UN adopts landmark framework to integrate natural capital in economic reporting

Stewardship – Environmental Economic Accounting

UN adopts landmark framework to integrate natural capital in economic reporting
10 Mar 2021 | DESA

The new framework — the System of Environmental-Economic Accounting—Ecosystem Accounting (SEEA EA) — was adopted by the UN Statistical Commission and marks a major step forward that goes beyond the commonly used statistic of gross domestic product (GDP) that has dominated economic reporting since the end of World War II. This measure would ensure that natural capital—forests, wetlands and other ecosystems—are recognized in economic reporting…

UN Secretary-General António Guterres welcomed the adoption of the new economic and environmental framework. “This is a historic step forward towards transforming how we view and value nature.  We will no longer be heedlessly allowing environmental destruction and degradation to be considered economic progress.”

The new framework can also underpin decision-making at two crucial conferences later this year—COP15 on Biodiversity in Kunming and the Glasgow Climate Conference, COP 26.

According to a new UNEP report, “Making Peace with Nature,” the global economy has grown nearly fivefold over the last 50 years, largely due to a tripling in extraction of natural resources and energy that has fuelled growth in production and consumption. Over the same time, the world population has increased by a factor of two, to 7.8 billion people, and though on average prosperity has also doubled, about 1.3 billion people still live in poverty and some 700 million are hungry…

“As governments to the Convention on Biological Diversity get ready to agree and implement a framework that will recraft our relationship with nature, this new framework will provide an impetus for an accurate accounting of the value of biodiversity” says Elizabeth Maruma Mrema, Executive Secretary of the Convention on Biological Diversity.  “In so doing, it is a step towards sustainable development.”

The new framework recognizes that ecosystems deliver important services that generate benefits for people. In essence, they are assets to be maintained, similar to economic assets. For example, forests play a role in providing communities with clean water, serving as natural water filters with trees, plants and other characteristics, such as soil depth, that help absorb nutrient pollution like nitrogen and phosphorous before it can flow into streams, rivers and lakes…

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System of Environmental Economic Accounting
Information on the new framework can be found at https://seea.un.org/ecosystem-accounting

The SEEA Ecosystem Accounting (SEEA EA) constitutes an integrated and comprehensive statistical framework for organizing data about habitats and landscapes, measuring the ecosystem services, tracking changes in ecosystem assets, and linking this information to economic and other human activity.

The United Nations Statistical Commission adopted the SEEA Ecosystem Accounting at its 52nd session in March 2021. The report of the Commission (subject to editing) can be found here.

This adoption follows a comprehensive and inclusive process of detailed testing, consultation and revision. Today, ecosystem accounts have already been used to inform policy development in more than 34 countries.

Ecosystem accounting – how it works
The SEEA EA is built on five core accounts. These accounts are compiled using spatially explicit data and information about the functions of ecosystem assets and the ecosystem services they produce.

The five ecosystem accounts are:

  • ECOSYSTEM EXTENT accounts record the total area of each ecosystem, classified by type within a specified area (ecosystem accounting area). Ecosystem extent accounts are measured over time in ecosystem accounting areas (e.g., nation, province, river basin, protected area, etc.) by ecosystem type, thus illustrating the changes in extent from one ecosystem type to another over the accounting period.
  • ECOSYSTEM CONDITION accounts record the condition of ecosystem assets in terms of selected characteristics at specific points in time. Over time, they record the changes to their condition and provide valuable information on the health of ecosystems.
  • & 4. ECOSYSTEM SERVICES flow accounts (physical and monetary) record the supply of ecosystem services by ecosystem assets and the use of those services by economic units, including households.
  • MONETARY ECOSYSTEM ASSET accounts record information on stocks and changes in stocks (additions and reductions) of ecosystem assets. This includes accounting for ecosystem degradation and enhancement.

The SEEA EA also supports ‘thematic accounting’, which organizes data around specific policy-relevant environmental themes, such as biodiversity, climate change, oceans and urban areas. Other important thematic accounts would include accounting for protected areas, wetlands and forests.

A key aspect of ecosystem accounting is that it allows the contributions of ecosystems to society to be expressed in monetary terms so those contributions to society’s well-being can be more easily compared to other goods and services we are more familiar with. Monetary estimates can provide information for decision-makers, for example for economic policy planning, cost-benefit analysis, and for raising awareness of the relative importance of nature to society. Ecosystem service values are derived by using a range of economic valuation techniques