Environmental Accounting

Complete ppt on Environmental Accounting

1. Environmental Accounting

2. Environmental Accounting Environmental accounting seeks to track environmental resource use, including both resource depletion and environmental degradation over a given period of time An effective management of natural resource, policy maker mostly needs a consistent, reliable and comparable data set relating to the availability and use of such resources Environmental accounting represent the data about the availability and use of natural resources It is a record that how much resources have been used and how much remaining or adjustment and compensation of resources in national income

3. Objectives of Environmental Accounting Prepare a balance sheet giving a profile or picture of what kind of stock of resources is available at given point in time Prepare an account that what are the uses of this stock of resources and what are the benefits derived from these resources and how they are transformed over time It ensure that stock account(stock resources) and flow resources (resources in use) are consistent

4. Need/Importance of Environmental Accounting Sustainable use of resources require effective management and a record of already used and available resource For effective management policy makers requires a consistent and reliable dataset regarding the availability and use of resources Natural resource account play an important role in measurement of sustainable income i.e loss or gain in natural resources should be considered while determining national income Environmental accounting shows the situation of degradation of resources When natural assets are included in the accounts, it can also give insights into issues of environmental distribution between current and future generations.

5. Approaches for Environmental Accounting Physical Approach Monetary Approach

6. Physical Approach Best approach for environmental accounting that analyze the linkage exist between environment and economy By looking to the current trend of utilization of resources, it can predict the demand of natural resources in future. The physical approach introduced by the Norwegian government in early 1970s. The purpose of this approach was to provide better and more long term planning of exploitation of natural resources

7. Cont.. It was visualized that improved natural resource planning could be obtained by natural resource accounting giving: New and better data Better coordination Common presentation of information on different natural resources Integration of natural resource planning and traditional economic planning Integration of national planning and regional (subnational) planning.

8. Norwegian Accounting System According to the Norwegian Accounting System resources are divided into two broad categories 1.Material resources - resources which can be extracted or harvested from the nature. Accounts for such resources are denoted material accounts. 2. Environmental resources - resources on which possibilities for life and production are dependent. Accounts for such resources have in Norway been denoted environmental accounts

9. Resources Physical Classification 1. Material Resources Minerals resources Minerals, hydrocarbons, stones, gravels etc Biological Resources Biological resources in water, land and on the ground flow resources Solar radiation, hydrological cycles, wind and oceans current Environmental Resources Status Resources Air , water, soil and space etc.

10. Material accounts :The material accounts comprise accounts for reserves in nature and for the material flow of resources from extraction through the economy to the usage. For mineral account (especially gas and oil) the categories are defined as: Developed reserves in which basic investment has been made and production process started. Underdeveloped reserves in which basic investment has been continued and production is not yet started. New field represent the deposit which are newly identified and investment is not yet made. Extraction reserves in which process of extraction is going on and it is not yet reaches to ordinary production. Revaluation involves the revision of previous estimates.

11. Environmental accounts Emission accounts , which give a survey of emissions, discharges and waste. Status accounts , which give a survey of environmental status at one point of time and changes between two points of time. For biological resources like fish the categories are reserves : existing stock resources Recruitment : new addition to present stock Revaluation: revision of previous estimation Extraction: part of resource under use Natural mortality : natural disappearance

12. Resources Accounting In France The French accounting system was introduced by French government in 1978. The French accounting system built up on similar basis which are considered in Norwegian accounting system. The French accounting system classifies the resources in to four broad categories i.e underground resources, land resources, living organism and type of environmental status

13. Resources Physical Classification 1. Underground Resources Minerals and other energy resources ( fossil fuel, hydrocarbons etc.) 2. Living Organism Flora and Fauna 3. Land Inbuilt Areas 4. Type of Environment (status) Status Resources Air , water, soil and space etc.

14. Account Categories Central Account Peripheral Account Agent Account

15. Central Account It describe the state of a resource and also describe the change in its state from beginning to end of a specific period, like existing status of gas and oil deposit, it utilities and status at present time and coming end point.

16. Peripheral Account It shows the relationship between one resource and another resources and between human activities and other resources under use. Relationship between resources and humans. How resources depend on each other and how humans used them

17. Agent Account Agent Account describe the flow between resources and economic activity in term of physical quantities as well as expenditures approved for its maintenance, repair, supervision or improvement In this account category, two parameters are consider, the role of resources in economic activities and development and second is the repair or sustainability to use the resources for long period for maximum development

18. Monetary Approach The monetary accounts are derived from the physical accounts by applying monetary unit values, that is to say, market prices or estimated (imputed) market values, to the physical stocks and stock changes. According to the United Nations Division for Sustainable Development, “the main problem of environmental management accounting is that we lack a standard definition of environmental costs” (UN CSD 2001 p. 4). Consequently, recognizing and uncovering environmental costs is one of the most important processes in environmental accounting.

19. Techniques to identify environmental costs EMS (Environmental Management System) can be used. environmental impact assessment (EIA) is generally used. Cumulative impact assessment is a technique used to examine impacts over larger spatial area (e.g. region) Strategic environmental assessment is a technique used to examine impacts of strategies, plans, policies or programmes . Life cycle assessment (LCA) or cycle inventory analysis can be used for many of the above. The basic idea of life cycle costing is to consider the costs caused over the whole life cycle of a product To the determination of social costs, externalities, contingent costs and environmental costs, environmental economic valuation techniques can be used .