Edited by Giles Atkinson, Simon Dietz, Eric Neumayer and Matthew Agarwala
Chapter 21: Environmental accounting
Sustainable development is the stated objective of many countries and the search for operationalizing this concept has focused in part on the System of National Accounts (SNA). The SNA is crucial in the quest for sustainable development because it constitutes the primary source of information about the economy and is widely used for assessment of economic performance and policy analysis throughout the world. Sustainable development begins with monitoring and the information needed to design effective policy. The most recent version of the SNA 2008 (EC et al., 2009) has begun to address this, but the well-known shortcoming regarding the treatment of depletion remains. The SNA 2008 includes guidelines for incorporating natural resource assets in the national balances sheet, but does not yet address depletion of these assets. Thus, while the income from extracting minerals is recorded in the national accounts, the simultaneous depletion of mineral reserves is not. Uncultivated fisheries and forests receive similar treatment, in contrast to the treatment of cultivated fisheries and forests. This can result in quite misleading economic signals about sustainable national income. Indeed, one of the primary motivations for the early environmental accounting efforts in the mid-1980s was concern that rapid economic growth in some developing countries was achieved through liquidation of natural capital, a practice that appears to boost GDP in the short run, but is not sustainable in the long run.
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