Contents - Previous - Next


This is the old United Nations University website. Visit the new site at http://unu.edu


III. Practical application of techniques for valuing marine resources

A. Existing case-study work

The limited work that has been done in dealing with accounting for and valuing marine resources has tended to be more descriptive and/ or conceptual rather than empirical. Such studies have focused primarily on wetlands, secondly on resources close to the shoreline, and only rarely on ocean resources. Also, most of the work deals with marine resources of industrial countries.

A recent article by Costanza et al. (1989) used both WTP and energy analysis-based methodologies to value wetlands in Louisiana. They indicated a broad range within which the value of the wetlands lost per year was established. Also, Turner (1988, 1990, 1991) has directed a number of efforts on how to value wetlands and how their management can be improved. Barbier et al. (1991) undertook a wetland valuation exercise in a developing country (Nigeria).

Another strand of work has attempted to assess the recreation value of marine resources. Again focusing on wetlands, Bergstrom et al. (1990) assessed the recreational value of Louisiana coastal wetlands within a total economic value framework which divided components into current use, nonuse, and future use values. Their results indicated sizable aggregate economic values (of about $145 million annually) for Louisiana wetlands. Other work includes that of Doeleman (1990) who valued marine wilderness areas, and Van't Hof (1985) who analysed marine parks and protected areas in the Caribbean region. The latter concluded that marine parks have high cost-benefit ratios. Another related piece is that by Hodgson and Dixon (1988) who researched the benefits of fisheries and tourism in Palawan, Philippines.

Pollution damage has been evaluated by Grigalunas et al. (1990) who applied an integrated systems/economics damage assessment model to study the impact of oil and hazardous substance spills in the Yellow Sea off Korea, and Kahn (1987) who estimated the economic damage from herbicide pollution in the Chesapeake Bay (USA). There have been several attempts to estimate the damage from various oil spills on the oceans (e.g., see the Oil and Gas Journal, 1989, concerning the Exxon Valdez incident).

B. Challenges for empirical work

At the empirical level, some of the main challenges to improved accounting of marine resources arise because:

a. A large part of the oceans are outside the territorial limits of individual countries and are being exploited like a common property resource (in terms of fishing), and also used as a (costless) sink for wastes.

b. The multi-purpose nature of the resource. The oceans produce not only fish but a large number of other social (recreation, etc.) and climatological services, and they are an important pool of biodiversity. The same argument holds true for coastal resources such as mangroves that produce, among other things, wood (which can be processed into charcoal), while also being important as breeding grounds for shrimp and fish, as bird sanctuaries, etc.

c. Fish, other organisms, and pollutants are not confined to national boundaries, making it more difficult to prepare precise accounts, even for the marine resources within the 200-mile limit of nations.

d. Measuring stocks of fish and other organisms is difficult, and so is the determination of the sustainable level of exploitation.

e. There are significant limitations in knowledge on how pollution physically affects marine output, biodiversity, and the various services.

f. Even in areas where physical information is available, economic valuation in money terms is often difficult or sometimes not possible.

In summary, partly because of the difficulties mentioned above, only limited empirical work has been done to account for and to value marine resources. More attention should be given to this area, in parallel to efforts in international law, as well as to institutional, project, or policy interventions at the national or international level.

IV. Conclusions and recommendations

1. Accounting for marine resources and valuing their contribution to generating sustainable income and providing other services has been neglected in the past but should be given more attention in the future.

2. Better accounting for marine resources both inside and outside of national territorial waters will face conceptual and empirical problems. Nevertheless, work should be pursued in this area, perhaps leading up to an international workshop in a year or two.

3. For oceans outside territorial waters, one should work towards the goal of establishing Ocean Accounts. Various international agencies gather information concerning the oceans, and one of them (such as FAO or the United Nations Statistical Office) could be assigned to take the lead in preparing such accounts. In such accounts, extraction of fish for processing and/or sale in countries would represent an export, and the dumping of wastes would represent an import that reduces the natural capital of the ocean in question. An international agency should be given the responsibility of establishing these accounts in collaboration with other agencies. A paper might be commissioned to review existing databases and suggest which agency should be appointed the lead agency to pursue this initiative.

Notes

1. For a discussion and example of this see Aylward, B., and E. Barbier, "Valuing Environmental Functions in Developing Countries," forthcoming in Biodiversity and Conservation.

2. See for example Randall, A., and J.R. Stoll, "Existence Value in a Total Valuation Framework," in Managing Air Quality and Scenic Resources at National Parks and Wilderness Areas, Westview Press, 1983.

3. Considerable work is going on to identify defensive expenditures. Such expenditures by firms are treated in the current System of National Account (NSA) as intermediate cost and are therefore not part of value added or final output. Defensive expenditures by households and governments, on the other hand, are treated as final expenditures and included in GDP. This practice is being questioned, and proposals are being discussed to change this (see Lutz, E., and M. Munasinghe, "Accounting for the Environment," Finance and Development 28 (1991) no. 1:19-21).

4. For an example, see Hanley, N.D. "Valuing Rural Recreation Benefits: An Empirical Comparison of Two Approaches," Journal of Agricultural Economics 40 (1989), no. 3: 361-374.

5. See, for example, several papers appearing in: The Energy Journal, Special Issue on Electricity Reliability, vol. 9, December 1988.

6. For examples of contingent valuation studies see the case-studies on Haiti and Kenya in this chapter and Munasinghe, M., Electric Power Economics, London: Butterworths, 1990, chapters 2, 7, 8, and 9.

Select bibliography

Aylward, B. The Economic Value of Ecosystems: 3 - Biological Diversity, LEEC Gatekeeper Series No. GK91-03, IIED/UCL London Environmental Economics Centre, June 1991.

Aylward, B., and E. Barbier. "Valuing Environmental Functions in Developing Countries." Biodiversity and Conservation 1(1992), no. 1: 34.

Barbier, E.B. The Economic Value of Ecosystems: 2 - Tropical Wetlands, LECC Gatekeeper Series No. GK89-02, August 1989.

Barbier, E.B. "The Economics of Controlling Degradation: Rehabilitating Gum Arabic Systems in Sudan." LEEC Discussion Paper No. DP90-03, IIED/UCL London Environmental Economics Centre, June 1990.

Barbier, E.B. The Economic Value of Ecosystems: 2 - Tropical Forests, LEEC Gatekeeper Series No. GK91-01, January 1991.

Barbier, E.B., W.M. Adams, and K. Kimmage. "Economic Valuation of Wetland Benefits: The Hadejia-Jama'are Floodplain, Nigeria." LEEC Discussion Paper No. DP91-02, April 1991.

Barde, J.P., and D.W. Pearce (eds) Valuing the Environment: Six Case Studies. London: Earthscan, 1991.

Bergstrom, J.C., J.R. Stoll, J.P. Titre, and V.L. Wright. "Economic Value of Wetlands-based Recreation." Ecological Economics, 2,1990, 129-147.

Costanza, R., S.C. Fraber, and J. Maxwell. "Valuation and Management of Wetland Ecosystems." Ecological Economics, 1,1989, 335-361.

Dixon, J.A., and P.B. Sherman. Economics of Protected Areas. Washington, D.C.: Island Press, 1990.

Doeleman, J.A. "On the Economic Valuation of Marine Wilderness," Research Report or Occasional Paper No. 174. Australia: University of Newcastle, 1990.

Durojaiye, Ramidele O., and Anthony E. Ikpi. "The Monetary Value of Recreational Facilities in a Developing Economy: A Case Study of Three Centers in Nigeria." Natural Resources Journal 28 (1988), no. 2: 315-328.

Finney, C.E., and W. Western. "An Economic Analysis of Environmental Protection and Management: An Example from the Philippines." The Environmentalist 6 (1986), no. 1.

Grigalunas, T.A., J.J. Opaluch, S.C. Chung, D. French, and M. Reed. "Adaptation of an Integrated Ocean Systems/Economics Damage Assessment Model to Korea: Some Preliminary Results." Ocean and Shoreline Management 14 (1990), 51-57.

Hanley, N.D. "Valuing Rural Recreation Benefits: An Empirical Comparison of Two Approaches." Journal of Agricultural Economics 40 (1989), no. 3, 361-374.

Hodgson, G., and J.A. Dixon. Logging versus Fisheries and Tourism in Palawan: An Environmental and Economic Analysis. EAPI Occasional Paper No. 7. Honolulu: East-West Center, 1988.

Kahn, J.R. "Economic Damage from Herbicide Pollution in Chesapeake Bay." Project Appraisal, vol. 2. no. 3, September 1987, pp. 142-152.

Kramer, R.A., E. Mercer, and P. Shyamsundar. "Economic Valuation of the Environmental Impacts of Development Projects: Study Design, Concepts and Progress." Briefing Paper, 24 April 1991.

Lutz, E., and M. Munasinghe. "Accounting for the Environment." Finance and Development 28 (1991), no. 1: 19-21.

Mercer, E. "An International Nature Tourism Travel Cost Model: Estimating the Recreational Use Value of a Proposed National Park in Madagascar." Duke University, April 1991.

Munasinghe, M. Electric Power Economics. London: Butterworths, 1990, chapters 2, 7, 8, and 9.

Munasinghe, M. "Managing Water Resources to Avoid Environmental Degradation: Policy Analysis and Application." Environment Working Paper No.41. Washington, D.C.: World Bank, 1990.

Oil and Gas Journal, Vol. 87, 10 April 1989.

Pearce, D.W. "An Economic Approach to Saving the Tropical Forest." LEEC Paper 90-06, 1990.

Pearce, D.W., and A. Markandya. Environmental Policy Benefits: Monetary Valuation. Paris: OECD, 1989.

Peters, C.M., A.H. Gentry, and R.O. Mendelsohn. "Valuation of an Amazonian Rainforest." Nature, 339, 29 June 1989, pp. 655-656.

Phelps, C.E. "Death and Taxes: An Opportunity for Substitution." Journal of Health Economics, 7, 1988, pp. 1-24.

Randall, A., and J.R. Stoll, "Existence Value in a Total Valuation Framework." In: Managing Air Quality and Scenic Resources at National Parks and Wilderness Areas. Westview Press, 1983.

Ruitenbeek, H.J. "The rainforest supply price: A tool for evaluating rainforest conservation expenditures." Ecological Economics 6 (1992): 57-78.

The Energy Journal. Special Issue: "Electricity Reliability," vol. 9, December 1988.

Tobias, Dave, and Robert Mendelsohn. "Valuing Ecotourism in a Tropical Rainforest Reserve." Ambio 20 (1991), no. 2.

Turner, K. "Economics and Wetland Management." Ambio 20 (1991), no. 2: pp. 59-63.

Turner, K. "Market Intervention Failures in the Management of Wetlands." Environment Committee, Group of Economic Experts, OECD, May 1990.

Turner, K. "Wetland Conservation: Economics and Ethics." In: D. Collard, D.W. Pearce and D. Ulph, eds Economics, Growth and Sustainable Developments: Essays in Memory of Richard Lecomber. London: MacMillan, 1988, pp. 121-159.

Whittington, D., J. Briscoe, X. Mu, and W. Barron. "Estimating the Willingness to Pay for Water Services in Developing Countries: A Case Study of the Use of Contingent Valuation Surveys in Southern Haiti." Economic Development and Cultural Change 38 (1990), no. 2.

Willis, K.G., and G.D. Garrod. "An Individual Travel-Cost Method of Evaluating Forest Recreation." Journal of Agricultural Economics 42, no. 1, 1991, pp. 33-42.

World Bank. "Brazil: An Analysis of Environmental Problems in the Amazon." Vol. 2, annex 5, p. 5.

World Bank. Operational Manual Statement No. 4.00, annex A.

Van't Hof, T. "The Economic Benefits of Marine Parks and Protected Areas in the Caribbean Region." In: Proceedings of the Fifth International Coral Reef Congress, Tahiti, 1985, pp. 551-555.

Addendum: A reaction from Max Börlin


1. The need for environmental accounting
2. Physical accounting in the marine sector
3. Valuation techniques
4. Environmental accounting at national level
5. Environmental accounting beyond the national level
6. Conclusions and recommendations
Notes


1. The need for environmental accounting

"The true value of the marine environment is not understood and the full social costs of using it and the resources it supports are not taken into account. Too often, scientific data are available but are not synthesized in a way to be understood and integrated into coastal management processes."1 This statement in IUCN/UNEP/WWF's Second World Conservation Strategy Project is shared by a participant from the UN Office for Ocean Affairs and the Law of the Sea at UNCED's PrepCom³ in Geneva: "So many developing countries still don't know what's out there, and are still not in a position to conduct real resource assessments, to really collect all the information and data to be used as a major economic component of their development plans." These shortcomings are rightly stressed by Lutz and Munasinghe.

2. Physical accounting in the marine sector

2.1 Physical accounting a prerequisite of monetary accounts

Lutz and Munasinghe mention the need for relevant data in physical terms. In this regard, UNESCO's Intergovernmental Oceanographic Commission (IOC), in cooperation with UNEP and WHO, studied for UNCED ways and means of strengthening observation systems for the marine sector, i.e., through the establishment of a Global Ocean Observing System (GOOS),2 and the Satellite System of Integrated Environmental and Economic Accounting (SEEA),3 which aim at covering comprehensively the total stock of reserves of natural resources and changes therein, even if they are not (yet) affected by the economic sector.

GOOS is being developed as a comprehensive, integrated system for collecting, analysing and distributing physical, chemical and biological data from the ocean world, including the coastal zones and enclosed and semi-enclosed seas. It consists of five "modules" for living marine resources, coastal zones management and development, health of the ocean, ocean services, and climate prediction.

For UNCED, IOC has drafted a "Declaration on a Global Ocean Observing System (GOOS)" reading: "Recognizing the present evidence of anthropogenic environmental change in the oceans and the key role of the oceans in determining the earth's climate, UNCED should assign a high priority to planning, implementing and maintaining a Global Ocean Observing System and request IOC to continue the development of this system, in cooperation with other international organisations."4 PIM XIX may wish to subscribe to this Declaration.

2.2 Indicators in physical dimension

"A problem lies in converting the values of certain natural assets to monetary terms so that they can be properly compared with values resulting from market transactions. Until there is further progress in solving this problem, sustainability indicators will need to be used."5 Given this fact, IUCN/UNEP/WWF6 request the elaboration of an ecological sustainability indicator covering ecological life-support systems, biodiversity, sustainable use of renewable and minimum depletion of non-renewable resources, and acceptance of the carrying capacity of supporting ecosystems.

Examples of other non-monetary indicators are:7

a. OECD's Preliminary Set of Environmental Indicators comprising 18 environmental indicators (of which "river quality," "protected areas," and "threatened species" concern the stock of environmental resources, and the other 15 flows such as "fish catches") followed by 7 key indicators reflecting economic and population changes of environmental significance. At the macro level, priority is being given to measures relevant for the development of satellite accounts to the system of national accounts, and for work on natural resource accounts (for example, on forest resources).8

b. The World Resources Institute's Vulnerability Index measuring vulnerability to anthropogenic change and abundance of tropic coastal ecosystems in some 100 countries.

c. The Index for greenhouse gas net emissions published by World Resources Institute in collaboration with UNEP and UNDP; as the Delhi-based Centre for Science and Environment remarks,9 such an index requires a value-loaded allocation of the earth's natural ability to cleanse the atmosphere as well as equating "luxury emissions," e.g., of automobiles, with "survival emissions" e.g., from paddy fields or cattle in subsistence farming.

However, disaggregated physical accounts result in an unusable mountain of statistics, and do not enable economic policymakers to integrate resource and environmental considerations into economic, monetary decisions.10 For that purpose, aggregation through monetarization is required, as discussed by Lutz and Munasinghe.

PIM XIX could support the elaboration of non-monetary indicators for the marine sector prepared in parallel with monetary environment accounts.

3. Valuation techniques

The paper of Lutz and Munasinghe discusses valuation techniques. These methodologies should be evaluated in the light of Giarini's "Theory of Wealth and Welfare" and of the functional value of marine resources.

3.1 The theory of wealth and welfare

In the terminology of the theory of wealth and welfare developed by Giarini in his "Dialogue on Wealth and Welfare,"11 "Dowry and Patrimony" (D&P), i.e. the source of wealth and welfare, is the total stock of natural (physical), biological, man-made (cultural), and monetarized (capital) D&P, and has, owing to the synergy between the different D&P components, "utilization value." The latter is the utility gained from a stock of products or services for the period of duration of their lifetime whatever their destination, and regardless of the fact that they are paid for or priceless. Thus, utilization value is the measure of real wealth and welfare, and results from the (objective) availability or level of D&P and the (subjective) accessibility to it (both material and cultural).

Factors affecting the estimate of utilization value in the context of, for example, a decision to exploit or abandon an offshore resource include the detection of an offshore resource, resource characteristics, status of current technology, socio-political conditions, economic aspects, and capacity and demand aspects. Similarly, the value of oceans for human nutrition might depend on the existence of indigenous cooperatives for fishing and the existence of man-made infrastructure such as ports. This illustrates the importance of synergy between natural and man-made accumulation of D&P as mentioned earlier.

To measure or indicate welfare requires three steps:

a. First define a new theory of value based on a synthesis of economics and ecology and of priced and non-priced activities based on the new perspectives in terms of the service economy (utilization value).

b. Then devise the most appropriate methods and possibilities of measurement (selection of appropriate monetary and non-monetary indicators).

c. Finish with regular reports comparable to the one done by the World Bank on the basis of GNP, but based on a wider notion of economic development and providing an analogous instrument within a broader economic framework, thus opening the possibility of identifying new operational forms of managing the common heritage of mankind as represented by the oceans.

3.2 Earth's rights

Lutz and Munasinghe mention non-use or intrinsic values of marine resources, currently defined as values that reside "in" something independently of any actual or potential use, but which is captured by people through their preferences in the form of non-use values. 12

In this context, IUCN/UNEP/WWF's Strategy for Sustainable Living13 proposes respecting and caring for community life and asserts our responsibility towards the other forms of life with which we share this planet. Similar views had been expressed at WWF's Anniversary Celebration in Assisi 1987, and UNCED is working at the "Earth Charter: The Rio de Janeiro Declaration on Environment and Development" that stresses our common, but differentiated responsibility towards the Earth as a whole.

The concept of "utilization value" in the "Dialogue on Wealth and Welfare"14 of this new "economics of the common heritage of mankind," covers physical and non-physical uses of natural D&P. It insists on the cultural component of D&P and on the integration of ecology and the economy and hence, also copes with the Earth's rights.

3.3 The functional value of marine resources

Considerable work is going on to identify environmental defensive expenditures15 and the costs of environmental damages. On the positive side increasing attention is being given to the functional value of marine resources, since they help satisfy physiological and psychological human needs through their:

a. Regulation functions: regulation of certain climatic conditions; storage and recycling of organic matter, nutrients, inorganic human waste; maintenance of biodiversity; providing nursery, feeding, and resting habitats.

b. Carrier functions.

c. Production functions: providing oxygen, mineral resources, tidal, wild plants, and animals.

d. Information functions: providing opportunities for "recreative," spiritual/religious, cultural, educational, and scientific activities.

The theory of wealth and welfare also stresses the importance of the functional value of marine resources and, more generally, of service activities (as opposed to production activities).

3.4 Summarizing

Lutz and Munasinghe recall shortcomings of the available valuation techniques. Their role is not to capture the long-term, global functional value of natural resources. More generally, a systematic evaluation and adjustment in the light of the concept of utilization value, which includes functional values, is needed.

4. Environmental accounting at national level

An accounting framework is needed that permits the computation of measures such as an environmentally adjusted net domestic product (EDP) and an environmentally adjusted national income (ENI), which account for natural capital and its depreciation, relevant categories of defensive environmental expenditures, and damages to the environment as a result of production and consumption activities. Thus, resource depletion and environmental degradation would enter into the traditional macro-economic measures of gross domestic product (GNP) and national income (NI).

This suggestion of Lutz and Munasinghe converges with draft recommendations presented by the UN Statistical Office and UNCED Secretary-General stating that the integration of sustainability concerns in macroeconomic management requires the establishment of better measurement of the crucial role played by the environment as a source of natural capital and as a sink for by-products generated during production and consumption activities . The goal is a Satellite System of Integrated Environmental and Economic Accounting (SEEA) with the following steps:

a. segregation and elaboration of all environment-related flows and stocks appearing in present traditional monetary accounts;

b. linkage of physical resource accounting with monetary environmental accounting (as mentioned in pare 2.1 above);

c. assessment of environmental costs and benefits;

d. accounting for the maintenance of tangible wealth including natural assets;

e. elaboration and measurement of indicators of environmentally adjusted product and income.

5. Environmental accounting beyond the national level

Lutz and Munasinghe recall that a large part of the oceans are outside the territorial limits of individual countries; hence, Global Accounts for the Oceans are needed. This aspect is crucial; in fact, the suggestions for environmental accounting at the national level have a logical addressee, namely the agency producing today the traditional product and income measures. The elaboration of supranational ocean accounts on the other hand is new, the relevant recommendation has no logical addressee and hence, requires supranational arrangements between international organizations in charge of specific contributions. This requirement should be considered in discussing institutional mechanisms for sustainable development of the oceans at regional and global levels.

6. Conclusions and recommendations

One of the 18 chief recommendations of Pacem in Maribus XVI (1988) says: "On the need for new economic/ecological indicators:

We will need to develop and use new indicators of value added: calculations that include, for example, the value deducted from societal benefits by the production process itself."

Pacem in Maribus XIX may wish to come back to this general recommendation elaborating it in ways suggested by our authors and referring it to the UNCED process:

1. Concerning "2.1 and 2.2 Physical accounting," PIM XIX could subscribe to IOC's "Declaration on a Global Ocean Observing System (GOOS)" stressing also the need for non-monetary environmental indicators.

2. Concerning "3. Valuation Techniques," PIM XIX may ask for more systematic integration of the valuation techniques with the principles developed in the theory of wealth and welfare, this new "economics of the common heritage of mankind," with special reference to the long-term global functional value of natural resources.

3. Concerning "4. Environmental accounting at national level," PIM XIX may wish to lend special support for the work of the UN Statistical Office in developing SEEA. A coordination between GOOS and SEEA would be mutually beneficial; the concepts of functional and utilization value of marine resources would be a priority topic.

Also PIM XIX could support the activities of the intergovernmental "Task force on environmental accounting" (of UN Statistical Commission, the Economic Commission for Europe, and Conference of European Statisticians and suggest that the pilot patrimony case-studies include the marine sector.

4. Concerning "5. Environmental accounting beyond the national level," our authors recommend the establishment of Ocean Accounts for marine resources outside territorial waters; PIM XIX may consider this activity of first priority, including the preparation of the suggested review paper. Again, coordination with the GOOS activities would be a prerequisite. Keeping in mind that national bureaux of statistics and national accounts are not responsible for preparing supranational accounts, some other institutional solution is needed; PIM XIX may ask for the lead to be taken by an appropriate international organization along the lines suggested by our authors and in strong cooperation with an appropriate International Environmental Academy; PIM XIX may wish to come back to this issue when dealing with institutional mechanisms at the regional and global levels.

Notes

1. IUCN/UNEP/WWF. "Caring for the Earth - A Strategy for Sustainable Living." Gland, Switzerland, 1991, p. 152. A general overview of environmental accounting is given in chapter 8 of Elkins, P., and M. Max-Neef, eds. Real-life Economics: Understanding Wealth Creation. London: Routledge, 1992.

2. Preparatory Committee for UNCED, Third Session 1991. Global Ocean Observing System (GOOS). A/CONF.151/PC/70, 26 June 1991. Agenda 21, chapter 17, programme area D.

3. Ibid. Now in Agenda 21, chapter 8, programme area D.

4. See also the discussion of indicators in Giarini's "Dialogue on Wealth and Welfare" (8) mentioned in para. 3.1 below.

5. OECD. "Environmental Indicators - A Preliminary Set." Annex to State of the Environment, Paris, 1991, p. 72.

6. Agarwal, A., and S. Narain. Global Warming in an Unequal World - A Case of Environmental Colonialism. New Delhi: Centre for Science and Environment, 1991.

7. Repetto, R. "Balance-Sheet Erosion - How to account for the loss of natural resources." In: International Environmental Affairs 1, no. 2, Spring 1989, pp. 103-137.

8. Giarini, O. Dialogue on Wealth and Welfare: A Report to the Club of Rome. Oxford: Pergamon Press, 1980.

9. Giarini, O., and N. Börlin. "Toward estimating the Contribution of Oceans to Wealth and Welfare." In (14), pp. 229-245.

10. Pearce, D.W. et al. "Blueprint for a Green Economy," London: Earthscan, 1989, p. 105. For a detailed discussion see Markandya, A., "The Value of the Environment: A State of the Art Survey," presented at the International Conference on the Economy and Environment in the 1990s, Neuchatel, Switzerland, August 1991.

11. In Footnote 3 of their paper the authors assert that environmental defensive expenditures by firms are intermediate costs and therefore not part of value added or final demand. Let us assume that an outboard motor boat factory buys from a physical instruments company some noise-isolating devices to be added to the boats it produces. These intermediate noise-defensive expenditures would be excluded from value added and final demand only if the anti-noise devices remain forever in the boat factory and never go with the boats into final use, or inversely if the noise-isolating devices do not stem from the two original production factors of present national accounts, namely, labour and manmade capital, which obviously is not so. See:

Börlin, M., "Industrial environmental defensive expenditures do not inflate GNP? The GNP revision revisited." The Environmentalist 11 (1991), p. 312, UK.

See also Antille, G., and M. Börlin. Intégration des dépenses environnementales dans l'analyse entrées-sorties. Contribution au 23ème Colloque International de l'Association d'Econometrie Appliquée, Econometrie de l'envirounement, Genève, Janvier 1992.

12. With its national research programme on environmental damages, Germany probably placed itself in the forefront of research in damages expressed in monetary terms. Weskamp, A. (Bundesumweltministerium), and W. Schulz (Umweltbundesamt), "Nutzen des Umweltschutzes Kosten der Umweltverschmutzung," Informationen, Bonn, September 1991. In the USA, e.g., impetus is coming from the need for damage assessment under the US Comprehensive Environmental Response, Compensation and Liability Act of 1989 (CERCLA), p. 61.

13. de Groot, R.S. Functions of Nature - Evaluation of Nature in Environmental Planning, Management and Decision-making, Netherlands: Groningen, 1992.

14. Vandermeulen, J., and S. Walker. Ocean Technology, Development, Training and Transfer. Proceedings of Pacem in Maribus XVI. Oxford: Pergamon, 1991.

15. Commission statistique et Commission economique pour l'Europe; Commission des statisticiens européens; 39ème réunion plénière (1991):

- Le Secrétariat. Quelques approches de la comptabilité de l'environnement. CES/700 20/3/ 1991.

- Bureau de statistique de l'ONU. Statistiques et comptabilité de l'environnement. CES/ 701 10/4/1991. See UN Statistical Office. Handbook on Environmental Accounting. New York, February 1994.


Contents - Previous - Next