How Natural Capital

Accounting Contributes
To Integrated Policies
For Sustainability

photo : Gabor Molnar

System of
Environmental
Economic
Accounting

photo : Gabor Molnar

 Statistics

How Natural Capital

Accounting Contributes
To Integrated Policies
For Sustainability

© United Nations, 2020

 © United Nations, 2020
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ISBN: 978-92-1-259154-4
eISBN: 978-92-1-005250-4
Sales No: E.20.XVII.14
The Department of Economic and Social Affairs of the United Nations Secretariat is a vital interface between global
policies in the economic, social and environmental spheres and national action. The Department works in three main
interlinked areas: it compiles, generates and analyses a wide range of economic, social and environmental data and
information on which Member States of the United Nations draw to review common problems and to take stock of policy
options; it facilitates the negotiations of Member States in many intergovernmental bodies on joint courses of action
to address ongoing or emerging global challenges; and it advises interested Governments on the ways and means of
translating policy frameworks developed in United Nations conferences and summits into programmes at the country
level and, through technical assistance, helps build national capacities.

The Statistics Division of the Department of Economic and Social Affairs is a global centre for data on all subject matters,
bringing to the world statistical information compiled by the entire UN system. It is committed to the advancement
of the global statistical system, by compiling and disseminating global statistical information, developing standards
and norms for statistical activities, and supporting countries’ efforts to strengthen their national statistical systems. It
also facilitates the coordination of international statistical activities and supports the functioning of the United Nations
Statistical Commission.

The System of Environmental-Economic Accounting (SEEA) is the first international statistical standard for environmental-
economic accounting, which was adopted by the United Nations Statistical Commission at its 43rd Session in 2012. The
SEEA brings together economic and environmental information into a common framework to measure the contribution
of the environment to the economy, the impact of the economy on the environment, and the condition of the ecosystems
and the services they provide.

For further information on the SEEA, please visit seea.un.org or contact [email protected].
CONTENTS
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1.1 Tackling Complex Policy Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.2 Policy Complexity and the Policy Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

1.3 Siloed vs Integrated Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

1.4 The System of Environmental-Economic Accounting (SEEA) . . . . . . . . . . . . . . 20

1.5 The SEEA-Central Framework (SEEA-CF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

1.6 SEEA-Experimental Ecosystem Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

1.7 Specialized SEEA Accounts and Policy Modeling . . . . . . . . . . . . . . . . . . . . . . . 27

2. HOW CAN THE SEEA BE APPPLIED TO POLICY? . . . . . . . . . . . . . . . . . . . . . . . . . 28

2.1 Macro-Economic Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

2.2 Climate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

2.3 Biodiversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

2.4 Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

2.5 Sectoral policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

3 IMPLEMENTATION AND CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

3.1 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

3.2 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

ANNEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
EXECUTIVE SUMMARY

Today many nations, across the world, are facing a myriad and
unique blend of pressing social, economic, environmental and
political challenges - from climate change to political polarisation to
widening economic inequality - which humanity has not witnessed
before to such a degree and magnitude. Many of these problems
are interconnected and involve different stakeholders, from both the
public and private sector, and at local, national and global scales,
making it difficult for decision makers to formulate coherent and
integrated policies.

The interconnectedness of policy is not the only This complex policy context is being implemented
challenge which policymakers are currently trying to through major policy initiatives around the world,
tackle. Governments are also reconsidering their focus including the Sustainable Development Goals (SDGs),
on economic performance. Especially the centrality of “green deals”, carbon neutrality targets, and circular
economic growth in policy – the focus on increasing economy and well-being economy initiatives. All of
Gross Domestic Product (GDP) – is increasingly being these policy goals require a robust statistical framework
questioned by society and policy makers. Many of these that can support policy prioritisation, implementation
governments are looking to promote goals “Beyond- and evaluation. Moreover, moving towards integrated
GDP”, which not only focus on human well-being but policies and away from a “silo” approach towards policy
also on sustainability and inequality. Humanity’s making requires integrated statistics and data.
relationship with nature and the way natural resources
are valued in society play a prominent role in this To this end, the international statistical community
Beyond-GDP agenda. has developed an international statistical standard
 photo : Joan You
for natural capital accounting called the System of capital accounts across many nations. To maintain
Environmental-Economic Accounting (SEEA), which is this promising momentum, it remains essential that
an integrated framework that shows the relationship implementation and usage of the accounts continues
between the environment and the economy. By to increase, which in some contexts may be challenging.
providing a multipurpose view of the interrelationships Nevertheless, current country experiences have shown
between the economy and the environment, the SEEA that the SEEA can not only play a vital role in responding
can help uncover trade-offs and synergies across to today’s policy challenges but also effectively
different policy domains. In short, the SEEA reveals contribute towards the evolution and increased uptake
society’s complex relationship with nature and also of integrated policies which better match the needs of
helps to identify which policies can be implemented to today’s policy reality.
lower environmental pressures, while at the same time
continuing to manage the economy effectively. The
SEEA therefore plays an important role in governments’
desire to look Beyond-GDP and towards an economy
that is focused on the promotion of well-being and
sustainability.

The implementation of the SEEA is supported by many

national governments around the world (as shown
in the examples of Canada, Indonesia, European
Union countries and Uganda) as well as international
organizations (including the United Nations, World
Bank, OECD and several others). As a result of this
global support, in 2020, close to 100 countries have
compiled SEEA accounts (UNSD, 2020). The increased
global uptake of the SEEA is leading to a high-quality,
comparable and institutionalized supply of natural
 Background
AU D I E N C E
This overview paper is aimed at policymakers at various levels
including international organizations, national government as well
as local authorities. These stakeholders are currently the primary
users of the SEEA, and this document will show how the SEEA can
answer a variety of policy questions on sustainable development.
This paper provides several successful examples that are aimed to
inspire policymakers in applying the SEEA to inform their specific
challenges.
It is a misconception to think that the SEEA is, or should only be, used to tackle environmental issues such as
climate change, biodiversity loss, water management, air pollution and resource exploitation. This paper shows
that many policy domains such as economic development, transportation, agriculture and even health are linked to
environmental issues. Therefore, policies in these areas stand to benefit from using the SEEA framework because
it uncovers the interrelationships between policy domains and environmental developments. Thus, this paper is
not aimed exclusively at environmental policymakers; it also discusses how economic and social policies can be
improved and therefore appeals to other government ministries.

In addition to policymakers, this paper may be of interest to businesses, NGOs, banks, insurance companies or
members of the general public. For example, the corporate sector is increasingly adopting Natural Capital Accounting
(NCA) in their decision making processes in order to streamline business models and de-risk supply chains.1 Citizens
are also increasingly interested in their environmental footprints which are often calculated using SEEA data. While
the focus of examples in this paper are mainly on country-level applications that appeal to national governments,
these examples might also be relevant to other stakeholder groups.

Also related to this overview paper are three separate issue papers on biodiversity, climate change and macro-
economic policies, which are targeted towards more specific audiences. The paper on macro-economic policy is
meant for finance ministries or central banks that want to understand both the short and long-term impacts of
the environment on economic growth. The issue papers on climate change and biodiversity are geared towards
environmental policymakers who are interested in the value that the SEEA can bring to their domain.

1 Although companies are adopting NCA it is not always done using SEEA methodology (see also Example 4). There are however efforts to find common
ground so that the various approaches align (Spurgeon et al., 2018).

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T H E E N H A N C A P RO J E C T
This overview paper, as well as the three separate issue papers, are part of a series of papers developed by the
project “Enhance Natural Capital Accounting Policy Uptake and Relevance (EnhaNCA)”. The aim of the project is to
provide materials to increase policymakers’ understanding of applications of NCA according to the SEEA.

The objective of the project is to address three shortcomings in the environmental and economic policy space:

(a) A lack of awareness by policy makers on the value added of NCA and how it can address policy needs;
(b) A lack of systemization of the potential applications of NCA; and
(c) A lack of compelling case studies on the impact of NCA policy applications.

AC K N OW L E D G E M E N T S
The project has received generous support from the German Federal Ministry for Economic Cooperation and
Development, implemented through the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.

This paper has been authored by Rutger Hoekstra (MetricsForTheFuture.com), under the guidance of an editorial
board. The Editorial Board operated under the direction of Alessandra Alfieri and Jessica Ying Chan (United Nations
Statistics Division) and included the following persons: Thomas Brookes (IUCN), Raffaello Cervigni (World Bank),
Glenn-Marie Lange (World Bank), Wadzanayi Mandivenyi (Department of Environmental Affairs of South Africa),
Stefano Pagiola (World Bank), Corli Pretorius (UNEP-WCMC) and Juha Siikamaki (IUCN), and was chaired by A.H.
Kroese (Statistics Netherlands).

The author and editorial board would like to acknowledge the inputs of both Chloe Hill and Sarah K. Jones (Altus
Impact) for their editorial and design services on this paper. The author and editorial board would also like to
acknowledge the support and contributions of Nina Bisom and Johannes Kruse (GIZ) in producing this paper.

With funding from the Supported by

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Acronyms
ANS Adjusted net savings
CBD Convention on Biological Diversity
CETA Comprehensive Economic and Trade Agreement
COP Conference of the Parties
DMC Domestic material consumption
EU European Union
FAO Food and Agriculture Organization of the
United Nations
GHG Green house gas
GDP Gross Domestic Product
IMF International Monetary Fund
IPCC Intergovernmental Panel on Climate Change
IPBES Intergovernmental Science-Policy Platform on
Biodiversity and Ecosystem Services
MFA Material flow accounts
MRIO Multiregional input-output model
NCA Natural capital account(ing)
NGO Non-governmental organization
OECD Organization for Economic Cooperation and
Development
SDG Sustainable Development Goals
SEEA System of Environmental-Economic Accounting
SEEA CF System of Environmental-Economic Accounting
- Central Framework
SEEA EEA System of Environmental-Economic Accounting
- Experimental Ecosystem Accounting
UN United Nations
UNCEEA United Nations Committee of Experts on
Environmental - Economic Accounting
UNSD United Nations Statistics Division
1. INTRODUCTION
photo : Ulvi Safari
 1.1 Tackling Complex Policy Challenges

Today, the majority of countries across the world are facing a

diverse range and an increasing magnitude of social, economic,
environmental and political challenges such as climate change,
biodiversity loss, poor air quality, inadequate resource management,
inequality and poverty, financial imbalances and health crises, among
others. In order to effectively tackle these problems, fundamental
societal and economic transformations are needed that not only
require innovative thinking but also integrated policies.

The growing intensity of these challenges are now have at their disposal. By doing this, these stocks can
starting to reinvigorate debate amongst policymakers ultimately be better managed in a way which achieves
over what policy goals need to be prioritized and then well-being and sustainability.
pursued. Currently economic growth, as measured
by Gross Domestic Product (GDP), dominates policy One of the most influential Beyond-GDP initiatives is the
discussions, mainly owing to the widespread belief that 2030 Agenda for Sustainable Development, which has,
“growth is good”. In reality, though, income is just one at its core, the Sustainable Development Goals (SDGs).
of the many other factors that influence human well- The SDGs are comprised of a number of goals and
being. At the same time, the sole focus on economic targets, each of which have been agreed by Member
growth leads to broader sustainability issues e.g. States and are coordinated by the United Nations .2
over exploitation of natural resources etc. Mounting The goals provide a vision and future pathway towards
evidence coupled with a growing recognition amongst enabling Member States to better recalibrate how they
decision makers has now started to lead to stronger value and manage their resources more effectively and
arguments to move to “Beyond-GDP” policies that are sustainably. However, other initiatives and movements
geared towards a greener, more inclusive and equitable such as “green deals”, “circular economy”, “carbon-
society. To achieve these policies, decision makers neutrality” and the “well-being-economy”, including
need to develop a clearer view of the stocks of natural, many others, are also contributing towards the
social, human and economic capital that nations improvement of human well-being and sustainability

2 The SDGs were agreed upon in 2015. More information can be found here: https://sustainabledevelopment.un.org/.

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and therefore also play an important role in policy French Government announced an eco-tax on petrol
goals. All over the world, governments are grappling in 2018, it sparked an uprising of the Gilets Jaunes
with these complex policy questions around how to movement which protested that the new taxes would hit
execute better resource management. What makes low-income communities the hardest. After months of
these challenges even greater is that they are all public protests, the French government was eventually
interrelated. If these issues are looked at in isolation, forced to withdraw the proposal. The legacy of this
using a “silo” approach, it is difficult to take advantage episode is that governments across the world are now
of the synergies across the different policy domains. far more sensitive to the social impacts that can be
Moreover, it is likely that there may be unintended caused by climate change policies. Public support for
consequences of how one policy might impact another. climate policies is crucial and those that are seen to be
‘unfair’ by the general public will ultimately be rejected.
An example of interrelatedness can be observed Before these types of policies are drawn up, therefore,
in the case of transportation. Due to air emissions, it is essential that decision makers are provided with
transportation is closely linked to climate change, but well researched information around the costs and
also to air quality and public health issues. Transport benefits of climate policies on different segments of
infrastructure also generates significant economic society in order to better inform policy making.
benefits during the construction phase (jobs, profits),
as well as economic benefits that are associated with Beyond these interlinkages, policy challenges can
improved mobility after the infrastructure has been be complex in other ways. For example, there are
completed. However, if the infrastructure is not executed many stakeholders involved in every policy issue (e.g.
sustainably it may negatively affect biodiversity through international organizations, national governments,
encroachment and/or fragmentation. Transportation regional and local authorities, multinationals, small and
policy, therefore, has many social, economic and medium-sized enterprises (SMEs), banks, insurance
environmental implications, where trade-offs need to companies and individuals), all of which contribute to a
be made and synergies need to be identified in order to certain problem, suffer the impacts, and/or are part of
maximize the most effective and sustainable outcome. the solution. A further complication is that the impacts,
These trade-offs and synergies exist for virtually all problems and solutions manifest themselves at
policy problems, and so it is imperative to formulate different spatial scales: global, national, regional, local
coherent policies that take more of a comprehensive etc. A modern-day policymaker, in order to be effective
rather than siloed approach to these interrelated therefore, needs to view these challenges from each
issues. perspective of the different stakeholders and take on
board the differential impacts at the varying spatial
Overlooking these interlinkages can have serious social scales.
and political repercussions. For example, when the

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 This complex policy reality has significant implications commissioned this overview paper. It highlights, in
for the type of information that is required for effective non-technical terms, the value of the SEEA for policy
policymaking. For example, today’s policy issues require makers. It builds on previous documents which have
data and policy models that can sufficiently deal with discussed the value of the SEEA (Bass et al., 2016;
the complexity at hand. The System of Economic and Ruijs and Graveland, 2018; Ruijs and Vardon, 2018). In
Environmental Accounting (SEEA) is an information addition to this overview paper, separate issue papers
framework that can help tackle such complexities will cover three crucial policy challenges: climate
by providing an integrated view of the environment change, biodiversity and macro-economic policy. This
in the context of economic and social change. paper does not provide a comprehensive overview of
Implementation of the SEEA is spreading rapidly. In all applications. Instead, the aim of the paper is to
2020, close to 100 countries have compiled the SEEA. provide intriguing examples of economic, social and
International organizations such as the United Nations, environmental applications from around the world with
European Commission and World Bank are investing the intention of inspiring policymakers to think of new
great efforts into the global implementation of the and innovative ways in which the SEEA can be used to
SEEA (see section 3.1 for further discussion). At the address their specific needs.
national level, it is often the National Statistical Office
which implements the SEEA, though in other cases it The remainder of Section 1 will discuss the policy
is the Central Bank, Ministry of Finance or Ministry of context and then look at SEEA in more detail, specifically
Environment. Whatever the case, implementation of demonstrating how, using examples, the framework
the SEEA necessitates cutting across data siloes and can be useful and indeed how it is already being used
inter-institutional collaboration. However, producing in many policy domains. Section 2 is entirely devoted
SEEA accounts is not an end goal; it should also be to describing which roles the SEEA can play in various
adopted to support integrated policies that strive policy domains. Finally, Section 3 sets the scene on
towards well-being and sustainability. how to move forward in terms of using SEEA data to
support integrated policies.
To enhance the uptake of the SEEA for policy and
decision making, the UN Statistics Division has

1.2 Policy Complexity and the Policy Cycle

There are four dimensions that make the current policy challenges
particularly complex:
• Interconnected domains: Policy challenges are almost always closely linked to each other. Improvements in
one area may lead to detrimental effects in other domains (trade-offs). In other cases, improvements in two
domains can go hand in hand (synergies).

• Multiple stakeholders: There are various institutions and entities that play a role in creating the problem,
suffering the impacts or contributing to the solution. Governments, international organizations, local authorities,
businesses, banks and individual citizens all play a role.

• Various spatial scales: The problems, impacts, and solutions can manifest themselves at different scale levels.
Some problems are global, while others manifest themeselves at the national and/or local level. In some cases
problems might even be restricted to a bio-region, such as a water catchment area or a tropical rainforest.

14 | H OW N AT U R A L C A P I TA L AC C O U N T I N G C O N T R I B U T E S TO I N T EG R AT ED P O L I C I E S FO R S U S TA I N A B I L I T Y
 • New sustainable policy goals “Beyond-GDP”: Governments are looking to shift the traditional focus on
economic growth (increasing GDP) towards policies that enhance the well-being of current generations without
compromising the well-being of future generations.

To deal with these dimensions of complexity, policy makers and analysts need a flexible, versatile system that takes
into account trade-offs and synergies in a spatially explicit way. Moreover, such a system must be able to inform all
stages of the decision making process. Taken together, these stages are referred to as the “policy cycle” (see box 1
below based on Bass et al., 2016).

Box 1. Stages in the Policy Cycle

1. Policy definition: In this phase, new problems are identified, and a judgement is made whether a new issue requires
government action. This phase also includes an analysis of the drivers and consequential impacts, as well as the
interlinkages with other policy domains.

2. Policy response (analysis and formulation): This stage refers to the process of evaluating different policy responses
and choosing the preferred option. For example, policymakers might use techniques such as cost-benefit analysis
to rank the best alternative paths. When looking at the environment and natural capital, analysis may be needed
in either (or both) monetary or physical terms, or as input to scenario modeling or other environmental-economic
models.

3. Policy instruments (implementation): This stage refers to the actual process of implementing a policy. This is carried
out through specific policy instruments such as subsidies, taxes, regulation or government procurement. The main
data requirement in this stage is quantifying the size of the phenomena, such as data on taxes and subsidies.

4. Evaluation and policy appraisal (assessment and monitoring): In this phase, the success of the policy is evaluated in
order to formulate lessons-learnt that can be applied in the future. It is also important to see whether any unpredicted
effects have occurred. The evolution includes the appraisal of the policy problem and the policy response and/or
the implementation of policy instruments. The evaluation is usually used to reassess the problem definition again,
recalibrate or perfect the policy response in a second round of actions.

The SEEA is a sophisticated statistical framework that economic value of ecosystems and the services that
that can deal with the various dimensions of policy they provide. The SEEA can also be applied to ex-ante
complexity and can be used in all the stages of the modeling applications which help with making effective
policy cycle. The SEEA provides information that helps choices between various policy options. Modeling
to identify problems or make decisions about policy using the SEEA might also be used to identify the
priorities. For example, the SEEA can be used in a effectiveness of policy instruments, such as a carbon
multitude of ways such as to track the progress of tax. Given its unique position at the environment-
the SDGs, show which industries are causing carbon economy nexus, the SEEA is well-placed to help policy
emissions to increase or assist in making visible the makers address complexities that often go ignored.

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 1.3 Siloed vs Integrated Policy

Policymaking is carried out by various levels of government at the

local, regional or national level or by international organizations
(e.g. IMF, World Bank, World Trade Organization) or supranational
organizations (e.g. European Union). Within each government or entity,
responsibilities may be delegated further. National governments have
various ministries that focus on specific goals.
For example, the Ministry of Finance or the Ministry traditional siloed policy structure is maintained, the
of Economic Affairs are responsible for economic SEEA can still be of significant value. Section 2 will
development, while the Ministry of the Environment explore in more detail the value of applying the SEEA in
is responsible for tackling issues such as climate a more conventional policy making context/structure.
change and biodiversity loss as well as improving
resource and water management. As a result, many B E YO N D - G D P
policy discussions quickly conform to the thematic
boundaries that have been delegated. An important first exercise to help achieve integrated
policies would be to identify a nation’s priorities such
Given the interrelatedness of today’s challenges, as: what are the key pressing issues that need to be
this traditional demarcation of policy responsibilities tackled and how can a longer term sustainable future
is increasingly problematic. For example, economic be achieved? Currently, many governments, implicitly
policies have a profound impact on the environment. or explicitly, adopt economic growth as its primary
At the same time environmental challenges such as goal. However, it is now well documented that GDP
climate change, biodiversity loss, resource and water is not an effective measure of societal progress.
scarcity, can have profound negative impacts on the Economic growth, if not achieved sustainably, can
economy, now and in the future. It is therefore imperative also contribute to the onset of climate change, the
to look at the existing interlinkages between different destruction of ecosystems and to the exacerbation
policy domains by examining economic, environmental, of many other environmental problems. In several
and social developments simultaneously. Clearly, countries, particularly developing nations, inequality
there is tension with the current siloed way in which has risen even when their economy has been growing,
policy responsibilities are delegated and the way that further accentuating the poverty gap. In addition, and
financial resources and decision making powers are whilst income contributes to societal and individual
distributed amongst the different ministries. 3 well-being, it is by no means the only factor. Social
relationships, health and thriving communities are
Two of the main fields that are helping to promote also major contributors to the well-being of the
integrated thinking are the Beyond-GDP debate and population. Clearly, just focusing on economic growth
the SDGs initiative. These movements are based on the as the goal of policy, therefore, is insufficient. This
idea that societies should be viewed with a very broad was recently reiterated by the Intergovernmental
lens and that policy domains are very much interrelated. Science-Policy Platform on Biodiversity and Ecosystem
This will require new ways of assigning responsibilities Services (IPBES), which argued that a “key component
between governmental bodies. However, even if the of sustainable pathways is the evolution of global

3 See also (OECD, 2016) on “Breaking out of policy silos”.

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financial and economic systems to build a global In response to the narrow focus on economic growth,
sustainable economy, steering away from the current, some governments have taken bold steps towards a
limited paradigm of economic growth” (IPBES, 2019). “well-being economy” (Exton and Mira d’Ercole, 2019).
One of the focuses of the Beyond GDP movement, For example, in 2019, the New Zealand Government
therefore, focuses on developing indicators that are as presented the first “well-being budget”, in which the
clear and appealing as GDP, but are more inclusive of rationale for budget priorities was explicitly based on
environmental and social aspects of progress. well-being (New Zealand, Treasury of New Zealand,
2019). Many of the measurement systems and policy
The fact that GDP is not a measure of well-being, applications for a well-being economy also rely on
sustainability, or inequality has been known for a long the idea of a broad set of resources, just like wealth
time (van den Bergh, 2009; Costanza et al., 2014; accounting, which is discussed in more detail in
Coyle, 2014; Fioramonti, 2013; Hoekstra, 2019; section 2.3. The conceptual foundation, therefore, also
Philipsen, 2015). Literally hundreds of Beyond-GDP includes all asset types (produced, financial, social,
alternatives have been suggested and, although they human and natural capital), although many countries
use many different methodologies, they are all based have chosen not to give a monetary value to the capital
on the goal of creating a society that enhances well- stocks.
being for the current generation in a sustainable way
so that future generations are capable of living the
“good life” as well.

4 There are many examples such as the Human Development Index (HDI), Genuine Progress Indicator (GPI), Ecological Footprint, Sustainable
National Income, Subjective Wellebing, U-Index, Sustainable Development Goals (SDGs), SDG index and many others. Hoekstra (2019)
suggests that hundreds of alternatives have been suggested and summarizes them in an Annex.

5 See for example the CES recommendations (UNECE et al., 2014) and countries that follow these guidelines such as
the Netherland, New Zealand and Belgium.

photo : Laura Chouette

 S U S TA I N A B L E D E V E L O P M E N T pay attention to the links between the various goals.

G OA L S ( S D G S )
Policy coherence would be enhanced by adopting
“Sustainable development” is one of the most popular SEEA indicators for various SDG targets that make it
concepts used to advocate a holistic view of progress. possible to link environmental issues to economic and
Since the Brundtland report (World Commission on social developments. Figure 1 presents the findings
Environment and Development, 1987) popularized from an assessment showing how 9 out of the 17 goals
the phrase in 1987, it has been reflected in many can be supported by SEEA data (UNCEEA, 2018). In
government policies, sparked activist movements, fact, the analysis indicates that 40 indicators could
generated private sector interest and has been potentially come from the SEEA framework. Due to
institutionalized throughout various UN processes. data availability, the SDGs are not always measured
Most recently, the 2030 Agenda for Sustainable using SEEA data. Example 1 on the other hand shows
Development has provided a major impulse towards how the European Union has already begun to use the
achieving sustainable development more concretely. SEEA to measure progress towards the SDGs and the
Encompassed in the 2030 Agenda are the SDGs, effectiveness of this approach for policymaking.
which are a set of 17 goals and 169 targets, all of
which have been agreed upon by Member States as Figure 1. The SDG goals which are supported by
the framework for development, under the auspices the SEEA
of UN.6 Most of the deadlines for the targets are set
for 2030, and the SDGs include a broad spectrum of
environmental, social and economic goals. The SDGs
have inspired action by governments, businesses,
NGOs and individuals.

The SDGs are an important initiative because they define

a global policy agenda. The agenda that launched the
SDGs also notes that the “interlinkages and integrated
nature of the Sustainable Development Goals are of
crucial importance in ensuring that the purpose of the
new Agenda is realized” (A/RES/70/1). In other words,
there is an explicit desire to have coherent policies that

Source : UNSD

6 SDG target 15.9.1 explicitly mentions implementation of the SEEA.

18 | H OW N AT U R A L C A P I TA L AC C O U N T I N G C O N T R I B U T E S TO I N T EG R AT ED P O L I C I E S FO R S U S TA I N A B I L I T Y
Example 1. Measuring the environmental targets of the SDGs

The European Commission tracks progress towards the SDGs. Several of the SDG targets are mea-
sured using data from the SEEA framework. For example, SDG 12.2 states: “By 2030, achieve the
sustainable management and efficient use of natural resources.” Eurostat has chosen two SEEA
indicators to help do this: 1) Domestic material consumption (DMC), which measures the total amount
of materials directly used by an economy; and 2) Resource productivity, which is GDP divided by DMC.
Resource productivity data for 2018 is shown in the figure below.

The resource productivity measures are an indication of the efficiency with which physical resources are
used in an economy. If an economy can generate more income (GDP) per unit of materials used (DMC), this
is seen as a positive development, although it is also important to look at the absolute DMC data to show
how large the overall material use is per capita.

Using these indicators, policy makers from around Europe can compare their resource productivity with
other countries and over time. The use of the SEEA for the SDGs also allows this data to be used in policy
models for the 2030 Agenda.

RESOURCE PRODUCTIVITY OF EUROPEAN MEMBER STATES, 2018

5.
4.
3.
2.
1.
0.
Latvia
Netherlands

Ireland
Germany
Malta
Denmark
Austria
Sweden
Greece

Hungary

Poland
Lithuania

Estonia
Romania
Bulgaria
Luxembourg
Italy
France

Slovenia
Cyprus
Portugal
Czechia
Croatia

Finland
Slovakia
United Kingdom

Spain
Belgium

UNITS : Euro per kilogram, chain linked volumes (2010)

Source : Eurostat, 2020b

| 19
 1.4 The System of Environmental-Economic Accounting (SEEA)

The SEEA-Central Framework (SEEA-CF) was adopted in 2012 as an

international statistical standard by the United National Statistical
Commission (UN et al., 2017). The SEEA-CF focuses on individual
environmental assets (e.g. water, energy, etc.), and particularly on how
they are extracted from the environment, used within the economy
and returned to the environment in the form of residuals.
In 2013, the SEEA-Experimental Ecosystem Accounting SNA also measures other important quantitative
(SEEA-EEA) was adopted (UN et al., 2014b). The SEEA- macro-economic measures including consumption,
EEA complements the SEEA-CF by taking a spatially investment, as well as imports and exports. It is the
explicit (i.e. mapping) ecosystems perspective to conceptual link between the SEEA and SNA that
examine the extent and condition of ecosystems as well makes it possible to better understand the complex
as the services that they provide. Together, the SEEA- relationship between the economy and environment. In
CF and SEEA-EEA make the overall SEEA framework. particular, the SEEA and SNA use the same concepts,
definitions, classifications and boundaries. Without
Development of the SEEA is coordinated by the United this link, it is impossible to formulate integrated
Nations Statistical Commission and United Nations policies that simultaneously take on board economic
Committee of Experts on Environmental-Economic and environmental impacts.
Accounting (UNCEEA). The SEEA is supported by
many national governments around the world and C A P I TA L A N D S T O C K / F L OW
international organizations such as the United Nations
AC C O U N T I N G
(UN), European Commission (EC), Food and Agriculture
Organization of the United Nations (FAO), International The SNA and SEEA frameworks are based on
Monetary Fund (IMF), Organisation for Economic Co- accounts for “stocks” and “flows”, as shown in Figure
operation and Development (OECD), and the World 2.7 Economic models are based on the idea that a
Bank, among others. society has resources, or “stocks”, at its disposal,
which are also referred to as capital. These resources
A key feature of the SEEA framework is that it are needed in production processes to create goods
shares the same conceptual basis as the System of and services. Production of goods and services are
National Accounts (SNA) - the standard that dictates considered as “flows”, which generate welfare. Total
the compilation of macro-economic information in a production over a one year period, is aggregated into
systematic set of national accounts for each country. GDP. The production process is an important way to
The SNA yields important indicators, such as GDP, generate income, through the wages that are paid out
which measures overall economic performance. The to employees and the profits generated by businesses.

7 This figure is adapted from Conference of European Statisticians (CES) Recommendations on Measuring Sustainable Development (UNECE, OECD, and
Eurostat, 2014). The CES framework is based on the Stiglitz-Sen Fittoussi report (Stiglitz, Sen, and Fitoussi, 2009) but is also similar to the conceptual
approach used by the Better Life Inititaive (OECD, 2017a).

20 | H OW N AT U R A L C A P I TA L AC C O U N T I N G C O N T R I B U T E S TO I N T EG R AT ED P O L I C I E S FO R S U S TA I N A B I L I T Y
In turn, generated income is used to buy products or However, the SNA does not cover all relevant aspects
invest in new capital. This economic cycle of production because human well-being is a broader notion than
and consumption is the underlying factor of economic just the consumption of goods and services (UN et
theory and the SNA. al., 2014a). Moreover, it is generally understood that
a society’s resource base is far broader than what the
Figure 2. Capital, asset stocks and flows SNA defines it to be. In addition to produced/financial
capital, there is also human capital (educated and
skilled workers) (UNECE, 2016), social capital (networks
Welfare / Wellbeing and social trust as well as governance and rule of law)
(Fukuyama, 2000; Grootaert, 1998; Woolcock, 1998)
and natural capital.
Production [GDP]
and Consumption The framework shown in Figure 2 above is frequently
FLOWS
used in the context of Beyond-GDP policy discussions.
For example, in 2009, France’s then President
Sarkozy commissioned a report on measuring well-
being and sustainability. The resulting “Stiglitz-Sen-
Fitoussi report” (named after its prominent lead
authors) proposed the framework. It argued for a
policy framework in which the well-being of current
Human
STOCKS generations and future generations are treated
Capital
separately and in which the concept of “capital stocks”
Produced /
Natural play an important role (Stiglitz et al., 2009).
Financial
Capital
Capital
Social
What is the role of the SEEA in these Beyond-GDP
Capital frameworks? The SEEA is the internationally agreed
measurement framework for natural capital and its
relationship to the economy. It shows the many ways in
Source: Author, adapted from UNECE et al. (2014) which natural capital influences the economy/human
well-being as well as the ways in which the economy
The SNA measures a part of the stock/flow accounting affects natural capital. The SEEA adopts a stock/flow
structure. It provides an asset account that records accounting framework, just like the SNA.
the stock of “produced capital” such as machines,
buildings, intellectual property products, as well The next sections will look in greater detail at the
as financial capital (stocks, bonds, gold etc.).8 The various parts of the SEEA and their policy applications.
flow accounts of the SNA record flows of production, Empirical examples are used to illustrate the various
consumption, investment, depreciation, income accounts. Further details on the SEEA methodology
generation and distribution. may be found in the Annex.

8 The SNA includes a number of natural capital categories such as natural resources and fossil fuel reserves.

| 21
 1.5 The SEEA-Central Framework (SEEA-CF)

The SEEA-CF includes three core types of accounts which are related
to resource management (physical flows accounts), a country’s
wealth (asset accounts) and the importance of the “green economy”
(environmental activity accounts).
R E S O U RC E M A N AG E M E N T ( P H Y S I C A L F L OW AC C O U N T S )
Physical flow accounts present the material flows within the SNA. They both include products and industry
the economy-environmental system (UN et al., 2014a). breakdowns and share various categories for final
Physical flow accounts show the extraction of natural demand. This makes it possible to link economic
inputs (including mineral, timber, aquatic and water developments in output, value added, consumption,
resources) into the economy, how these resources are investments, imports and exports to the use of natural
used within the economy and the flow of emissions inputs or the generation of residuals. This can be done
of pollutants and waste from the economy back into both at the national, industry and product level.
the environment. Thus, physical flow accounts provide
an in-depth picture of the relationship between our Example 2 presents the greenhouse gas emissions
economies and the environment - the pressures that and the value added per industry for the country of
humans exert on the environment, the role of the Romania in 2017. It shows policymakers the economic
environment in our economy and the impacts we importance of the sectors that are contributing most to
create on the environment. climate change and thus enables the relevant policies
to be created and the appropriate regulations to be
The SEEA-CF physical flows accounts are consistent applied.
with the economic flows data which is produced by

Example 2. Greenhouse gas emission and value added per industry in Romania (2017)
Source: Eurostat (2020a)
Units: 1000 tonnes CO2 equivalents and Million Euro

50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
n

es

es
ng

es
g

n
tie
in

rin

io
io

io

iti

iti

vic
hi

ry

at
ct

at
ili
tu

tiv

tiv
f is

ar

tru

od

ic

er
Ut
ac

ac

ac
un
qu

rs
d

m
ns
uf
an

m
co

he
d

Co
an

at
nc
m
an
tr y

ac

Ot
M

st
co

ra
es

le
d

su
in

an

d
or

a
an
in

in

Re
,f

rt
M

GHG Emissions
nd
n
re

po

io
tu

la
ns

at
ul

ia
m
ra

Value Added
ric

nc
r
,t

fo
Ag

na
de

In

Fi
a
Tr

22 | H OW N AT U R A L C A P I TA L AC C O U N T I N G C O N T R I B U T E S TO I N T EG R AT ED P O L I C I E S FO R S U S TA I N A B I L I T Y
W E A LT H ( A S S E T AC C O U N T S ) sovereign wealth fund which now reaches over USD1
The natural resource stocks of a country are recorded trillion dollars (Norges Bank, 2020). This ensures that
in asset accounts. These stocks are measured in future generations benefit from the current depletion
physical as well as monetary terms. For example, fossil of natural resources. In many other countries, profits
fuel reserves can be measured in terms of the volume from natural resource use and extraction are utilized
and energy content as well as the economic value of for consumption by the current generations, thereby
these reserves. leaving future generations with depleted natural capital
and no financial resources to compensate.
The task of policymakers is to manage these capital
stocks in a responsible way. However, non-renewable Example 3 shows how asset accounts have helped
energy and mineral resources are subject to exhaustion. produce measures of national wealth in Uganda
The resources will not last forever, which poses a long- (Uganda Natural Capital Accounting Program, 2019).
term threat to a nation’s prosperity. Some countries While the SNA and its indicators, such as GDP,
have therefore enacted laws that make it compulsory provide information on economic activity, SEEA asset
to invest income that is delivered from non-renewables accounts can be used to generate wealth accounts
into other capital stocks. Famously, Norway’s that supplement this information with information
Government Pension Fund Global has invested all on renewable and non-renewable natural capital
government fossil fuel revenues into financial assets, (in addition to produced capital, human capital and
leading to the establishment of the world’s largest financial assets).

Example 3. Wealth Accounts in Uganda

Under the Uganda Natural Capital Accounting Programme and World Bank Global Programme on Sustainability, the Ugandan
government has developed adjusted macroeconomic measures of national wealth and measures of income and savings
using the SEEA. These adjusted measures take into consideration human and natural capital and show that natural capital
is the second largest single contribution to Uganda’s comprehensive wealth, particularly cropland and pastureland (the first
largest contribution being human capital). The figures in the graph below also indicate a reduced contribution of forested
land to overall wealth, mainly due to rapid depletion and deforestation. The findings point to the importance of increasing
the productivity of farmland, as well as reducing (or reversing) the rate of net forest depletion. In addition, as Uganda begins
commercial production of oil and gas in the coming years, the SEEA and adjusted measures of wealth will become increasingly
important for ensuring the sustainable use of resources.

PER CAPITA WEALTH OF UGANDA

15,000
constant 2014 US$ per capita

10,000

5,000

0
1995 2000 2005 2010 2014

Produced capital Natural capital - renewable

Natural capital - nonrenewable Human capital

Source: Uganda Natural Capital Accounting Program, 2019

| 23
 T H E “ E N V I RO N M E N TA L E C O N O M Y ”
( E N V I RO N M E N TA L AC T I V I T Y AC C O U N T S )
Example 4 shows the employment generated by the
The SEEA-CF also includes monetary flow accounts
environmental economy in the European Union (EU-
that show the economic importance of environmental
28) for the period 2010-2017. The figure shows that
activities. An example is the environmental goods and
the sector is growing faster than the overall economy,
services sector (EGSS), which is also referred to as
particularly in terms of employment i.e. “green jobs”.
the “environmental economy” or sometimes as “green
By considering this information in the policy debate,
economy” - an economy that is low carbon, resource
it is possible to factor in the positive economic and
efficient and socially inclusive (UN Environment,
employment effects that environmental policies
2020). The EGSS account records goods and services
have.11 This helps to underscore that environmental
that minimize, reduce, eliminate, treat and manage
regulations can sometimes also have beneficial
pollution or repair damages to air, water, waste, noise,
impacts such as increasing employment.
biodiversity and landscapes. These goods and services
can have a significant economic impact, which is
reflected in the EGSS accounts.

Example
110 4. Development of employment in the “environmental economy” and in total,
EU-28, 2010–2017 (2010 = 100)

109

106

104

102

100

98
2010 2011 2012 2013 2014 2015 2016 2017

Environmental economy : employment [FTEs] Total economy : employment

Source: Eurostat (2020a)

11 There are other environmental activity accounts such as the Environmental Protection Expenditure Account (EPEA), which quantifies the resources
devoted to environmental protection. There is also the Resource Management Expenditure Accounts (REMEA) which include, for example, direct
expenditures for the protection of biodiversity. The SEEA-CF also includes accounts for environmental taxes and subsidies accounts in order to show the
fiscal dimension of environmental policy.

24 | H OW N AT U R A L C A P I TA L AC C O U N T I N G C O N T R I B U T E S TO I N T EG R AT ED P O L I C I E S FO R S U S TA I N A B I L I T Y
 photo : Francouis Kaiser
1.6 SEEA-Experimental Ecosystem Accounting

The SEEA-EEA12 complements the SEEA-CF by looking at how the

individual environmental assets of the SEEA-CF interact over given
spatial areas (e.g. ecosystems). As with the SEEA-CF, the SEEA-EEA
provides accounts (tables) for stocks and flows.
However, the SEEA-EEA also provides a spatially explicit approach by exemplifying these tables through GIS mapping.
By providing guidelines on how to account for the bio-physical developments of ecosystems and biodiversity, the
SEEA-EEA is a vital resource towards enabling our understanding of the drivers behind rapid biodiversity loss and
the increasing pressures on ecosystems. These experimental accounts include physical accounts for the extent and
condition of ecosystems showing the quantity/extent of ecosystems and their health, respectively.

The SEEA-EEA also provides physical and monetary what benefits, thereby highlighting the contributions
values for the ecosystem services that are provided by of ecosystems to well-being and the benefits of
ecosystems themselves. These include “provisioning conservation. Likewise, it shows where degradation is
services” (e.g. water, crops), “regulating services” (e.g. taking place and who is suffering the consequences for
climate, bioremediation, water flow regulation, carbon the degradaton. Due to this spatially-explicit component,
sequestration) and “cultural services” (e.g. recreation, the SEEA-EEA can link biodiversity policies with
acquisition of information and knowledge). It is vital to location-specific agricultural development, watershed
have this information because it makes clear what role management, nature conservation and local economic
ecosystems have in enhancing human well-being and policies. This spatially-explicit approach holds appeal
economic prosperity. for not only government authorities and their decision
making, but also for businesses. Example 5 presents
One of the prime contributions of the SEEA-EEA is that an example of ecosystem services that have been
it puts natural capital in a spatially explicit context. The mapped out for a company in Tasmania, Australia, and
quantity and quality of ecosystems, and the services how the SEEA-EEA approach can help factor natural
that they provide, are location specific and indicated capital into business decisions in a systematic way.
through mapping. Thus, spatially explicit mapping
under the SEEA-EEA shows which ecosystems provide

12 The SEEA-EEA was published in 2014 but there are currently efforts to revise the SEEA-EEA and raise its status to a global standard. More on the
revision process can be found here: https://seea.un.org/content/seea-experimental-ecosystem-accounting-revision

| 25
 Example 5. Business-uptake of NCA, Forico, Tasmania, Australia

Businesses are increasingly reporting their impacts on society and the environment.13 Within these corporate reports,
NCA is an important approach. Notably, the Natural Capital Coalition, which has published the Natural Capital Protocol
(Natural Capital Coalition, 2016), has gained considerable support. However, while companies have been adopting natural
capital principles, the approaches used for assessment and accounting are not yet completely harmonized with the SEEA. In
principle, harmonisation and alignment with the SEEA is important in order to support comparisons between business-level,
industry-level and national results. The potential for the use of methodologies aligned with the SEEA is therefore increasing
in business applications.

A good example of SEEA-aligned business-level NCA is Forico, a private forest management company which manages 173,000
hectares of plantation and natural forest land in Tasmania, Australia (IDEEA Group, 2018). Ninety thousand hectares of
plantation are managed for wood fibre production, while 77,000 hectares of natural forest are managed for biodiversity
conservation purposes. Forico must achieve sustainable forest management outcomes across the entire business.

The “Accounting for Forico’s Forest Assets” project focused on showing how the SEEA’s ecosystem accounts could be applied
to allow traditional corporate accounts to embrace environmental and social factors. Specifically, this involved (i) accounting
for the stock and changes in stock (including changes in condition) of ecosystem assets held by Forico and (ii) accounting for
the flow of ecosystem services supplied by these assets (i.e. beyond plantation fibre production).

So far, the project has produced considerable spatially explicit physical information on ecosystem extent services. The results
show that the areas under Forico management provide significant provisioning services as well as carbon sequestration and
habitat services (as shown in the maps below). Steps are being taken to link this physical data to monetary values and to
integrate this data into business decisions.

The case of Forico shows how the SEEA approach can support business-level decision making, for example through forest
management planning, and can underpin delivery against sustainable forest management reporting and assessment
protocols.

Wood fibre provisioning services Water provisioning services Carbon sequestration services Habitat services

Source: IDEEA Group (2018).

13 According to KPMG (2017) “corporate reporting is standard practice for large and mid-cap companies around the world.” They found that “Around
three quarters of the 4,900 companies studied in this survey issue corporate reports”.

26 | H OW N AT U R A L C A P I TA L AC C O U N T I N G C O N T R I B U T E S TO I N T EG R AT ED P O L I C I E S FO R S U S TA I N A B I L I T Y
1.7 Specialized SEEA Accounts and Policy Modeling

The SEEA-CF and the SEEA-EEA provide a broad foundation to NCA.

However, in some cases, additional information is required to tackle
specific policy challenges.
One of the prime advantages of the SEEA is that it circular economy policies and resource management.
is flexible, and there are several “sub-systems” of Water and energy accounts provide additional details
the SEEA, each with their own accounts, which have and classifications needed to create policies for these
been developed for specific policy domains. These domains. Section 2 below looks at how the SEEA can
sub-systems cover topics such as energy, materials be applied to the policy realm in more detail.
flows, water, agriculture and more. For example, the
material flows accounts can be used in the context of

photo : Gustavo Yoneya

 photo : Nicholas In Travel

2. HOW CAN THE SEEA

BE APPLIED TO
POLICY?
2.1 Macro-Economic Policy

A central part of government policy is the management of the

economy, whereby objectives that are associated with issues such
as inflation, debt, employment, innovation etc. are also considered.
The achievement of economic growth, as measured by GDP, is one
of the most important of these goals.
Section 1.4 above discussed the fact that GDP This conventional way of looking at long-term economic
growth is a poor policy target because it is not a growth is increasingly questioned because it fails
measure /indicator of either human well-being nor to consider all the relevant inputs into production
of the sustainability of our current economic system. processes, including natural inputs and the availability
Nevertheless, the economy remains an important of these inputs over time (see section 1.2). It also
determinant for societal progress, sometimes in a includes human capital, which is the productive capacity
positive sense because rising incomes lead to higher and innovation potential of the workforce. To maintain
quality of life in terms of housing, health and education. this capital stock, governments and companies invest
On the other hand, though, growth can also have in education and training. Additionally, social capital,
detrimental effects such as increasing environmental the networks and trust amongst people, are vital for a
pressures or losses in social cohesion. well-functioning and efficient society. Good governance
and responsive institutions, which are also included in
Economic theory shows that growth occurs when an social capital, are crucial for a thriving economy.
economy becomes more efficient, in the sense that
production processes require fewer resources to Economic growth is also clearly dependent on natural
achieve the same or greater levels of output. In the capital. The environment provides many direct inputs
long run, these “productivity” improvements lead into production processes, such as metals and minerals,
to increases in national income. Most conventional fossil fuels, wood, fish, food and other materials.
economic policy focuses on resources such as Some of these are non-renewable, so their exhaustion
machines, infrastructure, financial assets and represents a threat to the long-term prospects of
intellectual property that are needed in the production society. In the case of renewable resources, such as
process. For example, investment in new machines, forests and fish for example, excessive logging and
buildings and infrastructure will enable more productive overfishing that exceed replenishment rates, could
production processes. In addition, investment in also threaten future prosperity. At the same time, any
intangible capital, such as research and development waste generated by our societies, albeit industrial,
and innovation, are needed to drive productivity commercial, domestic or agricultural waste, either
improvements and hence future growth. ends up in the ground via landfills, is released into

| 29
 the Earth’s atmosphere or is discharged into water To respond to the demands of a more comprehensive
bodies, seriously compromising ecosystem health and integrated analysis, international institutions,
and resilience. For the business sector, such impacts national statistical offices (e.g. Netherlands, Statistics
not only affect supply chains but they also increase Netherlands, 2020) and universities (Bennett Institute,
business risk as well as the long-term growth of many 2020) are developing databases which are broadly
sectors and industries.14 compatible with the SEEA. Example 6 below shows the
results derived from the World Bank’s Changing Wealth
A more comprehensive analysis of economic growth of Nations report. The Inclusive Wealth Report and the
should therefore include all capitals (including Inclusive Wealth Index published by UN Environment,
financial as well as natural, social and human are part of another well-known wealth accounting
capital) in economic policy. This is known as “wealth initiative- see also the separate paper on macro-
accounting” which leads to economic policies that economic policy applications of SEEA/NCA.
are geared towards the management of assets. Data
for these types of policies is increasing all the time.

Example 6. Wealth Accounts

The World Bank regularly publishes wealth accounting data for 141 countries (Lange et al, 2017). The figure below shows
the share of each capital stock in total wealth per country income group (for 2014). The results show that the low-income
countries still have a high share of natural capital. In OECD countries, human capital is by far the biggest contributor to
overall wealth, with natural capital being a very minor component. Only high-income non-OECD countries, which include
many of the Organization of the Petroleum Exporting Countries (OPEC) countries, have a large natural capital share. These
wealth estimates give a clear picture of the resource base which each economy has available for sustained growth.

SHARES OF CAPITAL STOCK BY COUNTRY INCOME GROUP

80
70
60
50
40
30
20
10
0
-10
Low-income Lower-middle- Upper-middle-income High-income non- High-income
countries income countries countries OECD countries OECD countries

Produced capital Natural capital Human capital Net foreign assets

Source: Lange et al. (2017)

14 The corporate sector has set up the Task Force on Climate-related Financial Disclosures (TCFD) which aims for transparency of the risks which
companies face due to climate change.

30 | H OW N AT U R A L C A P I TA L AC C O U N T I N G C O N T R I B U T E S TO I N T EG R AT ED P O L I C I E S FO R S U S TA I N A B I L I T Y
 The World Bank also publishes an indicator called “Adjusted Net Savings” (ANS), which is an indication of whether the stock
of capital is increasing. The ANS starts from the figures of Gross National Savings from the SNA, which look at the changes
in financial capital. The ANS adds to these figures, the changes in other capital stocks such as human capital (education
expenditures). The figure below shows the various variables as a share of national income for Sub-Saharan Africa. The figure
shows that, compared to Gross National Saving, the ANS is often negative, with natural resource depletion being a significant
negative component. Sustainable economic policies would be converting these natural resources into other productive
assets such as human capital or financial capital. For example, money that is earned from the mining of natural resources
could be reinvested into education (human capital) or stocks and bonds (financial capital). These data are imperative not
only for governments to understand the true asset value of their economy but also to ascertain how well these assets are
being managed.

NATIONAL INCOME SHARE FOR SUB-SAHARAN AFRICA

30

20
10

-10
-20

-30

-40
00

02

03

04

05

06

08

09
95

96

98

99

01

12

13

15
07

11
10
97

14
20

20
20

20

20

20
19

20

20
20

20

20

20

20

20

20

20
19

19

19

19

Consumption of fixed capital Education expenditure Natural resource depletion

Pollution damage costs Gross national saving Adjusted net saving

Source: Lange et al. (2017)

So far this section has concentrated on wealth as well as taxes on transport, pollution and resources.
accounting, but the SEEA provides more information In addition, each tax category is presented by the type
relevant for economic decision making. For example, of economic activity (such as industry and transport)
environmental activity accounts of the SEEA-CF provide and households. The government can therefore
data on environmental tax revenues. Example 7 shows pinpoint precisely who is paying the environmental
environmental taxes for the EU28. These accounts taxes. When combined with physical data on energy
enable governments to compare their tax revenues to use and other environmental indicators, it is possible
other countries, providing insights into the importance to see whether increasing taxes has an effect on
of government revenues. The accounts also provide environmental performance over time.
information about the environmental tax burden on
business. The data can be further split into energy taxes

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 Example 7. Environmental Tax Revenues for the EU28

The figure below shows the totals tax revenue as a percentage of GDP. These figures can also be related to
other macro-economic data such as total governments taxes. The data shows that the share of tax revenues
to GDP can differ significantly. The tax revenue is greatest in Greece and lowest in Ireland. Further analysis
could show which type of taxes are largest in Greece and which sectors are paying these dues.

ENVIRONMENTAL TAX REVENUE (% OF GDP)

4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Greece
Denmark
Croatia

Latvia
Netherlands
Slovenia

Italy
Bulgaria
Finland
Cyprus

Portugal

France

Austria

Germany
Estonia
Poland

Malta
Belgium

Slovakia

Hungary

Romania
Lithuania

Luxemburg
Ireland
United Kingdom

Czechia
Sweden

Spain
Source: Eurostat (2020a)

The SEEA can also be used as input for macro-economic to a wide variety of policy questions. Example 8 shows
models designed to analyse the effects of economic a model that was used by the Canadian government
policies on economic and environmental factors. There to estimate the environmental impact of joining a free
are many techniques and models that can be applied trade agreement with the European Union.

Example 8. The environmental effects of free-trade agreements

Before passing the Canada-EU Comprehensive Economic and Trade Agreement (CETA), the Canadian De-
partment of Foreign Affairs, Trade, and Development analyzed the net impact of increased bilateral trade
with the European Union on Canada’s environment, which was required by law. To carry out this analysis,
they used a general equilibrium model combined with information from the SEEA accounts and looked
specifically at:

• The scale effect quantifying the impact of expanded economic activity from the CETA on the environment

• The composition effect due to changes in the economic structure i.e. sectors and products which
either diminish or increase in importance

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 • The technical effect caused by changes in technology

The quantitative analysis showed that the impact of both scale and composition effects on GHG emissions,
energy use and water use would be minor, and even less for the technical effects. These results were used
to assist the negotiations of the CETA trade deal, which was passed.

SUMMARY OF ENVIRONMENTAL IMPACTS OF THE CANADA-EU COMPREHENSIVE ECONOMIC AND

TRADE AGREEMENT [CETA]

SCALE COMPOSITION TECHNICAL TOTAL TOTAL EFFECT/TOTAL EMISSIONS

EFFECT EFFECT EFFECT EFFECT AND DEPLETION IN CANADA (%)
GHG Emissions

(kilotonnes of CO2 eq) 1,791.9 -369.3 -155.3 1,267.3 0.165

Energy Use (terajoules) 51,820 -20,835 -803.8 22,282.4 0.187

Water Use (’000m3) 212,401 174,817 N/A 104.1 0.275

Source: Canada, Global Affairs Canada (2017)

2.2 Climate change

In the 1980s and 90s, the realization that greenhouse gas emissions
were affecting global climatic conditions became mainstream. A major
role was played by the Intergovernmental Panel on Climate Change
(IPCC), which, though an international process, provided a synthesis
of climate science that can be communicated to both society and
policymakers.
The process has led to various accords and agreements, of people, including, for example, impacts associated
the latest being the Paris Agreement which states that with agriculture, infrastructure, health, migration and
“the central aim is to strengthen the global response ecosystems.
to the threat of climate change by keeping a global
temperature rise this century well below 2 degrees There are many policy options that can address
Celsius above pre-industrial levels and to pursue efforts climate change. To mitigate emissions, for example, a
to limit the temperature increase even further to 1.5 robust set of policies will be needed to transform the
degrees Celsius”. To date, the atmosphere has already sectors that are contributing the most to greenhouse
changed dramatically, and the sea level has risen gas emissions. Many options are being considered,
significantly. Further climate change is likely to lead to including carbon taxes, removing implicit subsidies
more extreme weather events such as droughts and on fossil fuels, stimulating renewables energy and
storms with consequences for the general well-being shifting food systems towards sustainable agriculture

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 and farming. In addition to reducing emissions, policy develop under certain assumptions. Example 9 below
should also focus on adaptation towards a changing provides an ex-ante example from Indonesia, which
climate, which includes protecting coasts against sea was used by the Ministry of National Development
level rises and anticipating floods and droughts. Planning.

The SEEA can support information and modeling SEEA data can also be used to analyse the driving forces
requirements in all stages of the policy cycle for climate of environmental pressures such as technological and
change policies. For example, scenario models, which economic developments. Example 10 provides an ex-
are based on SEEA and SNA data, can be built to post model of such a decomposition analysis from
indicate how environmental pressures are likely to Denmark.15

Example 9. Development towards a low-carbon economy in Indonesia

In 2017 the Ministry of National Development Planning (Bappenas), in close collaboration with development partners,
initiated Indonesia’s Low Carbon Development Initiative (LCDI) (LCDI, 2019). To better understand the feasibility of low
carbon growth under different scenarios, they conducted scenario modeling using environmental accounting approaches
based on the SEEA.

The figure shows various scenarios with their resultant carbon emissions. The modeling demonstrated that a low carbon
growth path is feasible, and that it would still deliver an average GDP growth rate of 6% annually until 2045. This scenario
requires Indonesia to use its natural resources sustainably and reduce its carbon and energy intensity. In such a scenario,
GHG emissions would fall by nearly 43% by 2030.

By conducting scenario modeling using the SEEA, the Ministry of National Development Planning was able to determine
which policies might be implemented to curb greenhouse gas emission, and, at the same time, calculate the economic
impacts. This provides a solid basis for Indonesian policy makers to choose between the various options and scenarios at
hand.

DEVELOPMENT TOWARDS A LOW-CARBON ECONOMY IN INDONESIA

4,000 Base Case : no new policies but
reflects environmental degradation
3,500
LCDI Moderate : Includes new low
29% Unconditional Climate carbon policy measures for
3,000
Target vs Base Case 2020-2045, achieves the
2,500 unconditional NDC target
MtCO2

LCDI High : Includes more

2,000
ambitious policy measures than
1,500 LCDI Moderate for 2020-2045,
achieves the conditional NDC target
1,000 41% Conditional Climate
LCDI Plus : Reflects LCDI High for
Target vs Base Case
2020-2045 and additional, more
500
ambitious policy measures
2044
2020

2022
2023

2025
2026

2028
2029
2030

2032
2033
2034
2035
2036

2038
2039
2040

2042
2043

2045
2021
2018

2024
2019

2027

2031

2037

2041
2017

thereafter
Source : BAPPENAS Environment Directorate, based on results from Indonesia Vision 2045 Model - IV2045

15 Other examples of integrated environmental-economic models that use SEEA data include (Banerjee et al., 2016, and 2019)

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 Example 10. Analysing the driving forces of GHG-emissions in Denmark

In Denmark, industry GHG emissions fell from almost 62 million tonnes of CO2 equivalents in 1990 to 42 million tonnes
of CO2 equivalents in 2016. This was a decrease of 19 million tonnes of CO2 equivalents or more than 31% (see green
bar in the figure below). Using a structural decomposition analysis (SDA), it is possible to identify the contributions of the
various driving forces. The results show that the increase in the demand level is the largest driving force for increasing GHG
emissions. If emissions of GHG in the period 1990 to 2016 had followed the growth in demand for Danish products from
private and government consumption, exports and investments, etc., they would have been 39.3 million tonnes higher than
in 1990.

ANALYSING THE DRIVING FORCES OF GHG-EMISSIONS IN DENMARK

1. Emissions of greenhouse gases

2. Demand level

3. Demand structure

4. Production structure

5. Emissions intensity

6. Energy intensity

7. Energy mix

Source: Gravgård, 2018 -30 -20 -10 0 10 20 30 40 50

Million tonnes CO2-equivalents

However, all other driving forces contribute to lower GHG emissions, with two drivers standing out. The demand structure,
which is the mix of products and services that Denmark exports and provides to Danish consumers, has become much less
GHG intensive. In addition, the largest negative contribution is through the energy mix, which shows that the shift towards
renewables has continued significantly to lower GHG-emissions.

These historical analyses help to untangle the environmental performance of the economy and the underlying driving forces.
It shows which of the structural changes have had a major impact and which are less consequential, providing important
lessons learned for future policies.

One of the problems related to climate change is the among each other. In fact, total global emissions have
issue of “carbon leakage”, which indicates that a country increased because production has shifted from those
can reduce domestic emissions, while importing countries with efficient technologies to countries with
carbon-intensive products from other countries. It poor technologies (Hoekstra, Michel and Suh, 2016).
is widely documented that, since the 1990s, there
has been carbon leakage from developed countries There are therefore two ways to represent emissions.
to other countries, China in particular (Peters, 2008; The first, shown in the example of Romania (example
Peters et al., 2011). Thanks to rapid globalization, 1), is to record the emissions from a territory. This
countries are able to shift environmental pressures approach, referred to as the “production approach”,

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 needs to be augmented by a second perspective in emitted. These “footprint” calculations can be done
order to tell the full story. The “consumption approach” using an input-output analysis. Example 11 shows a
looks at the emissions “embodied” in the final use methane footprint for the European Union. This type
of products. This means that all emissions that have of information provides details about how to prioritize
occurred in the entire supply chain of the product policies and how to reduce lifecycle emissions.16
are included, irrespective of which countries have

Example 11. Emissions of methane (tonnes) from final use of products (footprint) in 2017 in the EU-28

Eurostat has created a multiregional input-output (MRIO) model, which shows the economic structure of Europe and the
global economy. It has linked the MRIO to SEEA data from the EU28. By using an input-output analysis, it is possible to
calculate the “footprint” for a wide variety of emissions. The footprint includes all the emissions that were used in the supply
chain of the product. Below is the list of the top-10 products which have led to the largest emissions of methane in the supply
chain. This methane emitted in the agricultural sector is therefore linked to the food products that are consumed. In fact,
taking all food related categories (rank 1, 2 and 6) together makes up 40% of the methane footprint.

EMISSIONS OF METHANE (TONNES) FROM FINAL USE OF PRODUCTS

(FOOTPRINT) IN 2017 IN THE EU-28

RANK PRODUCTS 2017

1 Food, beverages and tobacco products 5,404,619

2 Products of agriculture, hunting and related services 4,060,785

3 Coke and refined petroleum products 2,141,553

4 Waste management services 1,678,316

5 Constructions and construction works 1,159,719

6 Accommodation and food services 1,151,076

7 Direct emissions by private households 923,707

8 Electricity, gas, steam and air conditioning 772,529

9 Chemicals and chemical products 590,097

10 Wholesale trade services (except of cars/motorcycles) 551,391

Source: Eurostat (2020a)

Data: Emissions of greenhouse gases and air pollutants from final use of CPA08 products -
input-output analysis, ESA 2010

16 This topic will be further discussed in a forthcoming paper under this series: Natural Capital Accounting for Integrated Climate Change Policies.

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2.3 Biodiversity

Ecologists have warned that we are currently in the middle of the sixth
mass extinction (Ceballos et al., 2015), which refers to the fact that
in Earth’s history, there have been five moments when species have
experienced extinction at massive rates. However, unlike previous
mass extinctions, this one is wholly attributable to the pressures that
humans are putting on the ecological system which is sometimes
referred to as the “anthropocene” (Crutzen, 2002).
The Intergovernmental Science-Policy Platform on policy through the adoption of environmental-economic
Biodiversity and Ecosystem Services (IPBES) is an accounting. Many governments have integrated the
international collaboration to support science-based Strategic Plan into national planning, including the
policies for biodiversity and ecosystems. It provides identification of biodiversity targets. Biodiversity is
the most recent global assessment of the state of also a crucial part of the SDGs. The problem of how to
biodiversity and associated ecosystem services tackle severe biodiversity loss will be revisited in 2021
(IPBES, 2019). The report concluded that if society at the 15th meeting of the Conference of the Parties
continues to develop in the same way, over one million (COP 15) to the Convention on Biological Diversity in
species (of the current seven to eight million) would be Kunming, China. While there has been some progress
at risk of extinction. This loss of biodiversity will have towards the Aichi Biodiversity Targets, overall there has
profound consequences for humanity, particularly been less progress than hoped for. Thus, COP 15 will
considering that biodiversity is a foundation for human be an opportunity to develop a bold and transformative
well-being and existence. The IPBES also lists all agenda for biodiversity, one in which measurable and
the drivers that contribute to biodiversity loss which actionable targets will be of great importance.
include natural pressures (volcanic eruption etc.) as
well as human activities, which include land/sea use The SEEA can play a vital role in many policy questions
change, pollution and many other factors. related to biodiversity. It provides a measurement
framework for ecosystem extent and condition,
The current global policy framework for biodiversity is reporting on the importance of ecosystem and the
the Strategic Plan for Biodiversity 2011-2020, adopted services that they provide, analysing driving forces or
by the Convention on Biological Diversity (CBD), (CBD, choosing between policy options and instruments.17
2010). The plan includes Aichi Biodiversity Targets that The SEEA is increasingly being used in national
set specific goals. The targets are aimed at improving policymaking for ecosystems and biodiversity (for
biodiversity status and implementing policies that lead an overview see Ruijs and Vardon, 2018). Example
to enhanced management of nature. In particular, 12 shows an application focused on the value of
Aichi Biodiversity Target 2 specifically highlights the the ecosystem services provided by public forests in
importance of mainstreaming biodiversity values into England.

17 This topic will be further discussed in a forthcoming paper under this series: Natural Capital Accounting for Integrated Biodiversity Policies

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 Example 12. Public forest management in England

In order to support the management of the Public Forest Estate in England so that it continues to deliver a range of ecosystem
services other than just timber provisioning, Forestry England established an ongoing set of corporate natural capital
accounts based on the SEEA for the land that they manage. These accounts cover the extent and condition of different types
of habitat, both in physical and monetary flow accounts and a monetary asset account. The table below shows the results.

The accounts serve as an important tool for understanding what services England’s forests are delivering for society. The
process of identifying assets and physical flows of services through the development of the accounts has also proven to be
beneficial in highlighting what we do and do not understand about the services that the estate delivers, and how they might
be improved.

At a strategic level, the information in the accounts enables the organisation to have a regular check on whether the value
of the ecosystem services that the estate provides is increasing or decreasing. It also helps to ensure that they have a trend
overview for the condition of the different assets. Note that not all of the benefits will accrue to the same stakeholders. The
accounts are also used to inform decision making at all levels by clearly linking management activities with the value of the
ecosystem services and assets as well as stakeholders.

PUBLIC FOREST MANAGEMENT IN ENGLAND

SPATIAL ACCOUNTING UNIT BY TYPE OF BASELINE YEAR REPORTING YEAR

NATURAL CAPITAL BENEFIT FLOW 2013/14 2017/18

Timber provision

Woodland Timber produced £ 10,450,712 £ 12,763,488

Climate regulation

Woodland £ 98,739,421 £ 103,707,655

Bogs Carbon £ (523,001) £ (571,754)

Grassland sequestration - -

Heathland value - -

Woodland on Deep Peat Soils £ (4,974,455) £ (5,102,954)

Recreation

Whole estate Recreation £ 346,308,992 £ 446,260,046

Volunteers - -

Plant and seed supply

Source: Forestry England (2019)

Whole estate Plant and seed revenues £ 3,091,288 £ 2,790,983

Food provision

Whole estate Wild game carcass value £ 12,677 £ (83,295)

Livestock production value £ 143,783 £ 185,172

Crop production value £ 57,030 £ 73,688

Minerals

Whole estate Mineral production value £ 896,060 £ 426,925

Source: Forestry England (2019)

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 2.4 Circular Economy

Modern societies require great quantities of different types of

materials. Some are used in bulk, while others are highly specialized
materials that are used in minute quantities. When supplies of some
materials are limited, this can create substantial problems in supply
chains. In the case of bulk materials, such as plastics, there are
also significant problems related to waste generation, and even the
emergence of what has been referred to as a “plastic soup” in the
ocean.
The current economic system is said to be “linear”, in It is therefore a powerful way to monitor progress
the sense that materials are extracted from nature, towards a circular economy and to create effective
then used in products, and finally discarded, otherwise policies. It distinguishes where materials enter the
known as the “take, make, waste” model. Over the last economy, either through mining or imports and also
decade, the call to create a “circular economy” has shows where they are used and which materials are
intensified. This is an economy in which resources are emitted to water, air landfills or nature. Example 13
kept in the loop through recycling, remanufacturing, shows how data from material flows accounts can be
redesign and by other means. Many international fora, used to understand the physical metabolism of an
such as the World Economic Forum and the European economy. The SEEA enables policymakers to track the
Commission, have stressed the importance of moving status, driving forces, and policy options of resource
towards a circular economy. use (Potting et al., 2018).

The SEEA provides material flows accounts which show

all the material flows to, from and within the economy.
photo : Devi Puspita Amartha Yahya
 Example 13. Sankey diagram for material flows of the EU28

By using data from the material flow accounts, combined with other sources, the Sankey diagram below can be produced.
It provides a comprehensive overview of the material metabolism of a county. In this case, the figure shows the metabolism
of the entire European Union. It shows the quantities that are being recycled are still very small compared to the emissions,
dissipation and landfilled quantities.

The figure provides an overview for policy makers at the European Union level, but the advantage of the SEEA is providing
a conceptual framework to align diverse data sources and that this diagram can be broken down into individual countries.
Furthermore, it is possible to analyse which materials are involved and to derive which products and sectors are using certain
materials. This data can also be linked to economic data such as value added, to see whether the material intensity (amount
of materials per unit of value added) is reducing. A lower intensity signifies that technology is making production processes
more efficient.

IMPORTS 1.71 EXPORTS 0.67

DISSIPATIVE
FLOWS 0.27

DIRECT EMISSIONS
MATERIAL INPUTS TO AIR 2.53
7.36 EMISSIONS EXCL.
INCINERATION 2.40
EMISSIONS
DOMESTIC INCINERATION 0.15 TO WATER
EXTRACTION 0.01
5.65

WASTE
MATERIAL MATERIAL LANDFILLED
USE TO WASTE 0.80
5.16 TREATMENT
2.06

MATERIAL
ACCUMULATION
3.10

BACKFILLING 0.23
Source: Eurostat (2020c)

RECYCLING 0.87

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2.5 Sectoral Policies

Sections 2.1 to 2.4 discuss some of the economic and environmental

questions that could be answered by the SEEA. This is by no means
a complete overview. Even in terms of environmental problems, there
are more issues that countries are currently grappling with such as
food security, health and wellness and urbanization, to name just a
few.
For instance, agricultural policy has an important investments can therefore have long-term implications
environmental component, as farming practices for climate change. It is therefore necessary to consider
depend on renewable and non-renewable resources the environmental impacts of these investments.
and result in emissions to land, water and air. Agriculture The SEEA can be expanded to show the relationship
also depends upon and affects biodiversity in many between modalities, infrastructure and emissions.
ways. Furthermore, it has a clear link to employment
and poverty reduction, as it provides income and food Energy policy is based on factors such as the availability
to large portions of the population. While formulating of fossil fuels, energy security and sometimes geo-
agricultural policies, it is therefore necessary to think political issues. For example, many countries have
of the environmental and social implications. The policies to lower their dependency upon oil that comes
United Nations has coordinated the publication of a from unstable nations. This could be achieved by
specialized manual (SEEA-Agriculture, Forestry and substituting these imports by domestic fossil fuels such
Fisheries) which explicitly links agricultural and rural as shale oil. On the other hand, it could be achieved by
development to the environment. transitioning towards renewable energy sources that
would have the added benefit of contributing towards
Transportation is another example. Demand for the lowering of greenhouse gas emissions. The SEEA
mobility is driven by factors such as population growth can help inform economic, political and technical
and urbanization. In some cities, policymakers need aspects of this energy transition.
to decide on how to transport millions of people
in an efficient way. These decisions will shape the Sometimes, the SEEA can be used to link policy
transportation landscape for a very long time and will domains that are not usually taken together. Example
have significant effects on the environmental pressure 14 provides such an example, where the environmental
of the mobility system. For example, transport impacts of healthy diets is analysed.
modalities differ significantly in CO2 emissions, and
photo : Isaiah Rustad
 Example 14. Understanding how healthy diets affect the environment (Behrens et al., 2017)

Many countries have dietary recommendations that prescribe what a nutritious and healthy diet should look like. However, in
practice, the population usually does not adhere to these recommendations. In richer countries, the population tends to eat
too many calories and protein-rich foodstuffs, often leading to obesity. In poorer countries, there is more malnutrition, which
means that people do not eat the recommended quantities for optimal health.

Using the global EXIOBASE database, researchers analysed what would be the environmental consequences if all people in
a country would adopt a healthy diet. The EXIOBASE database is based on economic data from the SNA accounts of nearly
40 countries or regions of the world. The environmental accounts are structured according to the SEEA, and where possible
SEEA data from the 40 regions/countries are used. The difference between the average diet and the recommended diet is
calculated.

The results are mixed. For poor countries, where people are undernourished and do not eat enough to constitute a healthy
diet, greenhouse gas emission would increase if people increased their consumption to eat a healthy and nutritious diet.
However, some countries, particularly Brazil and Australia, eat far more meat than is recommended. If Australians and
Brazilians would all adopt healthy diets, this would have major positive impacts on GHG emissions, i.e. they would decrease.
The results therefore show that some countries that health policies can have the added benefit of reducing environmental
pressures. In case of poorer countries, policy makers could learn which types of foodstuffs could be used to fight malnutrition,
while at the same time limiting environmental pressures.

photo : Brunel Johnson

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 photo : Grant McCurdy

3. IMPLEMENTATION
AND CONCLUSIONS
 This paper has argued that to tackle modern day resource driven
problems, it is imperative to take on board the interrelationship
between different policy domains, as well as the various stakeholders
and scale levels.18
This type of integrated policy making, and one which SEEA can assist with, is increasingly necessary to solve the
complex challenges that societies around the world face. However, integrated policymaking is not yet a reality. It will
require a re-assessment of the current way of approaching policies and innovative ways in which to organize the
policy process. Further implementation of the SEEA will play an important role in this development.

3.1 Implementation
According to information from a 2017 global assessment on environmental-economic accounting, as well as
information from the United Nations regional commissions and informal consultations with Member States, over 90
countries have compiled SEEA accounts (as of mid 2020). In some regions, the production of SEEA data is a legal
requirement. For example, in the European Union, member states are legally obliged to compile six SEEA accounts
(European Court of Auditors, 2019). Many more are also planning to implement the accounts.

photo : Juliana Kozoski

18 See also OECD report on policy coherence (OECD, 2017b).

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The UN Committee of Experts on Environmental Nevertheless, SEEA implementation is ultimately cost-
Economic Accounting (UNCEEA) has set targets for effective and efficient. Implementation usually does
SEEA implementation by the end of 2020. By that time, not require a significant amount of new data collection.
its goal is to have at least 100 countries with ongoing, Instead, implementation involves collecting existing
well-resourced programs for the SEEA-CF. An additional data within the national statistical office and from line
goal is to have at least 50 countries that produce and ministries and harmonizing this data. In addition, the
use ecosystem accounting in policymaking. A major SEEA is an efficient data system because all accounts
boost has been given to the SEEA by introducing legal have a common conceptual foundation. Therefore,
obligations to produce them. The European Union has one consistent statistical system yields multiple
been particularly active in requiring member states to environmental indicators. To ensure further efficiency,
produce various accounts. This development has led it is important to use the relevant big-data sources.
to improvements in comparability, quality and priority For example, satellite data is increasingly becoming
of the SEEA, although more still needs to be done available and is creating a huge boost for ecosystem
(European Court of Auditors, 2019). accounting. In addition, for the energy accounts, some
countries such as the Netherlands and Botswana, are
While implementation has been increasing, there using the original client purchaser logs (For Botswana
are still some remaining challenges to broader SEEA see Botswana and the World Bank, 2016). These types
implementation. National statistical offices and line of big data sources, especially if they are based on
ministries regularly face budget cuts. In addition, it is comprehensive registers, provide a valuable tool to
important that SEEA implementation should be backed link macro-economic developments to micro-economic
by political buy-in, in order to ensure that the accounts behaviour.
are used. More broadly, promoting an entire government
approach is critical to facilitate SEEA implementation The country-level SEEA data that is produced by national
and ensuring that the accounts are applied for policy. statistics offices or other ministries is being collated
For example, in 2018, the Government of Australia into global databases such as EXIOBASE, WIOD,
developed a national strategy and action plan that set ICIO, FIGARO and EORA (Tukker and Dietzenbacher,
out a common approach to SEEA implementation, with 2013). These databases also include data on the
the aim of supporting decision making by governments, global economic structure, which means that that the
business and the community (Commonwealth of influence of globalization on environmental pressures
Australia, 2018). Similar approaches have been taken can be analysed (see Example 10 above). These
in several other countries. databases are now used frequently by scientists, policy
makers and even companies.

19 Some examples can be found at https://seea.un.org/home/National-Implementation-Project.

20 For EXIOBASE, see https://www.exiobase.eu/; for WIOD, see http://www.wiod.org/;

for ICIO, see https://www.oecd.org/sti/ind/inter-country-input-output-tables.htm;
for FIGARO, see https://ec.europa.eu/eurostat/web/experimental-statistics/figaro;
and for EORA, see https://worldmrio.com/.

21 For example, the pharmaceutical company Novartis used WIOD data to calculate the environmental impacts
https://www.wifor.com/uploads/2019/02/2018_Case_Study_Novartis_Global_Environmental-Impact_WifOR.pdf.

| 45
 3.2 Conclusions

The increased global uptake of the SEEA is leading to a high-quality,

comparable, institutionalized supply of data on NCA around the world.
The conceptual link between environmental, economic and social
developments embodied in the SEEA allows for the integrated policies
that are needed to tackle today’s complex challenges. Increasingly,
it is possible to take on board trade-offs and synergies between
various policy domains, as well as between different stakeholders
and scale-levels.
This paper has provided real world examples where policymaking. It will become more important to look
the SEEA has been used for better policy making and beyond the remit of one ministry towards the impacts
decisions. The SEEA can be used to track progress on that it might have on other domains. This collaborative
national policies or in models that are aimed at policy approach has been common to many of the countries
preparation or evaluation. There are, however, more implementing the SEEA. Since the SEEA necessitates
ways in which the SEEA can help evidence-based policy collaboration between national statistical offices and
decisions. Global initiatives such as the SDGs, post- line ministries, implementation often brings together
2020 global biodiversity framework, ‘Beyond-GDP’ and different ministries, eliminating the silo approach
circular economy are only driving up the demand for of working. It will also mean that statisticians will
integrated data. The number of new applications of the increasingly have to respond to the requests of
SEEA is increasing every year in policy and academic policymakers. The SEEA, as the international statistical
literature. standard for NCA, will be an important part of this
evolution towards integrated policy.
Moving towards integrated policies will have
important implications for the institutional aspects of

46 | H OW N AT U R A L C A P I TA L AC C O U N T I N G C O N T R I B U T E S TO I N T EG R AT ED P O L I C I E S FO R S U S TA I N A B I L I T Y
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ANNEX
photo : Leonard Cotte
 Introduction to the SEEA methodology

The System of Environmental-Economic Accounting (SEEA) is the

accepted international standard for natural capital accounting and
provides a framework for organizing and presenting statistics on the
environment and its relationship with the economy.
The SEEA framework follows a similar accounting physical and monetary terms coherently. The SEEA-CF
structure as the System of National Accounts (SNA), was adopted by the UN Statistical Commission, the
which is the statistical standard to measure macro- apex body of the global statistical system, as the first
economic transactions and flows. The SEEA framework international standard for environmental-economic
uses concepts, definitions and classifications accounting in 2012.
consistent with the SNA in order to facilitate the
integration of environmental and economic statistics. The second perspective complements the SEEA-CF
by taking the perspective of ecosystems. The SEEA-
Two different perspectives are embodied in the SEEA. Experimental Ecosystem Accounting (SEEA-EEA) looks
The first perspective is expressed through the SEEA- at how individual environmental assets interact as
Central Framework (SEEA-CF), which looks at individual part of natural processes within a given spatial area.
environmental assets such as energy, water, forests The SEEA-EEA constitutes an integrated statistical
and timber, to explore how they are extracted from the framework for organizing biophysical data, measuring
environment, used in the economy, and returned to ecosystem services, tracking changes in ecosystem
the environment in the form of waste, water and air assets and linking this information to economic and
emissions. The SEEA Central Framework allows for other human activity. The SEEA-EEA was first drafted
the integration of environmental information (often in 2012 and is now undergoing a revision, with the
measured in physical terms) with economic information intention of reaching an agreement on as many
(often measured in monetary terms) in a single aspects of ecosystem accounting as possible by the
framework. The power of the SEEA Central Framework end of 2020.
comes from its capacity to present information in both

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SEEA-Central Framework

At the heart of the SEEA-CF is a systems approach to the organization

of environmental and economic information which covers, as
completely as possible, the stocks and flows that are relevant to the
analysis of environmental and economic issues.
The SEEA-CF brings together, in a single measurement In practice, environmental-economic accounting
system, information natural resources, pollution and includes the compilation of physical and monetary
waste, production, consumption and accumulation. supply and use tables, functional accounts (such
The SEEA-CF is composed of several subsystems as environmental protection expenditure, taxes and
which focus on specific areas of policy interest. For subsidies accounts) and physical and monetary asset
example, SEEA-Water is the conceptual framework and accounts. To assess how the economy supplies and
set of accounts which present hydrological information uses natural inputs, SEEA accounts disaggregate
alongside economic information. SEEA-Water supports flows by different units of production (industries as
the analyses of the role of water within the economy categorized by the International Standard Industrial
and of the relationship between the environment and Classification22 and households). Data for SEEA
water-related activities, thereby supporting integrated accounts is usually collected from business and
water management. Other subsystems include household surveys related to resource extraction and
agriculture, forestry and fisheries; air emissions; use.
energy; environmental activity; land; material flow; and
waste.

S U P P LY A N D U S E TA B L E S
Supply and use tables in the SEEA-CF record the flows within the economy itself. By providing information
of natural inputs (e.g. flows of minerals, timber, fish disaggregated by industries and households, supply
and water), products and residuals (e.g. solid waste, air and use tables provide valuable information on
emissions and return flows of water) in both physical production and consumption patterns and changes
and monetary terms. In recording these flows, the in these patterns over time, as well as changes in the
SEEA-CF provides information on the amount and value productivity and intensity of the use of natural inputs
of materials, water and energy that enter and leave and the release of residuals.
the economy and flows of materials, water and energy

22 See https://unstats.un.org/unsd/publication/seriesM/seriesm_4rev4e.pdf.

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 Figure 1. Physical flows of natural inputs, products and residuals

ECONOMY ENVIRONMENT

Products (goods and Natural inputs (including mineral

services produced and resources, timber resources, aquatic
consumed in the economy) resources and water resources)

Residuals (including air emissions

Industries and return flows of water)
Households
Government

Source: SEEA-Central Framework (United Nations et al., 2014a)

A S S E T AC C O U N T S
Stocks and changes in stocks of environmental assets measurement of stocks in monetary terms. The
(e.g. water, timber, fish, minerals and energy resources measurement of stocks in monetary terms focuses
etc.) are measured in the SEEA-CF through asset on the value of individual environmental assets and
accounts. In physical terms, the Central Framework changes in those values over time. The valuation
focuses on recording the physical stocks and changes of these assets focuses on the net present value
of stocks of individual environmental assets, such as of the benefits that accrue to economic owners of
tonnes of coal, cubic metres of timber and hectares environmental assets, and the use of monetary
of land. However, the SEEA-CF also includes the terms enables the analysis of trade-offs between the
conservation and use of different natural inputs.

E N V I RO N M E N TA L AC T I V I T Y AC C O U N T S
Environmental activity accounts are a subsystem of in the SEEA-CF include environmental protection and
the SEEA-CF which deserve special mention, as they resource management expenditure accounts (which
do not focus on individual environmental assets, include, for example, direct expenditures for the
but transactions taken to preserve and protect the protection of biodiversity), environmental goods and
environment. More specifically, environmental activity services sector accounts, and environmental taxes
accounts record transactions in monetary terms and subsidies accounts. Used in tandem with other
between economic units that may be considered for SEEA accounts, environmental activity accounts supply
environmental purposes. Generally, these transactions valuable information on whether economic resources
concern activity undertaken to preserve and protect are being used effectively to reduce pressures on
the environment or activity designed to influence the the environment and maintain the capacity of the
behaviour of producers and consumers with respect environment to deliver economic benefits.
to the environment. Environmental activity accounts

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SEEA-Experimental Ecosystem Accounting

Fundamental to ecosystem accounting is the recognition that

ecosystems are the source of goods and services that are essential
to economic prosperity and human well-being, now and in the future.
In the SEEA, an ecosystem is defined as “a dynamic complex of
plant, animal and micro-organism communities and their non-living
environment interacting as a functional unit” (United Nations et al.,
2014b).23
Ecosystem assets are areas covered by a specific ecosystem accounting is that it is spatially explicit,
ecosystem type, such as forests, wetlands, agricultural i.e., it builds accounts based on underlying maps with
areas, rivers, coral reefs etc. The contributions of information. As such, ecosystem accounting produces
ecosystems range from natural products such as an integrated spatial information system.
timber and game to services like purification of air and
water, pollination of crops, nutrient cycling, carbon Ecosystem accounting is based upon the conceptual
storage and more. The importance of these services model shown in Figure 2. The model starts with
underlines the need for a thorough understanding of identifying ecosystem assets - an ecosystem that is
the ways in which ecosystems support economic and mapped by mutually exclusive spatial boundaries such
social well-being. that each asset is classified to a single ecosystem
type. Assets can be described through their condition
The framework, which is well aligned to national and extent. Through intra-and-inter ecosystem flows,
accounting principles, allows for the measurement ecosystem assets generate ecosystem services –
of ecosystem assets in terms of both their condition the contributions of ecosystems to benefits used in
(overall health) and the services they provide, and can economic and other human activity, for example water
be applied consistently across terrestrial, freshwater regulation.
and marine areas. A defining characteristic of

Figure 2. SEEA-EEA Conceptual Model

ENVIRONMENT SOCIETY

Economy
Ecosystem assets

ecosystem
extent Final individual
benefits and
Ecosystem societal
Services wellbeing

ecosystem
condition

GDP Boundary
Source: UNSD

23 The SEEA uses the definition of the Convention on Biological Diversity. See https://www.cbd.int/ecosystem/description.shtml.

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 E C O SY S T E M E X T E N T AC C O U N T S
Ecosystem extent accounts serve as a common classified in terms of different ecosystem types such
starting point for ecosystem accounting. They organize as forests, wetlands, cropland etc. All assets together
information on the extent of different ecosystem populate an ecosystem accounting area, which could
types within a country in terms of area. In particular, range from a watershed to a municipality to a country
ecosystem extent accounts describe the environment etc. The extent account describes the various types of
in terms of sets of mutually exclusive (i.e. non- ecosystems that are distinguished within an area and
overlapping) ecosystem assets. These assets (e.g. how they change over time.
an individual forest, or a specific wetland) can be

E C O SY S T E M C O N D I T I O N AC C O U N T S
Condition accounts measure the overall quality of an provided against which values for indicators can be
ecosystem asset and capture, in a set of key indicators, compared. There is a wide range of indicators that can
the state or functioning of the ecosystem in relation be assessed in the condition account, and indicators
to both its naturalness and its potential to supply can be ecosystem type specific. Condition accounts
ecosystem services. Essential is that the condition provide valuable information on the health and state
account compares at least two different years to track of ecosystems and their capacity of ecosystems to
changes over time. As with all ecosystem accounts, deliver critical ecosystem services in the future.
condition accounts are built up from underlying maps
of the various variables. For every ecosystem type (e.g.
forest; inland water bodies etc.), a reference level is

E C O SY S T E M S E RV I C E S AC C O U N T S
This set of ecosystem accounts measures the supply of Ecosystem services are defined in SEEA EEA as the
ecosystem services as well as their corresponding use contribution to benefits, rather than as the benefits
and beneficiaries, classified by economic sectors used themselves, in order to avoid double counting. For
in the national accounts, in both physical and monetary example, an agricultural crop such as corn or maize is
terms. In SEEA EEA, ecosystem services are defined as already recorded in the national accounts. Moreover,
“the contributions of ecosystems to benefits used in corn is the result of combining human capital (in the
economic and other human activity” (United Nations et form of labour), produced capital (machinery) and
al, 2014b). SEEA EEA uses the following three broadly natural capital (the cropland). The objective of the
agreed categories of ecosystem services: services accounts is to isolate the contributions of
nature to the production of the crop visible. In addition,
• Provisioning services (e.g. supply of food, fibre, fuel by expanding the national accounts production
and water); boundary, the accounts also recognize a range of
ecosystem services that lead to benefits that are
• Regulating services (related to activities of filtration,
not currently recognized in the SNA such as carbon
purification, regulation and maintenance of air,
water, soil, habitat and climate); and sequestration or air filtration.

• Cultural services (related to activities of individuals

in, or associated with, nature, such as recreation).

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 photo : Ian Chen
M O N E TA RY A S S E T AC C O U N T
The monetary asset account records the monetary the ecosystem, using a so-called net present value
value of opening and closing stocks of all ecosystem method. In order to estimate these projected service
assets within a given ecosystem accounting area, as flows, it is important to take into account the capacity
well as additions and reduction to those stocks. The of the ecosystems to sustain these service flows which
ecosystem services supply accounts are a key input into will depend on their condition and the extent to which
the monetary asset account and provide an estimate these ecosystems are sustainably managed, and if
of the total annual flow that is generated during a not, make corrections to future service flows. Thus, the
specific year. The value of the ecosystem assets can be valuation of ecosystem assets allows an assessment of
estimated by capitalizing these annual flows of services a more comprehensive measure of wealth of a country
over the projected period i.e. the expected lifetime of (in addition to produced capital, financial capital etc.).

T H E M AT I C AC C O U N T S
The SEEA-EEA also includes several thematic accounts. Carbon accounts are another common thematic
These are standalone accounts, or sets of accounts, account. The carbon account was developed to allow
that organize data according to an accounting framing for a consistent and quantitative comparison of carbon
about themes of specific policy relevance. For example, stocks and flows in the reservoirs ‘biocarbon’ (organic
species accounts in the SEEA-EEA have the structure of carbon in soils and biomass), ‘geocarbon’ (carbon in
an asset account and describe the opening and closing the lithosphere), atmospheric carbon and carbon in the
stock of a particular species over a period of time. The economy. Other potential thematic accounts include
account tries to explain the observed changes in a accounting for protected areas, wetlands and forests.
number of categories (e.g. additions / reductions). The
account can be compiled for instance for endangered
species or for specific iconic species.

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 Aggregates and indicators

The SEEA-CF and SEEA-EEA are multipurpose and relevant in a

number of ways for policy development and evaluation, as well as
decision-making. First, the summary information (provided in the
form of aggregates and indicators) can be applied to issues and
areas of the environment that are the focus of decision makers. For
instance, the SEEA-CF and SEEA-EEA provide the data to inform 40
SDG indicators, including goals 2, 6, 7, 8, 9, 11, 12, 14 and 15.
Second, the detailed information, which covers some physical and monetary data. A combined presentation
of the key drivers of change in the environment, can thus represents an analytical framework showing
be used to provide a richer understanding of the which parts of the economy are most relevant to
policy issues. For example, the SEEA-CF accounts can specific aspects of the environment, and how changes
be effectively communicated to users and decision in the economic structure influence the environment
makers through combined presentations combining (see Figure 3).

Figure 3. Possible structure of and typical content for combined presentations

Industries Households Government Flows with the

(by ISIC divisions) Accumulation Total
rest of the world

Monetary supply and use: flows

(currency units)
Supply of products
Intermediate consumption and final use of products
Gross value added
Depletion-adjusted value added
Environmental taxes, subsidies and similar transfers
Physical supply and use: flows
(physical units)
Supply of:
Natural inputs
Products
Residuals
Use of:
Natural inputs
Products
Residuals
Asset stocks and flows
Closing stocks of environmental assets
(currency units and physical units)
Depletion (currency units and physical units)
Closing stocks of fixed assets (currency units)
Gross fixed capital formation (currency units)
Related socio-demographic data
Employment
Population

Note: Dark grey cells are null by definition

Source: SEEA-Central Framework (United Nations, 2014a).

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Further, as the accounts provide consistent The SEEA also enables the derivation of depletion-
environmental and economic indicators, the adjusted balancing items and aggregates within the
possible trade-offs in environmental terms between sequence of economic accounts of the SNA. Using
alternative environmental and economic strategies the SEEA, balancing items, within the sequence of
can be analysed. The SEEA enables the calculation of economic accounts, can be adjusted for depletion
indicators on several topics, including: resource use so that estimates of the monetary cost of using up
and intensity; production, employment and expenditure natural resources can be deducted from conventional
related to environmental activities; environmental economic aggregates, such as GDP and saving to yield
taxes and environmental subsidies; and environmental depletion-adjusted aggregates.
assets, wealth, income and depletion of resources.

Applications of the SEEA

There are several other applications of the SEEA.24 One common

application of the SEEA is environmentally extended input-output
tables (EE-IOT). EE-IOT are datasets that combine information from
economic input-output tables from the SNA in monetary units and
information on environmental flows, such as flows of natural inputs
and residuals, that are measured in physical units.
EE-IOT data sets, which reflect industry and product or pressures. Decomposition analysis can be used
detail in physical and monetary terms and encompass to account in detail for the factors underlying these
economic and environmental information, can be changes. Typically, the variables used in the calculations
powerful tools in analysis and research. Input-output include changes in the size of the economy, changes in
analysis is regularly used to attribute environmental the structure of the supply chain and demand, changes
flows to final demand categories. It can identify the link in the energy intensity of production, and improvements
between final demand and resource use, emissions in the production process. Decomposition analysis can
and other environmentally related flows and thereby be used to understand, for example, the economic or
highlighting “hot spots” or “pressure points” that are technological changes that have caused emissions of
highly policy relevant. CO2 to increase. Thus, decomposition analysis can be
a powerful tool for analysis and policy design.
The SEEA is also often used for decomposition analysis,
a tool which enables separate estimates of the Finally, another common application of the SEEA is
particular drivers influencing changes in environmental computable general equilibrium (CGE) models. CGE
impacts or pressures. Since changes in the pressures models are a class of economic models that combine
from the environment occur within dynamic systems of use of input-output data with the application of
interactions, it is often difficult to identify the extent to microeconomic theory and are especially well suited
which specific consumption and production activities to analysing the future effects of policies. They consist
have contributed to changes in environmental impacts of a system of non-linear demand, supply and market

24 See The System of Evnironmental-Economic Accounting 2012 Applications and Extensions, https://seea.un.org/sites/seea.un.org/files/ae_final_en.pdf.

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 equilibrium equations, into which various assumptions For example, CGE models can assist in understanding
may be introduced (depending on the model). In the the dynamics arising from the introduction of a tax
context of the SEEA, CGE models may be developed on CO2 emissions, which will entail a shift away from
using information contained in EE-IOT, thus bringing relatively carbon-intensive inputs.
together monetary and physical data. The use of
CGE models can facilitate an understanding of what
dynamic impacts may be expected in the case of policy
interventions, or other developments.

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Economic
Accounting