Measuring Environmental Incomes Beyond Standard -Spain

The traditional System of National Accounts (SNA) used by the United Nations has long been a cornerstone for measuring economic activity. However, it has a significant limitation: it fails to account for the costs of environmental inputs from nature and the degradation of environmental fixed assets in natural working landscapes. This oversight means that the true economic value of ecosystems and their services is not fully captured. In response, the United Nations Statistical Division (UNSD) is working on the standardization of the Experimental Ecosystem Accounting (EEA) as part of the System of Environmental-Economic Accounting (SEEA). The EEA aims to address these shortcomings by incorporating ecosystem services and environmental assets into economic calculations. However, the current draft of the EEA still has gaps, particularly in estimating environmental incomes. This paper explores the concept of environmental incomes and compares how different accounting systems, including the Agroforestry Accounting System (AAS), the SNA, and the EEA, measure ecosystem services and environmental incomes. The analysis is based on a case study of privately-owned holm oak dehesas working landscapes in Andalusia, Spain.

The SNA, as currently structured, does not account for the environmental inputs from nature or the degradation of environmental fixed assets in natural working landscapes. This omission means that the economic value of ecosystem services is not fully reflected in national accounts. For example, the benefits derived from clean water, air purification, and biodiversity are not captured in the SNA. As a result, decision-makers lack a comprehensive view of the true economic value of natural landscapes. This limitation is particularly significant in regions where natural resources play a crucial role in economic activities, such as in agricultural and forestry sectors. The SNA’s failure to account for these environmental factors can lead to misinformed policy decisions and underestimation of the importance of environmental conservation.

To address the limitations of the SNA, the UNSD is developing the EEA as part of the SEEA. The EEA aims to extend the concept of economic activity by explicitly incorporating ecosystem services and environmental assets into the estimates of net value added (NVA). This approach adjusts the NVA according to the costs of environmental inputs consumed and the degradation of environmental fixed assets. For instance, the EEA would account for the costs associated with water pollution or soil erosion in agricultural activities. By doing so, it provides a more accurate picture of the economic value of natural landscapes. However, the current draft of the EEA has inconsistencies. It omits the manufactured costs of public economic activities related to the new government institutional sub-sector of the ecosystem trustee. Additionally, the ongoing methodological guidelines of the EEA do not propose to estimate environmental incomes. This gap means that there is no single indicator that integrates the ecosystem services obtained and the evolution of environmental assets in natural working landscapes. As a result, the full economic value of these landscapes remains unaccounted for.

Environmental incomes refer to the economic benefits derived from ecosystem services and environmental assets. These incomes can be both direct and indirect. Direct environmental incomes include revenues from activities such as ecotourism, sustainable forestry, and organic agriculture. Indirect environmental incomes are the economic benefits that arise from the preservation and enhancement of ecosystem services, such as improved water quality and reduced flood risks. The concept of environmental incomes is crucial for understanding the true economic value of natural landscapes. By incorporating environmental incomes into economic accounting, decision-makers can make more informed choices that balance economic development with environmental sustainability. For example, a region that relies heavily on tourism may benefit from investing in the protection of local ecosystems, as this can enhance the attractiveness of the area and increase tourism revenues.

To better understand the measurement of ecosystem services and environmental incomes, a case study of privately-owned holm oak dehesas working landscapes in Andalusia, Spain, was conducted. The dehesas are a unique agroforestry system that combines tree cultivation with livestock grazing. This system provides a range of ecosystem services, including carbon sequestration, biodiversity conservation, and soil protection. The Agroforestry Accounting System (AAS) was used to measure the economic value of these services and the environmental incomes generated. The AAS extends the traditional SNA by incorporating the costs and benefits associated with agroforestry activities. It accounts for the environmental inputs, such as water and soil nutrients, and the degradation of environmental fixed assets, such as soil erosion and tree loss. The AAS also estimates the environmental incomes derived from ecosystem services, such as the value of carbon sequestration and the benefits of biodiversity conservation. The results of the case study show that the AAS provides a more comprehensive view of the economic value of the dehesas compared to the traditional SNA and the current draft of the EEA. The AAS captures the full range of ecosystem services and environmental incomes, highlighting the importance of sustainable agroforestry practices for economic development and environmental conservation.

The comparison between the refined SNA, the refined EEA, and the AAS reveals significant differences in how they measure ecosystem services and environmental incomes. The refined SNA and the refined EEA, in their current state of development, do not fully account for the environmental income contribution to the total income of natural working landscapes. They fail to capture the full range of ecosystem services and the economic benefits derived from environmental assets. In contrast, the AAS provides a more comprehensive and accurate measurement of these factors. The AAS incorporates the costs and benefits associated with agroforestry activities, including the environmental inputs and the degradation of environmental fixed assets. It also estimates the environmental incomes derived from ecosystem services, providing a single indicator that integrates the economic value of natural landscapes. The AAS highlights the importance of sustainable practices in maximizing environmental incomes and supporting economic development. For example, the case study in Andalusia shows that sustainable agroforestry practices can enhance the economic value of the dehesas by increasing environmental incomes. This finding suggests that the AAS can provide valuable insights for policymakers and stakeholders interested in promoting sustainable development and environmental conservation.

The AAS offers several advances that could be relevant for future improvements of the EEA. First, the AAS provides a more comprehensive measurement of ecosystem services and environmental incomes. By incorporating the costs and benefits associated with agroforestry activities, the AAS captures the full range of economic benefits derived from natural landscapes. This comprehensive approach can help policymakers make more informed decisions that balance economic development with environmental sustainability. Second, the AAS estimates the environmental incomes derived from ecosystem services, providing a single indicator that integrates the economic value of natural landscapes. This indicator can be used to track the evolution of environmental assets and the economic benefits derived from ecosystem services over time. Third, the AAS highlights the importance of sustainable practices in maximizing environmental incomes. The case study in Andalusia shows that sustainable agroforestry practices can enhance the economic value of natural landscapes by increasing environmental incomes. This finding suggests that the AAS can provide valuable insights for policymakers and stakeholders interested in promoting sustainable development and environmental conservation. Future improvements of the EEA could benefit from incorporating these advances, particularly in estimating environmental incomes and integrating the economic value of ecosystem services and environmental assets.

The concept of environmental income is crucial for understanding the true economic value of natural landscapes. The current draft of the EEA, while an improvement over the traditional SNA, still has gaps in estimating environmental incomes. The AAS, as demonstrated in the case study of privately-owned holm oak dehesas in Andalusia, Spain, provides a more comprehensive and accurate measurement of ecosystem services and environmental incomes. The AAS incorporates the costs and benefits associated with agroforestry activities, estimates the environmental incomes derived from ecosystem services, and highlights the importance of sustainable practices in maximizing environmental incomes. Future improvements of the EEA could benefit from incorporating these advances, particularly in estimating environmental incomes and integrating the economic value of ecosystem services and environmental assets. By doing so, policymakers and stakeholders can make more informed decisions that balance economic development with environmental sustainability.