjectiveDescription 1. Managing water resources Contribute to integrated water resources management, water sector reforms, identify constraints to economic diversification strategies and ways to overcome them 2. Minerals & Energy Contribute to development of a new fiscal rule for mineral revenues. Addressing electricity shortages and the development of coal resources 3. Land & ecosystemsContribute to dialogue on best use of land to support long term growth, balance competing land uses: tourism (increase local benefits), commercial agr, subsistence agr, other ecosystem services 4. Macro-economic indicators New macro-economic indicators (ANS, ANNI and comprehensive wealth) to guide sustainable development and new fiscal rule for mineral revenues 5. Capacity BuildingTechnical training built into all components, participation in WAVES regional & global training programmes Botswana NCA Work plan

12. BOSTWANA Are scarce water resources allocated efficiently? Source: DWA

13. Resource-rich economies: managing rents from minerals and energy transform non-renewable resources into other forms of capital

14. Natural resource rents –a major source of income (% of GDP, 2012

15. Indicators: Measuring country sustainability through changes in wealth— ANS measures gross saving adjusted for Depreciation of fixed capital Human capital investment, Resource depletion Pollution damages Adjusted Net Savings

16. System of Environmental-Economic Accounting (SEEA) Agreed by the UN Statistical Commission 2012 The System of Environmental-Economic Accounting (SEEA) contains the internationally agreed standard concepts, definitions, classifications, accounting rules and tables for producing internationally comparable statistics on the environment and its relationship with the economy. The SEEA framework follows a similar accounting structure as the System of National Accounts (SNA) and uses concepts, definitions and classifications consistent with the SNA in order to facilitate the integration of environmental and economic statistics.System of National Accounts The revised SEEA consists of three parts: – the Central Framework, which was adopted by the UN Statistical Commission as the first international standard for environmental-economic accounting;Central Framework – Experimental Ecosystem Accounting and Applications and Extensions of the SEEA. – Subsystems of the SEEA framework elaborate on specific resources or sectors, including: Energy, Water, Fisheries, Land and Ecosystems, and Agriculture.Energy WaterLand and Ecosystems

17. What is SEEA-Water? Analytical framework that provides information about the interactions between the economy and water resources SEEA-Water is a subsystem of the System of Environmental-Economic Accounting (SEEA), coherent with System of National Accounts (SNA) International Recommendations for Water Statistics (IRWS) designed to assist countries in the implementation of SEEA-Water. Considered an Interim Statistical standard (2007) Provides key indicators to respond to different policy demands. They are comprehensive, consistent and comparable through time and space.

18. Structure of the accounts 1.Physical water supply and use tables (Chapter 3) – Information of volumes of water exchanges between economy and environment and within econony – Improving water efficiency 2. Emission accounts (Chapter 4) – Information on amounts of pollutants added to waste water as result of economic activities 3. Hybrid supply and use tables (Chapter 5) – Information on the economy of water in monetary terms 4. Asset accounts (Chapter 6) – Information on physical stocks of water

19. Water statistics Often developed to answer one particular question or problem Difficult to figure out if all information is included Not always easy to see the whole picture, or how it relates to other things Water accounts Help to make sense of the larger picture Help to identify pieces that are missing Can make connections to other statistics - especially economic statistics Why an accounting framework?

20. What Do Policy-Makers Need from Water Accounts? Economic information to make decisions: Allocation of water, water infrastructure among competing users: economic users and water productivity ecological requirements international requirements for shared water resources Water pricing and economic instruments: Variation of water delivery costs/scarcity by region Impact of water tariffs on different industries and different social groups, especially the poor Managing water pollution: sources, costs & benefits of reducing pollution Coordinating policy in related sectors: agriculture, rural development, tourism, etc. Planning for future water requirements, water demand mgmt.

21. I. Improving water supply and sanitation services II. Managing water supply and demand III. Improving the state of the environment and water resources Adapting to extreme hydro-meteorological events Water security Water issues and policy objectives: A broad grouping Reduced quality and pollution Allocating water among competing users: contribution to GDP, employment, social wellbeing Managing for increased floods/droughts Limited access Unequal distribution Policy objectives

22. NETHERLANDS Water issues

23. NETHERLANDS: Policy demands Main users: – Ministry of infrastructure and environment, – water boards, – water companies, – Eurostat, other etc. European Union Water Framework Directive Marine Strategy Framework Directive – Initial Assessment asks for ‘Economic analysis of marine waters’ Climate change policies  expenditure for climate change mitigation / adaptation Indicators for green growth

24. NETHERLANDS Is there decoupling between water use and economic growth ? Volume change GDP, employment and tap water used for production Source: CBS

25. NETHERLANDS Water Profiles: What are the most important users of water? Is their water productivity improving between 2003 and 2010? (liter/ euro of sector value-added) Source: CBS

26. NETHERLANDS Are there regional differences in emission intensity ? Emission-intensity per river basin (only producers) Source: CBS

27. Australia: Increasing water efficiency by sector, 2004 & 2008 Source: ABS

28. AUSTRALIA: Who uses water and who pays for water? Source: ABS

29. BOSTWANA Are scarce water resources allocated efficiently? Source: DWA

30. International Trade & Water Use Are water-scarce countries exporting water? How does export promotion drive water demand in Namibia, Botswana and South Africa? How much can ‘virtual water’ in imports reduce pressure on water demand? Exports in these countries are dependent on primary & processed primary commodities especially agriculture, mining--water intensive products

31. Water intensity of trade (m3 per 1000 rands of imports or exports) South Africa is net exporter not only because volume of exports > imports, but also because water intensity of exports > imports.

32. COLOMBIA Identifying main water users

33. GUATEMALA Is water supply enough to population’s demands? Water scarcity index, 2005 (rainy season) Water scarcity index, 2005 (dry season) Population density, 2005

34. Where to get started? PolicyDataInstitutions What are the main water issues? What is the legal framework and policies in place? How can policy be better informed? What are the relevant components of water accounts? What are the data needs, availability and gaps? What are the users and producers? Who are the stakeholders and how can they interact? Who will lead the process?

35. Stakeholders National statistical offices Government agencies (at the national, state/provincial or local levels) responsible for: – Water – Meteorology and hydrology – Agriculture – Environment (including environment protection authorities) – Energy (especially where there is significant use of hydropower) – Central planning – Finance (or central banks) – Geology or geological survey – Land use and land planning Water suppliers and sewerage service providers (government and non-government) Water research organizations (e.g., government agencies, universities) Non-governmental organizations (e.g., water industry associations, farmer associations) Arrangements Responsibilities for water management and water statistics are often divided by economic activity (agriculture, energy, etc.) Official roles and responsibilities of the agencies involved in water management and the production of water statistics vary between countries The coordination mechanisms should include regular meetings of stakeholders. an agency needs to take the lead in water statistics. However, in some countries there may be no single lead agency but rather several agencies taking leadership in different areas of water statistics or at different times Institutional arrangements

36. Data needs and issues Sometimes agencies are unwilling to share data because they fear it will reveal information that may be used unfairly against them, or that it will expose data gaps and deficiencies for which they could be criticized. Because of sensitivities about data confidentiality, arrangements need to be formalized, usually by data-sharing agreements. Data-sharing agreements should clearly define procedures for requesting, sharing and attributing data. Sharing data between agencies has many benefits. – For the collectors, cost may be eliminated or reduced compared to the cost of initiating a new data collection, if the information can be obtained from existing data sources. – It eliminates the possibility of conflicting data being produced, and can reduce the burden (i.e., data are collected only once and used by multiple agencies) of respondents, in this case the establishments or households that are reporting the data. Water statistics confidentiality can present a problem for the water supply and sewerage industries (ISIC, Rev. 4, divs. 36 and 37), because in some countries there are very few establishments engaged in these activities.

37. How to join WAVES, the ’50-50’ NCA Initiative Ministerial-level communication (email) expressing interest in joining sent to: World Bank Country Office Glenn-Marie Lange (glange1@worldbank.org)glange1@worldbank.org Yuvan Beejadhur (ybeejadhur@worldbank.org)ybeejadhur@worldbank.org

38. Thank you! http://www.wavespartnership.org/waves/