Ecosystem Accounting infographic.
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Objective and Benefits of Ecosystem Accounts
Efforts to promote social and economic well-being is a globally accepted objective, but it’s external effects on Earth's ecosystems are easily forgotten. Our current economic system is based on the assumption that humanity operates separately from nature. Our key measure of the national economy, gross domestic product (GDP), does not take into account the unsustainable use of ecosystems and the services they provide, or the deterioration of ecosystems caused or accelerated by human activity, for example, eutrophication of water bodies, the accelerating extinction wave and climate emergency. Our entire global economic system, as well as the policies that guide it, demands systemic change. One of the most important tools for achieving this goal is ecosystem accounting.
Ecosystem accounts extends the traditional system of national accounts by taking into account holistically both the benefits of natural ecosystem services and the harm caused by human activities to mankind and economic activities. Ecosystem accounts raise natural capital on an equal footing with human, physical and social capital, integrating natural ecosystems into an integral part of the national economy, and by making more visible the relationship between economic activities and ecosystems.
Ecosystem accounting brings together existing information on the extent and condition of ecosystems, and the supply and use of ecosystem services. The aim is to bring the importance of ecosystems to the national economy and humanity into the already established national accounts. Ecosystem accounting enables, inter alia, systematic monitoring of changes in ecosystems, detection of regional differences, and various scenario models to assess, for example, the economic, employment and ecosystem impacts of different policy recommendations.
On the other hand, ecosystem accounting provides quantitative information about the interaction between nature and man: by measuring and monitoring the trends of ecosystem service flows to their users, conclusions can be drawn whether this interaction is on a sustainable or unsustainable basis. However, the mere increase in public awareness of the inseparable link between human activities, nature and the economy is in itself a very important objective.
Ecosystem accounts can be compiled in both biophysical and monetary terms. The numerous benefits of nature are often not priced in the market and are ignored in economic decision-making. Monetary ecosystem service accounts concretely highlight the value of natural benefits.
The link between environmental and ecosystem accounts
Ecosystem accounts are also part of a broader accounting framework. Environmental Accounts (System of Environmental Economic Accounts, SEEA) consists of accounts and balance sheets describing the amounts of use of natural resources, the load from the use of natural resources, and the economics and business activities of environmental protection. Environmental accounts are typically sector-specific, such as forestry, water and energy accounts. Ecosystem accounts differ from other environmental accounts in two significant ways.
First, the focus of the accounts is on Earth’s terrestrial, aquatic and marine ecosystems and the services they provide, rather than just natural resources exploited by humans. Accordingly, ecosystem services which do not generate products or services sold on the market will also be taken into account.
Secondly, ecosystem accounts have a spatial dimension – the information contained in accounts can be represented both in the form of accounting tables and as different map representations. This opens up endless possibilities for a variety of spatial data analyses, as well as the possibility of combining ecosystem accounting data with other spatial planning systems and databases.
Guidance for Ecosystem Accounting and Reporting
The calculation of ecosystem accounts is guided at international level by the Statistical Standard and Guidelines of the United Nations Statistic Division. It has been drafted by experts from all over the world. More detailed technical instructions for biophysical modelling of ecosystem accounting can be found in a separate manual. The UN guidelines allow reporting countries to select the starting materials and methods best suited to each country's resources and knowledge level for ecosystem accounts. An online course on ecosystem accounting (requires registration) can also be found on the UN website.
Ecosystem accounting actors in Finland
Ecosystem accounts are developed in Finland by Statistics Finland, the Finnish Environment Institute and the Finnish Natural Resources Institute. Implementation of these accounts into routine statistics production requires close cooperation between the actors, clear sharing of responsibilities and transparent information exchange. Moreover, significant contributions to competence development, data collection and resourcing is required. The challenges posed by ecosystem accounting for data collection are known and, in order to overcome them, information must be collected by several methods and through cooperation between statistical authorities, research institutions, universities and their research infrastructures and enterprises.
EU Statistical Regulation for ecosystem accounts
The biophysical ecosystem accounts were adopted as an international statistical standard at a meeting of the UN Statistical Committee in March 2021. This took place after a decade of international research and development efforts, in which Finland also actively took part.
Statistical standard refers to the recommendation of making statistics with unified concepts, definitions, classifications, and connections between accounts/statistics. Therefore, the recommendation does not yet oblige statistics to be made, but supports making them statutory. Admission to the statistical standard meant that the statistical framework for ecosystem accounts was seen as sufficiently ready for global implementation, which facilitates comparisons between countries and contributes significantly to monitoring, for example, the implementation of the Sustainable Development Goals.
At the same time, Eurostat, the Ecosystem Accounting Task Force, and the Directors' meeting for environmental statistics and accounts (DIMESA) have been working on a statistical regulation that would make ecosystem accounts one of three new legal modules in the broader environmental accounting framework. According to the Eurostat roadmap, the aim is to have the amendment of the Statistical Regulation concerning EU regulation 691/2011 into force in 2023 and the first reports on data for the statistical year 2024 should be made by each EU Member State in 2027. The proposal for the new legal module was adopted by European Commission in July 2022 and the progress of the whole procedure can be followed from EUR-Lex.
Syke actively participates in the work of Eurostat's Ecosystem Accounting Task Force as a representative of Finland. In addition to the preparation of the statistical regulation, the work includes the development of technical and methodological guidelines and the testing of ecosystem accounting modelling tools. The Task Force meeting materials are public and can be found on the EU CircaBC service:
Please note that materials for older meetings may be out of date in their content and updated to new versions.
More information from Syke experts
- Natural resource and environmental economics, ecosystem services and accounts, natural capital: Group manager Soile Oinonen
- Aquatic ecosystem accounting, monetary valuation: Senior research scientist Liisa Saikkonen
- Marine ecosystem services and accounting: Researcher Susanna Jernberg
- Ecosystem accounting and monetary valuation: Researcher Tin-Yu Lai
- Ecosystem services, urban and municipal ecosystem accounting: Senior researcher Leena Kopperoinen
- Ecosystem extent and condition, EU statistical regulation and Eurostat EA Task Force: Senior researcher Pekka Hurskainen
This website was realized as part of Eurostat Grants project "2020-FI-ENVECOPACK", grant agreement 101023419.