EA SDI2007 Proceedingswww

ENVIRONMENTAL ACCOUNTING SUSTAINABLE DEVELOPMENT INDICATORS May 23-25, 2007, Prague PROCEEDINGS rd of the 3 international conference EA-SDI 2007 organised by Jan Evangelista Purkyně University in Ústí nad Labem in collaboration with Charles University Environment Center with the support of Czech Statistical Office Ministry of the Environment of the Czech Republic Reviewed by Iva Ritschelová and Egor Sidorov Design, layout and typesetting by Egor Sidorov The papers have not been edited, and J. E. Purkyně University in Ústí nad Labem can accept no responsibility for their accuracy. Views expressed in all contributions are those of the authors. All copyrights remain with the authors. ISBN 978-80-7044-883-0 Acknnowledgement The EA-SDI 2007 conference was organized as part of the following projects: “Application of Environmental Accounting” (402/06/1100), 2006-2008 funded by the Grant Agency of the Czech Republic, and “Macro-Economic Implications of Environmental Protection in the Course of Transformation of the Czech Republic” (A700850701), 2007–2009 funded by the Grant Agency of the Academy of Sciences of the Czech Republic The support is gratefully acknowledged! Preferred citation: Proceedings of 3rd International Conference “Environmental Accounting — Sustainable Development Indicators” 23–25 May 2007, Prague, Czech Republic. J. E. Purkyně University in Ústí nad Labem. ISBN 978-80-7044-883-0 JAN EVANGELISTA PURKYNĚ UNIVERSITY IN ÚSTÍ NAD LABEM Horeni 13, 400 96 Usti nad Labem, Czech Republic Fax: ++ 420-472-772-9822033 Email: [email protected] http://ea-sdi.ujep.cz 2 Preface Dear reader, With this Book of Proceedings we would like to bring to a close the International Conference on Environmental Accounting and Sustainable Development Indicators 2007 (EA-SDI 2007), which took place in Prague on 23-25 May, 2007. This event was brought to you by Jan Evangelisty Purkyně University in Ústí nad Labem in collaboration with Charles University in Prague, where all the conference activities actually took place. Invitations to the EA-SDI 2007 conference have been accepted by over 120 participants from almost 30 countries of Europe, Asia and America. Among the participants were senior officials of Ministries of the Environment and National Statistical Offices, academics, representatives of educational institutions, as well as representatives of the business sector. The whole event was held under the auspices of Mr. Martin Bursik — the Minister of the Environment of the Czech Republic and of Mr. Jan Fis cher — the Presiden t of the Czech Statistical Office; this fact underlines the importance of the conference. Both conference organization team and participants were privileged to welcome such special guests, as Mrs. Ruth Bízková — the Vice Minister of the Environment of the Czech Republic, Prague, Mr. Stanislav Drápal — the Vice President of the Czech Statistical Office, Prague, Mr. Bedřich Moldan — the director of the Center for the Environment of Charles University, Prague, Mrs. Elizabeth Mollgaard — the representative of Eurostat, Luxembourg, Mrs. Marta Nagy Rothengass — the representative of the EC, Brussels, and Mr. Karl Schoer — the representative of the German Statistical Office, Wiesbaden. Issues connected with the environmental accounting and sustainable development indicators, which determined the conference’s topic, have been at focus of social interest for a long period of time. Participants had a chance to present their papers and to attend the following sixth conference’s sessions: - Session A: Sustainability Indicators and Ecosystem and Land use Accounting, - Session B: Environmental Accounting and Reporting at Micro Level, - Session C: Accounting of Environmental Activities, - Session D: Material, Energy and Carbon Accounting, - Session E: Measurement of Decoupling, National Accounts’ Adjustment, Damage Valuation, - Session F: Population Census 2010 as a Tool for Environmental Policy. It is important that by the end of the conference we are able to arrive at some conclusions about the common directions of future activities of the institutions involved. The organization committee of the conference hopes that participants have obtained new understanding, fresh insights and valuable experiences. We hope that the newly gained knowledge will be useful in their future work. We believe that this conference and its outcomes will contribute towards harmony between the activities of society, nature and the environment. In conclusion, we would like to thank all participants for coming to our event. According to the numerous feedback messages and comments, the outcomes of the conference have been very encouraging to those, who work in the fields connected with environmental accounting and sustainable development indicators. 3 We would like to state that we will continue making efforts in promoting these vital topics amongst various stakeholders through future regular meetings in the Czech Republic, and we will be very pleased to welcome you at the next conference on Environmental Accounting — Sustainable Development Indicators* coming up in 2009! Iva Ritschelová, Rector of Jan Evangelista Purkyně University in Ústí nad Labem, Czech Republic Conference Chairperson May 23-25, 2007 * For closer information about forthcoming conference EA-SDI 2009 please check www.ea-sdi.ujep.cz for updates. 4 Contents Ope n in g Ope n in g a n d Ke yn ot e Spe e ch e s Opening Speech ............................................................................................................................................. 11 Rut Bízková Opening Speech ............................................................................................................................................. 13 Stanislav Drápal Keynote Speech ............................................................................................................................................. 16 Karl Schoer Keynote Speech ............................................................................................................................................. 20 Márta Nagy-Rothengass Keynote Speech ............................................................................................................................................. 24 Bedrich Moldan Keynote Speech ............................................................................................................................................. 26 Elisabeth Møllgaard Se ssion A: Su st a in a bilit y I n dica t or s a n d Ecosyst e m a n d La n du se Accou n t in g Taking the Measure of the Incalculable: Democratic Freedom as a Function of Ecological Resilience.................................................................................................... 31 Eric Zencey Challenges of the Renewed EU Sustainable Development Strategy for the National Accounting ....................................................................................................................... 47 Josef Seják Measuring Land Appropriation of the Czech Foreign Trade .......................................................... 52 David Vackar Objectives of Revitalisation Planning According to the Results of Fish Fauna Monitoring ............................................................................................................................ 60 Zsuzsanna Nagy, Miroslav Švátora, Bořek Drozd New Approaches to Accounting of Natural Capital and Ecosystem Services.......................... 70 Lidiya Hryniv The Spatial Mangrove Ecosystem Accounting: A Tool for Achieving the Sustainable Mangrove Ecosystem Activities ............................................................................... 77 Dewayany Sutrisno, Suwahyuono, Aris Poniman Geo-Referenced Environmental Accounting for Multi-functionality. Valuation and Land Accounts: The Case of S. Erasmo Island in the Lagoon of Venice. ...................... 88 Alessandra La Notte, Margherita Turvani Translating Ecosystem-Services Science into Guidelines for Brazilian Decision Makers..................................................................................................................108 Eduardo H. Ditt, Susana Mourato, Jonathan D. Knight 5 Integrating Sustainable Development Indicators (SDIs) for Sustainable Built Environment Assessment ...............................................................................113 Yangang Xing, Mohamed A. El-Haram, Jan Bebbington, R. Malcolm W. Horner Creating a Visual Historical Perspective for Sustainable Development of Urban Landscapes…………………………………………………………………………………………………….……123 Pavel Raška, Tomáš Oršulák, Jiří Anděl, Martin Balej Se ssion B: En vir on m e n t a l Accou n t in g a n d Re por t in g a t M icr o Le ve l Environmental and other Sustainability Performance Indicators — Key Features of Recent UN, GRI and UK Proposals and the Assurance Implications ................131 Robert Langford Environmental Key Performance Indicators and Corporate Reporting ...................................147 Jiří Hřebíček, Petra Misařová, Jaroslava Hyršlová Sustainability Accounting versus Environmental Accounting .....................................................156 Jaroslava Hyršlová, Jan Vávra Moving beyond Orthodox Methods: How to Benefit from Online Reporting for Communicating Sustainability Issues ...........................................................................................163 Ralf Isenmann, Jorge Marx Gómez Cerebral – a Web Based Sustainability Reporting Software .......................................................191 Jorge Marx Gómez, Ralf Isenmann, Teméd Ilán, Jens Meyer, Thomas Path, Ruben Schorling Multicriterial Valuation of Environmental Projects ..........................................................................204 Jana Soukopová Environmental Disclosure in the Mining Sector in Latin America and South Africa ..........................................................................................................................................209 Marina Mitiyo Yamamoto*, Luiz Fernando Distadio, Ronaldo Campos Fernandes Current Levels of Environmental disclosure in the Oil, Gas and Refinery Industry in China ..............................................................................................................226 Xiaomei Guo, Fang Wang, Hua Tian Se ssion C: Accou n t in g of En vir on m e n t a l Act ivit ie s Liberalisation of Trade in Environmental Services — Methodological Approaches....................................................................................................................235 Eva Tošovská NAMEA Activities at Eurostat — More than 10 Years of Experiences ......................................245 Stephan Moll, Julio Cabeca, Elisabeth Mollgaard Environmental Management Accounting for Municipal Waste Reduction with Utilisation of Cleaner Production (Consumption) Principles ..............................................258 Ilona Obršálová, Marcela Kožená, Ticiano Costa Jordão, Robert Baťa 6 Comparing Financial Statement Reporting of Environmental Costs, Obligations, and Activities: A Review of Disclosures by Publicly-Traded Vehicle Manufacturers in Developed Nations....................................................................................265 Suzanne B. Summers Consequences of the Liberalization of Environmental Services.................................................272 Iva Ritschelová, Eva Tošovská, Egor Sidorov, Jiří Študent Standardized Methodology for Economic-Social-Environmental Result Based Administration ...................................................................................................................276 Roy Martelanc, Felipe Turbuk Garran Se ssion D : M a t e r ia l, En e r gy a n d Ca r bon Accou n t in g The Material Flows Indicators in the Sustainability Measurement for Tourist Coastal Places.........................................................................................................................289 Maria de las Nieves Suárez Sánchez Tracing Chemical Flows in the Social Metabolism. Could it be REACHed? ............................302 Márton Herczeg Local Agenda 21 in Çorlu, Turkey and its Role in Waste Management ..................................313 Füsun Uysal, Remzi Erman Accounting for Direct and Up-Stream Energy Requirements and Carbon Emissions Related to the Production System in the Czech Republic .......................317 Jan Kovanda, Miroslav Havranek, Helga Weisz, Gloria Gerilla Energy Balance and Balance of Reserves Fuels...............................................................................327 Miroslav Farský, Martin Neruda, Roman Neruda, Jiří Iša Energy and Exergy Analysis of a Sulfation Unit of a Powder Detergent Plant.....................331 G. Bektaş, F. Balkan Waste Minimization as an Option to Preserve the Environment ...............................................339 Martha Elena Velasco Becerra Final Report of Material Flow Accounts (MFA) in Slovenia...........................................................348 Vida Butina, Maja Zupan Economy-Wide Material Flow Accounts Compilation in the Czech Statistical Office .................................................................................................................359 Eva Krumpová Se ssion E: M e a su r e m e n t of D e cou plin g, N a t ion a l Accou n t s’ Adj u st m e n t , D a m a ge Va lu a t ion Critical Factors in the Assessment of External Costs from Transport: How Reliable are the Estimations for Decision Makers?...............................................................365 Vojtěch Máca, Jan Melichar Modelling Recreation Demand Function: A Contingent Behavior Model.................................373 Jan Melichar 7 External Costs Associated with Waste Management Practices in the Czech Republic.................................................................................................................................386 Miroslav Havránek, Milan Ščasný Multidimensional Analysis of Macro Sustainability of Austria: A Dynamic Approach..................................................................................................................................391 Stanislav E. Shmelev, Beatriz Rodríguez-Labajos Is France Sustainable? Some Empirical Evidence from Eight Sustainable Development Indicators ...................................................................................................409 Myriam Nourry Environmentally Adjusted GDP for the Czech Republic: To What Extent is Assessment Possible? ...........................................................................................431 Iva Ritschelova, Egor Sidorov Importance of Socio-economic Valuation of Forest Services to Sustainable Accounting........................................................................................................................451 Miroslav Hájek, Karel Pulkrab The Effect of Different Scale and Mapping Pattern Size on Landscape Evaluation ..........................................................................................................................456 Marcela Prokopová, Renata Burešová, Josef Seják, Pavel Cudlín The Economic Value of the Cultural Landscape: How to Evaluate the Non-production Services of a Territory.....................................................475 Hana Švejdarová Se ssion F: Popu la t ion Ce n su s 2 0 1 0 a s a Tool for En vir on m e n t a l Policy Private Households and Environment — a New Sectoral Reporting Module of the German Environmental-Economic Accounting ....................................................................485 Karl Schoer, Šárka Buyny, Helmut Mayer, Christine Flachmann Modeling of the Population in the Light of Census (2001) ..........................................................498 Jaroslav Kraus Willingness-to-Pay for Organic Food and its Determinants in the Czech Republic……………………………………………………………………………………..504 Jan Urban, Milan Scasny Women’s Agency: an Indicator of Fertility Decisions and Maintenance of Food Resources for Sustainable Livelihood Development in Rural Nepal. .......................514 Narayani Tiwari, Anke Niehof, Lisa Price, Dilliram Dahal 8 Opening Opening and Keynote Speeches 9 10 Opening Speech Rut Bízková Vice-Minister of Environment, Ministry of the Environment, Prague, Czech Republic [email protected] Ladies and gentlemen, I am deeply honoured to welcome you to Prague, open this conference and give you greeting on behalf of Martin Bursík, deputy prime minister and minister for environment of the Czech Republic. The topics of this conference are very close to the activities of the Ministry of Environment. Sustainable development is a good conservative idea for everybody who wants his best for himself/herself and our children. But the idea has to be implemented through various instruments and progress has to be measured. The Czech Republic has been professing the sustainable development concept ever since its adoption at the Earth Summit in June 1992. Although this concept was approached in a non-complex manner at the beginning, with only the Ministry of the Environment being in principle involved with these issues, an institutional framework for sustainable development was formed through progressive development and continued discussions, in particular in connection with the need to coordinate the steps taken by the individual government departments in this field. The Government Council for Sustainable Development was established in August 2003 as an advisory and coordinating body of the Government of the Czech Republic in the domains of sustainable development and strategic management. The Government Council for Sustainable Development overarches the work on the particular sustainable development aspects through a structure of its working bodies. The Sustainable Development Strategy of the Czech Republic was approved by the government in December 2004 and now new version has been prepared. The State Environmental Policy of the Czech Republic, supporting various voluntary approaches to achieve its objectives, has its own irreplaceable position under the sustainable development concept. One of these approaches is the environmental accounting or the sustainable development accounting, as appropriate. The Ministry of the Environment pays particular attention to the environmental accounting; this issue is dealt with at the macroeconomic and the business level. In connection with the approval of the Sustainable Development Strategy and in view of the experience abroad, in particular with the initiative of the UN Division for Sustainable Development, great attention has been paid to the sustainable development accounting in the recent years. As regards the environmental accounting at the macroeconomic level, it is possible to state that many activities and their outputs are comparable with those in other EU Member States. In this field, the Ministry of the Environment actively cooperates with the Czech Statistical Office. There have been a number of nation-wide and international meetings, workshops and conferences focused on the issues of environmental accounting at the macroeconomic level, with the aim to promote awareness of sustainability concepts and instruments that use the indicators and environmental accounting as a basis to improve interpretation. The participants evaluated the current situation and initiated a discussion on the direction for further development in the area of environmental accounting and sustainable development indicators. Several specialized publications were issued to enhance the knowledge of the general public. 11 The Czech Republic actively participates at the EUROSTAT meetings, under the Working Group on national aggregate environmental accounts. In the field of environmental accounting at business level, it is necessary to continue to ensure progressive implementation of environmental indicator monitoring in more and more enterprises in connection to the EMS/EMAS system and to further develop business reporting and communication with all stakeholders as regards the business approach to the environment. In 2003, the Ministry of the Environment issued a methodological guideline for the implementation of environmental accounting in the Czech Republic, to which businesses can adhere. For this year, we are preparing the issue of a methodological guideline for the implementation of a sustainable development management accounting. There have been many nation-wide and international meetings, workshops and conferences held on the issues of business environmental accounting. The purpose was to make the participants acquainted with the issues concerning the monitoring of financial flows related to the environment and to prepare enterprises for the implementation of business environmental accounting, taking into account the specific conditions of each company. Environmental accounting issues are becoming part of broad awareness of the business sphere. Practical experiences of enterprises, which have already implemented the environmental accounting, confirm the strength and positive contributions of this instrument. In this domain, the Czech Republic participates at activities of United Nations Conference on Trade and Development and the ISAR working group (Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting), too. As far as business accounting is concerned, the Czech Republic is also developing cooperation with an expert working group focused on the improvement of the governmental role in the support of Environmental Management Accounting (EMA), which was established based on the initiative of the UN. I think that this conference can contribute to the dissemination of knowledge in this field and establish a certain tradition allowing people to meet on a regular basis to discuss the environmental accounting issues. I see a major importance in the exchange of knowledge and experience among the particular participating countries. So I wish you fruitful and successful day! 12 Opening Speech Stanislav Drápal Vice-President, Czech Statistical Office, Prague, Czech Republic [email protected] Ladies and Gentlemen, Distinguished Colleagues, First, let me excuse the absence of Mr. Jan Fischer, President of the Czech Statistical Office, who is just taking part in the meeting of the Statistical Programming Committee in Luxembourg. I would like to give to all of you his respects and wishes of successful conduct of this conference. Prague is already for the third time the venue of the conference on Environmental Accounting and Sustainable Development Indicators. The Czech Statistical Office is honoured by having been invited to participate on this conference together with the Ministry of the Environment, Charles University — Environmental Research Centre and Purkyně University in Ústí nad Labem. We highly appreciate interest in this conference on the part of experienced and young professionals from statistical offices, universities and research centres, and from the most important international organisations — Eurostat, OECD and others. I think that this conference, a meeting point of experts from many countries of the world, is very useful also for further development of the international and Czech statistical service. One of the fundamental tasks of a statistical service is to observe various fields of life of society by means of statistical indicators and to use this predominantly quantitative information for analyses of facts, causes and interrelations of phenomena and processes, and also for predictions of future development. Then, on the basis of this cognition, to determine the ways of measuring phenomena and processes, indicators allowing quantification of these phenomena and processes, and methods of analysing all interrelations. Statistical service, to be able to observe reality in progress as truly as possible, must constantly change itself. It should apply new techniques, tools and methods and respond to qualitative changes in life of society as a whole and in its individual segments. Statistical service, as a service to society, works not only on the basis of its own intentions, but also, and predominantly, on the basis of the needs of society. This public order may be formulated by governments, public at large, research and developing centres, universities, journalists or entrepreneurs. These needs are the point of departure for the Czech Statistical Office in preparing statistical surveys, seeking administrative data sources and preparing the programme of publishing data and information. Basic documents of the Czech Statistical Office bear the text that the Office collects, produces and disseminates data and information on economic, social, demographic and environmental development in the Czech Republic and its regions. Regular monitoring of the CZSO web pages reveals what is most demanded by our users. In April 2007, for example, there were 144 000 visits to CZSO web pages. Among statistical domains, most demanded were data concerning demography, inflation, external trade, wages and employment. On the increase is the demand for tables and analyses that cover not a single industry, but provide a complex assessment. This is due to the fact that macro- and microeconomic issues mingle more and more with social issues, demography and the environment. The recent EU decisions 13 on emissions, limits for car emissions, on waste, etc., prove that the environmental issues permeate all fields of human lives. The complexity of life of society requires complex assessment of interactions of all aspects of life. A really objective assessment of phenomena and processes needs a multicriterial approach. For example, a successful economic process — successful from a merely economic point of view — may have negative or positive impacts, social, demographic or environmental. Statistics are still unable to fully value the complex costs of economic development from the point of view of impacts on various fields of social conditions of living and impacts on the quality of various segments of the environment. Assessment of effects in dependence on time is often missing. Some of the present economic successes are paid for by negative social and environmental impacts that appear with a delay. A look at the assessment of the development in the Czech Republic by key macroeconomic indicators since the beginning of the independent CR in 1993 shows a predominantly favourable development. The dynamics of industrial and construction production grow sharply. The annual growth of GDP is now around 6 %. The volume of external trade is on the increase and so is the external trade balance. Wages grow and unemployment has dropped close to 6 %. Over last years inward flows of foreign investments rose considerably, which was not only a stimulus for restructuring and modernisation of the economy. Advanced technologies allowed a decrease of energy intensity per unit of production, creation of new jobs, removal of territory-related environmental burden originating in the previous decades. At the same time, however, we can observe changes in the economy, which have significant effects on the state of the environment. High inward flows of investments, increases in industrial and construction production, and growth of external trade and tourism are shifting the burden of freight and passenger transport from the rail to the road. In passenger transport, there was a decrease in mass transport by road in favour of individual road transport. An especially high growth of freight transport by road occurred after the entry of the Czech Republic to the EU and after removal of customs barriers. This not only produced negative impacts on the state of roads, but also increased the numbers of road accidents involving leakage of transported substances, raised noise and dust pollution and other negative effects on areas adjacent to roads and highways. There are increasing demands on the consumption of electricity that the Czech Republic produces in thermal power plants from indigenous lignite or in nuclear power plants. Growing incomes and living standard of the population accelerate production of all kinds of waste and make the problem of scrapped cars, TV sets and refrigerators more difficult. Out of the total value of environmental investments in the Czech Republic, nearly half is currently directed to wastewater treatment and 30 % to air pollution and climate control. Investments and the change of the structure of the economy result in a constant and considerable decrease of solid and gaseous pollutants discharged into the air. Investments in housing further increase the proportion of the population living in houses with piped water and sewerage connection. Issues of wastewater treatment are being dealt with, prompted by the Czech Republic’s entry to the EU. However, economic changes have had impacts on water consumption. Multiple increase in water rate and sewerage charges resulted in a sharp fall of water consumption in total and in households. Nevertheless, it is very difficult for statistical service to cover impacts of this fall, for example, on personal hygiene or more economic use of water. Quality of life should be the decisive criterion of economic and social development and environmental care. This concept is hard to statistically grasp, just like the concepts of living standard or style of life. We can determine a higher or lower number of indicators characterising some aspects of quality of life, still it is hard to measure life satisfaction. And 14 more so, because everyone has their own personal, individual criteria, among which some may correspond to majority opinion and some sharply differ depending on sex, age, social status, etc. In spite of that, among the generally accepted criteria can be included life expectancy, mortality of children, or state of health. While variables characterising these criteria result from a great number of factors (the period of exposure may be rather long), some development trends have been observed over last 15 years. Infant mortality dropped and is among the lowest ones worldwide, life expectancy of men and women is on the increase. Economic — and subsequently also social and demographic — development in individual countries is now affected by tools and processes of economic globalisation. The coverage of attributes, impacts and implications of globalisation belongs to the most important tasks to be dealt with by the statistical service in the Czech Republic and in all countries of the world. The complicated ownership, management and decision-making structures of the global economy add to the difficulty of identifying essential phenomena, processes and their interrelations. Whereas real execution of production processes or providing of services and their impacts on health and living conditions are bound to a specific place, their use and use of the financial results may be connected with very remote places. The same applies to decision-making processes, which increasingly often take place quite elsewhere than the implications of production processes and services on social and environmental conditions of life. Creation and implementation of appropriate statistical methods and tools is one of the main tasks of a global statistical service today and in the future. The statistical service in the Czech Republic and worldwide must cope with the qualitatively new conditions of acquiring data and, in particular, with the search for new scientific techniques of assessing a complex of interlinked economic, social, demographic and environmental aspects of life. The implementation of this intention will allow a different view of relations between economic and environmental development in individual countries. There is no doubt that this conference contributes to the search for theses ways. 15 Keynote Speech Karl Schoer Head of Department Environmental-Economic Accounting, Federal Statistical Office Germany, Wiesbaden, Germany [email protected] Madame chair, ladies and gentlemen, It is a great honour to me to hold one of the keynote speeches for this conference. As you perhaps know, the German Federal Statistical Office was one of the pioneers of environmental accounting. We started to work in that area at the beginning of the 80th with focus on energy accounting and environmental expenditure. International exchange and cooperation has always been crucial in the process of developing our accounts. Therefore it is a pleasure to us to contribute to this conference. The aim of the conference This is a third conference in a row held by Jan Evangelista Purkyne University in collaboration with Charles University focused on the subject environmental accounting and sustainable development indicators Looking on how this conference is designed, I am sure that it will not only work with high scientific expertise on a considerable number of special issues for improving accuracy and adequacy of statistical data and analytical approaches for using the data, but at the same time it will contribute to enhancing the relevance of the data by linking it to the requirements of policy making. In my view in that respect two things are particularly remarkable with this series of conferences. 1. The first point is the stress on linking sustainable development indicators and environmental accounting. 2. The second point is the link between methodological and statistical work with political practice by initiating a dialogue between scientist, statisticians an policy makers. German experience As an example or at least a good beginning for linking accounts and indicators the recent monitoring report on the German National Strategy on Sustainable Development “Sustainable Development in Germany, Indicator Report 2006” could be mentioned. The German Statistical Office was entrusted with writing that report on behalf of the German Government. In that report stress was put on analysing important interlinkages between the different economic, environmental and social indicators of the strategy by utilizing accounting data. Especially the link between environmental pressures and the economic driving forces was investigated by applying the tool of decomposition analysis. That type of integrated analysis was possible, as about half of the indicators of the German National Strategy of Sustainable Development — mainly environmental and economic indicators — are already embedded into the accounting system. Some prints of the report are available here. However it can also be downloaded from the website of the german Federal Statistical Office. Of course what is demonstrated in that short report is only a first step, which may raise the public awareness about the reasons of the change of the individual sustainable indicators 16 and its interrelationships. However once the indicators are embedded into the accounting system, the integrated accounting data body can be used for supporting all stages of the so called policy cycle. Role of indicators and accounts In the following I would like to present some further considerations on why and how the two worlds of indicators on sustainable development and the environmental accounts could be merged. In practice almost all countries that have a national strategy on sustainable development are using a multi-dimensional indicator approach for monitoring the situation. But very often the individual indicators used for that purpose are not systematically linked with integrated physical and monetary economic, environmental and social accounting data, as originally SDindicators and accounts are approaches with different purposes and characteristics. Sustainable development indicators are of high political relevance. They are located on the top of the information pyramid. Therefore they provide a very condensed or aggregated kind of information which supports the issues of communication, problem description and performance control. The political relevance is further stressed by the fact that indicator sets are the outcome of negotiation processes among politicians, experts and stakeholders. That is, the indicator sets reflect the social preferences of a society. Compared to that accounting systems are more detailed and provide data on a mesolevel. They have a strong theoretical foundation. They are based on a common set of classifications, rules and concepts which define how to describe the system and they aim at the complete and coherent description of a system such as a national economy (national accounts) or the relationships between economy and environment (environmental economic accounting). That features supports further analyses of interdependencies and underlying causes and subsequently the formulation of political measures, which can be seen as the main strength of the accounting system. In the political process, which may be described as a cycle of problem description, diagnosis, political measures and performance control the features of both approaches, political relevance of the data and the suitability as a communication tool as well as the suitability for an integrated analysis and for the formulation of measures is needed. Therefore the vision would like to put forward is, to merge the two approaches in order to utilize the special advantages of both. As far as the problem description is concerned, highly aggregated indicators can reduce the complex reality to a limited number of figures. Therefore they can serve as a rather simple communication tool mainly directed to the general public and the media. They are used for describing important problems under a sustainability perspective. The topics selected for the indicator set usually reflect the political preferences of the society. For the diagnosis or analysis highly aggregated indicators alone are generally not sufficient. An analysis of the underlying mechanisms and reasons for change of the indicator values requires detailed disaggregated information. The data-base for further analysis can either be provided by detailed basic statistics or by an accounting system. Political measures for achieving the sustainability goals of the society should be cost efficient and above all should be tailored for balancing conflicting goals. The general objective of sustainable development requires a holistic policy approach, as the issues of a sustainable development policy are closely interlinked. A policy for sustainable development is characterised by not only looking on how far the goals for the individual indicators can be achieved, but has to have in mind the interdependencies between the topics and the simultaneous achievement of different economic, environmental and social goals. Decisions on measures aiming at the improvement of one indicator at the same time have to consider the 17 effects that may occur on the other relevant goals of the overall strategy for sustainable development. The rather complex analytical tools required for that type of policy approach demand a homogeneous and coherent database depicting the interdependencies between the different indicators. For that reason it will usually not be sufficient to deal with the different indicators individually. That is, the underlying data for the individual indicators should be part of a comprehensive framework that ideally integrates all relevant topics. The System of National Accounts (SNA) forms together with its satellite systems Environmental-Economic Accounting (EEA) and the Socio-economic Accounting (SEA) an expanded accounting data set. Such an expanded data set is an ideal framework to meet the above mentioned requirements. The SNA is the world wide accepted standard for describing the economic process. The environmental-economic and the socio-economic accounts extend the economic accounts by a description of the interrelationships of the economic to the environmental and the social system and between the environmental and the social system. The satellite systems in principle use the same concepts, definitions and classifications as the SNA. That guaranties that the data of all three sub-systems can be combined with each other, i.e. they form an integrated database that covers the three principal topics of a sustainability approach. An integrated analysis and especially the formulation of political measures require rather complex analytical instruments. It is one crucial advantage of the SNA data set that it is being widely used as a basis for already existing and proven analytical tools that are related to the economic process. The extension of those tools for analysing environmental-economic questions has already been put into practice successfully in Germany and other countries. The indicators, especially if they are combined with quantitative goals, serve as an instrument for general performance controlling of political measures. A reduction of the gap between the observed and the target values indicates improvement of sustainable score keeping for individual indicators. Strategy for integrating indicators and accounts Merging the two approaches simply means in terms of data that the indicators should be derived by aggregation from the more detailed accounting data base. That requires that the selected indicators are embedded into the accounting data base. A strategy for the development of integrated indicators and accounts as the basis for an integrated sustainable development policy consists of three elements to be worked on: further adjustment of the indicator set, expansion of the accounting system and development of appropriate tools for integrated sustainable development analysis. It is the task of the political side to identify the priority issues to be included into the indicator set for sustainable development. On that basis concrete indicators can be formulated on relative short notice by using already existing data. That was what happened in developing the present national indicator system in Germany. But indicators which were developed in such an ad-hoc manner necessarily run the risk of putting together indicators which are not linked with each other and which therefore can only be of limited use for an integrated policy on sustainable development. Developing an indicator set for sustainable development that on the one hand perfectly covers the politically important issues and on the other hand is embedded into a coherent and rather comprehensive database can only be an iterative process with a threefold movement: 1. Future revisions of the indicator set should try to preferably select indicators that can be derived by aggregation from the existing accounting data set. In any case, in future it will be necessary to review and improve the existing indicator sets in the light of new problems, methodological progress and with the goal of attaining better international harmonisation. 18 2. 3. The accounting system itself has to be adjusted to the new data needs. It has to be put high priority on extending the accounting data set towards the priority issues of a policy for sustainable development. The accounting framework offers rather good and cost efficient opportunities of generating the required data by reformatting already existing figures. But beyond this, depending on the quality requirement, in the long run it may also be necessary to improve some of the accounting estimates by new primary surveys. At the same time, also further investment in developing appropriate tools (modelling approaches) for an integrated environmental, social an economic analysis will be necessary. Initiating such a process could be an important step for a successful sustainable development policy. In the economic domain statistical data and especially accounting data as well as the analytical instruments utilising those data are a common basis for dealing with conflicts of interest and for decision finding. A policy for sustainable development can only stand firm in the social discourse against more particularistic policy approaches in the long run, if it is also sufficiently founded on data and facts. Insofar, investment in the development of a data base for a policy on sustainable development and the related analytical instruments is a necessary condition for carrying through that policy approach. 19 Keynote Speech Márta Nagy-Rothengass Head of Unit European Commission, Information Society & Media Directorate-General, ICT for Sustainable Growth, Brussels, Belgium [email protected] Ov e r v ie w Ove I CT* for Su st a in a ble Gr ow t h * I nfor m a t ion a nd • “Sust a ina ble D e v e lopm e nt ” - Policy Cont e x t in Eur ope • Role of I CT* in su st a ina ble Gr ow t h • D om a in s of a ct ivit y in “I CT for sust a ina ble Gr ow t h” Com m unica t ion Te chnologie s • • • I CT for En e r gy Efficie n cy I CT for En v ir on m e nt a l M a n a ge m e nt I CT for Em e rge n cie s a n d D isa st e rs M a n a ge m e n t • Com m unit y I nst r um e nt s • Su st a in a ble D e ve lopm e nt I n dica t ors • Conclusion D r . M a r t a N a gy- Rot he nga ss Head of Unit Eu r ope an Com m ission I n form at ion Societ y & M edia D ir ect or a t e - Gen e r a l I CT for Sust a in a ble Gr ow t h EA SDI 2007, Prague (CZ), 24/05/07 * I CT = I n for m a t ion a nd Com m u n ica t ion Te chn ologie s Policy con t e x t in Eu r ope Gr ow t h Tr e n ds s le thi ab I s t a in s su w t h ? gro Re n e w e d SD S a n d Lisbon st r a t e gie s EU Cou ncil ( Jun e 2 0 0 6 ) : • « The EU Sust a in a ble D e ve lopm e nt St r at e gy ( SDS) and t he Lisbon St r a t e gy for growt h and j obs com plem ent each ot her. » • « The SD S is prim arly concerned wit h qua lit y of life ,… The Lisbon St r a t e gy m akes an essent ial cont ribut ion t o t he overarching obj ect ive of sust ainable developm ent … increasing com pet it iveness and econom ic growt h and enhancing j ob creat ion. » Policy con t e x t in Eu r ope Policy con t e x t in Eu r ope I n t e gr a t e d clim a t e a n d e n e r gy policy i2 0 1 0 st r a t e gic fr a m e w or k Br u sse ls Eur ope a n Cou n cil ( 8 / 9 M a r ch 2 0 0 7 ) Obj e ct ive s: • An int e gr a t e d clim a t e a nd e n e r gy policy is of vital importance ƒ To cr e a t e a fa v ou r a ble e n v ironm e n t f or com pe t it iv e n e ss a n d grow t h... ƒ To r e in for ce t h e cont r ibut ion of I CT t o Eu r ope ’s pe r for m a n ce ... ƒ To incr ease t he w elfare of European cit izens t hrough increased use of I CT... • EU leaders set com bine d t a r ge t s: • Reduction of GHG emissions in the order of 20% by 2020 compared to 1990 • 20% for renewable energy sources by 2020 compared to the present 6,5% • Saving 20 % of the EU’s energy consumption compared to projections for 2020 ¾ Scope for all electronic communications, services and media sectors, investment in research, inclusiveness and public services ¾ Link to the Lisbon strategy, stating objectives and benchmarking performance 20 Policy con t e x t in Eu r ope Ov e r v ie w Ove i2 0 1 0 : t h r e e prior it ie s • A Single Eur ope a n I nfor m a t ion Spa ce i. The completion of a Sin gle Eu rope a n I nfor m a t ion Spa ce which promotes an open and competitive internal market for information society and media • I nnova t ion a nd in ve st m e nt in r e se a r ch • “Sust a ina ble D e v e lopm e nt ” - Policy Cont e x t in Eur ope • Role of I CT* in su st a ina ble Gr ow t h • D om a in s of a ct ivit y in “I CT for sust a ina ble Gr ow t h” • • • ii. Strengthening I n n ov a t ion a nd I nve st m e n t in ICT research to promote growth and more and better jobs • I nclusion, be t t e r public se r vice s a n d qua lit y of life iii.Achieving an I nclusiv e Eu r ope a n I nf or m a t ion Socie t y that promotes growth and jobs in a manner that is consistent with sustainable development and that prioritises better public services and quality of life I CT for En e r gy Efficie n cy I CT for En v ir on m e nt a l M a n a ge m e nt I CT for Em e rge n cie s a n d D isa st e rs M a n a ge m e n t • Com m unit y I nst r um e nt s • Su st a in a ble D e ve lopm e nt I n dica t ors * I CT = I n for m a t ion a nd Com m u n ica t ion Te chn ologie s Su st a in a ble gr ow t h Ov e r v ie w Ove The Th e Role of I CT • ICT accounts for approximately h a lf of t he pr oduct ivit y gr ow t h in modern economies • It offers a great potential for r e - e ng ine e r in g socie t y towards more sustainable economic, social and environmental patterns • It could possibly contribute to a lower Carbon economy through pr ogr e ssive d e m a t e r ia lisa t ion • Many examples of ICT addressing societal challenges, e.g.: • Improved e n e rgy e fficie ncy • Improved management of our e nvir onm e nt a n d disa st e r s • e Gove r nm e nt including online services for modern administrations • e I nclusion including services for an ageing European population • e H e a lt h and improved healthcare systems and services • “Sust a ina ble D e v e lopm e nt ” - Policy Cont e x t in Eur ope • Role of I CT* in su st a ina ble Gr ow t h • D om a in s of a ct ivit y in “I CT for sust a ina ble Gr ow t h” • • • I CT for En e r gy Efficie n cy I CT for En v ir on m e nt a l M a n a ge m e nt I CT for Em e rge n cie s a n d D isa st e rs M a n a ge m e n t • Com m unit y I nst r um e nt s • Su st a in a ble D e ve lopm e nt I n dica t ors * I CT = I n for m a t ion a nd Com m u n ica t ion Te chn ologie s Se cond e x a m ple I CT for Env ir onm e nt a l M a na ge m e nt Fir st e x a m ple : I CT for Ene r gy Efficie n cy • ICT can not only reduce it s ow n foot pr in t … • Environmental monitoring in Europe is fa cin g fr a gm en t at ion an d h e t er ogen iet y • but also help reduce t h a t of a ll ot h e r se ct ors/ a ct ivit ie s • Power generation and power distribution • Intelligent building • Need t o fost e r t h e em er gen ce of a Sin gle ( in t e gr a t ed) I nfor m a t ion Spa ce in Eur ope for t h e Envir on m e nt ( SI SE) • Need t o pr om ot e t h is a ppr oa ch t o r e leva n t Eur opea n / I nt e rn a t iona l in it ia t ives su ch a s I N SPI RE, GM ES, GEOSS • Moreover, by increasing Energy-awareness, it will be instrumental to ch a nge con su m e r s’ be ha viou r • Smarter, networked appliances will be able to monitor and publish their energy profile, empowering the users to effectively save energy … a n d I CT for D isa st e r & Em e r ge ncy M a na gem e n t • An t icipa t ion of cr isis sit u a t ions is limited by the absence of an Integrated Information Space for the Environment and the heterogeneity of potential disasters • Re spon se t o crisis sit u a t ion s is limited by weak preparedness, lack of interoperability among involved organisations, inadequate early warning • N e e d t o fost e r a p a n Eu rop e a n in f r a st r uct u re a im in g a t re d ucing im pa ct of clim a t e ch a ng e , n a t u r a l a n d m a n- m a de disa st e rs including coordination through a Pub lic Sa fe t y Com m u n ica t ion Foru m and an EU-wide emergency telecoms spectrum policy Ov e r v ie w Ove • “Sust a ina ble D e v e lopm e nt ” - Policy Cont e x t in Eur ope • Role of I CT* in su st a ina ble Gr ow t h • D om a in s of a ct ivit y in “I CT for sust a ina ble Gr ow t h” • • • I CT for En e r gy Efficie n cy I CT for En v ir on m e nt a l M a n a ge m e nt I CT for Em e rge n cie s a n d D isa st e rs M a n a ge m e n t • Com m unit y I nst r um e nt s • Su st a in a ble D e ve lopm e nt I n dica t ors * I CT = I n for m a t ion a nd Com m u n ica t ion Te chn ologie s 21 Su st a in a ble gr ow t h I CT – Policy Suppor t Pr ogr am m e A pa noply of con ve r gin g in st r u m e n t s W or k pr ogr a m m e 2 0 0 7 AN OVERALL STRATEGIC FRAMEWORK FOR COMMUNITY ACTION • To de v ise a nd im ple m e n t a de qu a t e Eur op e a n policie s Tw o Th e m a t ic N e t w or k s su ppor t in g Su st a ina ble Gr ow t h 1 . I CT e na bling Env ir onm e nt a l m a na ge m e nt interoperable environmental information infrastructures to monitor the environment and respond rapidly to emergencies/disasters • To r a ise a w a re n e ss a n d de p loy I CT- b a se d solu t ion s for e n v ir on m e n t a l su st a in a bilit y 2 . I CT e na bling En e r gy e fficie ncy smart buildings, industrial processes, working practices, distributed power grids • To su pp ort RTD on n e x t ge n e r a t ion of I CTs con t r ibut in g t o su st a in a ble gr ow t h I CT – Policy Suppor t Pr ogr am m e W or k pr ogr a m m e 2 0 0 7 AI M S: • • • • • To To To To To ME AM GR RO 8 K P -2 0 0 R WO 2 0 0 7 I CT for Envir on m e nt a l M a na gem onm ge m e n ntt Expected Outcome I a ) Colla bor a t ive syst em s for en vir onm ent a l m a n age m e n t • • • • e x ch a nge e x pe r ie n ce r a ise a w a r e ne ss ide nt if iy areas for p ot e nt ia l fut u r e pilot s bu ild con se n su s im p le m e nt pla n s From monitoring to reporting, management, alert and response Enhanced capacity to assess popula t ion e x posu re a nd he a lt h r isk Ge ne r ic solu t ions with typical validation focus on water and air Visiona r y con ce pt s , as well as e v olut iona r y int e gr a t e d sy st e m s In order to a cce le ra t e t h e t a k e - u p of I CT e na ble d solut ions by • br ing in g t oge t h e r r e le va n t st a k e h olde r s • e x pe r t ise • fa cilit ie s E MM RA OG 8 PR 0 RK 7 - 2 0 O 0 W 20 Fun din g sch e m e s: I P a nd STREPS I CT for Envir onm e nt a l M a na ge m e n t Ex pe ct e d Out com e I I ME AM GR RO 8 K P -2 0 0 R WO 2 0 0 7 c) I CT for Ene r gy- int e nsiv e sy st e m s, pr odu ct s a n d pr oce sse s: b) Coordina t ion a nd Supp ort Act ion s • • • • Adopt ion of com m on open a r ch it ect u r e s (INSPIRE, GMES, GEOSS) ICT research for r isk r edu ct ion a n d disa st er a n d em e r gen cy m a n a gem e nt Building the Eu r opea n Resea r ch Ar e a in the field of I CT for en vir onm en t a l su st a in a bilit y • • Funding scheme: CSA • Design and simulation of energy use profiles over the whole life-cycle, towards en er gy opt im isa t ion M on it or in g of en er gy pr odu ct ion , dist r ibut ion st or a ge a nd consum pt ion , as well as energy trading involving the end-users Tools a nd pla t for m s for e ner gy efficien cy se rvice pr ovision Typical a pplicat ion dom a in s: • • e ) Spe cific I nt e r na t iona l Coope r a t ion Act ion • • • • I CT for Ene r gy Efficie ncy Ex pe ct e d Ou t com e ICT for env ir onm e nt al disa st er r edu ct ion a n d m a n a gem e nt D eve lopm ent an d int e r ope ra bilit y of r a pidly de ploya ble I CT- ba sed solut ion s Assessment of natural hazards and communities vuln era bilit y For public w a r n in gs a n d em e r gen cy m a n a gem en t Efficie n t m a n a g e m e nt o f loca l pow e r g r id s En e r g y- n e u t r a l h o m e / w or k ing e n vir on m e n t s Funding scheme: STREP Coor din a t ion a n d Sup por t Act ion s f or re se a r ch in I CT- e n a b le d e ne r gy- e ff icie ncy Funding schemes: STREP/SICA, CSA Funding scheme: CSA Bu dge t & Ca ll I n for m a t ion E MM RA OG PR 0 0 8 RK -2 WO 2 0 0 7 Ov e r v ie w Ove Objective 2007.6.3 Ca ll: • Reference: FP7-ICT-2007-2 • Opening: June, closure: October 2007 W or k p rogr a m m e 2 0 0 7 - 2 0 0 8 : • Published in the Official Journal on 22 December 2006 • “Sust a ina ble D e v e lopm e nt ” - Policy Cont e x t in Eur ope • Role of I CT* in su st a ina ble Gr ow t h • D om a in s of a ct ivit y in “I CT for sust a ina ble Gr ow t h” Tot a l Com m unit y bu dge t * : 5 4 M ˆ • Topics a -b-c-d: • Collaborative projects: 41 Mˆ (minimum of 9 Mˆ for IPs and minimum of 20 Mˆ for STREP) • Coordination and Support Actions: 9 Mˆ • Topic e : • Collaborative Projects (STREP only/SICA): 2 Mˆ • Coordination and Support Actions: 2 Mˆ * Given budgetary figures are indicative only, pending later decision on FP7 budget. The European Commission reserves the right to modify these figures at a later stage. • • • I CT for En e r gy Efficie n cy I CT for En v ir on m e nt a l M a n a ge m e nt I CT for Em e rge n cie s a n d D isa st e rs M a n a ge m e n t • Com m unit y I nst r um e nt s • Su st a in a ble D e ve lopm e nt I n dica t ors * I CT = I n for m a t ion a nd Com m u n ica t ion Te chn ologie s 22 Th e r e n e w e d EU Su st a in a ble D e v e lopm e n t St r a t e gy Fr om Ke y Ch a lle nge s t o M onit or ing The m e s Key Challenge 1 Key Challenge 2 Key Challenge 3 Key Challenge 4 Key Challenge 5 Key Challenge 6 Key Challenge 7 • Addr e sse s t he m ost se r iou s t h r e a t s t o su st a ina ble de ve lopm e nt in Eur ope a n d t he w or ld; t he so- ca lle d 7 k e y ch a lle n ge s 1. Climate change and clean energy 2. Sustainable transport 3. Sustainable production and consumption 4. Conservation and management of natural resources 5. Public health 6. Social inclusion, demography and migration 7. Global poverty and sustainable Î Th.5: Climate change and energy Î Th.8: Transport Î Th.6: Production and consumption patterns Î Th.7: Management of natural resources Î Th.4: Public health Î Th.2&3: Poverty and social exclusion; Ageing Î Th.10: Global partnership Key objective Î Th.1: Guiding Principle ÎTh.9: Economic development Good governance “In analysing the state of play with regard to the challenges described above, the Commission will draw on a comprehensive set of Sustainable Development Indicators (SDIs) I CT w it hin t he “M onit or ing Th e m e s” of SD I ndica t or s Pyr a m id a n d qu a lit y of in dica t or s Pr oposa ls: Level 1: 12 Level 2: Headline indicators Lead objectives (Main policy issues) SDS priority objectives General policy performance indicators 45 Level 3: 98 Detailed monitoring, explanatory variables • T1: Economic Development • T2: Poverty and social exclusion • • T4: Public health What makes a good quality indicator ? • • • • Clarit y, effect iveness, univocal Link, relevance, • sensit ivit y, t raceabilit y, consist ency • Detailed level of indicators on efficiency of policy measures Electronic Health Record, on-line access, co-ordination tools T5: Climate change and energy ICT energy efficiency & savings share T6: Product. & consumpt. patterns On-line purchasing T7: Natural resources management Tools for co-ordination T8: Transport ICT Charging infrastructure, GPS usage T9: Good governance E-government on-line availability E-government usage by individuals T10: Global partnership I CT for Sust Su st a ina in a ble Gr ow t h Ov e r v ie w Ove • “Sust a ina ble D e v e lopm e nt ” - Policy Cont e x t in Eur ope • Role of I CT* in su st a ina ble Gr ow t h • D om a in s of a ct ivit y in “I CT for sust a ina ble Gr ow t h” • • • Con clu sive r e m a r k s • Ve r y a m bit iou s goa ls on Eur ope a n le ve l • Support ing inst r um e nt s ( FP7 , I CT PSP) • I CT ca n t r igge r ch a nge of be h a viou r s EE • Thr e e dom a ins of a ct ivit ie s I CT for En e r gy Efficie n cy I CT for En v ir on m e nt a l M a n a ge m e nt I CT for Em e rge n cie s a n d D isa st e rs M a n a ge m e n t • Com m unit y I nst r um e nt s • Su st a in a ble D e ve lopm e nt I n dica t ors • Conclusion Broadband penetration Digital literacy T3: Ageing • Energy Efficiency (EE) DEM • Environmental M anagement (EM ) • D isaster and Emergency M anagement (D EM ) • N e e d of a ppr opr ia t e SD I for m onit or ing im pa ct in a ll a r e a s ( e .g. I CT) • I CT could suppor t t he m onit or ing of t he SD I ndica t or s * I CT = I n for m a t ion a nd Com m u n ica t ion Te chn ologie s Th a n k you for you r a t t e nt ion! 23 EM Keynote Speech Bedrich Moldan Senator, Director of the Charles University Environment Center, Charles University Environment Center, Prague, Czech Republic [email protected] Headline indicators Headline Indicators z Reduce complexity to the highest possible level. Ultimate goal: a single number. z Should be policy relevant (if salient, credible and legitimate) z Loss of detailed information Bedrich Moldan Charles University Environment Center EA-SDI Conference, Prague, May 23-25, 2007 EA-SDI Conference, Prague, May 23-25, 2007 Selection of 5 most used headline indicators Gross Domestic Product: Definition z z z z Economic: Gross Domestic Product (aggregate) Social: Human Development Index (composite) Environmental: Enevironmental Sustainability Index (composite); Ecological Footprint (composite); Living Planet Index (aggregate) z z EA-SDI Conference, Prague, May 23-25, 2007 EA-SDI Conference, Prague, May 23-25, 2007 Gross Domestic Product: Ranking (IMF, 2005) 1. Luxembourg 2. Ireland 3. Norway 4. United States 5. Iceland . 33. Czech Republic . 177.Yemen 178.Malawi 179.Burundi Gross Domestic Product is defined as the total value of all goods and services produced within that territory during a given year. GDP is designed to measure the market value of production that flows through the economy. Includes only goods and services purchased by their final users, so GDP measures final production. Counts only the goods and services produced within the country's borders during the year, whether by citizens or foreigners. Human Development Index: Definition 80,471 PPP USD per capita 44,087 43,574 43,444 40,277 z 23,100 z z 759 706 680 The Human Development Index measures the average achievements in a country in three basic dimensions of human development: a long and healthy life, knowledge, and a decent standard of living. It is a standard means of measuring well-being, especially child welfare. It is used to determine and indicate whether a country is a developed, developing, or underdeveloped country and also to measure the impact of economic policies on quality of life. EA-SDI Conference, Prague, May 23-25, 2007 24 Human Development Index: Ranking (UNDP, 2006) 1. Norway 2. Iceland 3. Australia 4. Ireland 5. Sweden . 30. Czech Republic . 175.Mali 176.Siera Leone 177.Niger Environmental Sustainability Index: Definition z 0.965 (dimensionless index) 0.960 0.957 0.956 0.951 z 0.885 0.338 0.335 0.311 The Environmental Sustainability Index benchmarks the ability of nations to protect the environment over the next several decades. It does so by integrating 76 data sets – tracking natural resource endowments, past and present pollution levels, environmental management efforts, and the capacity of a society to improve its environmental performance – into 21 indicators of environmental sustainability. EA-SDI Conference, Prague, May 23-25, 2007 Environmental Sustainability index: Ranking (Yale et al., 2005) 1. Finland 2. Norway 3. Uruguay 4. Sweden 5. Iceland . 92. Czech Republic . 144.Turkmenistan 145.Taiwan 146.North Korea Ecological Footprint: Definition z 75.1 (dimensionless index) 73.4 71.8 71.7 70.8 z 46.6 33.1 32.7 29.2 The Ecological Footprint measures humanity’s demand on the biosphere in terms of the area of biologically productive land and sea required to provide the resources we use and to absorb our waste. The footprint of a country includes all the cropland, grazing land, forest, and fishing grounds required to produce the food, fibre, and timber it consumes, to absorb the wastes emitted in generating the energy it uses, and to provide space for its infrastructure. EA-SDI Conference, Prague, May 23-25, 2007 Ecological Footprint: Ranking (Living Planet Report, 2006) Living Planet Index: Definition z 1. United Arab Emirates 11.9 gl. hectares per person 2. United States 9.1 3. Finland 7.6 4. Canada 7.6 5. Kuwait 7.3 . 20. Czech Republic 4.9 . 146.Bangladesh 0.5 147.Somalia 0.4 148.Afghanistan 0.1 z z The Living Planet Index measures trends in the Earth’s biological diversity. It tracks populations of 1 313 vertebrate species – fish, amphibians, reptiles, birds, mammals – from all around the world. Separate indices are produced for terrestrial, marine, and freshwater species, and the three trends are then averaged to create an aggregated index. Although vertebrates represent only a fraction of known species, it is assumed that trends in their populations are typical of biodiversity overall. EA-SDI Conference, Prague, May 23-25, 2007 Thank you for your attention [email protected] Living Planet Report, 2006 EA-SDI Conference, Prague, May 23-25, 2007 25 Keynote Speech Elisabeth Møllgaard Unit E3 Environmental Statistics and Accounts, Eurostat, Luxembourg, Luxembourg [email protected] Environmental Accounts Environmental Accounts Overview Environmental Accounts z z European Environmental Accounts z z EA SDI – Environmental accounting and Sustainable Development indicators z Conference in Prague, 23 to 25 May 2007 z z Presented by Elisabeth Mollgaard Eurostat Unit E3 Environmental Statistics and Accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Environmental Accounts in Europe Policy background and use The core areas and indicators Foreseen developments Data availability and the nearest future Environmental Data Centres Webpage Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Environmental Accounts Environmental Accounts Environmental Accounts in Europe EU Policy Background (I) z z z Eurostat Environmental Accounts Team z Network of European Statistical System European Commission: DG ENV, DG Research, DG ECFIN z Co-operation with the OECD z UN City groups: most relevant = the London Group z UNCEEA, high level committee on environmental Commitment by Commission AND European Council in renewed Sustainable Development Strategy (June 2006): “… avoid overexploitation of renewable resources, apply the concept of life-cycle thinking, break the link between economic growth and environmental degradation” accounting Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Environmental Accounts Environmental Accounts EU Policy Background (II) EU Policy Background (III) z z Commitment by Commission AND European Council in renewed Sustainable Development Strategy (June 2006): Commitment by Commission AND European Council in renewed Sustainable Development Strategy (June 2006): ”For better understanding of interlinkages between the three dimensions of SD, the core system of national income accounting could be extended by inter alia integrating stock and flow concepts and non-market work and be further elaborated by satellite accounts e.g. environmental expenditures, material flows and taking into consideration international best practices.” “… build on the EU Strategy on the sustainable use of natural resources” Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts 26 Environmental Accounts Environmental Accounts Thematic Strategy on the Sustainable Use of Natural Resources (I) Thematic Strategy on the Sustainable Use of Natural Resources (II) Objectives: Which Indicators? - Indicators to measure progress in efficiency and productivity in the use of natural resources, including energy - Resource-specific indicators to evaluate how negative environmental impacts have been decoupled from resource use, and - overall indicator to measure progress in reducing the ecological stress of resource use by the EU (eco-efficiency indicator). - Decoupling: reduce negative impacts of resource use in a growing economy - Improving resource efficiency - Focus on key economic sectors Forthcoming: EU Sustainable Consumption and Production (SCP) Action Plan Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Environmental Accounts Environmental Accounts D-P-S- cause-effect chain Advantages (‘Statistisches Bundesamt’) Driving forces Economic production and final use activities State Pressures z Link between environment and economy – Aggregated impact indicator Change of environmental assets (impacts) Environmental pressure flows Physical product flows – – z Tool for policy making and monitoring – – Economic accounting (SNA) Environmental-economic accounting (SEEA) Environmental sciences Good complement to environment statistics Disaggregating data by economic activities National or regional level – Environmental sciences social value judgements – Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Decoupling indicators Sustainable production and consumption Degradation of natural resources Effects of economic policy measures (Env. Expenditure) Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Environmental Accounts Environmental Accounts The core areas Environmental Accounts and Indicators z z z z z Forest and Subsoil Asset Accounts NAMEAs for air emissions Economy Wide-Material Flow Accounting (EW-MFA) Environmental Expenditure and Taxes Depletion/degradation of natural resources Air emissions per economic activity Decoupling indicators e.g. MFA-indicators Effects of economic policy measures (Env. Expenditure and Taxes) z z z Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Environmental Accounts Environmental Accounts NAMEAs for Air Emissions - decoupling of environmental pressures from total economic output EU25 1995-2004 EW-MFA: Material productivity/material use EU-15 1970-2001 250 140 130 200 120 DMC per capita GDP per DMC 110 [1970 = 100] Index 1995 = 100 GDP Population DMC Econom ic Output (in millions of PPPconverted 2000-Euros ) Global W arming Potential (CO2equivalents ) 100 90 150 100 Tropospheric Ozone Form ing Potential (NMVOC-equivalents) 80 50 70 Acidification Potential (SO2-equivalents) 60 0 1970 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 1975 1980 1985 1990 1995 2000 2004 Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts 27 Environmental Accounts Environmental Accounts Data availability Foreseen developments: z z Environmental Industry Water Accounts: – – z z – UN standard for water accounts SEEAW 2007 Joint EEA/Eurostat pilot project: the feasibility of SEEAW for EU. End date: first half of 2008 Challenge: to coordinate with WFD and WISE Next data collected Environmental tax revenues EU25: 1995-2004 2007 Environmental taxes by industries 10 countries:1995-2003, EU15 estimates 2007 Environmental expenditure 1995-2003. 2005 data* (24 of 37 countries) 2008 Air emission accounts 1990-2004. 2005 estimates for EU15, EU25, EU27 2008 Economy-wide material flow accounts EU-15: 1970-2001**, 2004* 2008 Subsoil asset accounts 1980-2000** 2007 Forest accounts 1999** 2007 Physical flow accounts Waste Accounts, data from the Waste Statistics Regulation Energy Accounts, handbook Asset accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Environmental Accounts Environmental Accounts Forthcoming accounts Grants for Pilot Studies Data Available Next data collected Estimates of EU15: 1999 and 2004 EU25: 2004 ? Water flow accounts Pilot project on SEEAW for the EU using existing data 2008 Waste accounts Pilot project on waste NAMEAs for the EU using existing data 2008 Continuation of the Grants programme - with built-in promotion of the Accounts Environmental economic accounts Environmental industry Data Available Environmental economic accounts Main strategy: - Filling data gaps Secondary: - Develop new areas in the countries. - New aspects on existing accounts Physical flow accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Environmental Accounts Environmental Accounts Environmental Data Centres Eurostat responsible for EDCs on 1. Resources including indicators on MFA, on sustainable use of Natural Resources 2. Products (Integrated Product policy) including data on Life-Cycle-Analysis (LCA) 3. Waste (Waste Statistics Regulation) Other EDCs JRC: Soil, Forestry EEA: Air, Climate Change, Water, Biodiv., Land Use Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts Environmental Accounts European Environmental Accounts Beyond GDP: http://www.beyond-gdp.eu Thank you for your attention ! [email protected] http://epp.eurostat.ec.europa.eu Directorate E: Agriculture and environment statistics; Statistical cooperation Unit E3: Environment statistics and accounts 28 Session A Sustainability Indicators and Ecosystem and Landuse Accounting “… important features of the Session are: recognizing the value of the natural resources and ecosystem services helps to avoid overexploitation and misma-nagement; geo-referenced indicators (results expressed as maps) are appropriate way of reporting important facts to both public and decision-makers; accounting of ecosystem services is necessary to provide a solid indication of their state but the methodologies are at the beginning; local and regional scales are of the appropriate levels for analyses — otherwise it is difficult to get attention of the stakeholders.” (Tomáš Hák, Charles University Environment Center) 29 30 Taking the Measure of the Incalculable: Democratic Freedom as a Function of Ecological Resilience Eric Zencey Visiting Associate Professor of Historical and Political Studies, Empire State College, Saratoga Springs, NY, USA [email protected] 1 Introduction: Rousseau, Backwards “Man is born free, and everywhere he is in chains,” proclaimed Rousseau in 1762.1 He published this stirring sentiment in a world in which his entire potential audience — the entire human population of the planet — was about 500 million. Today, we who live on a planet with six billion humans have good cause to think that Rousseau got it exactly backwards: from our vantage, it seems man is born enchained by physical law and natural limits he can’t transgress, and yet everywhere believes himself to be free. In his delusion he lays waste to the planet and the ecosystems that support his culture. In the world of 1762, the physical, natural environment was so large in comparison to human works and efforts that it was difficult to believe that its impact could be anything but inconsequential, vanishingly small, too insignificant to be noted.2 Given our planetary population of six billion (many of whom enjoy a much more affluent, much more resourceintensive life than even the wealthiest humans did in Rousseau’s day), it now is eminently clear that this is not the case. It’s not hard to postulate reasons for western civilization’s inability to appreciate the full extent of our dependence on nature, nor for our inability to accept the full implications of our collective subordination to the physical laws that obtain there. Some basic physical laws and principles lay undiscovered until the nineteenth and twentieth centuries, and remained generally underappreciated for decades after. (Not until 1911 did the US Patent office effectively prohibit applications for perpetual motion machines — machines that violate the first or second laws of thermodynamics, laws that had been fully in place by the 1870s.3) Learning is driven by perceived problems, and in no western culture was the ecological sustainability of human activity perceived as an issue, let alone a fundamental problem. Our idea systems did not admit of the possibility that human action could have a cumulative and destructive effect on nature. Nature was unfathomably larger than culture, and stood outside of it as an unchanging essence, the baseline against which we measured cultural progress.4 And the necessary root of culture in nature was further obscured by the advent of oil and the 1 Jean Jacques Rousseau, The Social Contract. While it was possible to believe that human works had no significant or permanent ecological impact, that belief was not always warranted, as the work of Jared Diamond (Collapse: How Civilizations Choose to Fail or Succeed [Viking, NY, 2005]) makes clear. 3 In 1911 the Patent Office began requiring that inventors seeking patents on machines that used no energy, or that gave more energy than they consumed, had to produce a working model that would be held in storage to function for a year before a patent was issued. Applications dropped to nil. 4 George Perkins Marsh’s Man and Nature, or, Physical Geography as Modified by Human Action [Belknap Press, 1965; first published in 1864]) was the first work in the western tradition to discuss how human acts have produced cumulative environmental degradation and ecosystem destruction. He studied the environmental damage done by Mediterrean cultures of antiquity—a body of evidence available in Rousseau’s day as well. 2 31 heady power it gave to industrial civilization. We became Prometheans; what care had we for that which we exercised our power over? Through the fossil fuel revolution humans enjoyed an exponential increase in their (perceived) degree of liberation from what Marx and Engels called “natural necessity.” It may be no accident that, seen from a sufficient historical distance, a graph tracing the increasing rise of democracy and its notions of individual civil rights — what we commonly call freedom5 — closely matches a graph tracing the increasing displacement in our economies of muscle power (frequently embodied in human slaves) by machinery driven by the stored solar energy of fossil fuels.6 What is the relationship between the experience of human freedom and the ecological reality in which that freedom is experienced? The question does not admit of a rigorous, elegantly precise answer, not least because the presence or absence of an abstract value like "Freedom" is not easily quantified and measured. And yet, vague though the term may be, human freedom is one value that either will or won't be augmented as we move out of the Petroleum era and toward a sustainable economic system. Careful consideration of the relationship between democratic forms and institutions, on the one side, and sustainable economic practice, on the other, is necessary if the form and substance of human freedom is to be preserved and extended as we either stumble toward, or plan to achieve, sustainability in our economic activity.7 History is complex, and single-factor explanations are invariably wrong because incomplete. And yet focusing on the role of a single factor, such as the role that human exploitation of ecological resilience plays in the experience of freedom, is an appropriate way to understand that factor, and this is a necessary part of the effort to place that factor in its larger, more complete and complex context. A survey of the history of liberal democracy suggests that for centuries, democratic freedoms have been dependent on the bounty of nature; within the history of industrial society, our experience of civil liberty has been purchased by economic development fuelled by the draw-down of the planet’s ecological endowment, particularly but not solely its endowment of fossil fuel. This draw-down is clearly not sustainable. As we approach the limits of the planet's ability to support this continued draw-down, we must re-ground our understanding of freedom on a new, sustainable basis. This paper is an attempt to clarify the environmental roots of the experience of human freedom, the conditions under which that experience might be sustainably perpetuated, and the major challenges we face in that effort. 5 I speak very broadly here of “democracy,” of “notions of individual human freedom,” of “liberal democracy.” These are difficult terms to define with any precision, and it isn’t necessary to attempt such definition here: at the largest scale the very real differences between various ideological definitions look more and more like subtle nuances. In general I’ll presume that we know what we’re speaking of when we speak of democratic freedoms, and that what we know is embodied in documents like the U.S. Constitution’s Bill of Rights and the Universal Charter of Human Rights. “Liberal Democracy” is here taken as a term describing the tradition of democratic thought embodied in the political institutions of western societies, a tradition that encompasses both conservative and progressive movements. 6 The connection between the rise of fossil fuel use and the demise of slavery is explored by Richard L. Rubenstein in The Cunning of History: the Holocaust and the American Future (Harper Colophon: 1978). At a sufficiently panoramic scale—one implied by looking at the course of human civilization through millennia-there are any number of other graphs that are congruent with the rise of liberal freedoms: the spread of the printing press, the spread of cheap weapons available to the general populace, the increasing percentage of workers not engaged in agriculture, etc. Correlation is not necessarily causation. 7 That our economies will do either one or the other is axiomatic: an unsustainable system, by definition, cannot last. 32 2 Background: Malthus No one has ever convincingly answered Malthus.8 His numbers were arbitrary and don’t withstand scrutiny, and he wrote well before (and couldn’t have foreseen) the petroleum era with its concerted effort to turn antique sunlight into fertilizers and pesticides and thence into food and human biomass. For these reasons his work is an easy target. But no one has successfully controverted the fundamental dynamic to which he pointed — that the human population, like populations of all sunlight-eaters, expands to fill the niche available to it, defined as an energy opportunity in nature. Population is indeed capable of growing geometrically. A modest percentage increase in population each year will produce a doubling of the population in short order. Agricultural productivity — the exploitation of sunlight for the purpose of creating human biomass — cannot and will not keep pace. Our population can increase only to the limit of our food supply, to the limit of the solar energy (current or antique) that we can appropriate as digestible calories. The amount of sunlight falling on the planet is finite, and sets an outside limit to the amount of agriculture the planet can sustain. Through the Green Revolution we may have slightly increased the sustainable agricultural productivity of the planet, by accomplishing changes in our farming infrastructure that increased arable land and the technical efficiency with which we use it.9 But by far the largest part of the productivity gains of the Green Revolution are unsustainable, because they came about through use of fossil fuel: we augmented production from current sunlight by importing into the present a subsidy from past solar income. We borrowed from age-old Peter to pay modern-day Paul, and while Peter has been generous with his wealth, his fortune isn’t infinite. When the endowment we’ve been borrowing from runs out, the miraculous productivity gains of the Green Revolution will too. 3 Malthus, extended Food is not the only intake problem that sets a limit to the niche humans can sustainably occupy, and intake problems are not the only problems we face. On the intake side water has also proven to be a factor limiting expansion of human population, both for its necessity to health and sanitation and its role in agriculture. Just as we’ve come to speak of “peak oil” — the period in which we’ve used up half the planet’s stock of petroleum, leading to an era of declining production, volatile pricing, and energy constraints on production — so too are we coming to speak of “peak agriculture” and “peak water.” In some regions, water and food scarcity are already limiting human populations through the mechanisms that Malthus adumbrated: war, disease, pestilence, starvation. There is one additional intake problem that affects how many humans can be supported sustainably on the planet, and that is the larger, amorphous problem of the cumulative environmental impact of our uptake activity: the problem of industrial culture’s ecological footprint. The size of our culture’s ecological footprint is affected not only by uptake but by output — our various exhausts and effluents — as well.10 This out-flow from our economy is 8 Thomas Malthus, An Essay on the Principle of Population, first published in 1798. In order to assess any increase over time in the technical efficiency of agriculture, one must “back out”— subtract—the subsidy that contemporary agriculture receives from antique solar energy. If we do that, what is left is a significantly smaller gain. 10 If we come to admit that economic activity is not exempt from the laws of thermodynamics, we see that from a physical standpoint, economic activity consists in nothing other than the transformation of scarce inputs of valuable matter and energy into relatively valueless waste. The production of degraded matter and energy is not, of course, the purpose of economic activity; what we seek is what Nicholas Georgescu-Roegen called “an immaterial flux, the enjoyment of life” — or, in the time honored term of economists, “utility.” See Nicholas Georgescu-Roegen, The Entropy Law and the Economic Process, Harvard University Press, 1977. 9 33 a thermodynamically inescapable consequence of economic activity. The laws of thermodynamics tell us “you can’t make something from nothing” — economic activity requires the uptake of valuable matter and energy, from ecosystems into the economy — and “you can’t make nothing from something” — the matter and energy we take up from nature do not cease to exist when our economic use of them is done. Although the effluent stream from some national economies is cleaner than it was a few decades ago, and certainly cleaner than when economic actors everywhere could discharge effluents into the commons without regulation or limit, when we consider economic activity as a global system we see that the environmental damage of the pre-regulatory age has been exceeded by the damage done today by much more numerous economic actors abiding by current environmental laws, which vary dramatically around the globe.11 All other things being equal — and they are close to equal12 — greater uptake means greater effluent, and a greater burden — a larger industrial footprint — on the planet. Obviously, land that is used for mining, for processing, for habitation, for transportation, for agriculture, for extraction of resources, for receiving waste materials is land that is not left to go through its natural cycles. Just as obviously, land is only one form of the global commons that is affected by economic activity; our air and water are affected as well. But to speak of land and air and water misdirects our attention. What is significant about human impact on the planet is the effect of our activity on the other life forms that share this land and air and water with us. That life and its material foundation in minerals, air, and water form a global commons that embodies the natural capital endowment of the planet. That human civilization depends on the continued existence of ecosystems left in something close to their natural states is the unassailable conclusion of the study of natural capital. 4 Natural Capital In an article in Nature, Robert Costanza et al. made a first approximation of the value to human economic life of the goods and services provided by natural capital.13 The article classified ecosystem goods and services into 17 distinct categories, including: - regulation of planetary gases; - regulation of micro- and macro climates; - regulation of disturbances (storms, floods, droughts); - regulation of water; - provision of potable water; 11 The Environmental Kuznets Curve, which purports to model an increasing-then-decreasing amount of environmental damage (or “negative externalities”) as economies develop, is a stupidity that achieves its optimistic results only by failing to use the relevant frame of reference. While the experience of some or all developed countries can be made to fit a Kuznets curve, the curve neglects to take into account a common dynamic: wealthy countries can and do export the negative environmental effects of their standard of living to less developed countries. In a globalized economy, the relevant frame of reference for environmental damage is the globe, not the quality of environmental indicators measured in individual industrial nations with relatively more stringent environmental laws. 12 The mitigating factors are several, and they tend to cancel each other. Increased efficiency means that we can accomplish more economic activity with the same amount of uptake, and the application of increasing knowledge about how ecosystems work tends to reduce the ecological damage from that uptake. But reductions in environmental damage achieved by these means have been outpaced by the increasing scale of our uptake as population and economic throughput have grown. The ecological damage of a given unit of throughput is also a function of the mix in that throughput of renewable-to-nonrenewable resources, and in the past two centuries less and less of our uptake has been from renewable sources. 13 R. Costanza et al., “The Value of the World’s Ecosystem Services and Natural Capital,” Nature, 387: 253-260 (15 May 1997). 34 - waste absorption capacity; erosion control and sediment retention; formation of soil fertility; nutrient cycling; pollination; biological control of natural populations (including populations of those life forms that humans define as pests); habitat for species that provide goods and services useful to humans; genetic resources; recreation; aesthetic, educational, spiritual values. No doubt some environmentalists find the list distressingly anthropocentric: value is measured here against human purposes. I think that culturally we could note this and move on: to say that ecosystems have value to humans, and to try to affix that value more certainly, is not necessarily to say that they don’t have value in and of and for themselves. The value that Costanza et al. affixed to this inflow of goods and services into the human economy is US $16 to $54 trillion per year, with an average of US $33 trillion per year — a contribution larger than the Global Gross National Product of US $18 trillion per year. The inflow of goods and services that humans receive from nature is received by us as individuals, as citizens, in our collectivities in communities, corporations, nations. These goods and services are not valued by any market; they are the free gift of nature. We tend to find value in them mostly when the inflow is interrupted. Natural capital has many characteristics that distinguish it from humanly built capital, and chief among them is the capacity of renewable forms of natural capital to maintain themselves. In mechanical and thermodynamic terms, maintenance of built capital represents an importation of low entropy — valuable matter and energy — into economically productive structures to replace the degraded matter that has worn out, rusted, rotted, or otherwise fallen into disrepair. Unlike built capital, natural systems are self-regulating open systems, pulling energy and matter in to maintain system integrity (or, in a different rhetoric, to maintain ecosystem diversity and health). Besides being a free gift of nature, nature capital comes to us with zero operating costs. Some forms of natural capital are replenishable (forests, for instance); others aren’t (the planet’s endowment of fossil fuels). The existence of this natural capital is necessary to human productive life, both as it is practiced now and in absolute terms. Without protection from radiation given by the ozone layer, we die of skin cancer; without the moderating effect on climate of rainforests and ocean currents, our agriculture shrinks to a fraction of its current scale; without the transfer of tropical warmth to Europe though the ocean Conveyor Belt (a massive movement of water threatened by the desalination of the North Atlantic consequent on melting icecaps), Europe becomes a cold, energetically more expensive, agriculturally less hospitable place to live; and so on, and so on. One brief and compelling illustration of the value of natural capital is to be found in the recent experience of the American city of New Orleans. One hundred years ago, fifty miles of coastal marsh — bayou — lay between that city and the ocean. Engineering projects undertaken in the twentieth century — the creation of shipping channels to circumvent the digressive meanders of the river, so that boats could save time and fuel by steaming more directly to their destination — destroyed the bayous by depriving them of the regular inflow 35 of sediment that replenished and nurtured them.14 A coastal marsh is a sponge: it will absorb about four inches of storm surge per mile. Fifty miles, two hundred inches: sixteen feet of storm surge. Had those bayous been in place there is every expectation that the storm surge that arrived in New Orleans would have been a fraction of its size, and the city’s storm defenses would in all likelihood have withstood the onslaught. In retrospect, we see that the storm protection service offered by those bayous was at least the equivalent of the damage done to the city, which is estimated to be $81.2 billion. It is possible, within limits, to substitute humanly made capital for natural capital. The storm-protection function of the deltaic marshes south of New Orleans was replaced by an expensive system of dikes and pumps designed to protect the city from storm water. (Evidently, the system could have used a larger investment.) If the climate of Europe changes due to global warming, we could make adjustments—spend more on clothing, heat, air conditioning, irrigation of crops, sunscreen, etc. If bees continue to disappear from our world, we could hand-pollinate all the species of plants that are useful to us. In doing these things, we would replace the free service offered by nature with an expensive service provided by human engineering, labor, and development. A greater proportion of our economic activity would thereby be dedicated to this macro-economic overhead, with consequent reduction in the amount of that activity that could be dedicated to the end of economic activity, the maintenance and increase of the human standard of living. A totally analytical economist might find a trade-off: if the benefits of destroying natural capital outweigh the costs of building and maintaining a humanly engineered replacement, then it makes economic sense to destroy the natural capital and make other arrangements to receive those services in the market. This of course assumes that a) we know what benefits we are getting, and can cost them out effectively, b) we can arrive at responsible estimates of maintenance costs infinitely into the future; and b) when we replace natural capital with human engineering, we’ll be able to do the job as well as nature did. All three assumptions are exceedingly dubious. Because destruction of natural capital is not counted as a cost in anyone’s cost-benefit calculations about proposed economic development, it is not only conceivable but highly probable that, if unchecked, economic development will establish such a large environmental footprint that the amount of natural capital left to us will be insufficient to maintain our accustomed inflow of its non-market goods and services. By failing to account for the services that come from natural capital, we have achieved the world that John Stuart Mill, an early advocate of sustainable economic activity, imagined in his Political Economy: "...Nor is there much satisfaction in contemplating the world with nothing left to the spontaneous activity of nature; with every rood of land brought into cultivation, which is capable of growing food for human beings; every flowery waste or natural pasture ploughed up, all quadrupeds or birds which are not domesticated for man's use exterminated as his rivals for food....and scarcely a place left where a wild shrub or flower could grow without being eradicated as a weed in the name of improved agriculture."15 To Mill, the preservation of some untrammeled nature was primarily an aesthetic and perhaps a psychological and even a spiritual issue: humans need to experience the not-human in order to realize who and what they are, and their appreciation of nature is essentially aesthetic. In the century after Mill, those who sought to preserve the spontaneous activity of nature relied less on aesthetics and psychology than on ethics; they made moral arguments for preservation of ecosystems and their inhabitants. “We have no right to cause harm to other beings.” This approach was implicitly endorsed by no less an anti-environmentalist than 14 The channelization also had the effect of allowing greater discharge of sediment into the shrimp fisheries of the Gulf of Mexico, a burden that has dramatically affected their net productivity. The sad case of New Orleans illustrates a fundamental principle of ecology: when tinkering with nature, “you can’t do one thing.” 15 J. S. Mill, “Of the Stationary State,” in Book IV of Political Economy. 36 American Vice President Dick Cheney, who insisted, in defense of the energy policy whose creation he oversaw, that “conservation is an individual moral issue.” He was content, that is, to agree that damage to nature was by some people’s lights immoral; it didn’t happen to be immoral within his ethical universe (an ethical universe in which only certain “individual moral issues” are allowed to be appropriate subjects of public policy), and so it was easy for him to dismiss conservation as a policy concern. Within his frame of reference, living in sustainable harmony with nature’s systems has been and evidently still is an entirely private virtue, not a matter of compelling public concern. (Thankfully, Cheney’s frame of reference is, in planetary terms, a miniority view; unfortunately, that minority has been setting policy in the United States.) We may have reached the end of the need for environmental ethics as it has been practiced, for the preservation of the spontaneous activity of nature is now no longer easily shunted aside as a matter of morality, whether public or private; as we gain in our appreciation of the direct, non-market goods and services that nature provides to us, we see that preservation of earth’s ecosystems is a practical necessity if we are to maintain a commodious standard of living on this planet.16 As part of that standard of living, we will want to enjoy democratic freedoms. And these, it turns out, are also in some measure dependent on the existence of a sufficient stock of natural capital. Our freedoms flourish in the resiliency of healthy ecosystems; in unhealthy ecosystems, or in ecosystems operating near their theoretic maximum provision of goods and services to humans, there is little room for democratic freedom. 5 Ecosystems and Democratic Freedom: Locke The derivation of civil freedoms from ecological resilience is deeply rooted in the Western political tradition, as is evident in an examination of one of the foundation texts of modern democratic theory, Locke’s Second Treatise of Government, An Essay concerning the true Original, Extent, and End of Civil-Government. In chapter 5, “Of Property,”17 Locke goes through a careful derivation of how a reasonable right to one’s own labor power leads to a right to property — ownership of that in which one’s labor power is mingled — and thence to the right to enclose elements of the global commons (we might say, to exploit natural capital) for personal use, which we are entitled to do as long as “enough, and as good” is left for others. From this right to possess property, including to hold title to land, Locke will go on to derive his doctrine of the social contract, describing how as a matter of implicit logic rather than actual historical fact we can understand government to be the reasonable result of men combining in self-interest to protect and preserve their lives and property. The civil authority created by this social contract is legitimate and both necessarily and intrinsically limited, and on both counts, Locke finds, that authority is the progenitor of the modern democratic state. Reading the work with early 21st century sensibilities, it’s interesting to see how many times Locke adduces the existence of the continental mass of America in this passage. The Second Treatise was written sometime between 1680 and 1683, when the human population of the planet a mere 600 million.18 The continent of America, on which European culture was consolidating a foothold, fighting wars against the indigenes and playing out the religious 16 This does not mean that environmentally concerned ethicists are in danger of mass unemployment. Within a sustainable economy that operates within caps set by ecological limits, issues of social justice can no longer be resolved through the simple expedient of increasing economic throughput. The distribution and redistribution of wealth become matters of immediate ethical concern. 17 pp. 127 -140 in Mark Goldie, ed., John Locke: Two Treatises of Government, Everyman Library, 1993. 18 John H. Tanton, "End of the Migration Epoch," reprinted by The Social Contract, Vol IV, No 3 and Vol. V, No. 1, 1995. 37 rivalries that beset Europe and England, is mentioned a half a dozen times. It lurks as a presence throughout the argument. “In the beginning,” Locke writes, “all the world was America” — all the world was vacant space, held in common, awaiting individual appropriation and exploitation by the true originator of civil society, “the man who first declared ‘this is mine’ and found himself in the midst of men foolish enough to believe him,” as Rousseau put it. As long as America, with its “inland, vacant places” is a commons, no man prejudices the interests of another by taking possession of any part of the commons, because in America there is always “enough, and as good,” for others. (A modern economist might point out that Locke is being glib here in ignoring significant costs that challenge the “as good” part of that qualification. A commons available four thousand miles and a difficult sea journey away is not quite the same thing as a commons ready to hand.) There are any number of lenses through which to read this passage of Locke’s. One strong set of lenses finds in his argument a clear statement of the deep dependence of liberal democracy on the faith — still remarkably current today, especially within academic departments of economics — that the world is infinite, capable of absorbing in perpetuity our less-than-humble projects and our considerable population growth. But I want to narrow the range of what we look at and ask why this presumed infinity is so crucially important in the Western tradition. The characteristic of an infinite planet that is most salient here is that an natural system can easily (implicitly) be assumed to have an infinite capacity to absorb human economic activity with no harm or consequence to any person and no appreciable decrease on the ability of natural capital to supply us with the stocks and flows of goods and services on which we depend. An infinite system, that is, is resilient; it is unfazed by our acts and works. In Locke’s derivation of the right to property, we find acknowledgement that the foundation of civil liberty is the resilience of the ecosystems that support human life. Locke’s derivation of governmental authority begins with individual entitlement, the natural right of humans to appropriate the sustenance they need from nature. This origin allows Locke to place limits on governmental authority, creating the foundation for the limited state and its democratic freedoms. If nature is not infinitely available to us for appropriation and exploitation, Locke’s careful argument for limited government, for human freedom in civil society, falls apart. 6 Constitutional Law: The First amendment The allowable range of my personal expression of my freedom is restrained by the injunction to avoid imposing real and demonstrable harm (perhaps even only the risk of harm) to others. “My freedom to swing my arm,” said a US Supreme Court Justice in an opinion delineating the limits to the freedom of speech guaranteed under the US Constitution, “stops just short of my neighbor’s nose.” A world in which “every rood of land is brought under cultivation,” a world in which natural capital has been diminished to a point at which any further diminishment causes demonstrable harm to the interests all humans have in living a commodious life on a generous planet — a world, in short, whose ecosystems lack resilience — is a world in which we live surrounded by noses. One illustration of this dynamic can be found in the evolution of property rights law in the United States. The fifth amendment to the Constitution guarantees citizens the right to be secure in their property: "Nor shall private property be taken for public use, without just compensation." In the era in which the amendment was written, the paradigmatic taking was the requisitioning of horses and silage and wagons in wartime. As both human population and the ecological footprint of their economic activity expanded in the succeeding two centuries, Fifth Amendment takings cases have come to deal with attempts to regulate the use 38 of private property in ways that retain or conduce to the retention of the public benefits that derive from natural capital even as it is privately owned. What is remarkable in this body of law is the complete absence of explicit recognition of ecological principles — such rudimentary notions as “everything is connected,” “you can’t do one thing,” “there is no such place as ‘away,’” as well as the more sophisticated analyses that allow that land, over which individuals have ownership and some presumed degree of prerogative and discretionary authority, clearly has a necessary and unalienable public character, by virtue of its contribution to natural capital, which provides non-market goods and services to numerous people besides the landowner. Two hundred years ago, the man who owned a forest could cut it as he pleased, subject only to the expectable constraints on behavior that apply to individuals no matter what their occupation, purpose, or acts: generally, that they cause no direct and obvious harm to others. (In those days, harm was construed simply and mechanically: trees falling on fences, that sort of thing.) The rise of environmental awareness led to a reduction of this realm of discretionary liberty: there are rules now that require a wood-cutting landowner to ensure that in the harvesting of wood, streams aren’t muddied, its habitats of rare and endangered species aren’t destroyed, and its soil doesn’t erode onto adjacent landowner’s parcels. Constitutional law has not taken the further step of noting that every tree on the planet, whether it stands or public or private property, provides a tiny increment of public service whose loss adversely affects others. At each of these three stages — prevention of mechanical damage, prevention of ecological harm, preservation of ecosystem resilience — regulations affecting landowners could be construed as a regulatory “taking” under the Fifth Amendment: the realm of prerogative and control was diminished by regulation. The first category was not so construed. The second category is coming more and more to be interpreted this way by an American Supreme Court that takes a distinctly conservative view of property rights. The presumption, perhaps reasonably enough, is that any decrease from the level of prerogative and control enjoyed in the past is a diminishment, and an expansive view of the Fifth Amendment protection against uncompensated seizure (a view championed by neoconservatives antagonistic to the fundamental premises of governmental regulation for the public good) requires that diminishment be compensated. Note the implication: as long as the Endangered Species Act is in force, the discovery of any endangered species on a parcel of property constitutes a taking under this principle, for it immediately brings that parcel under a form of regulation that limits its development for economic purposes, depriving the parcel’s owner of the possibility of using the land for its most remunerative purpose. As the human ecological footprint increases, we can expect more and more species to become endangered through loss of habitat; consequently, there will be a greater and greater legitimate state interest in regulating activity on larger and larger amounts of land, and more and more of such “takings” of (supposedly) private property.19 One solution — the one favored by short-sighted, anti-environmentalist, antigovernment, free-market boosting “property rights” advocates — is simply to do away with the Endangered Species Act and declare that the endangerment (and eventual extinction) of non-human species is not in any sense a public harm that the state may legitimately act to avoid. This position has the virtue of logical consistency, but it is grounded in factual error. While in any particular case, it may be difficult to establish the physical harm that species extinction causes the public interest, there is (and cannot be, among informed and thoughtful people of moderate intelligence) no doubt that the public interest is served by the continuation 19 A brief account of the tension between “property rights” and environmental regulation can be found at http://www.publiceye.org/eyes/privprop.html 39 of healthy ecosystems, and that genetic diversity of biota is a one definitive constituent element of ecosystem health. These demonstrable facts find no place in caselaw on Fifth Amendment takings, and they should. If we as a civilization choose to have more people, people who want to do more economically ambitious things with their land, we face a choice: either individual landowners will have less and less discretionary authority — less liberty and freedom — to use their land as they see fit — or we will see the continued debilitation of those ecosystems whose health provides our civilization with real, increasingly measurable benefits. What is needed is a reversal of the conceptual frame: if appropriation of natural capital fails to leave “enough and as good” for the enjoyment of other citizens, then that appropriation of natural capital is a taking from the public commonwealth that needs to be compensated. Requiring developers to pay the full cost of their developments would allow the market to be a more efficient allocator of resources here. The abstractions become concrete in caselaw. In Dolan v. City of Tigard, Dolan sought and received compensation for the regulatory “taking” of part of the value of her property, since the city plan for Tigard, Orgeon (a suburb of Portland) encoded provisions for flood prevention and the creation of bicycle pathways, provisions that prevented her from expanding her auto parts store as much as she would have liked. The law did not presume that in expanding her store Dolan would have been appropriating from a collective commons, committing a taking that should be prohibited or, if allowed, compensated. In Lucas v. South Carolina Coastal Commission, the US Supreme Court decided that Lucas, a developer, should receive compensation for the loss of value of two building parcels he owned that became unbuildable after the passage of coastal zoning regulations that had the very reasonable intent to limit dwellings being built within twenty feet of the 40-year average high tide line. Again, the law presumes that what is taken was taken from the individual; it does not conceive that in building on a fragile, transient ecosystem the developer would in effect be taking from an ecological commons. In each of these cases, the public purpose being served by the regulatory “taking” was clear and a matter of general (but not total) cultural consensus: it is reasonable for a city to promote flood control through the retention of greenspace, it’s reasonable for a city to seek to relieve traffic congestion through facilitation of bicycle use, it’s reasonable to place limits on a developer’s ability to put housing in harm’s way. But the kinds of regulatory takings that are implied by recognition of the role of natural capital in the human economy are nowhere near being a matter of general cultural consensus. Every acre of forest cleared — the cutting of every single tree on that acre — detracts incrementally from the ability of the planet to regenerate oxygen, to control micro- and macro-climates, to regulate storm runoff — in short, to support present and future human life at the level of economic well-being we currently enjoy. For the loss of individual trees, the public harm is vanishingly small, but it is not zero. The vanishingly small harm is of no moment within a healthy, resilient ecosystem, and so here we see clear illustration of the principle: within a sustainable civilization, individual (or corporate or other collective) human prerogative over land can flourish only when the amount of biomass needed to sustain human culture is less, significantly less, than the amount of biomass present on the planet. Democratic freedoms arose in the expansiveness of a nature that was obviously larger than even our most ambitious purposes, and are sustainable only within a nature that can itself sustain and absorb the damage our economic activity inflicts on it. 40 7 Factory Earth In ecosystems, resilience is a function of health, which can be measured along two fundamental variables: that ecosystem’s degree of diversity — the presence within it of diverse species, including parallel species occupying similar niches — and as that ecosystem’s approach to the theoretical maximum of productivity in turning sunlight into biomass. To humans, ecosystem health looks like the capacity to produce surplus ecosystem biomass — surplus being defined, anthropocentrically, as the biomass produced by an ecosystem above and beyond the biomass we extract for our own use and cycling. The amount of sunlight that falls on the planet sets an outer limit to the amount of photosynthesis that the planet can sustain, and hence the maximum possible biomass the planet can sustain. That biomass is present as a variegated collection of ecosystems, each of which evolved through millennia toward maximum use of available energy. The stored sunlight captured by photosynthesis is a stock of low entropy that can be exploited to do work, and it is exploited: animals eat plants and get on with the work of surviving, reproducing, hunting, hiding, nurturing young, and solving, with that combination of learned and hard-wired response that is their species endowment through evolution, the various problems that their existence presents to them. There is no waste in nature: wherever organized, low-entropy biomass exists, a life form has (or will soon) evolve to exploit it, to live upon it, to make use of it. An ecological niche is an energy opportunity. Sunlight falling on rock created a niche for green plants. Green plants create niches for herbivores; herbivores create niches for carnivores. The organized low entropy of dead biomass creates niches for scavengers both large (vultures, jackals, hyenas) and small (unicellar bacteria) and of a variety of sizes in between. Animals, including humans, take in biomass to fuel the movement of their muscles. Some animals — humans most notable among them — appropriate additional biomass for other purposes. Birds and beavers use cellulose biomass to build structures for protection; beavers, with their dams, alter landscapes to make them more suitable to their purposes. What humans do is not different in essence from what beavers do, but the differences in scale (both spatial and temporal) are sufficient to make human action different in kind. Human works are unparalleled in their effect on the biosphere. Beaver engineering evolved over millennia, giving ecosystems time to adapt to the new energy opportunities, the foreclosure of other energy opportunities, and in general the changed reality of the aquatic systems that the animal alters. Human engineering has also evolved, but with a rapidity that outpaces nature’s ability to co-adapt.20 Our projects also regularly destroy habitat, precluding the existence of a great deal of other life for sheer thermodynamic and practical reasons. We may have destroyed enough habitat to interrupt the operation of evolution on micro- and perhaps even the macro scale; for evolution to proceed, there must be a sufficiently large gene pool to support variability, from which competition can reward selected, useful adaptations. Another significant (but certainly not the only other) negative aspect of our destruction of habitat is the loss, to non-human nature, of the available energy of the habitats that are destroyed. That is, we destroy niches, energy opportunities, when we destroy habitat. Reparation of this expropriated energy opportunity through some other means (as by importing food from another ecosystem into the ecosystem we’ve altered, for instance) is not 20 Some aspects of human engineering make it impossible for nature to co-adapt. Our projects regularly produce toxins hostile to life as it exists now, and while evolution is cunning and pragmatic in its counter-engineering, and may, given enough time, yet find ways to reconcile life to some of our poisons and effluents, we can’t expect evolutionary processes ever to find a way to reconcile DNA-based life to substances that destroy or damage DNA. 41 alone sufficient to support or restore the full productivity (measured as amount of biomass) of the ecosystems we alter, and in any sustainable system would in any case simply displace the problem: we’d have to deprive some other ecosystem of its full productive capacity in order to engage in this kind of redistribution. (We can import an energy subsidy into ecosystems from past, stored sunlight, but our capacity to do that will come to an end as those stocks are drawn down.) When we think about these matters from a whole-systems, global perspective, it’s clear that one key element of the alteration we make to the planet is this denial of energy opportunities to non-human nature. Sometimes, as when we take land out of forest and plant crops, we appropriate the energy opportunity directly for ourselves, for our own bodily sustenance. Sometimes, as when we turn a variegated meadow into a monocultural lawn, or pave that meadow to create a parking lot, we deny energy opportunities to nature without deriving any direct energy benefit to ourselves. In this latter class of acts, we create a net loss of biomass for the system. Parking lots and poisons, uptake and exhaust: our alterations have effects at both ends of our economic/thermodynamic processes, and those effects reduce the amount of energy that can course through ecosystems, maintaining their complexity, structure, and order. The biomass of the planet is finite. We can assign a number to represent this amount; call it B. The amount of appropriated biomass that human civilization requires at any given moment is a function of many complex and interrelated factors. It will depend, most obviously, on - The number of humans living in civilization and - The average per capita appropriation of biomass by those humans. Call this amount Bh. What level of biomass appropriation by humans is sustainable? That is, what is the maximum amount of biomass appropriation by humans that will leave “enough and as good” biomass in its natural state, capable of replenishment, renewal, and self-repair, and therefore capable of providing to human civilization in perpetuity the non-market, non-economic goods and services on which that civilization depends? Ultimately, we can’t know the answer. Despite our increasing knowledge, we remain stupendously ignorant of — sometimes, can’t even estimate the values of — the determinative variables: the complex interactions within and among the elements of natural systems in fine and on the global, even sidereal, scale. Even were we to have some clear idea of those variables, and consequently an informed estimate of the amount of biomass we could appropriate for our own use, there’s a host of trouble shoe-horned into that casual phrase, “in perpetuity.” The ecosystems of the planet (and the planet itself) receive occasional, expectable, but unpredictable exogenous shocks that alter the operation of the system. El Nino comes and goes, affecting rainfall and the productivity of agriculture and fisheries; sunspots wax and wane, perhaps influencing El Nino, perhaps not; volcanoes erupt; the poles wobble; bees suddenly begin to die off. Even at our best we seem to have an “oops, it’s broken” epistemology: we discover ecological trouble after the fact, and scramble to learn enough rapidly enough to take compensatory action, minimizing the harm we experience. The prospects for ever achieving enough knowledge to do things any better are exceedingly dim. We would do well to apply lessons learned — we have difficulty with that, as the experience of New Orleans shows — but we have little hope of learning lessons in anticipation of problems that remain inconceivable until well after they are manifest. Even though we have no hope of ever assigning an accurate number to the entity “maximum sustainable level of human biomass appropriation,” the concept is useful. 42 Whatever it is, call it Bhs. We can postulate a useful equation: the amount of biomass that is humanly appropriable on a sustainable basis is the biomass of the planet minus the amount of biomass needed to serve as natural capital, supplying us with the goods and services human civilization needs: Bhs = B – Bnc. Clearly if Bh is greater than Bhs , civilization is not sustainable. Inequality that runs this way is sensibly avoided — though it has taken a few centuries of industrial experience in order for us — some of us — to recognize this. Admittedly, “Bh should not exceed Bhs” is a shallow, broad-stroke approach to the problem of sustainability. But this broad-stroke portraiture allows us to get to this idea: There are ratios of Bh (the Biomass of the planet that is appropriated by humans for their purposes) to Bhs (the maximum amount of Biomass that can sustainably be appropriated by humans for their purposes) that allow for the existence of human freedoms and civil liberties, and there are ratios between the two that do not. If Bh is equal to Bhs, the combined culture-nature system has no resilience; it is (to use an analogy from fractional reserve banking) fully loaned up, with no slack, no reserve capacity, no leeway. To use another analogy from economics: when Bh is equal to Bhs , the planet is a factory operating at peak efficiency, at the rate that represents the theoretically maximum benefit to its human operators. As with any humanly-constructed factory, any change from that maximum must be a diminishment that reduces benefits to some humans somewhere in the system. With humanly constructed factories, we can imagine reaching such a maxima and then augmenting it, through further investment: additional floor space, additional storage space, additional machinery, additional increments of whatever capital stock or other productive input is identifiable as being the choke-point limiting expansion of output. The difference with our planetary industrial culture is this: there is no practical way to bring additional inputs of anything into the system.21 This one planet is all we have. On a planet in which the ratio between Bhs. and Bh approaches one — when what we take from nature is the maximum that nature can provide — there is no resilience in the system; we live in a full-capacity world, Factory Earth, a world of noses, a world in which there is the danger that we can no longer have any truly private acts or works. In such a world we will approach that explicit ideal of national socialism as the Nazis practiced it, the creation of a society in which "whatever is not forbidden is compulsory." When we take this insight — that when the ratio of Bh to Bhs approaches one, human freedom and civil liberties are severely constrained — out of doors and into the world, we find a host of confirmatory experience — in history, in current events. While few environmental historians have explicitly addressed the connection between ecological resiliency and democratic freedom, the relationship can be read in the evolving story of humanity’s relationship to the planet. The Constitutional freedoms that were created on the North American continent by European culture were underwritten by the bounty of the forests and fields and soils they encountered. Unlike most of the aboriginal cultures, the European imports exploited natural capital in unsustainable ways. Soil mining — the draw-down of the natural capital represented in the fertility of the fourteen-foot thick loess of the American Midwest — was a significant element of the US development of unprecedented agricultural productivity, which in turn fuelled industrial expansion and the nation’s rise to global preeminence. By the time the Petroleum Era was in full development, the relationship between 21 I’m aware that there are some bold proposals and aging hopes for colonizing space, mining minerals on the moon, positioning solar power satellites or even simple mirrors in space to augment Earth’s planetary stock and income of low entropy. It takes a great deal of energy to boost matter off the surface of the earth, and from what I’ve seen, the low-entropy-in to low-entropy-out ratios of such projects are invariably so close (or in some cases exceed) one-to-one that these strategems are unlikely ever to be economical choices. 43 draw-down of natural capital on the one side and the protection and extension of the US Constitutional system on the other was becoming equally clear. 8 The micro-macro distinction Factory Planet is a planet on which there is considerably less room for human freedom than there was in the days of John Locke or even John Stuart Mill. In our globalized economy, run efficiently according to “just in time” sourcing and inventoryless production, there is little resilience within the industrial system, and the size of that system’s ecological footprint leaves little resilience in systems of natural capital that provide us, in greater measure, with goods and services crucial to our standard of living. No resilience, no freedom: what are we to do? There is one consideration that mitigates this dark vision of the prospects for human freedom on Factory Earth. Daly and Farley make a useful distinction between the micro and macro scale in discussing the implications of natural capital analysis for individual human autonomy: “Policies should strive to attain the necessary degree of macro-control with the minimum sacrifice of micro-level freedom and variability. …If what is limited is the capacity of the atmosphere to absorb CO2, it is important to limit total CO2 emissions. Average percapita emissions times population will have to equal the limited total. But it is not necessary that each and every person emit exactly the per-capita average. There is room for microvariation around the average in the light of particular conditions, as long as the total is fixed.”22 Daly and Farley go on to note that markets are excellent mechanisms for preserving micro-variability within overall macro-policy goals (though markets alone will not achieve macro-control). Cap-and-trade systems to limit carbon emissions, or a population policy that manipulates incentives and disincentives to peg human reproduction at a replacement rate, 2.1 children per couple, would allow polities to meet ecologically non-negotiable macro-goals without resorting to the draconian measures of a command economy and a command society. This approach reconciles the need for ecological sustainability with our desire to preserve that realm of privacy and private action on which the exercise of human freedom depends. On this path — sensible anticipation of the problem, with wise, forward-looking policy in congruence with this principle — lies our best hope of preserving democratic liberties and values in a world that lacks the resiliency of the ecologically expansive, less humanly populated world of previous centuries. Unfortunately, there is a strong feedback loop that discourages achievement of this best path forward. 9 War It is a truth universally acknowledged that in times of war, civil liberties are diminished. The diminishment is less an accidental by-product than a juridicially recognized necessity of warmaking in an era of mass mobilization and industrialized warfare. A nation committing itself to war participates in a race to the bottom: war selects as its victor the strongest, and strength can be augmented through single-minded pursuit of victory, a dedication of a sufficiently large sector of economic and social activity to belligerence. The predictable effect on civil 22 Daly and Farley, Ecological Economics: Principles and Applications, Island Press, Washington: 2004 p. 361. 44 liberties was succinctly expressed by the US Supreme Court’s decision in Schenk v. Illinois: “When a nation is at war, many things that might be said in time of peace are such a hindrance to its effort that their utterance will not be endured so long as men fight, and no Court could regard them as protected by any constitutional right.” The US experience with the war in Iraq indicates that this sentiment is rather freely generalizable: As with freedom of speech, so with freedom of association, freedom of religion, privacy, due process, security against unreasonable searches and seizures, etcetera, etcetera. It is a truth not generally acknowledged that in times of environmental stress — lack of food, lack of water, lack of habitable land for an increasing population, disruption of the resource flows needed to sustain economic activity and a customary standard of living — nations frequently turn to war. Few nations go to war for explicitly environmental reasons, and I doubt that we will ever see a day that a President or Minister of Defense says “our people are suffering from lack of resources, and while we have no greater claim to such resources than any other people on the planet, nevertheless we will wage a war to secure them.” The German call for “leibensraum” in the mid-twentieth century stands out for its remarkable clarity; usually when wars are fought, they have as their stated purposes other, less obviously Malthusian causes. But as several students of environmental and diplomatic history note, unsustainable culture outpacing its root in nature has been a significant contributor to armed aggression in a variety of areas and times.23 As Thomas F. HomerDixon cautions, “as the human population grows and environmental damage progresses, policymakers will have less and less capacity to intervene to keep this damage from producing serious social disruption, including [armed] conflict.”24 10 Conclusion All experience of human liberty depends on the clarity and the location of the distinction we make between public and private — what actions are entirely personal and which ones are not, what human behavior is a fit subject for oversight, regulation, and control by civil authority and what behavior is not. The two categories are not polar types though we can easily imagine and draw illustrative examples from those extremes. Public and private exist on a continuum, with a middle region in which the nature of behavior — the decision as to whether an act is essentially private, or is so imbued with public consequence as to be legitimately regulated by civil authority — is open to debate, contention, negotiation, political resolution. In practice, where any particular political system will draw the line between the two kinds of acts is a product of many things (tradition; history; social context; the nexus of power relations, moral precepts and ideologies that are brought to bear on lawmaking; the tradition of political thought embedded in institutional practice, to name the most obvious). As we come to understand that collectively our civilization on the planet has approached the limits of what our environment can supply to us and the limits of what it can absorb from us, more and more of our private acts are seen to have public consequences. The realm in which civic freedom is exercised is diminished as we approach the full-capacity planet, what I have here called Factory Earth. In assessing the costs to our societies of environmental degradation, in deciding how nearly we want to approach the full-capacity planet, we should keep this relationship in mind. To live on Factory Earth and not limit ourselves to a sustainable rate of economic throughput is to ensure a great deal of human pain and suffering, most probably in 23 Homer-Dixon, in the work cited in the next note, reviews the admittedly thin but developing literature. Thomas F. Homer-Dixon, “On the Threshold: Environmental Changes as Causes of Acute Conflict,” International Security 16: 2 (Fall 1991), pp. 76-116. 24 45 the not-too-distant future. To live on Factory Earth with a sustainable level of economic throughput is to acknowledge that a choice about human population is also, necessarily, a choice about the permissible average ecological footprint. In the short run, with the ratio of ecological footprint to economic throughput fixed by existing technologies, a choice about quantity of population is also a choice about the standard of living that population can enjoy. This much is easy to see. We need also to recognize that on a sustainable Factory Earth, a choice about our standard of living is also a choice about our standard of liberty. 46 Challenges of the Renewed EU Sustainable Development Strategy for the National Accounting Josef Seják Faculty of the Environment, J.E.Purkyne University in Ústí nad Labem, Czech Republic [email protected] 1 Introduction The European Council in Göteborg (2001) adopted the first EU Sustainable Development Strategy (SDS). In conclusion of the review of the EU SDS, the European Council has adopted in June 2006 an ambitious and comprehensive renewed SDS for an enlarged EU (ec.europa.eu/sustainable/docs/renewed_eu_sds_en.pdf). The main challenge is to gradually change our current unsustainable consumption and production patterns and the non-integrated approach to policy-making. Sustainable development is about safeguarding the earth's capacity to support life in all its diversity, respecting the limits of the planet's natural resources and ensuring a high level of protection and improvement of the quality of the environment. The EU SDS identifies 7 key challenges and corresponding targets, operational objectives and actions (Climate Change and clean energy; Sustainable Transport; Sustainable consumption and production; Conservation and management of natural resources; Public Health; Social inclusion, demography and migration; Global poverty and sustainable development challenges). Historically for the first time, the European Council sets a new target of recognising the value of ecosystem services. Incorporating values of ecosystem services into the national income accounting and into the economy and economic decision-making processes can and will substantially help in integrating economy and environment. In relation to the system of national accounting, the Renewed EU SDS underlines that for better understanding of interlinkages between the three dimensions of SD, the core system of national income accounting could be extended by inter alia integrating stock and flow concepts and non-market work. At the same time, the EU SDS is rather inconsistent in having the goal of valuation of ecosystem services and requesting at the macroeconomic level of national accounting that “satellite accounts should be further elaborated by e.g. environmental expenditures, material flows and taking into consideration international best practices”. What is really needed are not satellite accounts, but direct incorporation of natural capital consumption (depreciation) into annual national accounts. The system of national accounts reflects the consumption of man-made capital, but completely disregards the consumption of the largest stocks of capital — natural capital and human capital. Conventional system of national accounts, in practice, liquidates the most important natural and human capital and calls it income (Hawken, Lovins, Lovins, 1999). Only incorporation of direct monetary values of natural capital depreciation can have high informational impact on changes in human attitudes toward natural ecosystem services. 2 Recognising the value of ecosystem services In contemporary environmental economics four main functions/services of ecosystems are identified (Turner, Pearce, Bateman 1994, p. 17): 47 1. 2. 3. 4. a natural resource based goods (renewable and non-renewable resources), a waste assimilation capacity, a life support system, a set of natural amenities (landscape and amenity resources). Ecosystem services sustain and fulfill human life. The first two „economic“ services (marketed natural resource base, sink for wastes from human activities) have traditionally been the main interest of humans, having direct use value for their survival. Nevertheless, with exponential growth of people during the period of industrial revolution, these two “economic” services clearly became rival with the other two „environmental“ services (lifesupporting non-marketed ecosystem services, incl. amenities) that, according to consumer and economists perception, have “only” non-use or passive use value for human individuals. Although ecosystem services of the Earth (protection from the sun harmful UV rays, purification of air and water, maintenance and renewal of soil fertility, stabilisation of climate and temperature maintenance etc.) for billions years have been playing quite decisive role in the development, sustaining and fulfilling of life (micro-species = 3,5 billion years and “higher” macro-species = around 600 million years), for most of human history (around 4 million years) these nonexclusive and non-rival environmental services have not been expressed in the values of humankind. Ecosystem environmental services, as public goods, are commonly received for free. Free usage of ecosystem services has led to enormous destruction and pollution of world ecosystems. At present mankind significantly exhausts the natural wealth of the planet, which took several billion years to form. Consumption growth in the North and population growth in the South severely stress the global ecosystem. As stated by the recent World Resource Institute study on the state of the Earth’s environment, compiled for the U.N., during the last century half of the world’s wetlands have disappeared, the world‘s virgin forests have decreased by half, 60 % of the largest rivers in the world have been dammed. World faces shortages of freshwater, increases in soil erosion, loss of biodiversity, changes in chemistry of atmosphere and significant changes in climate. Global changes may drive the Earth into a state much less hospitable to humans and other forms of life. Economic valuation methodologies for valuing non-marketed ecosystem services and goods have reached during two or three decades a considerable development, but still remain tied in the straitjacket of individualistic utilitarian approach. The main obstacles in the paradigm of utilitarian welfare economics that prevent the faster development of economic valuations of non-marketed biodiversity and ecosystems are: 1. self-interested behaviour of individuals that replaced the medieval ethical framework of an individual’s behaviour directed for the benefit of the community and nature, 2. utilitarism of economic valuation, 3. subjectivism of economic valuation, 4. discounting the future, 5. non-accepting the intrinsic value of nature by neoclassical mainstream economics. For measurement and economic evaluation of ecosystem services the spatial (territorial) approach seems to be the best solution. Ecosystems are spatially tied with biotopes (≈habitats). According to the Czech law No. 114/1992 on the Protection of Nature and the Landscape, biotope is defined as “a complex of animate and inanimate mutually effected factors, which form the environment of a certain individual, species, population or community. A biotope is a local environment that meets the requirements which are 48 characteristic for plant and animal species”. Biotopes anchor the ecosystems to the Earth’s territory. That is why the Czech researchers recently proposed to apply the so called Hessian method of biotope valuation as an effective economic instrument for revealing the value of national natural capital and for identifying annual consumption (depreciation) of that capital. This so called Hessian method was recommended in 2000 for dissemination by the EU White Paper on Environmental Liability (Brussels, 09/02/2000, COM(2000)66 final) and can effectively be utilized in implementing the Directive 2004/35/CE of the European Parliament and of the Council of 21 April 2004 on environmental liability. The Hessian method is based on interdisciplinary expert valuations of all kinds of biotopes that exist in the respective national territory. 3 Biotope valuation method In order to identify and protect natural ecosystems and biotopes, a complete list of biotope types for the Czech territory was elaborated (192 biotope types for the Czech Republic) and each biotope type has been recently valued by an interdisciplinary team of ecologists and economists of different scientific backgrounds using points according to eight ecological characteristics, each of them with the potential point value from one to six points: 1. biotope type matureness (points acc. to phylogenetic age of species), 2. biotope type naturalness (6 p. to completely natural, 1 point to anthropogenic), 3. diversity of biotope type structures (6 p. to all vegetation layers), 4. diversity of biotope type species (points acc. to number of autochthonic species), 5. rareness of biotope type (points acc. geographical and climatic uniqueness, scarcity, frequency and extent), 6. rareness of species of biotope type (points acc. to nr. of rare and red list species), 7. sensitivity (vulnerability) of biotope type (points acc. rate of vulnerability through the change of habitat conditions), 8. threat to number and quality of biotope (points acc. to dependency on the change of rate of anthropogenic activities and conditions). The sum of points achieved in the first four characteristics was multiplied by the sum of points achieved in the four remaining characteristics. The figure obtained was divided by the maximum of points (576) and multiplied by 100. [( (1 + 2 + 3 + 4) * (5 + 6 + 7 + 8) ) / 576 ] * 100 = nr. of points (3-100) The point value of respective biotope type shows its relative ecological significance compared to other biotopes. Based on eight of the above mentioned ecological characteristics, a complete list of biotope types for the territory of the CR was created (currently including NATURA 2000 biotopes, extended by underground water biotopes) with their respective point values, showing the ranking of biotopes according to their ecological quality (biotope’s life-supporting potential). The list of biotope types is in enclosure of this paper (point values are related to 1 m2 of respective biotope and the scale of biotope types goes from 0 to 84 points) and can also be found at http://fzp.ujep.cz/projekty/bvm/BVM.pdf. Point values were transferred into monetary terms by the average national replacement (restoration) costs necessary per one point increase. Around 140 nature restoration projects have been analysed that had already been implemented over the last five years in different parts of the Czech Republic and which brought the increase of point value of the area. The financial value of one point was counted for one revitalisation project as a sum of its costs 49 divided by a sum of the point increase expected in the long-term future (future values were discounted by 0 discount rate). Presently, the average value of one point in the Czech Republic is set at 0.4 Euro (in monetary terms the most valuable Czech biotope — T3.3 Narrow-leaved dry grasslands — e.g. counts Euro 33.6/m2 = 84 points x Euro 0.4). In substance, this method brings a new value dimension of ecosystem services into economic system and economic decision-making processes (Seják, Dejmal et al., 2003). As can be seen from the above description of biotope valuation method, it enables to measure the total natural capital of the country by means of multiplying the biotope values by their total country surfaces. Since biotope is defined as an environment for specific plant and animal species, it reflects the potential of biodiversity (biodiversity carrying capacity). By combining biotope values with the CLC (Corine Land Cover) project results, the development of total national value of biotopes as the monetary value of national natural capital was quantified. Changes in natural capital of the Czech Republic were monitored by comparing the areas of CLC items 2000 (Euro 587 billion) with the areas of CLC items 1990 (CZK 568 billion). It means that during 1990s (period of transiting from the centrally planned to market economic system) some ecologically positive changes took place; these changes were caused mainly by transferring some arable lands to meadows and pastures and by increasing the area of forests (total increase yearly by about Euro 1.9 billion). At the same time, the period of 1990s witnessed a growing consumption of natural capital in the Czech Republic. Against the above mentioned positive tendency (reflected by CLC images) there was on the other hand also a negative tendency of developing industrial zones and commercial and residential areas on agricultural lands (not reflected by the CLC, being mostly less than 25 ha). An order of natural capital consumption allowances can be estimated from the agricultural land use statistics. The annual depreciation of natural capital in the Czech Republic can be estimated (based on the use of agricultural land for nonagricultural targets only) at approximately CZK 10 bln, i.e. at approximately Euro 330 million. Having the same economic dimension, such natural capital consumption allowances can be deducted from the conventional gross annual national output and income flows (GDP, GNP). The main challenge of the renewed EU SDS is the request to begin with the ecosystem service valuations and to incorporate the flows and stocks of natural capital into the national economies and into decision-making of human individuals. 4 1. 2. 3. 4. 5. 6. 7. 8. 9. References Convention on Biological Diversity, 5 June 1992, http://www.biodiv.org Costanza R., d'Arge R., de Groot R., Farber S., Grasso M., Hannon B., Naeem S., Limburg K., Paruelo J., O'Neil R.V., Raskin R., Sutton P., van den Belt M., 1997. The value of the world's ecosystem services and natural capital, Nature 387: 253-260. Eiseltová M. (ed.), 1996. Restoration of Lake Ecosystems - A Holistic Approach, Wetlands International publ. nr. 32, The Nature Conservation Bureau Limited, 190pp. Groot, R.S., Functions of Nature, Wolters-Noordhoff, 1992. Handbook of Biodiversity Valuation, A Guide for Policy Makers. OECD 2002 Hawken, P., Lovins, A.B. and Lovins, L.H., 1999. Natural Capitalism, The Next Industrial Revolution. Earthscan Publications Ltd., 396 pp. The Renewed EU Sustainable Development Strategy, as adopted by the European Council on 15/16 June 2006, ec.europa.eu/sustainable/docs/renewed_eu_sds_en.pdf Turner, R.K., Pearce, D. and Bateman, I., 1994. Environmental Economics, An Elementary Introduction. Harvester Wheatsheaf, New York, London, Toronto, Sydney, Tokyo, Singapore, 328 pp. Richtlinien zur Bemessung der Abgabe bei Eingriffen In Natur und Landschaft, Hessisches Ministerium für Landesentwicklung, Wohnen, Landwirtschaft, Forsten und Naturschutz, St.Anz. 26/1992. 50 10. Seják, J. (1999). Reshaping European Economy, An Economic Evaluation of the Life-support Functions of European Nature, European Nature nr. 3 11. Seják, J. 1994. The Natural Capital of Central and Eastern European Countries, The Role and Valuation of Natural Assets in Central and Eastern Europe. 12. Seják et al., Land and Other Natural Resource Valuation (in Czech), Grada Publishing 1999, 256 pp. 13. Seják, J., Dejmal, I. et al. Valuing and Pricing Biotopes of the Czech Republic (in Czech), Czech Environmental Institute, 2003. 428 pp. Note: In order to see the list of biotope types and their relative values according to Biotope Valuation Method, please, refer to p. 467 of this Book of Proceedings. 51 Measuring Land Appropriation of the Czech Foreign Trade David Vackar Charles University Environment Center, Charles University in Prague, Czech Republic [email protected] 1 Introduction The land provides humans with many ecosystem services that directly or indirectly benefit human well-being. Ecosystem services including provisioning, supporting or regulating services require space to operate effectively. Land degradation or fragmentation often leads to the reduced performance of ecosystems and to the biodiversity loss. The Millennium Ecosystem Assessment revealed that humanity has fundamentally altered world’s ecosystems and that 60 percent of ecosystem services are used unsustainably (Millennium Assessment 2005). However, ecology and economics have failed to standardize the definition and measurement of ecosystem services (Boyd & Banzhaf, 2006). The result is that while ecosystem services are apparently traded, the units of trade in the case of ecosystems services are not always clearly defined. This situation enables the international trade to escape a link between the traded product and the ecosystem service supporting the production and can lead to the degradation of ecosystem services unnoticed by the product final consumers. As ecosystem services are bound to the land, land accounting could be used as a proxy for the ecosystem services appropriated by the international trade. The environmental and social consequences of trade are complex and usually are not included in the national and international agricultural policies and statistics (Wurtenberger et al., 2006). Humans consume land mainly from the reasons to ensure the continuous flow of services such as the provision of food, fodder, fibre or fuels. The production of agricultural commodities valued on markets in developed countries, such as coffee create significant pressures on ecosystems. Land consumption can be defined as a human induced land use change which leads to the creation of a new land cover category. The only real “land consumption” activity is the permanent or temporary land sealing, i.e. the creation of built-up land cover categories. This process breaks the bio-productive functions of land. However, as land consumption processes can be regarded all land and ecosystem flows induced by land use change. The System of Integrated Environmental and Economic Accounts recognise the need to develop consistent natural capital accounts which would monitor environmental degradation. Land and Ecosystem Accounts are regarded as a specific environmental asset, which provides economic benefits but also indirect ecosystem services as a complete system. Recently, the European Environment Agency introduced the Land and Ecosystem Accounts (LEAC), which are built on SEEA (EEA, 2006). LEAC document flows between different categories of land cover. However, methodologies for the construction of ecosystem accounts are still at an early stage of development and applied mainly in Europe. They cannot be used to track land and ecosystem changes tied to international trade. The land appropriated by international trade can be seen as a one of the basic indicators of provisioning ecosystem services and of the pressure which national economies have abroad. It was suggested that rich and powerful nations are transferring environmental problems on poorer and developing nations (Morse & Fraser, 2005). By exporting the higher shares of a “global” land, the nations can escape the sustainability limits for the provisioning 52 services and provide an array of cultural services such as recreation or nature protection. International trade with the “virtual” land thus have significant implications for sustainability strategies, as some leading environmental indicators such as the Ecological Footprint are based on the land productive and absorption capacity. 2 Definitions The aim of this paper is to calculate the land appropriated by the Czech imports from foreign countries and compare different methods. Land appropriation of foreign trade is here defined as the actual land requirement demanded to produce materials imported by the national economy. There are several approaches to calculate land appropriation by the national economies, from which the two basic approaches include the actual land appropriation and the hypothetical land appropriation. While the first approach calculates the actual area of land “imported” with particular products (so called virtual land), the latter calculates the area required for the production of food and other products with the global average yields. This approach is a basis of the Ecological Footprint methodology. The Ecological Footprint methodology is accounting for the international trade of biological production in a way that calculates the hypothetical land requirement with normalized factors, so called Equivalence factors and Yield factors (Wackernagel et al., 2005). These factors are adjusting the consumption of biological products by the population of a given country to get the resulting footprint of primary products. The consumption is calculated as the production purged from imports and exports. The Ecological Footprint thus can mask significant regional differences in the production of agricultural commodities. The Ecological Footprint Accounts (EFA) are based on the concept of bioproductive areas, i.e. areas which provide the flow of biomass to feed the society’s metabolism. The EFA recognize seven major bioproductive areas, consisting of cropland (primary and marginal), pastures, forests, fisheries, built-up areas, hydropower areas and the energy land. Some of the defined bioproductive areas, especially the built-up, hydropower and energy (fossil fuel) should be viewed from the methodological point, as they reflect the human encroachment of bioproductive land or demand for the absorption of waste, here mainly represented by CO2 emissions from the combustion of fossil fuels. Bioproductive areas reflect basic categories of land cover, or land use respectively. Some of these areas can be disaggregated according to the available data resolution, for example cropland can be on different crop systems. The Ecological Footprint Accounts produce two indicators, the Footprint and the Biocapacity. Biocapacity express the availability of bioproductive areas within the nation. The Footprint is the indicator measuring the demand of a society on biological products and the capacity to absorb wastes from the burning of fossil fuels (Wackernagel et al., 2005). The environmental sustainability assessment using the EFA compares available biocapacity with the overall footprint. Nations can score either as ecological debtors (those with the footprint component exceeding the available biocapacity) or as ecological creditors (those with the footprint lower than available biocapacity). Equivalence factors reflect the relative productivity of world-average hectares of different land types. Equivalence factors are reflecting the suitability of land for farming and the most productive land classify as cropland. Cropland thus has the highest value of Equivalence factor. The value of the Equivalence factor for cropland was extracted from the National Footprint Accounts managed by the Global Footprint Network (GFN, 2005). Yield factors reflect the relative productivity of national and world-average hectares of a given land use type. While the Equivalence factors are used for the calculation of both the Footprint and the Biocapacity, the Yield factors are employed only for the calculation of the Biocapacity. 53 3 Methods The Eurostat methodological guide on material flows noted that indicators complementary to material flow indicators can be derived also for land use imported and exported (Eurostat, 2001). The most straightforward approach is to calculate the land appropriated in countries from which a specific commodity is imported. This approach is already making a component of the Ecological Footprint calculation. Although criticized (van den Bergh and Verbruggen, 1999), the Ecological Footprinting is currently one of the leading tools of sustainability analysis. The actual land demand approach has been already used to modify or complement the Ecological Footprint analysis (Erb, 2004; Wackernagel et al., 2004). For example, Erb (2004) calculated the actual land demand, included also demand for imported land, based on geographically explicit analysis and used country-specific yields for agricultural products. This approach is used also in this paper for the calculation of the actual land appropriation by the Czech trade. To estimate the demand of the Czech population on productive land beyond its boundaries, I calculated both the area of actual land appropriated by the import of specific products and the Footprint of imported primary agricultural resources. Only primary cropland production was considered for the calculation. 3.1 Primary cropland Footprint The Ecological Footprint is a weighted indicator measuring the society’s demand on the natural resources. The weights, Equivalence factor and Yield factor, normalize actual productive hectares into the standardized global hectares. These factors reflects the relative productivity of a given land unit and makes the Ecological Footprint method suitable for international comparison. As a part of the land requirement analysis, I calculated the Footprint of primary products imported to the Czech Republic. The imported primary cropland Footprint (EFpcim) can be expressed as EFpcim( gha ) = ∑ Pi (t ) × Efpc ( gha / ha) , Ygi (t / ha ) (1) where Pi denotes the quantity of product i which is imported, Ygi represents the average global yield for the particular crop i, and Efpc denotes the Equivalence factor for the primary cropland. The Footprint is expressed in global hectares (gha) units, which express in a comparable manner the Footprint of imported products. The data on primary product imports were extracted from the External Trade database of the Czech Statistical Office. Data on global average yields were gained from the FAOSTAT database (FAO, 2006). The reason why to use global average yield is that not all crops are produced in a country to which they are imported. Global average yield thus reflects the average productivity of the world crop varieties mixture, planted in different environments and different management systems. Conventional Ecological Footprint Analysis calculates the footprint component by dividing the consumption of a nation by the global average yield. However, this approach wipes out differences between the producing nations. The nation hypothetically relying on the import of high-yield crops thus would be performing better in comparison with the countries importing the crop mix with the global average yield. Planting crops with higher yields significantly reduce the area needed for the agricultural production and thus reduce the overall 54 footprint of primary products. As the imports are included in the Footprint of the nation importing the particular product and are subtracted from the Footprint of producing country, lower area requirements on imported products decrease the primary cropland Footprint. Therefore, the allocation of the footprints to the exporting states would better reflect the land appropriation induced by the international trade. 3.2 Actual land appropriation To avoid the global averaging bias in the Footprint calculation, the actual country-specific yields were used to calculate the land appropriation. Data from the database of external trade, maintained by the Czech Statistical Office, were used for the calculation of the land appropriation. The external trade statistics is produced by combining data reported by the companies and custom declarations. I extracted data on crop imports to the Czech Republic, disaggregated according to the product and the country of origin. The Combined nomenclature was used as an initial product classification system for the analysis. This nomenclature builds on the Harmonised Commodity Description and Coding System, which is an international commodity classification. Where possible, products were associated according to HS6 (6-digit numerical codes) division; however, some product categories were further merged from practical reasons. The resulting database consists from data covering 104 primary product lines imported from 110 countries. The external trade database was complemented by the yield data extracted from the FAOSTAT database of the UN Food and Agricultural Organization. The database contains extensive records on production, yield and agricultural area for all countries. The product categories wasn’t always consistent with the combined classification system of the external trade and for some coupled categories, single product yield averages were used. As the External trade database and the FAOSTAT database use different units, some conversions were applied to the database. The land appropriation was than calculated as LandApprop riation (ha ) = ∑ Pij (t ) , Yij (t / ha ) (2) where Pi denotes the imported amount (in physical units) of the product i from country j, and Yi denotes the yield of the primary crop i in the country j. By dividing the import by yield, we get the area appropriated in a given country where the particular commodity is produced. This method enables to allocate the area of land which is appropriated in a particular country from which there is the crop flow to the Czech Republic. 4 Results 4.1 Footprint of primary crops The Footprint of imported primary crops is 496,730 global hectares (gha), which is 0,048 gha per one inhabitant. This number is approximately 5.3 % of the overall footprint of primary crops for the Czech Republic, based on the National Footprint Accounts of the Global Footprint Network. The highest total footprint has imported cereals, followed by oilseeds (including classical oilseeds and also peanuts and similar products), and coffee and tea (Fig. 1). Fig. 1 includes summarize the information on all imported products in appropriate product groups. Disaggregating the products yield the absolute rank of product footprint. The highest 55 product footprint have coffee, followed by cereal products barley and rye, soya, rice and lentils (Fig. 2). 4.2 Actual land appropriation The Czech Republic appropriates 167,135 actual hectares of primary cropland, calculated with country-specific yields. This amount corresponds to the 5.4 % of the arable land utilized in the Czech Republic. The rank of actual land appropriation by particular products is similar to the showed by the ranking according to the footprint (Fig. 3). There are only minor product interchanges in the overall rank. Regarding the land appropriation sorted by the country of origin, the highest land appropriation is imported from Slovakia, followed by Vietnam, Canada, Germany and United States (Fig. 4). This reflects the dominance of area-intensive production in these countries (coffee in Vietnam, lentil in Canada, soybeans in the United States) or the relatively high bulk of products imported (Slovakia, Germany). In terms of absolute land appropriation of a country-specific product, the Czech Republic appropriates the highest share of land in Canada for growing lentil, rye in Germany, and coffee in Vietnam. 5 Discussion The results of the footprint analysis of primary crops and results of the analysis of actual land appropriation are relatively consistent and mutually corresponding. The highest footprint as well as the highest land appropriation have products with both high quantities imported and/or low yields achieved globally or in a particular country. The highest footprint has crops achieving relatively low yields, which are crops requiring extensive areas of agricultural land to be grown. Coffee, lentil or soybeans are products achieving yields in the range 0.5–1.8 tonnes per hectare, while products as rye or barley can yield as much as about 6 tonnes per hectare. The vegetables production system can achieve much more, exceeding 50 tonnes per hectare. Therefore, vegetables and other high-yielding crops appropriate the lowest share of land. However, it is important to compare the footprint of imported land to the overall footprint of primary products and the actual land appropriation to the actual land available in the Czech Republic, and not to compare footprint with actual land appropriation, which would give misleading results. However, the important finding is, that the relative numbers are insensitive to the country-specific yields and global average yields can be used to carry out a sufficiently robust Ecological Footprint analysis. The analysis of international trade is an important part of the sustainability appraisal of regions and nations. It has been often argued that trade can assist to escape the environmental limits of a society or its dependence on the regional resources. Indeed, many urbanized areas are fully dependent on imports of vast quantities of materials and energy. The land is somewhat a critical natural resource in many countries and despite technological developments can be substituted only partially. The land scarcity is either direct or indirect cause of people migration to urbanized areas or the cause of armed conflicts (Diamond, 2005). However, the land appropriation is not the only way to analyse sustainability of trade. This can be done by for example a water footprint analysis (Chapagain et al., 2006). The land appropriation concept reflects the demand which the Czech Republic has on the productive land in other countries. The similar concept of upstream requirements on imported production would be the measure of total materials requirement of imported products, which would include indirect material flows associated with imported products. Although total material requirements for materials extracted in other countries has been estimated (Eurostat 2001), extensive work would be required to further compile land appropriation accounts for the international comparison. The appropriated land expresses the 56 land use intensity in a particular country, although it doesn’t reflect the sustainability of production or sustainable use of a given commodity. The analysis thus should be complemented by country-specific sustainability indicators to get a better impression of production sustainability. However, direct measurement of land cover flows associated with imported products is currently not feasible for the whole land appropriation account. 6 Conclusions and further research steps The analysis has shown that the Czech Republic is relatively self-sufficient regarding the appropriation of agricultural land abroad. The Czech population appropriates slightly more than 5 % of agricultural land, measuring by the footprint (5.3 %) or actual land appropriation (5.4 %). However, to appraise the complete land appropriation of the Czech imports, also other primary products (mainly the wood) and secondary products (such as meat) should be included. The land appropriation accounts for the Czech imports will be expanded to take into account also these products. Moreover, the complete balance of imports and exports would illuminate the land appropriation balance of the Czech trade. 7 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. References Boyd, J., Banzhaf, S., 2006. What are ecosystem services? The need for standardized environmental accounting units. Discussion Paper, Resources for the Future, Washington, http://www.rff.org/Documents/RFF-DP-06-02.pdf. Chapagain, A.K., Hoekstra, A.Y., Savenije, H.H.G., Gautam, R. 2006. The water footprint of cotton consumption: an assessment of the impact of worldwide consumption of cotton products on the water resources in the cotton producing countries. Ecological Economics, 60: 186-203. Diamond, J., 2005. Collapse: how societies choose to fail or succeed. Viking Press, New York. Erb, K.-H., 2004. Actual land demand of Austria 1926–2000: a variation on Ecological Footprint assessments. Land Use Policy, 21: 247-259. Eurostat, 2001. Economy-wide material flow accounts and derived indicators: a methodological guide. European Communities, Luxembourg. FAO, 2006. FAOSTAT. Food and Agricultural Organisation of the United Nations, Roma, http://www.faostat.fao.org. Hubacek, K., and Giljum, S., 2003. Applying physical input-output analysis to estimate land appropriation (ecological footprints) of international trade activities. Ecol. Econ., 44:137-151. Millennium Assessment, 2005. Ecosystems and Human Well-being: Synthesis. Island Press, Washington. Morse, S., Fraser, E.D.G., 2005. Making „dirty“ nations look clean? The nation state and the problem of selecting and weighting indices as tools for measuring progress towards sustainability. Geoforum, 36: 625-640. SEEA (2003). Handbook of National Accounting: Integrated Environmental and Economic Accounting 2003. United Nations, European Commission, International Monetary Fund, Organisation for Economic Co-operation and Development, World Bank. Van den Bergh, J.C.J.M., and Verbruggen, H., 1999. Spatial sustainability, trade and indicators: an evaluation of the ecological footprint. Ecol. Econ., 29:61-72. Wackernagel, M., Monfreda, C., Erb, K.-H., Haberl, H., Schulz, N.B., 2004. Ecological footprint time series of Austria, the Philippines, and South Korea for 1961–1999: comparing the conventional approach to an “actual land area” approach. Land Use Policy, 21: 261-269. Wackernagel, M., Monfreda, C., Moran, D., Wermer, P., Goldfinger, S., Deumling, D., Murray, M., 2005. National Footprint and Biocapacity Accounts 2005: The underlying calculation method. Global Footprint Network, Oakland. Wurtenberger, L., Koellner, T., and Binder, C.R., 2006. Virtual land use and agricultural trade: estimating environmental and socio-economic impacts. Ecol. Econ., 57:679-697. 57 Annex 160 140 120 100 80 60 40 20 Roots and tubers Fodder P eanuts B ananas Spices Fibres Legumes Vegetables Fruits Oilseeds Coffee and tea 0 Cereals Footprint of imported primary crops (kgha) Figure 1: Footprint of the most important imported primary crops, sorted by the general crop class Figure 2: Footprint of imported primary crops, sorted by the detailed crop category 100 000 80 000 60 000 40 000 20 000 58 S unflower Rapes eed Lentil Ric e S oy a Ry e B arley 0 Coffee Footprint of im ported crops (gha) 120 000 Hungary Rapeseed Poland Peanuts Spain China Sunflower 35000 Grapes 30000 Rye 25000 Lentil 20000 Soya 15000 Rice 10000 Barley 5000 Coffee Figure 3: Actual land appropriation of imported primary crops Actual land appropriation by imported crops (ha) 0 20000 18000 16000 Denmark 14000 Italy 12000 59 Brasil 10000 United States 8000 Germany 6000 Canada 4000 Vietnam 2000 0 Slovakia Figure 4: Land appropriation by country of origin of primary crops Actual land appropriation (ha) Objectives of Revitalisation Planning According to the Results of Fish Fauna Monitoring Zsuzsanna Nagya, Miroslav Švátorab, Bořek Drozdc a Department of Soil Science and Water Management, Corvinus University of Budapest, Hungary [email protected], [email protected] b Faculty of Science, Department of Zoology, Charles University in Prague, Czech Republic [email protected] c Research Institute of Fish Culture and Hydrobiology, Department of Aquaculture and Hydrobiology, University of South Bohemia in České Budějovice, Vodňany, Czech Republic [email protected] 1 Introduction 1.1 Streams in the frame of the EU Water Framework Directive The new policy of the European Union entered into force in 2000, named EU Water Framework Directive (2000/60/EC, WFD, Directive). Its implementation is obligatory for each European countries, so thus the so called good water status is to be reached. The Commission expects assessment, environmental objective set up with cost-effective measures for all kind of waters in Europe. For that the central tool is the river basin management planning. The objective of the Directive is to achieve the ’good ecological status’ in case of natural water bodies or so called ’good ecological potential’ concerning heavily modified (HMWB) and artificial water bodies (AWB) for surface waters and the good chemical status for groundwater by the end of 2015 in all Europe. The normative definitions of the classification of ecological and chemical statues are reported in Annex V of WFD (CEC 2000). General description for high (as a reference status), good (the minimum objective) and moderate status can be found comprising hydromorphological, physico-chemical and biological parameters (quality elements) as well. There is an increasing requirement in Europe and worldwide to assess the quality of rivers, which are under conflicting pressures due to human demands for water and the needs of the freshwater biota (Boon and Howell, 1997). The principle of sustainability must become an obligatory component in water management by specifying and interrelating ecological, economic and social aspects, too (Schuller et al., 2000). The central instrument of the WFD is the River Basin Management Plan, in which these integrated approach appear by costeffective analyses. Although such management plans are obligatory only for river basins, pressures and impacts as well as management options have to be investigated on a meso-scale level. The bottom-up approach is one of the key possibility for understanding the ecosystem functionality, because measures are executed in meso-scale level. And in certain circumstances within the frame of some pilot projects their effect can be investigated in mesoscale level, too. And then on a further step continue these for larger scale. 60 Thus to define environmental objectives to be settled down in the RBMP background information is needed. Therefore to reach this goal, assessment the actual deviation of the ecological situation of any observed site from (type-specific) reference conditions, monitoring system is to be set up and operated by using biological indicators. Among the four biological elements defined in WFD to be monitored fish fauna is selected for this paper. 2 WFD implementation in Hungary 2.1 Implementation of WFD in national level for running watercourses Hungary as a member of the European Community is obliged to implement the Directive. So thus the country has submitted the 2nd country report on time in 2005 March describing the main pressures including the pre-survey of the Hungarian surface and groundwaters, economical pre-analyses of water uses, etc. Table 1: Stream types according to WFD in the Hungarian typology (examples from the Hungarian typology, MoEW 2005) btype code 1 2 4 8 11 15 16 21 Name (English) Altitued Catchment size Small siliceous mountainous stream Small calcareous mountainous stream Small calcareous hilly stream Small calcareous hilly brook Small calcareous lowland stream Small calcareous lowland stream Small with low slope calcareous lowland stream Small organic lowland stream >350m >350m 200-350m 200-350m <200m <200m <200m <200m 10-200km2 10-200km2 100-200km2 10-200km2 10-200km2 10-200km2 10-200km2 10-200km2 Mean substrate composition coarse coarse coarse middle-fine coarse middle-fine middle-fine middle-fine The Hungarian typology was created according to the altitude (including 3 classes: 0200m, 200-350m, >350m), catchment size (smallest is 10km2) and mean substrate composition. Among the 25 different type running waters in Hungary there are 8 types having stream type, 4 of them are lowland stream types (Table 1). According to the hydromorphological pressures (MoEW, 2005) those are listed into the category of HMWB which are min.50 % in hydrological or/and morhological condition is effected by - Dammed water effect on big lowland rivers, or/and - Passageway for energetic purpose, or/and - WB serves as a reservoir in mountain area. - Water bodies are listed into the category of potentially HMWB if downstream section of the water body influenced by reservoir, or/and Increased water quantity resulted by reservoir-control effect, or/and Profile and water speed (current) are changed—these can not be considered as they would be in natural conditions. 349 among (42 % of the total no.) of running water bodies can’t reach and other 234 water bodies were put on a list of those, which are potentially won’t be able to reach the good ecological status due to hydromorphological pressures (MoEW, 2005). In the assessment of human activity beside diffuse and point source pollutions water abstraction and morphological pressures were considered as well. A list was created but was not detailed per water bodies. 61 Reference conditions were set for the worked out typology and named “river passports” for surface waters (Szilágyi et al. 2004). This is a description by river types containing all morphological, hydrological and biological parameters which a natural river should have. 3 Indicators for WFD purposes for streams 3.1 Actual source of data in Hungary There are just only 182 water bodies among the total 1026 which are in the actual main, staterun surface water monitoring-system in Hungary, and are mainly on big catchment area (>1000km2). Due to the obligation the preliminary monitoring system had to be developed till the end of year 2006. The actual routing monitoring programme is done in accordance with the National Standard No.12749, which states the sampling frequency, sites, method and components to be measured. Five component groups have been monitored. These are oxygen and nutrient balance, microbiological components, micro pollutants and others as the fifth component group. The current monitoring has 150 national sites, and 90 of the regional network. Water flow measurements are run by the River Boards, and registered mainly daily. The location of these sites are similar to the water quality sites: located particularly at rivers. Biological data required by WFD is under development. The national biomonitoring programme by Ministry of Environment and Water (MoEW) has been running from 1995 and gathering dataset from all WFD required biological elements but its WFD harmonisation shall be solved. 3.2 Background of hydromorphological related projects and modelling on small catchments in Hungary Regarding the purpose and aim of the Water Framework Directive and the possible costbenefit analyses methods requested, more data are needed. The picture of the actual dataset shows very fragmented information from water bodies point of view. The status assessment has to show the representative status of the water body not just the status measured at the sampling point. The investigation methods have been under development. Some hydromorphology linked WFD projects were carried out in Hungary, such as ECONTACT and FIDON Interreg projects. Their aim was to survey the Danube’s main tributaries on rehabilitation point of view (particularly in fish) and to establish a practical guideline, too. Some investigations have pointed on the abundance of the tolerance of ecosystems on hydraulical boundaries (ECONTACT Summary, 2005). Ecological survey of the Hungarian Waters in Hungary implemented in 2004-2005 aimed data gathering and biological validation of the typology of the Hungarian surface waters. An RHS based adapted hydromorphological survey (beside BQE manuals) was developed (EcoSurv final report, 2005) in which important Hungarian factors were considered. These project have resulted methodological output and in same time data-collection, too. Some of the main outcomes of the ECOSURV project were that in Hungary not the physical-chemical, but the hydromorphological pressure is among the main influencing factors on the biotic fauna. Therefore the restoration of hydromorphological parameters to semi-natural conditions will be among the most important measures to be carried out to be able to reach the good water status (MoEW 2005). For smaller running water currently — according to the authors’ information — three methodologically important projects have carried out: RAGACS (Szilágyi et al. 2006) for three streams, OTKA T 42646 research project for complex revitalisation actions on streams in Hungary (Bardóczyné 2007). 62 However, these mentioned examinations have brought some results in data and methodological level as well, but just on rivers (Mosoni-Danube), on those field on which where we have available long-term (at least hydrological) data or was just a single sampling not including all water bodies in Hungary. However these outputs were extremely important but the continuation of collecting data and some restructuring of system must be worked out. 4 Combinations of measures for inclusion in the programme of measures as described in Article 11 of the Water Framework Directive Environmental objectives are to be reached through cost-effective programme of measures, their ecological efficiency should be assessed, too. Fish fauna investigation could contribute for the implementation of the WFD in Europe, but it does not include the cost-effective analyses. River habitats depend on floodplain processes; and habitat diversity of natural floodplains depend on river dynamics (Richards et al. 2002). To be able to evaluate the result of the BQE monitoring elements the background long-term information (hydromorphological, structure and management of floodplain and riparian vegetation, soil parameters, etc.) is needed. Despite the well designed and operated Hungarian national routine monitoring system presented, the fact is that those background information for streams is hardly present. A study on small watershed (Nagy- Dannisøe 2005) reflected the well designed database for all water bodies which is capable of giving a good overview on its status including all the important parameters (water quality data series, longitudinal and cross-sections, discharge, BQEs and sediment composition) do not exist officially. Up today — according to the authors’ information — there was no trial for assessment of potentially applicable measures and instruments for stream water bodies in order to reach good status. In the developed WFD guideline (Rechenberg 2004) different measures and instruments were complied 5 Case study of Morgó rivulet —implementation of biomonitoring result into restoration planning level In this paper we present the steps towards concrete technical measures for improvement of water status, but no not deal with administrative, economic and informational instruments, which also can facilitate and support the implementation of the measures. The presented method is not just only water body based, but has an outlook for upper section. After the joint previous field trips in Czech Republic had in summer in 2006, where the expert group went to see finished revitalisation actions and its monitoring methods (Nagy et al. 2007), in October in 2006 fishing samplings was carried out in the Hungarian sites. The localities were sections of Morgó and Apátkúti streams. The objective of the joint field activity was to investigate and evaluate the faunistic samplings in the light of the possible revitalisation actions, from which the samplings result of Morgó streams will be showed now as a case study for future Hungarian revitalisation actions. This paper concentrates and gives a general guideline for such kind of interventions and hence the sampling protocol is important (MoEW 2001, CEN 14011) now does not present here in details (see more in final report of the ReviCze CZ-HU Kontakt project, www.natur.cuni.cz ). On Morgó mountainous stream belonging to types 8, 4 and 1 (depending the considered section) according to the Hungarian WFD typology (MoEW 2005) two sections were determined to be fished: 100-100m length sections both in upstream and downstream. The 63 results are presented on Table 2. The outcome, the specie-list can serve as one the most important background information source for planning. Table 2: Result of the faunistic sampling on Morgó stream, upstream and downstream (Kerestessy et al. 2007) Morgó stream — upstream section No. of fish species from the… 1st catch 2nd catch Phoxinus phoxinus 10 3 Barbatula barbatula 2 2 Oncorhynchus mykiss 43 14 Morgó stream – downstream section Leuciscus cephalus 30 170 Leuciscus idus 5 9 Phoxinus phoxinus 70 13 Alburnoides bipunctatus 2 1 Chondrostoma nasus 6 2 Barbus barbus 238 94 Barbus meridionalis petenyi 1 Gobio gobio-slope 23 31 Pseudorasbora parva 1 6 Rhodeus sericeus 9 6 Barbatula barbatula 44 15 Having ecological and economical effective implemented measures careful indicators an assessment method are to be selected. Reaching WFD aim renaturalisation, revitalisation or restoration could be considered as possible measures. But which is the possible min. level to be reached depends on the measures can be carried out determined by costs and ecological benefits. The work to be done is based on the sampling result on which the restoration purpose is based. The flow of work is the following: 1. Definition the restoration aim with naming the specie(s) to be protected. The evaluation means for planning purpose the determination of the fish species to be selected (in Table 2 coloured by grey). For upstream and downstream sections as well: For the upstream section two possibility were considered - As the result of the catches Phoxinus phoxinus and Barbatula barbatula can be determined for restoration purpose, or - despite of the fact that Salmo trutta was not found, but it is the specie which should be common in these geological conditions and was present in the past in upper section (Jolán Ipolyi’s personal talk, local inhabitant), it can be determined as the best indicator for good or excellent ecological status and specie for restoration goal. According to the expert opinion and the on-site discussions the rank of the options by ecological value are the followings (where the combination of the listed possibilities are also can be considered!): - the best would be the reintroduction of trought (Salmo trutta), - on the second level the protection of Phoxinus phoxinus and Barbatula barbatula. 64 2. Listing the selected specie(s) preference parameters to the local condition. The next step is the evaluation of the ecological needs of the species —this information is important for planning, because - Salmo trutta as the reophil fish specie can jump, the adult one can fight against elevation of max. 30 cm according to the German and Czech experiences (Just 2005). - While Phoxinus phoxinus and Barbatula barbatula can not jump and fight against neither max.10cm high, it means for them continuous longitudinal profile is needed in order to have optimal abundance. 3. Listing specific parameters gathered from the field survey. The following information must obtain from the sampling and field investigation in order to be able to compare needs of the species with the experienced parameters: - pH, - oxygen parameters, - max. current in river bed (important for migration), - bed slope gradient (variation), - min. water level in low flow condition (in case of lack of hydrological information expert judgement is needed for delineation of medium water level and low-water level cross sections as well as bankfull width: these are also important for small fish), - max. high deviation/alteration in longitudinal profile, - sediment structure. 4. Choosing all the occurred pressure category (among morphology, chemical pressures, flow control and water abstraction). After field investigation in our case morphological change was considered as the main pressure factor. Beside that in some sampling point oxygen condition parameters did not show good values. 1. Comparing the preference and the investigated parameters by defining deficit parameters. 2. Definition of the proper morphological pressures. 3. Listing the possible technical measures. 4. Description of detailed suggested technical solutions (example shown, Figure 1) considering the restoration goal (see point no.1, priority selection). Example for the deficit parameter such as Horizontal structures with height >30 cm: possible technical solution can meant slope or lowering the high altitude. Important outcome of the joint sampling is that even some literature exist (Just et al. 2005) for fish preference and biologically potential parameters and so for capacity (e.g. in jumping force) as well, and theoretically could be used for stream restoration planning, but these data can not be implemented directly and incorporated into the technical planning level for the Hungarian sites considering the fact that these species do not show the same biological parameters (e.g. length of adult fish) as in Czech Republic. It means that due to geographical and hydrological alteration occurring in Hungarian waters the same fish specie is smaller and so thus has less potential energy power resulting less “high fighting capacity”. 65 Table 3: Setting up the steps towards possibly measure at Morgó stream case study Deficit parameter Proper description of Possible measure morphological pressure Connectivity (non functioning ecological corridor) Horizontal structures with height >30 cm Creation of linear passability for migration Channalized section Unnatural, straightened water course Improvement of bank and bed structures Inherent dynamic development Deficit in minimum discharge in low flow conditions Not proper cross and longitudinal profiles Reshaping of profiles Oxygen conditions In the built up area too homogenous vegetation Plantation Not proper longitudinal profile Monoton longitudinal profil … means that according to the fisherists’ expert opinion the riffle-type habitat (smaller depth with bigger water velocity) can be found, but the transitional and pool type habitats are missing. Putting stones and gravel Detailed description of technically possible measure Less steeper slope with using stones and woodsticks with fishladder or reduce of the high alteration (making cascade) Meandering do not improve the status, but what is needed is the more variety of speed and sediments Re-planning of some cross section Planting some bush and trees to create more shadow and improve oxygen conditions Putting stones and gravel Figure 1: Example of some detailed measures for restoration of downstream section of Morgó stream, Hungary (Bardóczyné Székely-Bardóczy-Horváth 2004) Having the ecological effectivity evaluation (Table 4) for reducing the high of altitude in horizontal profile and the following ecological determinations must be considered: - For Phoxinus phoxinus and Barbatula barbatula the slope solution can be between 1:20 and 1:30, and pool (as a shelter area) should be planned downstream of the slope, - For Salmo trutta both solution slope and lowering the elevation high in longitudinal profile can be accepted, but the slope solution is the better one. 66 Table 4: Ecological effectivity of possible measures (simplified version for Morgó case study) Sum total of ClassificaIndicators of ecological deficits Measure definition individual tion of (Water Framework Directive, Annex V) (detailed description valuations priority technical intervention machrophyta algae fish Benthic (∑) work) invertebrate fauna 3 Reduce the .. .creating horizontal less steeper slope with object blocked the using stones migration and of fish by woodsticks 1 .. reduce of (just for some the high species: in our difference case for Salmo by cascade trutta) but in these case cascade is needed! Re-planning the cross 3 section profile for low flow condition Planting bushes and 3 trees Putting stones into the 3 river bed Creating more diverse 3 sediment structure in the downstream section (gravel) Remarks: Values from 1 to 3 refers the goodness of the measure (3x is the most effective) No effect (meaning the measure is indifferent) and also the possibly destroying BQE abundance effects were considered as well, but did not occurred in our case now. The table refers just on fish, but the work will be continued for other BQEs for the total possible WFD competent eco-effectiveness evaluation. Ranking the possible measures are must based on scientific point of view, and showing the possible eco-efficiency of the proposed work. Then their cost can be counted, and over the ecological effect social benefit (such as e.g. recreational value) can be analyzed, too. The parameters are so thus influenced by i) geographical and ii) morphological and iii) hydrological conditions. Morphological condition highly affects hydraulical conditions, why the hydrological condition also plays key role in the stream living conditions. So thus for evaluation of the efficiency of the measure long-term assessment data and well selected indicators are needed. 6 Summary and Outlook Standardized field survey (survey protocol) is basic of the monitoring work in order to be able to compare and evaluate the results on the assessed streams within national as well as international level, as the ECOSURV project (2004) stated as well. The standardized protocol is on equipments, fish measurements and on the assessment method as well. In our paper we presented how the biomonitoring and joint fieldwork of engineers and biologist (preferably specialised for the location, for the target water body) can contribute to reach WFD good water status. Our experienced was that finding the common language, which is essential for implementation of the integrated solutions, can be reached just by several joint on-site discussions. To be able to find the most ecological and economical effective solutions these 67 well understood iteration is needed: this is the only guarantee for finding all the possible technical measures and their eco-ranking by professional point of view. We experienced also that despite the well trained professionals the international knowledge transfer in the field of revitalisation is highly needed for working out optimal solutions for status improvement of Hungarian streams under hydromorphological pressure. The trial of the multi-step process is presented for a Hungarian stream, a good example how the biological and engineer experts must be interlinked for reaching the common agreed goal. 7 Acknowledgements The authors say thank you to Katalin Keresztessy, Olga Sychrová, Emőke Bardóczyné Székely providing help in biomonitoring, providing the information about the fish sampling carried out in October in 2006 on Morgó stream. The study was supported by HungarianCzech Intergovernmental S&T cooperation programme (OMFB 00662/2006 and CZ-10/2006) and the Hungarian State Eötvös Grant. 8 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. References Boon, P.J., Howell, D.L. (ed.), 1997: Freshwater Quality: Defining the Indefinable. The Stationery Office. Edinburgh, pp. 352. Bardóczyné Székely, E., Bardóczy, L., Horváth, J., 2004.:Kis vízfolyások revitalizációs tervezésének kezdeti lépései a Morgó patak belterületi szakaszán (Kismaros településen). Hidrológiai Közlöny (84) 4.szám, 27-33.p. CEN, 2003. EN 14011. CEN standards on “Sampling of Fish with Electricity” BS EN 14011:2003. FAME group, 2005. The development of a fish-based assessment method for the ecological status of European rivers — a tool to support the implementation of the European Water Framework Directive. Just, T., Matušek, V., Dušek, M., Fischer, D., Karlík, P., 2005. Vodohospodářské revitalizace a jejich uplatnéní v ochrané před povodnemi. AOPK, Praha. Keresztessy K., Bardóczyné Székely E., Nagy Zs., Švátora, M., Sychrová, O., Drozd, B., 2007: Halfaunisztikai eredmények a Börzsöny és Visegrádi-hegység patakjaiból. SZÜSZI 2007 konferencia. Krizek, J., 2006. Metodiky monitoringu evropsky vyznamných druhů mihulí a ryb. AOPK ČR, Praha, 37 pp. MoEW, 2001. Method of fish fauna monitoring (in Hungarian) http://www.kvvm.hu/szakmai/biodiver/hun/5_halak.htm. MoEW, 2005. EcoSurv. BQE report fish. MoEW, Budapest. 2005. 1-40p. Nagy, Zs., Bardóczyné Székely, E., Keresztessy K., Sychrová, O., Svátora, M., Drozd, B., Sipan, F., 2007. Problematic tasks of streams and small watersheds - Stream revitalisation in the light of Water Framework Directive. Bodrogköz conference- 23rd January, 2007. Budapest (in press). Rechenberg, J. (eds.), 2004. Basic principles for selecting the most cost-effective combinations of measures for inclusion in the programme of measures as described in Article 11 of the Water Framework Directive. Federal Environmental Agency. Berlin. Richards, K S, Brasington, J., Hughes, F, 2002. Geomorphic Dynamics of Floodplains: Ecological Implications and a Potential Modelling Strategy. Freshwater Biology, 47: 1-22. Szilágyi, F. (eds.). 2004. Folyópaszportok (Hungarian river passports). Manuscript. BUTE. 68 Figure 2: Selecting pressure and possibly measures using Rechenberg’s guideline (Rechenberg 2004) for Morgó rivulet, Hungary (selected in grey color the occurred ones) 69 New Approaches to Accounting of Natural Capital and Ecosystem Services Lidiya Hryniv Chair of Department of Economy of Ukraine, I. Franko National University of Lviv, Ukraine [email protected] Present day ecological-economic crisis is explained, first of all, by inability of economic science to meet the new challenges connected with determination of the cost of services of nature capital for the natural environment and economy. Underestimation of the reserves and resource flows of nature leads to the negative results both, in economic and social-ecological development. Economic evaluation of nature capital has to take into account the cost of its elements and services not only for the economy (business), but also for preservation of stability of exchange processes that are taking place between terrestrial ecosystems and external natural environment (biosphere). This causes the need for a more detailed methodological study of the peculiarities of reproduction of nature capital. That is, greater attention should be paid to transdisciplinary issues pertaining to the peculiarities of functioning of terrestrial ecosystems. Thus, how do the terrestrial ecosystems function? What does restrict services of the ecosystems? What is the end result of the functioning of terrestrial ecosystems? It is known, that processes on the Earth are taking place in the thermal shell of the atmosphere that has the ability to retain a certain temperature level on this or that territory. For this reason it is possible to state, that isothermal processes do occur on the Earth’s surface and, therefore, in the terrestrial ecosystems. As the solar energy, that appears to be the main driving force of all conditions and processes on the Earth, is delivered in cycles, these conditions and processes also have a cyclic character. Each process has its concrete designation, that is, performs a certain work. Isothermal processes therefore can be interpreted as the processes connected with a free exchange of energy and disorderliness (entropy) between the system and external environment. Free energy serves as the principal source of work in “isothermal process” and consists of internal energy E and energy characteristic of disorderliness (entropy) in the system with “–“ sign, that is, negentropy T. Thus, negentropy + is the measure of orderliness of each physical system, and T — temperature of the system that corresponds to –273°C or =0° Kelvin. The minimal orderliness is an even distribution, absence of any temperature gradients and other fields of force. There is no source of the processes in a condition with the minimal negentropy. Global climatic changes occurring today are the result of not only the increased emissions of carbon dioxide and other gases into the atmosphere, but, first of all, of excessive pressure on the land ecological systems. This results in the depletion of their resources, which disturbs the mechanism of exchange processes and, therefore, stability of biosphere. The losses of biodiversity become irreversible and this means, that tendencies of deterioration of stability of the existence of land ecological systems have a progressive character. In order to prevent further destruction of land ecological systems the need has appeared for theoretical modeling of the functions and determining the norms of conservation and consumption of nature capital which are, by their nature, spatial-economic norms and depend on biophysical parameters of stability of nature. 70 The components of nature capital play a decisive role in the economy of every country. Being variable in the production function of economy they are also an essential factor of production. However, along with performance of essentially the production function for the economy the elements of nature capital participate in exchange mechanisms with their energy and material playing a clearly defined function in local biogeocenoses. Thus, one may say, that nature capital not only forms a foundation for implementation of economic processes, but also for the demand of “biophysical” consumer, that is, for every local biogeocenosis. Economic productivity of nature capital depends on the level of conservation of biomass in land ecosystems. For this reason the most up-to-date ecological-economic theory must rely on the theory of V. Vernadskiy. Today there are all reasons to think, that the initial paradigm of sustainable development was substantiated in the works of V. Vernadskiy, in which he presented analysis of conservation of ecosystems. Ecosystem approach to evaluation of the elements of nature capital will take into consideration not only their economic opportunities, but also biophysical limits of their consumption in accordance with entropy law. Consumption of nature capital must be made taking into account peculiarities of not only economic behavior of consumer, but also that of “ecological behavior” of every biogeocenosis. In this sense when analyzing factors of the function of consumption of nature capital it is necessary to proceed from biophysical regularities of its stability. The principal purpose of each ecosystem is conservation of solar energy. That is, the inflow of solar energy is balanced by the loss of energy in the form of infrared radiation to the remaining part of the Universe. This testifies to the fact, that the established negentropy (orderliness) in each natural subsystem of the ecosociosystem is stable initially and depends of its temperature characteristics, which is the boundary of its stable homeostasis. This negentropy, as natural orderliness which, according to the law of conservation of biomass of V. Vernadskiy ensures homeostasis in biosphere, can be regarded, in our opinion, as the spatial capital of biosphere, as it is the main factor of conservation of energy and matter flows in the planetary EESS (ecological-economic-sociosystems). This negentropy can be accumulated or dissipated in the process of the use of nature. For this reason investigation of ecological stability of the resources of nature capital must be made from mesolevel to macrolevel. Each territory has its temperature and other peculiarities on which the spped of heat exchange with the natural environment and the volume of capacity for work of ecosociosystem depend. Thus, nature capital of each EESS we interpret as both, reserve (action) of free energy F, which depends on the volume of accumulated orderliness (σ). and disorderliness (Sn) forming the potential of its capacity for work. In this context we can speak of ecological proposal EESS Q as of the function of energy equivalent of its nature capital: Q(F) = Q(E + σ – Sn), (1) where: Q — EESS ecological proposal; F — EESS free energy; E — internal energy in EESS; σ — negentropy in EESS; Sn — entropy in EESS determined by the performance of biophysical and economic work. This universal function pertains to all elements of nature capital and testifies to the fact, that in spatial coordinates the entire nature capital is critical, as it supports the planet’s live environment — biosphere. 71 That is why conservation of this global ecosystem and its spatial components must be made taking into consideration the laws of their energy reproduction. Spatial non-uniformity of biosphere, according to V. Vernadskiy theory regulates the natural level of orderliness (negentropy), which is the determining factor of conservation of biomass of each ecosystem. Thus, the model of ecologically sustainable development of economy must reflect also the factors of energy, and not only of economic reproduction of the stability of nature capital. Ecologically sustainable condition of an ecosociosystem can be regarded such condition, to which it returns with its own internal regularities, continuously reproducing parameters of its natural subsystem and ensure stable stationary conditions of its functioning. Special attention should be drawn when defining the meaning of the formation of stable conditions in ecosociosystems to that, that this stability combines the two fundamental characteristics as the manufacture of economic product and manufacture of the product of nature (biomass). These conditions do not converge with the equilibrium of economic processes at all, but they must find an adequate reflection in macroeconomic identities through the functional dependence of the volume of the use of nature on the volume of energy equivalent of local nature capital. On the macroeconomic level this means, that the volume of gross domestic product created in the sphere of the use of nature is determined not only by exclusively economic components Y = C + I + G + NX, but also by biophysical components of aggregate ecological proposal (Y1): (2) Y1 = C1 + I1 – A1. The general regulator for an EESS, from the standpoint of cybernetics, is a special form of organization of feedback preserving the unity of quantity and quality of the system, i.e., its measure or boundary. Such measure for each EESS is conservation of natural stability of biological productivity of its nature capital [2]. Every natural EESS subsystem has a boundary of orderliness, whose cost is Pgp. Dissipation of this orderliness in the result of inadequate use of nature explains the reasons of ecological disbalance of EESS, for the change of the value of their stationary temperature regime testifies to the change of not only quantitative, but also qualitative boundaries of their natural self-organization. This means, that for each biogeocenosis as an ecosystem and a component of biosphere there is a natural boundary of percentage of forest land, a boundary of atmosphere transparence, a threshold of saturation with living matter, a threshold of humidity, etc. All these threshold values must be known to humans so that they would be able to prevent destruction of the environment. Thus, to ensure ecologically sustainable use of nature it is necessary to take into consideration not only the demands of economy, but also biophysical demands of EESS for conservation of this orderliness and, therefore, of biomass of nature capital. The reserve of free energy as the energy equivalent of the working capacity of nature capital (Kn) can be changed in the following directions: 1. receipts of “investments” of negentropy leads to the growth of aggregate reserves F; 2. 2) increase of aggregate entropy Sn leads to the reduction of reserves F and, therefore, reduces bioproductivity Kn in the long-term period. Thus, in order to achieve a stable bioproductivity of nature capital Kn it is first of all required, that the following condition is observed: δ – Sn = Pgp > 0, (3) where Pgp — cost of biophysical orderliness Kn. 72 Thus, let us determine natural threshold tendency of ecosystem to conservation of biomass Kn. According to the law of conservation of biomass the norm of conservation Kn in EESS is equivalent to Pgp . If internal energy of biosystem is a constant, then (4) Q = Q (Pgp ). Our task is similar to Solow model, however it investigates biophysical function of nature capital with the purpose of its evaluation. Δ Pgp = δ – Sn (5) Sn = h · Pgp (6) Q = c + δ = (1 – S) Q + δ (7) where S — norm of conservation; h — depreciation coefficient. Wherefrom it follows, that: δ=SQ (8) In order to achieve stability of an ecosystem it is necessary, that it attains a stationary condition, that is: Δ Pgp = δ – h· Pgp = 0 (9) P * gp (10) δ H Thus, at this cost of biophysical orderliness P*gp the ecosystem is in stationary condition. Let us find the level of the “golden rule” characteristic of R. Solow’s model. Threshold productivity Kn will be equal to: MPK = Q (Pgp + 1) – Q(Pgp), (11) where MPK - threshold productivity of nature capital. Under the “golden rule” the net threshold product of nature capital is equal to the norm of its depreciation. MPK – h = 0 or MPK = h (12) Thus, ecologically sustainable use of nature in EESS is such use of nature, in which maximal conservation of natural orderliness of the ecosystem is achieved. With the reserve of natural orderliness (negentropy) of EESS which conforms to the “golden rule” of accumulation conservation of nature capital achieves it maximum and the norm of its economic consumption must be equal to the norm of its depreciation. Such metrological approach to determination of the norm of ecologically expedient economic activity within the 73 limits of a local space provide new opportunities for introduction of protection mechanisms in the sphere of the use of nature. The cost of biophysical orderliness formed on the basis of ecological demand for conservation of stability of each land ecosystem is the road sign, which combines interests of nature and interests of spatial economy. Nature-economic norm setting for maximal conservation of the stability of bioproductivity of nature capital provides additional chances for conservation of biodiversity of the planet. Thus, the following conclusions can be made: 1. Absence of an effective mechanism of realization of the Concept of sustainable development is explained first of all by inadequate interpretation by theoretical economics of the category “nature capital” and its spatial-biophysical functions in the environment. 2. Determination of the system of estimates of biophysical orderliness for the norm setting of conservation of ecosystem’s stability creates new prerequisites for application of preventive, and not compensating economic mechanisms in the sphere of the use of nature. 3. Introduction into practice of economic activity ecologically expedient norms of consumption of nature capital within the boundaries of a local space will provide an opportunity of maximal conservation of biodiversity for future generations. Conclusions The project proposes a concept of the formation of ecologically balanced economy (EBE) which, contrary to the existing concepts, regards economy as a system functioning in isothermal regime within the boundaries of the global ecosystem of the planet — biosphere and is determined not only by the factors of production function, but also by the spatialecological factors of preservation of its durability. The model of life-preserving economy is outlined in the context of this concept which, in its essence, is a noosphere model based on the new system of parameterization of the restrictions on the use of nature. This new approach gave the opportunity to combine the subject of macroeconomic research with spatialeconomic modeling of the functions of consumption of nature capital, which will facilitate conservation of biodiversity. This project also presents an estimate of correlation of natural processes of energy and matter exchange, as well as that of socio-economic processes in land ecological-sociosystem (EESS) as the object of realization of the concept of sustainable development. The project has proved, that self-organization of the EESS takes place on the basis of reproduction of stable stationary conditions of its natural subsystem. The project pioneers determination of EESS energy reproduction and evaluation of their relationship with economic reproduction. It also proves, that their production function is a derivative of thermodynamic functions of free energy forming the ecological proposal depending on the two forces — “investment” of negentropy and the volume of entropy. It presents the theoretically modeled EESS behavior in the processes of the use of nature, which has permitted to determine spatial-economic factors of preserving its effectiveness and initiate the new methodological approach to ensuring a balanced EESS development as the foundation of effective policy of conservation of biodiversity. The project validates and brings into scientific use the terms “spatial coordinate of the function of nature capital energy” and “EES ecological proposal” as categories linking biophysical and spatial-economic criteria of conservation of stability of nature capital. Introduction of these terms and models into the economy of the use of nature opens up new methodological opportunities for further research of the problems of ecological balance of the use of nature from the standpoint of its spatial-economic structure. This provides an 74 opportunity of modeling qualitatively new spatial functions of reproduction of nature capital as land ecological systems which, unlike the functions of sustainable development adopted in modern macroeconomic analysis, aim at prevention of destruction of the environment through conservation of biodiversity in spatial-temporal coordinates. The new in principle methodological proposals reveal the essence of the system of ecologically balanced use of nature, which implies observance of correspondence of the extent of the use of nature capital to biophysical limits of its reproduction through the function of negentropy. It has been proved, that the function of negentropy of economy of the use of nature counteracts dissipation of natural orderliness of every local biogeocenosis in the process of economic activity and, therefore, ensures ecologically balanced use of nature and conservation of biodiversity. This project substantiates the determining role of this function in the development of ecologically balanced economy, for it is the function of formation of the new bio-social cycle, creating at the same time the new orderliness in the environment and economy. This work proves, that as far as every natural EES subsystem has a limit of orderliness which is a necessary prerequisite for preservation of its biophysical effectiveness in the future, to ensure ecologically balanced use of nature it is necessary to take into account not only the demand of economy for natural resources, but also biophysical demand of EES for preservation of this orderliness and, thus, biomass of nature capital. Prevalence of the level of orderliness (negentropy) over the level of disorderliness (entropy) is the dynamic indicator determining biophysical effectiveness of EES and the source of conservation of organic life on the planet. The potential of orderliness of each ES can be interpreted as its spatial capital, as it creates new flows of energy, matter and information. Substantiation of this category permitted formulation of principal spatial-economic identities of EES balanced development as supplements to the identities of macroeconomic equilibrium. The project defines the place of spatial-economic analysis in macroeconomic research of ecologically balanced use of nature. It proves, that the volume of gross product produced in the sphere of the use of nature is determined not only by such economic components as consumption, investments, public purchases and export-import flows, but also by biophysical components of cumulative ES ecological proposal, which are the functions of their stable stationary conditions. Research of interdependencies between the components of cumulative proposal of ecological benefits and cumulative proposal of economic benefits calculated on the basis of aggregation of relevant indices of mesolevel EES permitted to come to substantiation of the new functions and norms of ecologically balanced use of nature. New spatial-economic factors of balanced development of EES which are not reflected in the fluctuation of market prices and were not taken into account previously have been introduced into macroeconomic analysis. Modeling of the function of ecological proposal of EES has been made. New criteria of ecologically balanced use of nature are introduced in the economy, which are the factors of conservation of biological productivity of nature capital in the long-term span of time. Methods of determination of the indicator of ecological balance of economy that, as opposed to the effective methods, is based on taking into consideration of the EES orderliness potential have beensuggested. Index of normative scope of conservation of biomass of EES nature capital as a qualitatively new parameter of the economy of the use of nature determining conservation of biodiversity has been defined. The function of ecologically balanced use of nature capital has been modeled. This allowed to suggest new methods approach to determination of the norms of the use of nature which, as opposed to the effective methods have ecological instead of sanitary-hygienic meaning as they are aiming at prevention of negative changes in the environment. 75 References 1. 2. 3. Hryniv L. S. Ecologically sustainable economy: problems of theory. — Lviv: Ivan Franko National University of Lviv, 2001. 240 p. Beyond growth. Economic theory of sustainable development. H. Daily, (translation from English: Institute of sustainable development). — Kyiv: Intelsfera, 2002. 312 p. Melnyk L. T. Fundamental principles of development. – Sumy: University Book, 2003. 76 The Spatial Mangrove Ecosystem Accounting: A Tool for Achieving the Sustainable Mangrove Ecosystem Activities Dewayany Sutrisno, Suwahyuono, Aris Poniman National Coordinating Agency for Survey and Mapping (BAKOSURTANAL) — Indonesia Cibinong, Indonesia [email protected], www.bakosurtanal.go.id 1 Introduction 1.1 Background Understanding the vulnerability of mangrove ecosystem to the human activities becomes a crucial issue for managing the sustainable environment. The lack of knowledge of physical, biological and ecological functions often make this ecosystems becomes the target of conversion. These usually occur in developing countries, like Indonesia, where shrimp or fishpond becomes more valuable than the existences of mangrove ecosystems. The not marketable value of some goods and services from the ecosystems, cause the lack of appreciation to the ecological function of the ecosystems and it is end up to the conversion to the more marketable ones. The study of land use-cover change, including mangrove ecosystem, has been done for years as a part of land use monitoring efforts. The result indicates the degradation of the mangrove ecosystem within the whole country. At the end of 80s, the country has lost 40 % of mangrove area (Coastal projects 2001). Recently, the remaining area of mangrove ecosystem is predicted only less than 3.5 million ha (Coastal project 2001). Unfortunately, as a country with about 155 species of mangrove (Bengen 2002), the assessment of the mangrove ecosystem accounting has limitedly been employed. This is the core of the study that need to be informed and distribute to mangrove ecosystem’s stakeholders. Without accurate information of the mangrove ecosystem value, the majority of the people will still consider this ecosystem as an open access resources and possible to be exploited unlimitedly. Since the assessment of mangrove ecosystem accounting must be accordance with the study of mangrove ecosystem changes, a model of spatial multi-date mangrove ecosystem accounting should be employed for assessing the best mangrove ecosystem management. Using Sinjai Regency — Southern Celebes, Indonesia as the study area, the spatial model has been developed. 1.2 Study Area Sinjai regency is a coastal area that has long experiences to the lack of understanding value of mangrove ecosystems (see Figure 1). Cutting the trees for the shake of ponds and other short term economic purposes, have ended up in badly abrasion that almost destroy the existing coastal villages and all facilities (Munisa et al 2002). Realizing the effect of land clearing to their future life, the local people, then, rehabilitated the ecosystem by replanted the mangrove trees along the coastal area. The mangrove is enabling to protect the villages from abrasion. Until now, clearing the mangrove trees for the shake of shrimp ponds and other economic purposes still exist within the area. However, it is only for the short term, because the local people will replant the mangrove again after they gain sufficient profit. Clearing and planting 77 are parts of dynamic economic life of local people that depend on the existences of mangrove ecosystem in Sinjai regency. A lesson that can be learnt through local knowledge to have sustainable used of mangrove ecosystem. Figure 1: Location Of The Study Area 1.3 The Aim Of The Study The aim of the study is to simulate a spatial sustainable management of the mangrove ecosystem, using ecosystem accounting tools. Indeed, the study wants to indicate the value of the ecosystem not only from the economic function but also from the ecological functions. The best information of the value of mangrove ecosystem, hopefully, will decrease the deterioration of the ecosystem and improve the use of services and goods of the ecosystem in a sustainable manner. 2 Method The methods that were used for this study consist of: 1. Normalized vegetation Index (NDVI) method for assessing the quality of mangrove ecosystem, a remote sensing method for vegetation cover. 2. Spatial analysis method for assessing the changing ecosystem, a Geographical information (GIS) approach, and can be used as spatial simulation model. 3. Total Economic Valuation (TEV) method for mangrove ecosystem accounting. The basic idea of the study is described in the following figure; 78 Figure 2: Flowchart Of The Research Approach Spatial multi date mangrove quality data inventory: Multi date remote sensing data, i.e Landsat ETM+ derived at 1997 and 2004 were used to classify the quality of mangrove ecosystem based on Normalized Vegetation index (NDVI) method. The classes of the ecosystem quality are based on density and describe as: a. High-density mangrove ecosystem; b. Middle density mangrove ecosystem; c. Low-density mangrove ecosystem; d. Non-mangrove ecosystem. 1. The remotely sensed derived maps then converted to the vector format to be analyzed using geographical information system. Valuation of mangrove ecosystem quality: Using spatial analysis model, the changing matrix of the two spatial data can be explained in the formula: 2. NM (i..n)(t x − y ) = MA(i...n)t x − MP(i..n)(ty ) (1) where, NM MA MP i..n tx ty = = = = = = Mangrove ecosystem change (ha), Mangrove ecosystem quality date 1 (ha), Mangrove ecosystem qualiy date 2 (ha), Mangrove ecosystem quality classes: i .. n, Year x, Year y. 79 3. Mangrove ecosystem and other land use accounting: The mangrove ecosystem accounting use TEV (Total Economic Valuation) Method for calculating the value of the ecosystem, i.e: (2) TEV = DUV + IUV + OV + EV +BV Whereas the valuation method for each used (Natural resources accounting teamwork 2006) can be explain as: Ecosystem used a. Direct Used value (DUV) Fish, shrimps, crab, juvenile/ seeds, woods b. Indirect Used Value (IUV) Spawning ground, coastal protection c. Option Value (OV) All direct and in direct value d. Bequest Value (BV) Biodiversity Valuation Method Category Stakeholder/ Responden Productivity approach Market value Fishermen Replacement cost Market value Fishermen Non-fishermen Fishermen Non-fishermen Contigency valuation Method (CVM) Non-market value Contigency valuation Method (CVM) Non-market value Contigency valuation Method (CVM) Non-market value e. Existency Value Meanwhile the other land use were accounted based on: Ecosystem used Valuation Method Category Stakeholder/ Responden Direct Used value (DUV) Fish and shrimp ponds Woods and fire woods Productivity approach Market value Fishermen, villagers Vi..n = ( M i * Pi ) + ( M k*Pk ) + (M n * Pn ) + (T p * Pp ) + (Tw * PW ) + ... (3) The total value of the ecosystem was calculated based on: where, Vi..n i... n Pi..n M i..n T p.. P p..w = = = = = = Economic value of the Ecosystem (USD), Mangrove quality classes i ..n, Ecosystem value based on TEV and mangrove quality (USD), Mangrove quality area (ha), Other land use area (ha), Value of other land use area based on productivity approach (USD). 80 4. Assessment the scenarios model: Spatial ecosystem accounting model was developed using Net Present Value approach for short-term prediction of sustainable management of the mangrove ecosystem. Scenarios that may be applied for the study are: 1. Scenario 1; Existing condition. 2. Scenario 2: Conservation approach. 3. Scenario 3: Silvo-fisheries method with 10 % allowable area for Shrimp ponds. 3 Result and discussion 3.1 The Assessment of Mangrove Ecosystem Change Represented by two villages within the regency, i.e Karasi and Tongke-tongke, the spatial multi date mangrove ecosystem assessment based on remote sensing and GIS approach was employed. At the first date map (Figure 3), 12 years after the reforestation, the high-density mangrove classes dominate the coastal line, following by the low-density mangrove that only take small part of the area (1. 174 ha) in Tongke-tongke. Figure 3: Mangrove Ecosystem Density Map (1997) Meanwhile, at the second date map, 21 years after the first reforestation, there are the increasing area of mangrove ecosystem up to the mainland and coastal area. However, the quality of mangrove was varying changed to the low-density, high-density even to nonmangrove area (Figure 4). In this date, there are also increasing area of mangrove ecosystem along the coastline compare with date 1 map. This condition prove that, the local people seems still protect the coastline using the physical function of mangrove ecosystem. 81 Figure 4: Mangrove Ecosystem Density Map (2004) Other changes of the mangrove quality can be seen in Figure 5. It can be seen that there are the decreasing area of high-density to the low-density, even from the high-density to the non-mangrove within the study area. This usually occurs along the creeks up to the mainland area, indicating that the local people still cutting the trees for the shake of ponds and woods even though the reforestation still occur within the area of study. The effort of reforestation was shown by the increasing area of non-mangrove to the high-density and non-mangrove to the low-density mangrove ecosystem. Figure 5: Mangrove Quality Change Map 82 Excluding the increasing and decreasing area of mangrove ecosystem quality, the total area of mangrove ecosystem was increasing at about 47.825 ha (see Figure 6) Total area of change = 47.825 ha 3.2 The assessment of mangrove ecosystem accounting The total economic valuation has been applied for years to account the value of natural resources. However, the economic accounting was failed due to the disregarding the non market value of the goods and services of the ecosystem. The dynamic mangrove ecosystem in Sinjai was a good example to show the honorable value of some non market value of goods and services of this ecosystem. By applying Total Economic Valuation (TEV) method to mangrove area and productivity approach to the fish ponds area, the value trend seems increasing faster since the first reforestation program was launching (see Figure 7). 83 It can be seen from the above figure, during the pre-reforestation program (in the 60s) where the majority of local people economic activities are dealing with marine culture (fish or shrimp ponds), the ecosystem value was the lowest. This value was disregarding the ecosystem value since almost of the mangrove area has been cleared for the shake of shrimp ponds industry. Realizing the effects of land clearing, i.e coastal erosion at about 1- 30 m up to the ponds area, destruction of the villages and all facilities caused by wind and abrasion, salt water intrusion etc, local people started to stop the destruction. At the 80s, groups of local people planted the Rhizophora macronata along the coastline and creeks based on their local knowledge on coastal and local climate condition. Nowadays, comes appropriate time to assess the fruits of efforts, that the ecosystem value was increased (Figure 7). Prior to the more advance reforestation program, the ecosystem value was dominant. Protection of the coastal area seems become the first priority for the local people, indicating by the mangrove quality along the coastal area (see Figure 5). Then, cutting and planting the trees for the shake of ponds and woods occur within the small area after the advancing of mangrove ecosystem area. This indicating, the dynamic used of the ecosystem not only dealing with the ecological, biological or physical function of the mangrove ecosystem but also dealing with other market orientation activities in fishery. Figure 8 shows the changing value of the ecosystem in Sinjai Area. Meanwhile, The changing matrix of the ecosystem value and the spatial simulation to show the dynamic used of the ecosystem can be seen in Figure 9 and 10. 84 Figure 10: Mangrove Ecosystem — Quality Value Change Map Figure 9 and 10 shows that the reforestation occur within the non-mangrove area (used to be ponds), adding the value to the ecosystem more than $ US 128,123 (low-density and high-density mangrove). The changing quality of low to the high-density also adding value to the ecosystem as much as $ USD 3,033. The market oriented economy activities, depress the value as much as $ USD 31,452 for the shake of woods and $ USD 2,945 for ponds. However, dealing with the social economic activities, the last two values still become the adding value to the ecosystem management. Learning from the cutting and planting the tress from local people, scenarios were derived to show the most sustainable management of the Sinjai mangrove ecosystem, i.e: 1. Scenario 1: Existing conditions, whereas only 7 % of the total area was used for ponds, especially shrimp ponds. 2. Scenario 2: Conserve the whole area. 3. Scenario 3: Using other silvo-fishery management, whereas 10 % of the total area can be used as the shrimp ponds area. 85 The result of the modeling scenario shows that the local wisdom that applying 7 % of the area as the ponds and the rest for the conservation seems to be the best scenario. This can be shown by the highest NPV (Net Present Value) of the ecosystem management of scenario 1 for the next five years compare with others (see Figure 11). Meanwhile, the simulation scenarios can be seen in Figure 12. It is shown that for the next five years, scenario 3 has the lowest value following by scenario 2 and scenario 1. It seems the long experiences of degrading the ecosystem cause the local wisdom to manage the resources in sustainable manner. The scenarios modeling that use natural resources accounting proves this honorable wisdom. Furthermore, another lesson can be gain through Sinjai experiences that participatory approach seems to be the best management in improving the environmental conditions since it can improve the environmental awareness of the local people. Dealing with the development of the model, the assessment may be further developed up to the economic instrument model. For example, since the scenario 1 seems to be the best management to protect the nature, modeling fine and taxes can be applied to minimize the deterioration of the ecosystem. Indeed, local regulations can also been derived such as cutting the trees are only allowable for the shake of improving the quality of mangrove trees. 4 Conclusion Mangrove ecosystem in Sinjai Regency, i.e in Karasi and Tongke-tongke villages, is the good example of sustainable management of the coastal resources. The long experiences in degrading the ecosystem have developed the local wisdom for maintaining this ecosystem due to its physical (coastal protection), biological (biodiversity) and ecological functions. Using the natural resources accounting method for assessing the best scenario management of the area, shows that the local wisdom that only uses 7 % of the area for shrimp ponds industry is the best scenario. This model also shows that the natural resources accounting is a good tools for assessing the best environmental management. However, this model must be carried out accordance with the spatial assessment model that possibly to indicate the mangrove ecosystem quality including the quality changes. In this study, spatial natural resources accounting help to simplify the visualization and assessment of the environmental management and hopefully may help to improve the people environmental awareness. This can be applied through participatory approach such as Sinjai area. In addition to the model, further assessment in a spatial economic instrument model may also be employed. This 86 hopefully will help the Sinjai or any environmental stakeholders for developing any regulations to protect the nature. 5 1. 2. 3. 4. References Bengen, Dietriech. 2002. Introduction And Mangrove Ecosystem Management. Center for coastal and Marine Research Study — Bogor Agricultural Univeristy. Bogor. Coastal Project. 2001. Mangrove Productivity Through Nursery. Coastal and Marine News. No 3/III/2001. Jakarta. Pp14-15. Munisa et al. 2003. Development Program Of Mangrove Forest based on Participatory Approach: Study Case of Tongke-tongke, Sinjai Regency. Bogor Agriclutural University. Bogor. Natural Resources Accounting Team Work. 2006. Guidelines For Mapping Mangrove Ecosystem Value. Center for Marine Resources Survey — BAKOSURTANAL. Cibinong. 87 Geo-Referenced Environmental Accounting for Multifunctionality. Valuation and Land Accounts: The Case of S. Erasmo Island in the Lagoon of Venice Alessandra La Nottea, Margherita Turvanib a research associate in the Department of Economics, University of Turin, Italy [email protected] b associate professor in the Department of Planning, University of Venice-IUAV, Italy 1 Introduction Recently the European Environmental Agency has published a report on land accounts for 24 European countries (EEA, 2006). Precious information is delivered through the Corine Land Cover classification and the Land Cover Flows. It is highlighted how the accounting framework is able to show over time stock change in a consistent and systematic way in order to better understand its implications. Thus land cover accounting can integrate information about the impact of human activities on natural capital, about the benefits that natural capital provides to society and it can help identifying some key drivers of change. The report does not only provide data and analysis over the last 10 years in EU but offers a range of future possible developments of this powerful tool. The resolution adopted to generate data does not allow the detection of small change nor the extent of transport network. Heterogeneity detection might thus become a challenging issue. Spatial and temporal patterns that relate to the different processes that transform land cover can help identifying those areas likely vulnerable to particular combinations of different drivers of change. Land and ecosystem accounts might allow to assess a range of non marketed services using monetary and non-monetary measures. As pointed out by Heal (2006) the work on ecosystem accounting is still at a preliminary stage and Boyd (2006) expresses the necessity of including location and timing of ecosystem services because they strongly influence their benefit perceptions. In the Millennium Ecosystem Assessment (MEA, 2005) economic valuation is stated as a powerful tool for placing ecosystems on the agenda of conservation and development decision-makers. In fact the three main domains are recognized as critical to choose and implement successful policies: the biophysical information about the ecosystem status and process, the socioeconomic information about the context in which and for which the decision will be made and the information about the values, norms and interests of key stakeholders shaping and affected by decisions. Also within the MEA the TEV is confirmed as the most widely use framework to identify and quantify the contribution of ecosystem services to human well being.25 25 Within the quoted report, specifically compiled for wetlands, direct use values correspond to the MEA’s definition of provisioning and cultural services. Indirect use values correspond to MEA’s notion of regulating and supporting services. Provisioning, regulating and cultural services may all form part of the option values. Non-use values are simply defined as the value people may place on knowing that a resource exists even if they never use that resource directly. Moreover, The MA lists as commonly used valuation tools: replacement costs, 88 The basic concept that starts the valuation process is the identification of the economicsocial and ecological functions. There is a rich literature that sustains this kind of approach per functions (APAT 2006, Turner et al. 2000, IUCN et al. 2004) and also that suggests which might be the best methods to value each function (DeGroot et al. 2001, Hawkins 2003, Defrancesco et al. 2005). The attempt of this study is to consistently link the current land accounts developed in Europe with economic valuation of peculiar locations that require higher resolution in order to be properly considered and that detain environmental values that need to be captured first in physical and then in monetary terms. By utilizing georeferenced databases and by fully integrating the spatial dimension in the valuation processes we can take better care of heterogeneity and the variety of ecosystem functions and services. To each specific spatially defined unit of analysis we may attach vastly different information to be used in the valuation process; several features may be combined and associated for each chosen function that we may attribute to the ecosystem and the value calculation can also take into account specific physical and biological characteristics, allowing us to consider the level of integrity of the system. As started by Bateman (Bateman et al., 2003), to integrate diverse datasets greatly helps to understand and predict the concerned variables and to query and visualize model output allows decision-maker to readily comprehend the impact of alternative policies. GIS techniques can thus improve the way in which the complexities of the real world can be brought into economic analysis. The awareness about the need of quality georeferenced information for understanding the complexity and consequently for containing the negative impact of human activity on the territory is growing at EU level. In fact, the EU Commission is working on an initiative (INSPIRE26) to support the availability of spatial information for the formulation, implementation and evaluation of Union policies (INSPIRE ETC, 2002). Finally, so far (UNSD 2003, Schoer 2006) it was only considered how environmental accounts could be a useful source of information to calculate environmental and sustainable indicators. In this study, especially when dealing with ecological functions, some environmental indicators prove to be fundamental for both physical (through qualitative classes) and monetary valuation. The paper starts with a description of the area chosen for the valuation and the procedure followed. Data and maps obtained are presented through a series of frames that summarize the main steps undertaken once the main functions are identified. Final aggregation in TEV stimulates comments and raises a series of issues for further developments. 2 Description of the area: St.Erasmo and the Lagoon of Venice The Venetian Lagoon is situated in the Northern part of the Adriatic Sea and covers a surface area of around 550km². Only 8 %, including Venice and the other islands is made up of land, the remaining is water for about 11 %, made up of natural and dredged channels (canals), while around 80 % is made up of mud flats and salt marshes. effects on production, damage cost avoided, mitigative or avertive expenditures, hedonic pricing, travel costs, contingent valuation. 26 Infrastructure for Spatial Information in Europe: it intends to set the legal framework for the gradual creation of a spatial information infrastructure. 89 Figure 1: Location of St.Erasmo within the Lagoon of Venice The island of St.Erasmo is one of the largest in the Lagoon, it surface of 3.26 km2, it’s length is about 4 km and its width ranges from 500 to 900 meters. The Lagoon is connected to the sea by three inlets: St.Erasmo is located in front of the Lido inlet. Thus it has always been directly exposed to the sea, offering protection to the lagoon and the city and hosting various defense infrastructures. At the end of the XIX century the Lido inlet was modified by the construction of barriers with various effects on water depth, erosion, mud island modification and so on. Nowadays the area and the inlet is under modification for the foreseen construction of the Mo.S.E., the system of mobile ditches which should protect the lagoon from the effects of extremely high tides. The area is characterized by the presence of many marshy islands: they are largely made up of mud, and they are of various forms, surface, and state, being formed and transformed dynamically through time by deposits due to the tides or rivers or sea, and constituting sheltered areas in the lagoon. The mudflats are typically important regions for wildlife, in particular migratory birds and support a large population of different species; they also play an important role in preventing coastal erosion. The area is also characterized by many salt marshes, the intertidal zone, where the area is exposed to the air at low tide and submerged at high tide. The island therefore is a habitat for wildlife and biodiversity protection. Historically, the island has hosted human population since the roman times, and through the centuries, agriculture has been the main source of revenue for the people living there (currently 800 people live on the island) serving the Venetian markets with fruit and vegetables. It is commonly known locally as the orchard of Venice, producing fine artichokes and grapes, asparagus and fruit. With respect to the lagoon and the city of Venice St.Erasmo has a very important protective function. Nowadays it has become an attractive place for tourism, for the Venetian and the Veneto Region and for a wider public, taking advantage of the enormous flux of tourists visiting Venice. 90 3 Description of the procedure Assessing the total economic value of environmental goods and services is an extremely complex process: a systematic procedure is needed to approach this task. Given the complexity of the relationship between a natural and a manmade environment, a flexible procedure to adopt the necessary adjustment for specific occurrences is preferred. Figure 1 shows the steps of the procedure we propose in this study: although the various steps are clearly set, each of them allows considerable flexibility when approaching real case studies. Figure 2: Procedural Steps Environmental account modules represent an appropriate tool to frame the economic information obtained in the valuation procedures. Environmental accounts are applicable for multiple uses: from descriptive statistics monitoring purposes to strategic planning and simulations (UNSD, 2003). The aim of this kind of valuation study is to assess any opening stock for specific areas, in order to monitor over time changes, in both physical and monetary terms and consistently with the EEA and Eurostat environmental accounting frameworks. In this study, the environmental accounts are supported by georeferenced databases and GIS tools in order to include the spatial dimension in economic valuation. The choice of functions varies according to the kind of resources and land cover that has to be assessed. Of the same resource/land, functions range and distribution can also vary over time. The second step of the procedure allows the choice of functions. Each function has to be assessed first in physical and then in monetary terms. Valuation in physical terms may require quantification per ton of selected resources or zoning per hectare of certain areas: this approach may vary according to functions. Valuation in monetary terms might involve the application of different valuation methods: from the easiest market price value to a complex stated preferences approach. The choice of methods depends on the resource/land and on the functions themselves. Both valuation steps must be very flexible in order to allow the most appropriate choice for each specific case. We also need to consider that over time more sources may become available and better estimates could be calculated because improved valuation methods are developed and 91 implemented. Moreover, new GIS operations might become feasible for assessment and valuation. This implies that the same function calculated with the same general action can produce different results. Identifying the specific step where enhancements occur can facilitate calculation and do not compromise the complete procedure. The extreme flexibility of the adopted procedure will not create confusion because through meta-data analysis it is possible to track the processing behind each step and correctly interpret data and compare results over time. 4 Preliminary steps: patch definition and classification Several sources of information are available: to begin with, the cartography of the Consorzio Venezia Nuova, the economic valuation studies supported by Corila, the aerial photographs providing rich territorial information system. Yet, a supplementary effort was required to update and improve the information base: field surveys added more detailed information which turned out to be very useful for the valuation purposes, and interviews to agricultural producers and real estate managers made a more reliable monetary calculation possible. The preliminary step to undertake when valuing an area is to find the definition of the minimum reference unit to be used for the evaluation exercise. The choice should reflect both theoretical and pragmatic considerations: in our specific case we may refer to the land use with destination polygons or with the cadastral map resulting from the land register. The first choice involves diverse critical points if we want to take into account the likelihood of possible changes in destination in the future given that the subdivision of polygons would complicate the procedure and make it impossible to systematically frame the new situation. The second choice rests on a purely bureaucratic definition of land parcels, linked to property rights and regardless of land characteristics and its peculiar environmental features. In both cases a dynamic approach to report environmental changes over a period of time and consequently the possibility to systematically asses its evaluation over the same time span would become very problematic. The preferred way to proceed, in our case, was the raster processing. This enabled us to create a grid whereby the cells represent the reference unit to be valued. Technically the process implied the shift from vector to raster model, and then again from raster to vector model, overlaying the land use map to allow the possibility of assigning a land use code to each specific cell. The second necessary step was to decide the size of each cell. In this regard many difficulties arise from the actual ongoing destination of land on St.Erasmo: the island is partly residential, partly cultivated and partly left to natural recolonization. It is a seminaturalanthropic environment distributed on a relatively small space: the result is an extremely varied landscape. To represent such variety attempts were made on a scale from 5x5m to 10x10m to 20x20m; Figure 3 shows how cells of 20x20m and 10x10m reproduce territory features (initially mapped in polygons in the land cover layer). Overall, it seems that a cell of 100 m² (on the right side) could be a good representation of actual distribution of land uses, thus allowing the identification of the most important territorial features and therefore a good base to allocate physical and monetary values accordingly. Other possible choices, as in the 20x20m or in the 5x5m, do not seem to be appropriate for our purpose; in the first case the cell does not reproduce sufficient detail of the territorial features, in the second case too much detail involves a very heavy handling of the information with no counterparts in term of quality of the resulting evaluation. The proposed exercise in valuation therefore will be based taking into consideration a layer of land composed by 177.008 patches of 100 m² each. 92 Figure 3: Patch unit definition trials The starting point for all of the processes is a map produced by Consorzio Venezia Nuova, Territorial Information System unit. The current map, over which the valuation was undertaken, is the result of aerial photographs (B/W 2002 and color 2005) and field surveys. The initial layer has been integrated with relevant missing features. Figure 4 shows how the original map has been updated by means of photographs. Figure 4: Updating land use map through aerial photographs overlapping Other useful information has been collected by field survey with the purpose of reclassifying areas originally classified as uncultivated land (almost 30 % of the island surface) and not corresponding to the actual situation. The result of the re-classification step is reported in Table 1. An additional column shows the corresponding classification according to the CORINE land cover code: as discussed in the methodology, reference to CORINE codes is crucial because of the Land Accounting framework developed by EEA (EEA, 2006). The adopted Corine levels range from level 2 to level 5; in some extremely varied landscape composition a more detailed Corine code classification was required for monetary value attribution. Table 1: Land use reclassification CVN original CVN updated re-classification classification 2 — Lagoon channels 2.a — Internal lagoon channels27 2.b — External lagoon channels28 3 — Ghebbi e chiari 3 — Ghebbi e chiari 4 — Lagoon floor 4 — Lagoon floor 5 — Velme and shallow 5 — Velme and shallow waters waters 6 — Sandbanks 6 — Sandbanks 8 — Artificial sandbanks 8 — Artificial sandbanks 27 CORINE code 5113 — Internal water courses 511 — Water courses 411 — Marshes and swamps 521 — Coastal lagoons 411 — Marshes and swamps 423 — Intertidal areas 423 — Intertidal areas The channels are brackish waters not feasable for irrigation purposes. Through the channels is possibile to access the island. They are only marginally connected with the island idrography. 28 93 9 — Beach 11 — Fishing valleys 12 — Water courses for irrigation 13 — Arable land 15 — Islands 16 — Settlements 9 — Beach 11 — Fishing valleys29 12 — Water courses for irrigation30 331 — Beaches, dunes, sand plains 5113 — Internal water courses 13.a — Land cultivated with violet artichoke 13.b — Cultivated land 13.c — Vineyards 21113 — Non irrigated horticulture 13.d — Greenhouses 15 — Islands 2113 — Greenhouses - 16.a — Monuments and ruins 16.b — Suburbs and villages 152 — Monuments 1122 — Discontinuous built-up areas with family houses with gardens 1121 — Discontinuous built-up areas with multiflat houses prevailingly with gardens 1123 — Discontinuous built-up areas with greenery 123 — Port areas 16.c — Scattered houses 16.d — Farms 17 — Production and infrastructural areas 17.a — Dockings 17.b — Business activities 17.c — Recreational activities: stadium and Società Remiera 17.d — Basins/wet docks 24 — Various agricultural areas 221 — Vineyards 121 — Industrial and commercial zones 142 — Sport and recreation areas 123 — Port areas 19 — Margin infrastructures 19.a — Vertical infrastructures 19.b — Inclined infrastructures 1223 — Works 1223 — Works 22 — Roads 22 — Roads 31 — Uncultivated land 31.a — Urban park 31.b — Semi-natural environment (former fishing-valleys) 31.c — Dumps 1221 — Road network and associated land 1411 — Urban parks 32 — Areas with shrub and grass vegetation 132 — Pit heaps and waste dumps 31.d — Cemetery 31.e — Construction sites 1412 — Cemetery 133 — Construction sites 31.f — Sparse vegetation 31.g — Evolving vegetation 322 — Steppes and bushes 32 — Areas with shrub and grass vegetation 5 Function identification and choice of valuation methods The valuation process requires the identification of both economic and ecological functions that allow the calculation of TEV. Our case study exhibits particularly diverse characteristics and as a consequence, multiple functions to be valued. The island shows a variety of different use destinations of its land: it has a strategic location in the lagoon, being situated close to one of the inlet connecting the sea and the wetland; it hosts many various the species on its territory and surrounding waters. To assess the productive function of the island of St.Erasmo we may refer to the value of the residential buildings, the agricultural use and related outcomes. Although not the most popular tourist target within the northern part of the Venice lagoon, St.Erasmo still holds a 29 Fishing valleys are not really used for this purposes since many years. They mostly constitues areas in rapid natural conversion. 30 The channels are not used for irrigation purposes. 94 valuable number of visitors, largely coming from the residential areas in the province of Venice and the city of Venice itself. The island performs important ecological functions to be valued, the protective function, the carbon stocked in soil, and biodiversity. GIS supports the valuation processes in different ways: georeferenced databases highlight selected relevant features of the economic valuation tasks by providing ad hoc values for the cells retaining such features or by allowing the zoning of the area using spatial elements such as distance, size, fragmentation, etc. Table 2 summarizes the functions that will be valued, the adopted GIS approach, the monetary valuation method selected for each of the relevant functions, the measurement unit for the physical quantification and data source for the monetary valuation. Table 2: Identified functions and valuation methods Functions Approach Measurement unit in physical terms Productive: Ad hoc value Buildings per square meter residential attribution Productive: Ad hoc value Produced quantities agricultural attribution Cultivated hectares Recreational Area zoning Protective Ad hoc value attribution Ad hoc value attribution Area zoning Carbon stock Biodiversity Hectare classification according to selected features Hectares within selected buffer areas Carbon tons Hectare classification according to selected features Valuation method Market price Market price Contingent valuation: use and option value Defensive expenditures Emission Trading Scheme Contingent valuation: existence value Monetary valuation data source Real estate and construction sectors Interview with farmers and INEA data Valuation study for S.Erasmo Expenditure balance for St.Erasmoworks IETA Report 2005 Valuation study for S.Erasmo The overall valuation process consists in summing up the values calculated for each of the relevant functions to get the Total Economic Value: in the following paragraphs the specific valuation procedure for each function is presented in detail in physical and monetary terms. 6 Valuation in physical and monetary terms Each function identified as relevant for the Island of St.Erasmo is valued first in physical and then in monetary terms. The following frames summarize for each function the undertaken procedure reporting the numerical results obtained, and visualizing them on the corresponding map. 6.1 Productive function The productive function on the island is composed by the different uses that characterize the territory and the basis for the productive function calculation is the land use map. Updates of the map elements and a partial reclassification of uses, when necessary, required several preparatory actions before proceeding to the valuation procedure. The monetary valuation of this function can be performed through market prices. 95 Frame 1 PRODUCTIVE FUNCTION Valuation in physical terms Land use map is the base for valuation. Hectares where agricultural and residential use take place are highlighted with special reference to the kind of cultivation and housing setting. Valuation in monetary terms Residential values are taken from territorial databases and compared with updates from real-estate agencies in Venice. Values31 range from €1,300 to €1,800/m². Higher values are attributed to village houses while lower values are attributed to scattered houses and farms. Agricultural production is valued through INEA32 estimated prices. The only peculiar and very fine product is the violet artichoke. In order to assess its price and the quantity produced, interviews were conducted within the consortium with the main producers as participants. Total Productive Value € 527,287,100 Figure 5: Productive function valued in monetary terms 6.2 Recreational function In order to value the recreational function, the basic characteristics that attract tourists and visitors need to be identified. These characteristics are then ranged according to their importance for the recreational function and mutually crossed to obtain a classification of 31 Values are referred to the second semester of 2005: this updating is necessary to incorporate an increase in the residential value (the benefits) due to the infrastructure enhancements that have recently taken place in the island. 32 INEA is the National Institute of Agricultural Economics and all data was taken from its web site http://www.inea.it/ 96 areas with higher and lower values. Recently the island of St.Erasmo has been object of study by local research institutions (CORILA) and Universities: the results of this research have been a valuable source of information. We have been able to specify the kind of recreational facilities, the typology of visitors and a monetary value estimate (Alberini et al. 2004a, 2004b). This was used to our end for the calculation of a monetary value to be attributed to each area, which we were able to individuate and map. Frame 2 RECREATIONAL FUNCTION Valuation in physical terms Identification of the main attractions for recreational purposes is spatially zoned in two ways: firstly, some ranges33 are established and buffered for those features where tourist importance depends on distance; secondly, those features34 which play a role simply existing there are located. Both types of features will be considered concurrently. Zoning of recreation values is performed through coefficient attribution. Three classes are set by combining the results of the zoning spatial queries. When the value is maximum, the class will be 1; when the value is medium the class will be 2; when the value is minimum the class will be 3 Valuation in monetary terms A contingent valuation study assessed the willingness to pay through dichotomous choice payment questions. A sample of respondents, stratified by distance from Venice lagoon was randomly drawn from residents in the Veneto region. Within the obtained mean WTP use, optional and non-use values are elicited by the classification of respondents into lagoon users, potential users and non users. In order to shift from a per person value into a per hectare value: to calculate use value, the percentage of the lagoon users (i.e. those who usually enjoy the lagoon) is multiplied by the percentage of those who typically visit St.Erasmo (yearly average percentage: 7.59 %). The result is multiplied by the share of willingness to pay related to use value (€25 per person). Regarding option value, the percentage of people familiar with St.Erasmo is multiplied by the percentage of potential users (those who are willing to visit the island: 41.88 %). The result is multiplied by the share of willingness to pay related to the option value (€60 per person). The per hectare value is then weighted differently according to the qualitative classes identified through the zoning procedure. The maximum value reflects the full value of willingness to pay (€130/ha). Medium value and minimum value report respectively the 80 % and the 60 % of the willingness to pay Total Productive Value € 41,417,482 33 Dockings and basins are critical infrastructures for the island as they represent the only way to land on it. Their distance apart affects the distribution of visitors over the island surface. Buffered areas of 500 m, 1,000 m and 1,500 m are set. 34 The considered features are: monuments and ruins, the urban park, the ‘ex-valli da pesca’ (fishing valleys) which constitute an important naturalistic element, the stadium, the branch of the Società Remiera (rowing society), lodging and feeding services. Moreover a ‘Greenways’ run is found around most of the island perimeter and aims at offering the visitor a charming landscape of lagoon sandbanks. A unique buffer of 5 m is set. 97 Figure 6: Recreational function valued in monetary terms 6.3 Protective function Given the position of St.Erasmo within the lagoon and towards the Lido inlet, the protection against high tide and flooding was considered the main component to safeguard the island environment and to control island erosion. Recently works for enhancement of the island setting were undertaken by the Magistrato alle Acque. Part of these works is directly related to the island’s protective function we want to value. Extent and the type of works are identified and then they are located and buffered in physical terms to proceed with the valuation in monetary terms, through defensive expenditures . Frame 3 PROTECTIVE FUNCTION Valuation in physical terms Assorted locations on the island require different kind of work. This information can be digitized. The main works undertaken within the island and related to environmental protection are: -margin setting and embankments that are found all around the island perimeter; -restoration of internal seaways that affect the hydrogeological setting of the island; reconstruction of sandbanks which affect the lagoon equilibrium. Valuation in monetary terms Defensive expenditures seem the most consistent approach to value this function in monetary terms. Different segments of the island required different works to be undertaken and thus different costs to attach to each patch. Total Productive Value € 345,626,750 98 Figure 7: Protective function valued in monetary terms 6.4 Biodiversity The valuation -specifically- of biodiversity shows how indicators can play such an important role in building an accounting framework for the territory. In fact, thanks to indicators and parameters, quantitative measures can be computed and qualitative classes built up. Parameters and indicators will change according to the patch they refer to: the spatial reference allows an exclusive, specific characterization and thus more reliable assessment as the location differentiate the results. The procedure proposed to value biodiversity is based on the principle that physical and biological characteristics of the each area must be strictly related to its economic value. The monetary attribution will thus change according to the selected environmental indicators, and their spatial identification. Within the lagoon complex system, the area of St.Erasmo is of special interest for its extreme heterogeneity. There are very different landscape units all around the island, ranging from external to internal lagoon habitat, to the presence of different kinds of sandbanks. The significant heterogeneity of the island can be highlighted through the valuation of biodiversity. Frame 4 BIODIVERSITY Valuation in physical terms The procedure implies the calculation of environmental indicators in order to zone the area, according to different values of the selected environmental characteristics. A precious source of information is constituted by the ‘Atlante della Laguna’ (Guerzoni et al.,2006). First of all, according to the typology and characteristics of soil an index for biotic function is attributed. Secondly, the area ‘Secca del Bacan’ proves to be remarkable under several aspects: for the presence of 99 Valuation in monetary terms phanerogams35, the concentration of some fish species36, the presence of bird species for feeding and perch purposes. Thirdly, intertidal areas37 are extrapolated thank to GIS tools. All of the environmental indicators allowed the identification of specific zone (Table 4) to which an economic value can then be attributed (Figure 8). Zoning of biodiversity breaks down into 6 classes (Table 5). The group and class hierarchy we propose is based on the single value of indicators and the presence of several features38. The existence value as derived from the CV study on St.Erasmo is a willingness to pay per person that amounts to 27 Euro: this estimate is then elaborated to calculate a per hectare value. Outside the Veneto region there are people sensitive to the Lagoon existence and the naturalistic elements that it offers. Data on the tourist flows can be used to extrapolate a potential demand by selecting the kind of facility chosen for lodging and the period of the year39. The identified percentage of the general tourist flow relevant for our valuation purpose is then processed according to the following formulas: Thresholds percentages for tourist flow= (total flow)/accounted arrivals Monetary values = [(survey data on residents and tourist flow)*(thresholds percentages)]*(Per-person WTP) Qualitative classes are ranged according to the described environmental indicators. To each qualitative class a monetary value is going to be attributed according to Table 5. Total Productive Value €186,728,400 Table 3: Relevant areas identification Gis location Motivations A Feeding and perch areas of For the whole Mediterranean area 30 % of this specie is hosted by this part Tringa totanus of the lagoon. The survival of this area is linked to nest-building B Calcari-Oximorphic High value of the biotic function Marshsol sandbanks C Ochri-Oximophic High value of the biotic function Marshsol sandbanks D Barene costituite da Ochri- Medium-high value of the biotic function Redumorphic Marshsol E Calcari-Redumorphic Medium-high value of the biotic function Marshsol sandbanks F ‘Secca del Bacan’ area Presence of phanerogams and richness of fish and bird species G Intertidal areas (b/w -0.25 One of the most important habitats within the lagoon from the ecological point of view and + 0.25 m) H Areas on St.Erasmo rich in Vegetation in evolution; areas not used for cultivation humus; marshes I Agricultural areas Terrains used for cultivation L Anthropic areas. No environmental value. 35 Vascular plants which are extremely important for the lagoon ecosystem because they guarantee the existence of benthonic and ichthyic communities. 36 The area represents also an important ‘nursery’ area for fish during their juvenile stadium. 37 Intertidal areas are peculiar environments as they host flora and fauna species which is extremely valuable from a naturalistic point of view 38 No agreed upon standard exists for lagoon habitat, in order to compare and calibrate the value of each indicators we adopt for St.Erasmo: we can only record the presence of relevant features and individuate different areas accordingly. 39 Visitors who are inclined to naturalistic elements are likely to go for excursions in the lagoon, thus spring and summer result as the best period of the year for them to come to Venice. The naturalistic attitude could similarly be extrapolated from the kind of facility chosen for lodging: stays in agri-tourisms might serve this purpose. 100 Figure 8: Biodiversity zoning according to the selected environmental indicators Table 4: Qualitative classes for biodiversity Classes Description of class elements Value attribution B, C, F Sandbanks COM and OOM, ‘Secca del Bacan’ Very high D, E Sandbanks ORM and CRM High G,A Medium-high H Velme and shallow waters, feeding areas of Tringa totanus Marsh areas on the island I Agricultural areas on the island Medium-low L Anthropic areas on the island Low Medium Table 5: Monetary valuation per classes for minimum threshold (1,000 €) Area Class Qualitative Class Value attribution Code Very high B, C 100 Value per hectare (€) 140 High D, E 90 130 Medium-high G, A 80 115 Medium H 50 70 Medium-low I 30 40 Low L 1 1.4 101 Figure 9: Biodiversity function valued in monetary terms 6.5 Carbon stock The best way to value the quantity of carbon stocked in soil would be a direct study of the area; unfortunately this option is not available and only rough estimates can be calculated. The reference study (Batjes, 1996) for such calculation relates the type of soil and its depth to the organic carbon content, and once the carbon quantity is attributed, it is possible to monetize the value of this function by adopting the price of Emission Trading Permits per ton of CO2 in Europe. Carbon stock accounts for only a little part compared to the other ecological functions presented. However it is important to identify all components of ecological functions, as each of them contribute to add value to the environmental elements that characterize the area, the ecosystem. We should not exclude one part because it does not show big numbers: one ‘small component’ combined with other ‘small components’ shapes important amounts. Frame 5 CARBON STOCK Valuation in physical terms The information from the lithological map allowed to differentiate the typology of soil within the island: arenosols is attributed on inland soil while fluvisols is attributed to sandbanks. Some rough estimates of the content of organic carbon are calculated using Batjes (1996) tables linking type and depth of soils. Valuation in monetary terms Emission Trading Scheme for Europe (IETA, 2005) seems to be the best available estimate in order to provide a price for ton of CO2 ( €15/t). Total Carbon stock value € 492,876 102 Figure 10: Carbon stock valued in monetary terms 7 Total Economic Value: results and comments Total Economic Value is calculated by summing up the different values we obtained for each estimated function. While calculating a per hectare value we must consider that a total overall surface of 1100 hectares is accounted for, including land, wetland and water areas: the calculation of the value of functions such as biodiversity and recreation takes into account a higher number of hectares, while the calculation of the value of other functions, e.g. the productive function, takes into account a smaller surface. Frame 6 TOTAL ECONOMIC VALUE Total Economic Value € 1,106,880,970 Table 6: Aggregation of each function to obtain TEV (1,000 €) Functions Economic Value (€) €/ha % value Production 527,290 480 47.6 Carbon stock 495 0,5 0.04 Recreation 106,700 100 9.6 Protection 345,630 315 31.2 Biodiversity 126,760 120 11.5 TOTAL 1,106,880 1,010 103 Figure 11: The Total Economic Value of St.Erasmo Looking at Table 6 we may see that, within the lagoon of Venice, St.Erasmo is primarily considered for its productive function which represents the highest value. However, it is important to highlight that if we consider the productive function only, we are neglecting something like half of the Total Economic Value. St.Erasmo plays a small role in driving the tourist demand, yet, not considering its recreational function may mislead the TEV of the island because this function sums up to 10 % of TEV. We should consider however, that in the future the recreational use of the island may increase substantially. The ecological functions valued for St.Erasmo represent 42.8 % of the TEV. The carbon stocked in the inland and sandbank soils accounts for the lower percentage within this function, while protection plays a very important role with the 31.2 % of the total. The biodiversity value refers to the maximum threshold: taking into account all of the limitations and difficulties in valuing this function we must note that biodiversity plays a role that overcomes tourism and recreation, both well acknowledged functions. Biodiversity, within the attempt to value ecological features, represents almost 1/3 of such a value: accounting for the protective (perceived) function and neglecting the importance of biodiversity would lead to serious underestimates. Compared to other studies (King et al. 1995, Berger 1997, Costanza et al. 1997, Pacheco et al. 2003, Brander et al. 2004), although the percentage weight of each function over the total seems in line, the actual values we calculate show wide differences in range: such variation may be in part attributed to the specificity of the island, being situated within a worldwide known and protected area. The economic values calculated for the production and recreation function of St.Erasmo reflect the existence of higher market price due to the demand condition, if compared with other insular recreational and residential sites. The existence value calculated for non-use value also reflects this worldwide attention for the survival of the precious historical heritage within the lagoon. 104 8 Conclusions In this study we attempt to calculate the TEV of the island of St.Erasmo in the Lagoon of Venice: the exercise shows criticalities and it offers important insights. Total Economic value is about one billion euros for a surface of approximately 1,100 hectares, covering land, sandbanks, wetland, and water basins: 47 % of this value represents the productive function of St.Erasmo, while the protective function is about 30 % and biodiversity sums up to 11 % of TEV which is higher than recreational function (9 %). Specifically, we note that the protective function is quite important for the existence of the lagoon, and the result we get from the calculation of biodiversity shows how valuable the biological and landscape heterogeneity which is a distinctive feature of St.Erasmo is. The methodology we chose has three relevant features: it is based on environmental accounting framework and it is linked to actual land cover and land uses, and the assessment of land is built in accordance to environmental accounting frameworks, linking the classification of items and codes to European standards. Environmental accounting is a very useful tool to quantify and to value resources for many different uses: as a tool in valuation processes, in a Benefit-Cost analysis exercise, for planning necessities and development strategies. The methodology we propose is made up of few simple steps in which calculation techniques can change according to the resource we are valuating, or the kind of land cover and use that it is being considered. Behind such a simple procedure a complex meta-data information exists. For comparison purposes, both overtime and with other valuation studies, a careful analysis of meta-data guarantees robustness and coherence of results. Within this framework, an important role is played by the use of GIS tools as shown in Table 7: the spatial element creates important differences in the value calculation, especially when dealing with the ecological function, because the physical and biological features will determine the extent of monetary attribution. It helps transparencies in the calculation and it represents a way to reduce arbitrariness and to improve the rigor in utilizing estimates which, even though involving many subjective valuations because of the way they are calculated, are nevertheless useful when reframed in monetary terms and in a comparative incremental approach. Table 7: Role of georeferencing processing in valuation procedure for the St.Erasmo island Functions Productive Physical Units Monetary Units Recreational Physical Units Carbon Stock Protective Physical Units Physical Units Monetary Units Biodiversity Physical Units GIS Utilization Reclassification of land (ha) according to the new updated remote sensing images and codification according to the CORINE LC/LU Different market prices (€) applied to different residential locations and to different agricultural cultivations. Different qualitative classes identified on users’ profile for that specific area, related to factors such as distance from dockings and basins, trails and landscape features, refreshment sites, monuments. Soil: different quantities (t) according to different soil type and depth. Identifications of the critical areas (ha) on the island where safeguard actions against floods is feasible to be undertaken. Different defensive expenditures (€) applied to the different areas identified on the island according to the kind of work required for the specific location. Different values of environmental indicators based on biotic functions, importance for bird and fish species, location of intertidal areas etc.. 105 Moreover, an attempt is made to value within environmental accounting framework the challenging issue of biodiversity by making the monetary valuation, although calculated using stated preferences, dependent from environmental indicators values. The results obtained for St.Erasmo, although open to improvements, constitute a new attempt to identify and value the components of economic value. It would be interesting to find out how these results might change when new human activity and their impacts on the actual ecological setting are taken into account, because changes on the physical features will directly influence the monetary values. The composition of the value of different functions within TEV will change and the calculation of each effect on each function may produce helpful results for policy planning and decision making. The empirical application posed several questions: to begin with the choice of the patch unit, and the appropriate scale to use given the necessity to value an extremely varied, fragmented semi-natural environment, where anthropic elements historically have played an important role. Some crucial decisions had to be taken regarding the flexibility in defining the most appropriate surface to be accounted for when calculating the different functions and regarding how to use ‘per person value’ in calculating a per-hectare value. The choice of environmental indicators used to build a hierarchic range for monetary attribution was also a challenge, given that there is no reference scheme at international (or national/sub-national) level. This study is only a starting point and more applications on different areas, and over different scales are needed to build up confidence and reliability of this kind of exercise; only by successive refinements may we check and distinguish what is robust and coherent and what requires major improvement from what need to be rejected in the methodology and its application. Within these developments, GIS applications for economic valuation remain a strategic tool in integrating economic valuation and policies effects when planning the territory. 9 Acknowledgements Special thanks are due to Mauro Manfrin, Master candidate in the Department of Planning, University of Venice-IUAV, for his precious support. 10 1. 2. 3. 4. 5. 6. 7. 8. References Alberini A., Longo A., Rosato P., Zanatta V. (2004a) Il valore di non uso nell’analisi dei costi e dei benefici della salvaguardia ambientale, Programma di Ricerca Corila 2000-2004 Linea di Ricerca 1.1, All07 working paper. Alberini A., Galvan A., Longo A., Rosato P., Zanatta V. (2004b) Information and Willingness To Pay in a contingent valuation study: the value of St.Erasmoin the lagoon of Venice, Programma di Ricerca Corila 2000-2004 Linea di Ricerca 1.1, Val01 working paper. Alberini A., Rosato P., Turvani M. (2006) Valuing complex natural resource systems. The case of the lagoon of Venice, Edwrd Elgar Publishing. APAT (2006) Il Risarcimento del Danno Ambientale: aspetti teorici e operativi della valutazione economica, APAT - Servizio Stampa ed Editoria,Ufficio Pubblicazioni, Roma ARPAV (2004), Carta dei suoli del bacino scolante in Laguna di Venezia, Osservatorio Suoli e Rifiuti. Bartelmus P. (2006) ‘SEEA-2003: accounting for sustainable development?’ in Ecological Economics (article in press) doi:10.1016/j.ecolecon.2006.09.008. Bateman I. J., Lovett A. A., Brainard J.S. (2003), Applied Environmental Economics. A GIS approach to Cost-Benefit Analysis, Cambridge University Press. Batjes N.H. (1996), ‘Total carbon and nitrogen in the soils of the World’ in European Journal of Soil Science, n.47. 106 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. Brander L.M., Florax R.J.G.M., Vermaat J.E. (2004) The Empirics of Wetland Valuation: A Comprehensive Summary and a Meta-Analysis of the Literature, paper presented at the EAERE conference. Boyd J. (2006) ‘Nonmarket benefits of nature: what should be counted in green GDP?’ in Ecological Economics (article in press) doi:10.1016/j.ecolecon.2006.06.016. Costanza R., d'Arge R., de Groot R., Farber S., Grasso M., Hannon B., Limburg K., Naeem S., O'Neill R., Paruelo J., Raskin R., Sutton P., van den Belt M., (1997) ‘The value of the world's ecosystem services and natural capital’ in Nature, 387253-260. De Groot R.S., Wilson M.A., Boumans R.M.J. (2002) ‘A typology for the classification, description, and valuation of ecosystem functions, goods, and services’ in Ecological Economics , n.41. Defrancesco E., Rosato P., Rossetto L., Candido A., La Notte A. (2005), ‘Valuing environmental damage: an integrated economic framework’ in Proceedings of the International Conference The Multifunctional Role of Forests.Policies, Methods and Case studies, Padova 28-30 Aprile 2005 ,in corso di stampa. European Environmental Agency (2006), Land Accounts for Europe 1990-2000. Towards integrated land and ecosystem accounting, no. 11/2006, Copenhagen. Guerzoni S. Tagliapietra D. (2006) Atlante della Laguna, Venezia fra terra e mare, Marsilio editore. Hawkins K. (2003), Economic Valuation of Ecosystem Services, University of Minnesota. Heal G. (2006) ‘Environmental accounting for ecosystems’ in Ecological Economics (article in press) doi:10.1016/j.ecolecon.2006.09.009. IETA e World Bank (2005), State and Trend of the Carbon Market, Washington D.C. ISTAT (2001), Censimento della popolazione nel Veneto, Direzione Sistema Statistico Regionale. IUCN, The Nature Conservancy, The World Bank (2004), How Much is an Ecosystem worth? Assessing the economic value of conservation, working paper. King, D.M., Bohlen. C.C (1995). The cost of wetland creation and restoration, Technical Report DOE/MT/92006-9 (DE95000174), U.S. Department of Energy, Washington, D.C. INSPIRE Environmental Thematic Coordination Group (2002), Environmental Thematic User Needs Position Paper, version2, Editor Arvid Lillethun, EEA. La Notte A. (2005), ‘The potential use of geographic information technology in environmental accounting frameworks: a proposal’ in Defrancesco E., Galletto L., Thiene M., Food, Agriculture and the Environment, FrancoAngeli Editore, Milano. Louis Berger and Associates. (1997) Costs for wetland creation and restoration projects in the glaciated Northeast, U.S. Environmental Protection Agency, Region 1, Boston, Massachusetts Millennium Ecosystem Assessment (2005) Ecosystem and Human Well-Being: Wetlands and Water synthesis, World Resources Institute, Washington D.C. Pacheco A.I., Tyrrell T.J. (2003) The economic value of Narragansett Bay. A Review of Economic Studies, working paper, Department of Environmental and Natural Resource Economics, University of Rhode Island, Kingston. Schoer K. (2006) Sustainable Development Indicators and Environmental-Economic Accounting, Paper presented at the Meeting of the UNCEEA, New York 23-24 June 2006. Turner R. K., Brouwer R., Georgiou S., Bateman I.J. (2000), Ecosystem Functions and Services: an integrated framework and case study for environment evaluation, CSERGE working paper GEC 2000-21. United Nations Statistical Division, European Commission, International Monetary Fund, Organization for Economic Co-operation and Development, World Bank (2003) Integrated Environmental and Economic Accounting 2003, 2003, Studies in Method, Handbooks of National Accounting (ST/ESA/STAT/SERF/Rev.1) 107 Translating Ecosystem-Services Science into Guidelines for Brazilian Decision Makers Eduardo H. Ditta,b, Susana Mouratoa, Jonathan D. Knighta a Center For Environmental Policy, Imperial College London, UK Corresponding author Eduardo H. Ditt: [email protected] b IPÊ – Instituto de Pesquisas Ecológicas, Nazaré Paulista, SP, Brazil 1 Introduction The Atlantic Forest is one of the most threatened biomes in the world. Historically it covered more than 1 million square kilometres of land in Brazil, but today is reduced to less than 8 % of its original distribution (Myers et al., 2000; Morellato & Haddad, 2000). Within its domains there is one of the largest continuous urban areas in the world: the Great São Paulo, with more than 14 million inhabitants. More than 50 % of the water consumed in São Paulo is provided by the Cantareira Water System, which is formed by 4 inter-connected lakes. They have the capacity to store approximately 1 billion cubic metres of water. The current study was conducted in an area of 9,000 hectares that includes 188 catchments around one of these lakes: the Atibainha Reservoir (Figure 1). Figure 1: Study area: lands around the Atibainha reservoir, eastern São Paulo State, Brazil Remnants of Atlantic Forest occupy 50 % of these lands and their conservation in the long term depends upon a combination of environmental law enforcement and the development of economic incentives for conservation. One potential economic incentive could be a mechanism of payments for ecosystem services. The principle of this mechanism is that land users who provide ecosystem services should be compensated, and the beneficiaries who receive these services should pay for their provision (Pagiola et al., 2005). The current study aims to contribute to the development of such a mechanism by mapping and analysing the availability of ecosystem services and by translating scientific information about ecosystem services into guidelines that can be used by decision makers. 108 2 Assessment of ecosystem services Among the myriad of ecosystem services provided by remnants of Atlantic Forest two have been selected as the main focus of this study: mitigation of runoff sediment delivery in the water reservoir; and mitigation of climate change through retention of carbon stocks in the above ground biomass of trees. Local physical conditions such as slope, land use, and type of soil were assessed to quantify the distribution and abundance of the ecosystem services from which the economic values of these services were determined. By using the mapping ecosystem services approach (Troy & Wilson, 2006), the results were entered into a geographic information system for the construction of economic value maps of the ecosystem services. 3 Sediment delivery in the reservoir The MUSLE — Modified Universal Soil Loss Equation, that computes runoff, soil erodibility, slope, and land use (Williams, 1975), was applied for estimating the amount of sediment that can be delivered in two hypothetical land use scenarios. The first scenario is the study area entirely occupied by native forests. The second is the study area entirely occupied by pastures. The difference in the estimates of sediment delivery between the two hypothetical scenarios, divided by the total area of the 188 catchments around the Atibainha reservoir was assumed to be the contribution of forests to the mitigation of sediment delivery in tons of sediment per hectare. This value was multiplied by the area occupied by forests in each catchment and the product obtained refers to the service that is delivered by forests in preventing sediment delivery in the reservoir. Therefore each catchment was assigned its respective estimate of prevention of sediment delivery. In order to interpret these estimates in economic terms the following procedures were adopted: 1. The estimated cost of the construction of the Cantareira System was assumed to be R$2 billion or U$930 million (Andriguetti, 2004); 2. The sum of the volume of water that can be stored in the reservoirs was assumed to be 988,000,000 m3 (Braga, 2004); 3. The cost of the construction of the water storage system per cubic meter was calculated as follows: U$930 million / 988,000,000 m3 = U$0.94/m3; 4. If the density of soil sediments is assumed to be 1.2 tons/m3, the replacement cost of the capacity of water storage that is lost when 1.2 tons of sediment are delivered in the reservoir is U$0.94. Therefore, the economic value of the prevention of sediment delivery provided by forests is 0.94 / 1.2 = U$0.78 per ton of sediment; 5. Each catchment was assigned an economic value through multiplication of U$0.78 by its respective estimate of prevention of sediment yield. 4 Carbon storage in biomass of trees Carbon storage in biomass of trees was estimated through a combination of interpretation of aerial photographs with field survey of vegetation. In the aerial photographs two classes of native forest, named “young forests” and “old forests” could be distinguished and mapped. Data of vegetation of these two classes of forests have been collected in the field, using the quarter point method (Martins, 1993). The following variables were considered: distance of the trees from the sampling points of the quadrants; height of trees; and diameter of their trunks at 1.30 metres above ground. These data were used for calculating: the average area occupied by each tree, corresponding to the squared distance of the trees from the sampling 109 points; the number of trees per area; and the average above ground volume of trees, corresponding to the product of their height by their basal area. Only trees with circumference higher than 17 centimetres were considered. The above ground biomass density was calculated using the equation of Brown (1997), expressed by: (1) AGB = VOB*WD*BEF, where: AGB (t/ha) = above ground biomass; VOB (t/ha) = average above ground volume of trees per area; WD (t/m3) = wood density; BEF = biomass expansion factor (ratio of biomass density of aboveground components of the forest to the biomass density of the inventoried volume of trees). The value of wood density was assumed to be 0.6 ton/ m3. This is the mean suggested by Reyes et al. (1992) for closed forests in tropical America. The biomass expanded factor was determined using the formula BEF = Exp{3.2130.506*Ln(BV)}, where BV = VOB/ha (m3/ha)*WD(t/m3). Assuming that carbon corresponds to 50 % of forest biomass (Brown, 1997), the estimated values of biomass in young and in old forests were divided by 2 for determining their respective estimate of carbon stocks above ground per hectare. The attribution of economic values to the service of carbon storage was based on the marginal cost per unit of CO2 emitted over a decade suggested by Fankauser (2005), i.e. U$20.00. 5 Economic value maps and their application Results of the ecosystem services assessments described above were used to produce the economic value maps illustrated in Figure 2. The map on the left is a classification of the catchments according to the economic values of the contribution of their current land uses to prevent sediment delivery in the reservoir. Variations in these values are due to combination of bio-physical conditions encountered in these catchments, such as the slope and the size of the area occupied by forests. In one extreme, the value of this service is higher than U$30,000.00/year because there is a large amount of forests in areas highly suitable to sediment delivery. In the other extreme the prevention of sediment delivery is reduced and the estimated economic value is under U$1,000.00/year. The map on the right expresses the economic values of carbon storage in the two classes of vegetation. In young forests the estimated value is U$517.00/hectare/year, and in old forests it is U$656.00/hectare/year. By revealing the economic values of the two ecosystem services at any point of the study area, these maps can be overlapped with delineation of rural properties, in order to determine how ecosystem services are provided by land owners. The obtained information in a geo-referenced basis will facilitate the development of mechanisms to compensate farmers who maintain the native forests in their properties. One possible structure for such mechanisms is illustrated in Figure 3. The ecosystem services providers may be organized in the form of a cooperative. The governance of such mechanisms may occur through a committee of payments for ecosystem services that will be in charge of bridging the ecosystem services providers with the sources of payments. Such sources must be diverse, 110 including: government; private companies; non governmental organizations; international funds; carbon neutralization; credits of carbon; among others. Further to their role in informing conservation policy in the Atlantic Forest, the procedures developed in this study for assessing and producing maps of ecosystem services can be adapted to other regions of the world. Therefore they constitute a new tool for supporting interventions in landscapes associated to choices that minimize losses on human welfare. Figure 2: Economic value maps of ecosystem services Figure 3: Proposed mechanism of payments for ecosystem services 6 Acknowledgements We are grateful to the following institutions that supported this research: USAID — United States Agency for International Development; IPÊ — Instituto de Pesquisas Ecológicas; IEB — Instituto Internacional de Educação do Brasil; IFS — International Foundation for Science; 111 EFN/WWF — Russell E. Train Education For Nature Program; Whitley Fund for Nature; ORS — Overseas research Scheme. 7 References 1. Andrigueti, E.J. O Maior desafio é a manutenção da qualidade das águas. Interview for Agência de Comunicação Mídia Ambiente, Associação Global de Desenvolvimento Sustentável — AGDS. 16/07/2004. http://www.agds.org.br/midiaambiente/entrevistas07_2.asp 2. Braga B. P. F., 2001. Integrated urban water resources management: A challenge into the 21st century. International Journal of Water Resources Development, 17:581-599. 3. Brown, S. 1997. Estimating Biomass and Biomass Change of Tropical Forests: a Primer. (FAO Forestry Paper - 134). 4. Fankhauser, S. Valuing Climate Change: the economics of the greenhouse. EarthscanPublications Ltd, London. 1995. 5. Martins, F.R. Estrutura de Uma Floresta Mesófila. Editora da Unicamp, Campinas. 1993. 6. Morellato L. P. C. and C. F. B. Haddad, 2000. Introduction: The Brazilian Atlantic Forest. Biotropica, 32:786-792. 7. Myers N., R. A. Mittermeier, C. G. Mittermeier, G. A. B. Da Fonseca, and J. Kent, 2000. Biodiversity hotspots for conservation priorities. Nature, 403:853-858. 8. Pagiola S., A. Arcenas, and G. Platais, 2005. Can Payments for Environmental Services Help Reduce Poverty? An Exploration of the Issues and the Evidence to Date from Latin America. World Development, 33:237-253. 9. Reyes G, Brown S, Chapman J, Lugo AE (1992) Wood densities of tropical tree species. Gen Tech Rep SO-88. USDA Forest Service, New Orleans. 10. Troy A. and M. A. Wilson, 2006. Mapping ecosystem services: Practical challenges and opportunities in linking GIS and value transfer. Ecological Economics, 60:435-449. 11. Williams, J.R. Sediment yield prediction with universal equation using runoff energy factor. In: Present and prospective technology for predicting sediment yields and sources. USDA-ARS Handbook S-40, 1975. p244-252. 112 Integrating Sustainable Development Indicators (SDIs) for Sustainable Built Environment Assessment Yangang Xinga*, Mohamed A. El-Harama, Jan Bebbingtonb, R. Malcolm W. Hornera a Construction Management Research Unit, School of Engineering and Physical Sciences, University of Dundee, Scotland, UK *Corresponding autor: [email protected] b Centre for Social and Environmental Accounting Research, School of Management, University of St Andrews, Scotland, UK 1 Introduction and background Sustainable built environment is a very complex phenomenon. It cuts across many difference sectors. New sustainable built environment design process demands that every product, process, and procedure be questioned and reviewed from a new perspective, one that includes the ecological and human health impacts of design decisions, and it can also lead to more pleasing and productive environments for users, combined with savings for the owner. The old decision (Figure 1.a) model is based on a balance between cost, schedule and quality, however designers also need to become equally familiar with the effect their decisions have on the environmental and human society. The new decision model (Figure 1.b) integrates natural capital, social capital, whole life performance and schedule as well as whole life cost as deliberate considerations for the decision making process in the same way that time, cost and quality are integral to project decision today (Mendler et al., 2006). Figure 1: Paradigms in building design Whole life Cost Cost Whole life Schedule Schedule Whole life performance Quality Social Capital Natural capital b. new decision model a. old decision model Generally speaking, indicators are an effective way of packaging and conveying performance information to target user groups. They serve to summarise large or complex sets of performance-related data in a manageable quantitative or qualitative form. For example, indicators are defined as: means devised to reduce a large quantity of data down to its simplest form, retaining essential meaning for the questions that are being asked of the data.....if the [indicator] is designed properly, lost information will not seriously distort the 113 answer to the question (Mitchell, 1996). For example, three major uses of indicators have been identified (Smeets and Weterings, 1999, Lawn, 2006): - To supply information on environmental, social and economic problems, allowing policy-makers to prioritise issues. - To support policy development and optimise the assignment of resources to addressing priority issues. - To effectively monitor the effects of policy responses. Principal objective in developing indicators and measuring performance of a built environment is to generate information on which future action (i.e. building design, urban policies making and management initiative) can be based. Major objectives of this research is to determine what impact should be included in assessing sustainable built environment; to develop a framework structure to enable integrations of SDIs scattering in the different dimensions; to integrate international/national/local SDIs, construction sector’s and company’s indicators, indicators used in building assessments tools and other indicators, such as wellbeing and happiness indicators for sustainable built environment assessment. 2 Methodological frameworks for developing SDIs Frameworks are important for linking information pertaining to different areas, and for relating indicators to analytical questions and policy issues. Different frameworks are currently used in the various areas of sustainable development, with the choice of framework varying according to the purpose of the measurement. The following frameworks have been identified and discussed: 2.1 Cause-effect analytical frameworks In these models cause-effect relationships are identified and corresponding indicators are monitored. One example of analytical frameworks is the Pressure – State – Response (PSR) model, originally developed in the context of OECD work on environmental policies and reporting, and variants of it such as the Driving Force – Pressure – State – Impact – Response (DPSIR) model used by the European Environment Agency (EEA) or the Driving Force – State – Response (DSR) framework used initially by the UN Commission on Sustainable Development (UNCSD) in its work on sustainable development indicators. According to recent OECD work, frameworks for measuring sustainable development should: - Integrate the economic, environmental and social dimensions of sustainable development. - Have sound conceptual foundations. - Capture key information needed to measure sustainable development by selecting indicators. - Clarify relationships between different indicators and between indicators and policies. The Pressure – State – Response (PSR) Model considers that human activities exert pressures on the environment and affect its quality and the quantity of natural resources (“state”); society responds to these changes through environmental, general economic and sectoral policies and through changes in awareness and behaviour (“societal response”). The PSR has the advantage of highlighting these links, and helping decision makers and the public see environmental and other issues as interconnected. The PSR model provides a classification into indicators of environmental pressures, indicators of environmental conditions (state) and indicators of societal responses (Bowen and Riley, 2003). 114 The Driving force-Pressure-State-Impact-Response (DPSIR) model is an extension of the PSR (Pressure-State-Response) model, developed by Anthony Friend in the 1970s, and subsequently adopted by the OECD’s State of the Environment group. “After long debate among scientists and indicator experts, the DPSIR model has been adopted as the most appropriate structure environmental information by most Member States of the European Union and by international organizations dealing with environmental information, such as Eurostat, the European Environment Agency…(Eurostat, 2000)” PSR based models have proven particularly useful in highlighting relationships between the environment and the economy. Another example is the Resource – Outcome Indicator Approach developed in the context of OECD work on sustainable development (OECD, 2001). The approach requires measures of both how well we are preserving our assets (resource indicators) and how well we are satisfying current needs (outcome indicators). An important element of this approach is its extension of the traditional economic balance sheet to consider a broader range of economic, environmental and social assets. 2.2 Participatory approaches It has been described as a ‘‘bottom-up’’ approach with significant participation from the stakeholders affected by the SDIs (Rosenstrom and Kyllonen, 2007, Bell and Morse, 2001). It is argued there are wide needs for active public participation in the characterisation of ‘‘sustainable development’’ and in the appraisal of ‘‘sustainability’’: “the principles of sustainability science demand ongoing collective and reflexive learning in order to inform the implementation of sustainability principles (Mayumi and Glampietro, 2006, Blackstock et al., 2007)” . It is recommended to develop SDIs in cooperation with a wide-range of stakeholders who are either intended users of the indicators or who will be affected by their application (Maclaren, 1996). 2.3 Top-down approaches ‘Top-down’ approach also referred to as ‘external’ or ‘expert driven’ mode by natural and social scientists and planners. An ‘expert-led’ process of indicators generation may, at least on the surface, be thought to appeal to managers and policy makers. Top-down indicators established by experts or managers are seldom grounded in the experience of the affected communities and stakeholders, and may represent a last minute ‘add-on’ to pre-existing lists or longstanding sustainability management objectives, such as National Headline Indicators (Fraser et al., 2006). 2.4 System thinking approaches It has feature of analysis in the diagnosis of the regional system (Álvarez-Arenas and Mirón, 2006, Xing and Dangerfield, 2005) placing particular emphasis in its systemic character, and then to transfer the richness and complexity of SD relations to a conventional hierarchical indicators thematic framework, based on a reasonable reduced number of trends, which is oriented by policy priorities. 115 3 Integrated assessment categories for sustainable built environment assessment This section intends to simplify and consolidate the existing sustainable building assessment categories into integrated assessment criteria. This section includes a systemic review of existing sustainability development Indicators, prioritisation through simplification and consolidation, and the integrated assessment categories in sustainable built environment assessment. 3.1 A review of existing SDIs The review of sustainability assessment indicators is carried out to provide an understanding of how these systems work and inform how a sustainability assessment tool should be developed. This will provide a useful input for developing assessment categories for a built environment. The principal purpose of the analysis is to determine what impact should be included in sustainable built environment assessment 3.1.1 Ecological /environmental indicators Various indices have been developed to assess the biophysical status of the system, such as land and water efficiency e.g. livestock units / ha & livestock units / mm rainfall (Dore, 1997); ecological footprint (Rees, 1992, Wackernagel and W., 1996, Giljum et al., 2006); emergy (Odum, 1996) and exergy (Karakilcik and Dincer, 2007). In the following sections: applications of ecological footprint, emergy and exergy in built environment are discussed. Ecological footprint (Rees, 1992, Wackernagel and W., 1996, Giljum et al., 2006) analysis approximates the amount of ecologically productive land, sea and other water mass area required to sustain a population, manufacture a product, or undertake certain activities, by accounting the use of energy, food, water, building material and other consumables. The calculations used typically convert this into a measure of land area used in 'global hectares' (gha) per person. The EF has been widely praised as an effective heuristic communication and awareness raising tool as well as a pedagogic device for presenting current total human resource use in a way that communicates easily to almost everyone. Everyone understands land area as a numeraire. Footprinting is thus in widespread use in education, public policy and awareness campaigns (Jenerette et al., 2006a, Jenerette et al., 2006b, Munda, 2006, Muniz and Galindo, 2005). Individuals, organizations and decision-makers are more easily able to explore the impact of their actions. However, since the formulation of the ecological footprint, a number of researchers have mentioned the oversimplification in ecological footprints of the complex task of measuring sustainability of consumption (Giljum et al., 2006). In particular, aggregated forms of the final ecological footprint make it difficult to understand the specific reasons for the unsustainability of the consumption of a given population, and to formulate appropriate policy responses. In response to the problems highlighted, the concept has undergone significant modification. These modifications include: use of input-output analysis, renewable energy scenarios, land disturbance as a better proxy for sustainability, and the use of production layer decomposition, structural path analysis and multivariate regression in order to reveal rich footprint details. Comprehensive input-output-based ecological footprints are now calculated in many countries, and applied to populations, companies, cities, regions and nations. The concept of ‘emergy’ was developed during early 1980s (Odum, 1996). It refers to the energy embodied in the creation and maintenance of a factor or process, as a means of quantifying the relative contributions of different components to the operation of a hierarchy. Odum’s theory predicts that the control of faster components by slower components is 116 reflected in the latter’s higher ‘emergy’ transformity values. Transformity values are efficiency ratios of total ‘emergy’ to actual energy, normalized in solar-equivalent joules that enumerate a process’ relative capacity to influence system behaviour. As such, this theory provides a quantitative framework for relating building design to its material components, based on their relative contributions to the functions of an ‘ecosystem’ that includes the built environment and the materials and processes that sustain it (KIBERT et al., 2000). Emergy were also applied to analyse urban development (Lomas et al., 2007, Pulselli et al., 2007, Huang et al., 2007b, Huang and Chen, 2005). Exergy is defined as the maximum amount of work which can be produced by a system or a flow of matter or energy as it comes to equilibrium with a reference environment (Huang et al., 2007a). “It appears to be a potential tool for design, analysis, evaluation, and performance improvement … (Karakilcik and Dincer, 2007)”. Several researchers have applied the exergy concept to the built environment (Sakulpipatsin et al., 2006, Shukuya, 1994) and the urban development context (Balocco et al., 2004, Suganthi and Samuel, 2000, Schaumann, 2007, Akpinar and Hepbasli, 2007, Gunerhan and Hepbasli, 2007, Hepbasli, 2007). Exergy recognizes that the energy that is carried by substances can only be used ‘down’ to the level that is given by the environment. Exergy analysis permits many of the shortcomings of energy analysis to be overcome. Exergy analysis acknowledges that, although energy cannot be created or destroyed, it can be degraded in quality, eventually reaching a state in which it is in complete equilibrium with the dead state. 3.1.2 Indicators linking to a broader socio-economic and political environment The importance of linking ecological /environmental indicators to a broader socio-economic and political environment was recognised (Kemp et al., 2001). In order to link indicators to a broader social-economic and political indicator, a range of different sustainability development indicators — SDIs which are shown in Table 1, was critically reviewed. This review undertook in three parts. An initial section will review international, national and local initiatives to develop sustainable development indicator systems. This will be followed by a review of SDIs for construction sector and built environment. The last part will be other SDIs systems including wellbeing indicators and project EIA indicators. The list of SDIs is not an exhaustive, only the index systems with detailed assessment criteria and reliable data resources were selected, other schemes with merely generic principles were not presented at this stage. Table 1: A set of sustainability development indicators International, national and local headline sustainable development indicators 1. UNCSD Theme Indicators 2. European Common Indicators 3. UK Framework Indicators 4. Scottish Indicators 5. Australian Headline Sustainability Indicators 6. Japanese Sustainability Indicators 7. Bristol City Council Indicators 8. Plymouth City Council indicators Construction related indicators 9. BREEAM 10. LEED® 11. HK-BEAM and CEPAs (Cole, 2006) 12. GBTool® (IISBE, 2005) 13. BEES® 14. Design Quality Indicator 15. SPeAR® 16. DTI Sustainable Construction Strategy Report 17. Sustainable Construction: Company Indicators 117 Other Indicators — wellbeing, happiness and others 18. Measure of Economic Welfare (MEW) (Nordhaus and Tobin, 1973) 19. Index of Sustainable Economic Well-being — ISEW 20. Genuine Progress Indicator (GPI) — USA 21. Happy Planet Index —HPI 22. The EIA and SEA/SA 23. Dow Jones Sustainability Indices 24. Sustainability Assessment Model 3.2 Simplification and consolidation An ever-increasing number of environmental, social and economic indicators are being developed (Table 1). Generally, these indicators are either used in isolation to analyse the performance of projects, companies, sectors or countries as they relate to one of the three dimensions, or, increasingly, in combination as a means of measuring progress towards and away from sustainability. However, the simple combination of sets of environmental, economic and social performance indicators does not necessarily represent the creation of indicators that are capable of truly describing the extent to which a construction project is contributing or detracting from sustainable development goals over time from an intergenerational equity perspective. To address all the impacts generated from a building life cycle is very difficult task. However, a holistic picture of the all impacts, which are identified, is essential for deliver an integrated assessment tool. In turn, while indicators allow the complexity of events and trends to be reduced, and more easily understood and managed, there is a danger that the proliferation of indicators and different approaches to their development and use could ultimately undermine their effectiveness. At the broadest level, the proliferation of indicators and methodological approaches is driving the need to define common methodological standards and indicator sets, and to develop appropriate mechanisms for the incorporation of existing indicators and methodologies into these commonly accepted frameworks. Based on the review of the 24 sets of SDIs, the following Table 2 shows the most commonly used SDIs and their frequency. Table 2: List of the most commonly used SDIs and their frequency (Xing et al., 2007) Governmental indicators (8 sets) Internal impacts Whole life costs Whole life revenue External Impacts Economic impacts Economic growth Employment Economic capacity Environmental impacts Greenhouse gases emissions Pollution Waste Nuisance Biodiversity Natural resources depletion Materials Land Water Construction related indicators (9 sets) Others (7 sets) Total (24 sets) 3 1 1 1 4 2 8 8 8 2 3 3 6 6 5 16 17 16 8 8 8 8 8 9 9 9 9 7 6 7 5 3 2 23 24 22 20 17 8 8 8 9 9 9 3 3 3 20 20 20 118 Fossil fuel reserves Social impacts Crime Mobility Education Community participation Satisfaction Health Housing condition Poverty Family Total 8 9 4 21 8 7 8 8 7 7 7 7 2 157 3 3 2 3 1 8 2 2 6 2 2 2 3 6 3 7 3 89 17 12 12 13 11 21 12 16 5 361 115 In the Integrated assessment categories for sustainable built environment assessment (Xing et al., 2007), the performance indicators are grouped into two categories: internal impacts and external impacts. The internal impacts include whole life cost and whole life revenue. The external impacts include, environmental impacts, social impacts and economic impacts. Figure 2: Integrated assessment categories for sustainable built environment assessment Impacts Internal impacts Whole Life Value Whole Life Cost External impacts Environmental impacts Social impacts Natural resources depletion Whole Life Income Economic impacts Multiplier Effects of Jobs Direct Impacts Education Water Community Participation Materials Land Biodiversity Emissions Building Functionality (es) Fossil fuels Health Leisure Services Housing Provisions Social Wellbeing Gaseous Safe/security Particulate Health Fluid Physical Interconnectivity Wave Virtual Interconnectivity Waste 4 Further works: developing an operational model for analysing environmental impacts of a building. In this section an operational model for analysing environmental impacts of a building is presented. There are three steps towards a sustainability accounting model as shown in Figure 3: Step 1: Materials flow analysis. In this step a basic account of materials uses will be created. For sustainable building assessment, bill of quantities and other documents will be analysed. 119 Step 2: Physical impacts analysis. In this step a basic account of physical or chemical impacts (e.g. emissions) will be created. Multipliers, e.g. emission factors will be developed and utilised. Step 3: Monetization of the physical impacts. In this step a basic account of monetised impacts will be created. Multipliers, e.g. damage costs per unit, will be developed and utilised. Figure 3: Operational model — Physical accounts and multipliers SDIs (Environmental Impacts) Multiplier (tones/tones) (e.g. emission factors) Physical Impacts (unit tones) +Resources extraction +Emissions +waste Materials and Energy Flow Accounting (unit tones) +Materials use (tones) +Labour use Multiplier (£/tones) Monetized impacts (unit £) +Damage cost +Benefits Bill of quantities 5 Discussion and conclusion Trying to measure sustainability of a built environment is difficult given the complex nature of related eco-social systems and difficulty in discerning the relationships between built environment and eco-social systems. It has been argued that there is likely no one ‘‘best measure’’ for assessing sustainability (Wilson et al., 2007). Sustainable development varies according to needs, priorities, and values. Certain measures may be more suitable for certain contexts. 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Pukyně in Ústí nad Labem, Czech Republic *[email protected] 1 Introduction Since the conception of sustainability has found its solid position in environmental research, it has been applied on different types of landscapes through various methodical approaches (Izakovičová, Miklós, Drdoš 1997; Bastian, Steinhardt 2002 eds.). However, when looking at the practical results of these studies which often lack the application of complex perception of a landscape, it seems to be necessary to maintain in finding other, more efficient theoretical and methodical approaches. As it was formerly discussed, one of these is the reconcilement of physical and social data by mean of geographic information systems (e.g. Huby, Owen, Cinderby 2006) or, the improvement of landscape structure analyses (land use changes or fragmentation analyses) towards functional assessments of environmental stress and stability (necessity of functional assessments is explained by Hobbs 1997; practical examples are given e.g. by Šúriová, Izakovičová 1995; Durilová, Saksa 2003). Lately many geographers began to appreciate also the historical sources and their use for long-term based studies of a landscape change, which have an efficient and intensively developing tool in geoinformatic 2-D and 3-D modelling and visualisation (e.g. Spradley, Welch 1998; Tress, Tress 2003). The present contribution is based on research project which is being solved at the Department of Geography, University of J. E. Purkyně in Ústí nad Labem (Czechia), and which is focused on creating the methods of environmental stress assessment for the purposes of decision makers in the Czech Republic (Anděl et al. 2006). The method of assessment was already created and presented in several works (e.g. Balej 2004; Balej, Anděl, Oršulák 2006) and is recently tested in model areas and combined with other methods to improve its potential for sustainable landscape planning. Main aim of this paper is to present the potential and limits of combined environmental stress assessment and long-term modelling of urban landscape changes as a base for sustainable urban landscape planning. This intention works on assumption that if we recognize the past landscape character in relation to the processes acting in this landscape and their concrete responses, than we can recommend the optimal future developmental directions for this landscape. 2 Methods and Material The whole research project is being solved in a hierarchical system of three spatial scales to enable the comparison of results achieved and to implement possible precautions, or remedies in Czechia. The highest level is represented by the whole country, the middle one then by Ústí nad Labem region (NUTS 3, located in north-western Czechia) and the lowest one by eight model regions of diverse landscape types inside the Ústí nad Labem region (Anděl et al. 2006). In this contribution we focus on one of these model regions which centre is the town of Klášterec nad Ohří. Method of environmental stress assessment comprises two main components, ecological stress and social stress assessments, which are based on criteria system proposed by 123 international board of geographers and environmentalists addressed by the project holder. The ecological stress assessment system includes 7 groups of indicators comprising 9 indicators for all physical components of a landscape, while the social stress assessment system includes 5 main groups of 9 indicators in total, which are aimed especially at population change, structure and mobility, and family and economic relations. Data for these assessments were compiled from author’s research and enquires as well as from several institutions including Czech Hydrometeorological Institute, T. G. Masaryk Water Research Institute, Geodis, Forest Management Institute, Research Institute for Melioration and Soil Conservation and Czech statistical office (see Balej, Anděl, Oršulák 2006). According to main aim of this contribution, the interpretation of the results of environmental stress assessment was intended to be performed using the historical perspective of urban landscape development of the studied model region (resp. its urban centre). This historical perspective was visualized in GIS software while combining the map sources and historical photos from different periods. We primarily used the Military maps (Geolab, UJEP in Ústí nad Labem) and Orthophoto images (Geodis, Brno). 3 Results The results of environmental stress assessment in long-term perspective are shown in the Figure 1, and are compared with development of population per building in the centre of the model region. The curves in the figure indicate some specific developmental trends of environmental stress which correspond to several more or less general political and socioeconomic events. The period of primary rise of environmental stress during and after the industrial revolution can be well distinguished. Since 1950s, i.e. during the communist rule, the environmental stress has increased only slightly due to decreasing social stress in the region. Although the social stress started to rise again in the period of economic transition, the distinct remedies causing the decrease of ecological stress influenced the overall decline of the environmental stress. Figure 1: Development of selected indicators in the Klášterec nad Ohří model region Development of selected indicators (Klášterec nad Ohří) ecological stress (%) social stress (%) 100 90 environmental stress (%) population per buidlings 80 70 value 60 50 40 30 20 10 0 1850 1930 1950 1990 year Source: author’s calculation; population data compiled form Czech statistical office 124 2005 In the Figure 2 we can see the territorial growth of Klášterec nad Ohří as visualized from historical map sources and verified using historical photos. The oldest historical centre of the town is localized in the bottom part of the figure (white). Territorial growth of the town during the industrial period was oriented toward north-eastern open space along the important transportation connection in the area with relatively gentle slopes. Further development following the above mentioned direction (middle grey) was preconditioned by increasing economic activities and consecutive population growth, and caused next transformations of a landscape increasing the environmental stress. The development of town during the communist period was in sign of building the prefabs zones and other residential and industrial complexes (dark grey; see also Figure 3). This trend caused the decrease of social stress (unemployment, family relations, etc.); notwithstanding, further transformation of physical environment (e.g. inconsiderate reclamation of land by demolition of historical buildings, increasing traffic intensity, emissions, etc.) emerged in the growth of ecological stress and thus the environmental stress as well. Only the last 15 years with almost stable territorial extent of the town and frugal land reclamation and landscape care resulted in the lowering environmental stress as mentioned above. Figure 2: The visual historical perspective of the town of Klášterec nad Ohří territorial growth Source: authors; orthophoto from Geodis Brno, map sources from Geolab UJEP Ústí n. L. Figure 3: The town of Klášterec nad Ohří (north-eastern view) in late 19th century and present Sources: author’s archive; adopted from Oršulák, Raška, Suchevič (in press) 125 4 Conclusions An overview of most important processes in urban landscape development of the model region is shown in the figure 3. There, we can observe some coincidences of territorial urban growth with major ecological and social processes (events) and environmental stress developmental trends. The historical perspective as studied within the research can be divided into four main periods, while each of these is represented by different architectural and functional types of zones in growing urban centre (cf. Anděl 1992; Oršulák, Raška, Suchevič, in press). Furthermore, each of these periods shows the different tendency of environmental stress development. To conclude, we can state, that environmental stress has increased since the industrial revolution, yet the highest values of were achieved at the end of the communist period thanks to certain inertia in the reaction of physical landscape components to ecological stress. The late development of environmental stress indicates the apparent decrease; however, we should consider some possible future negative effects of recent activities in presented urban landscape. Among these, we should mention the effects of increasing traffic, if a bypass of the town will not be built. Moreover, the important issue to solve is the background for intended tourism in Klášterec nad Ohří, which aspires to be a spa town (Strategic plan ...). The sustainable form of this tourism demands the care about historical buildings in the town, the improvement of tourism related facilities and reclamation, resp. revitalisation of town zones built especially during the communist period. These focuses of urban planning then concern the landscape functions at all (i.e. environmental stress), when considering as for instance the ecological values of parks, architectural aspects of quality of life, economic and social functions of modern industrial and commercial zones, etc. Figure 4: Scheme of the historical perspective on urban growth and environmental stress in the model region Source: authors 5 Discussion As presented in the previous text, the visualization of urban landscapes in long-term perspective offers the alternative tool for sustainable landscape planning, since it enables to delimit the stable and risk zones and concrete historical causes of their recent character. Considering these causes and their responses in a landscape, we can determine the major tasks 126 for planning and to implement these into the analyses of new developmental opportunities of residential growth and modern and frugal economic activities (SWOT analyses, developmental plans, etc.). Thus it enables to understand the landscape in its complexity and to exploit its potentials (resources and space) in a more sustainable way. 6 Acknowledgement The present article is a result of the research project “Methodical procedure of social and ecological links assessment with economic transformation: theory and application, which is supported by Czech Ministry of Labour and Social Affairs. Authors would like to thank for the support. 7 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. References Anděl, J. et al. (1992): Generel životního prostředí Klášterce nad Ohří. Výzkumný ústav výstavby a architektury, Ústí nad Labem. Anděl, J. (1994): Regions of environmental burden in the Czech Republic — Methods of definition. Acta Universitatis Carolinae — Geographica I, UK, Prague, pp. 111-125. Anděl, J., Balej, M., Oršulák, T., Raška, P. (2006): Review of Geographical Research in North-western Bohemia. GeoScape Journal — Alternative Approaches to Middle-European Geography, pp. 3 – 12. Balej, M. (2004): Ecological stress on a landscape: case study from Eastern Ore Mts. In: Michalczyk, Z. (ed.): Badania geograficzne w poznawaniu srodoviska. UMCS, Lublin, pp. 461-469. Balej, M., Anděl, J., Oršulák, T. (2006): Long-term land use changes and environmental stress development. IGU 2006 Brisbane Konference, Speaker Abstracts „Regional Responses to Global Changes A View from the Antipodes“, Queensland University of Technology (QUT), Brisbane, p. 13. Bastian, O., Steinhardt, U. (2002 eds.): Development and perspectives of landscape ecology. Kluwer Ac. Publish., Dorddrecht. Durilová, A., Saksa, M. (2003): Comparative analysis of methodical procedures for evaluation of ecological landscape stability (Study area Gajary). In: Ekológia (Bratislava) 22, Supplement 2/2003, pp. 119 – 129. Hobbs, R. (1997): Future landscapes and the future of landscape ecology. Landscape and Urban Planning 37, 1-2, pp. 1-9. Huby, M., Owen, A., Cinderby, S. (2006): Reconciling socio-economic and environmental data in a GIS context: An example from rural England. Applied Geography 27, 1, pp. 1-13. Izakovičová, Z., Miklós, L., Drdoš, J. (1997): Krajinnoekologické podmienky trvalo udržateľného rozvoja. Veda SAV, Bratislava. Oršulák, T., Raška, P., Suchevič, S. (in press): Rekonstrukční vícerozměrná geovizualizace městských krajin — příkladová studie a perspektivy. Historická geografie — Supplementum, HÚ AV, Praha. Spradley, L. H., Welch, R. A. (1998): The challenges of a 3-D modelling in a dense urban environment. ISPRS 32. In: Fritsch, D., Englich, M., Sester, M. (eds.): ISPRS Commission IV Symposium on GIS Between Visions and Applications, Stuttgart 1998, pp. 594-596. Strategic plan of development of the Klášterec nad Ohří town — part of proposals (Strategický plán rozvoje města Klášterec nad Ohří — návrhová část), Regionální rozvojová agentura Ústeckého kraje, a.s., Ústí nad Labem, 157 p. Šúriová N., Izakovičová Z. (1995): Territorial system of anthropogenic stress factors in landscape— ecological planning. Ekológia (Bratislava) 14, pp. 181-189. Tress, B., Tress, G. (2003): Scenario visualisation for participatory landscape planning — a study from Denmark. Landscape and Urban Planning 64, 3, pp. 161-178. 127 128 Session B Environmental Accounting and Reporting at Micro Level “On the one hand, the presentations that have been held are illustrating considerable progress companies have made since the early stages and the inception of the field of environmental accounting and reporting two decades ago. Despite such progression, on the other hand, however, there is still room for improvements, and a number of current problems need to be solved in the field, e.g. in terms of methodology, measurement, standardization, software support, and credibility — among others. Hence, there is need for further discussion, hopefully at the next International Conference on “Environmental Accounting and Sustainable Development Indicators”. (Ralf Isenmann, University of Bremen) 129 130 Environmental and other Sustainability Performance Indicators — Key Features of Recent UN, GRI and UK Proposals and the Assurance Implications Robert Langford Sustainability Consultant, Institute of Chartered Accountants in England & Wales, London, UK [email protected] 1 Benefits and limitations of performance indicators — with particular reference to their application to environmental sustainability In the GRI Guidelines [1], a performance indicator is defined as “qualitative or quantitative information about results or outcomes associated with the organisation that is comparable and demonstrates change over time”. GRI distinguishes between core indicators (those of interest to most stakeholders and assumed to be material unless deemed otherwise…) and additional indicators (those that represent emerging practice or address topics that may be material to some organisations but not generally for a majority). In the UK, it is common to refer to key performance indicators. Key performance indicators are regarded as an important element of the information needed to explain an organisation’s progress towards its stated goals [2]. Whilst narrative disclosure is increasingly the subject of regulation, the use of indicators has invariably been treated as voluntary matter, however useful their analysis may prove to investors and other stakeholders, particularly in the area of sustainability. The use of performance indicators helps organisations to measure, manage and communicate their impacts on the environment and other aspects of sustainability [3] and [4]. Key performance indicators (KPIs) assist business and other organisations in meeting defined targets and can be used to provide a link between environmental performance and financial performance. The principal benefits likely to be available from the use and publication of performance indicators in reporting on environmental issues are that: - It is difficult to measure sustainable development directly so there is a need to look at environmental and other impacts via a range of performance indicators; - Stakeholders are often interested in particular issues, for which performance indicators can provide readily assimilated information; - Comparisons of the environmental impacts of an organisation over time and between different organisations in the same sector are assisted; - Preparation and internal use of performance indicators encourages and facilitates management of the key issues. Some of the main limitations of performance indicators are that: 131 - - 2 In many cases, environmental indicators are not yet well defined, with the result that data reported by different organisations operating in the same sector may not be comparable; The methodology for calculating some of the performance indicators is complex and there is limited reference material available to provide guidance; Underlying systems for recording and processing data are not normally integrated with mainstream information flows, posing a threat to completeness and reliability; Credibility may be in doubt without some form of independent verification or assurance. Conceptual underpinning The UN Manual [5] sets out a range of eco-efficiency indicators, defined as the ratio between an environmental and a financial variable. The aim of environmentally sound management is to increase eco-efficiency by reducing the environmental impact while increasing the value of an enterprise (Schaltegger/Sturm 1989) [6]. Accounting principles in the UN Manual are based on the IASB Framework for the Preparation and Presentation of Financial Statements, particularly the characteristics: understandability, relevance, reliability and comparability. For each of the eco-efficiency indicators, the accounting policy adopted is disclosed. The Manual notes the importance of aligning conceptual frameworks for ecological and financial accounting if the resulting figures are to be combined to produce eco-efficiency indicators and the need to ensure that, in defining the reporting entity for environmental items, the same criteria are used as in financial reporting, i.e. if upstream and downstream environmental impacts are included, related eco-efficiency indicators are distorted. The GRI Guidelines include principles regarding report content and quality of reported information about an organisation’s environmental, social and economic performance. Report content is governed by the principles of materiality, stakeholder inclusiveness, sustainability context and completeness. Associated guidance is provided on setting the report boundary, addressed in more detail in a technical protocol. GRI recognises that the boundary of a sustainability report should include entities over which the reporting organisation exercises control or significant influence, but the reporting requirement differs depending on the degree of influence. Quality of reported information is seen as being determined by such principles as balance, comparability, accuracy, timeliness, clarity and reliability. There is no specific reference to the IASB Framework or to any other conceptual framework, nor is there any attempt to link the environmental indicators with financial performance. Each category of indicators is expected to be accompanied by a disclosure on the Management Approach, in which matters such as overall policy, responsibility and performance are described, together with additional contextual information. The UK Reporting Guidelines are intended to apply to large businesses and state that: “where possible, the Government has sought to ensure that the Guidelines are consistent with other standards and reporting guidance”. Reference is made to the GRI framework as well as the Guidelines on Environmental Management Accounting issued by the International Federation of Accountants [7] and the Corporate Accounting and Reporting Standard issued by the World Business Council for Sustainable Development and the World Resources Institute [8]. The UK Guidelines identify three general reporting principles: transparency (including the definition of boundaries and explanation of processes to manage risk), accountability (including stakeholder engagement and third party assurance) and credibility (including the use of an environmental management system and policy for supply chain management). 132 ISO 14031[9] is designed to provide management with information to assist in evaluating environmental performance. It is not essentially an external reporting standard (although it accepts that management may wish to make the resulting indicators available to interested parties). Nor does it establish minimum levels of performance or identify core indicators amongst the 146 examples listed in an “informative” annex supplementing the standard. The guidance provided in ISO 14031 is intended to support existing ISO standards on environmental management systems and makes no reference to other international frameworks such as those of the IASB or the GRI. Two types of performance indicators are identified: management performance indicators, which measure management efforts to influence environmental performance; and operational performance indicators, which measure the environmental performance of an organisation’s operations. Both of these are distinguished from environmental condition indicators, which provide context by measuring the condition of the external environment and are not directly concerned with an organisation’s impacts. ISO 14031 suggests a number of possible bases for selecting performance indicators. The standard provides high-level guidance without explaining how any of the environmental performance indicators given as examples should be calculated. In addition to the groups of indicators discussed in Section III below, ISO 14031 includes a number of examples of management performance indicators dealing with conformance with requirements and the implementation of policies and programmes. The various proposals differ substantially as regards their conceptual basis and the principles on which performance indicators should be prepared and presented. Only the UN Manual states that the accounting principles are based on the IASB Framework for the Preparation and Presentation of Financial Statements. This promotes consistency. A paper issued by the Federation des Experts Comptables Europeens (FEE), 2000, showed that a conceptual framework is relevant to environmental issues [10]. It is sensible to build on an existing framework, even though the IASB Framework does not address the concept of “net value added” on which indicators in the UN Manual are based. No other conceptual frameworks are cited by the proposals although there are specific references to documents such as the WBCSD Accounting and Reporting Standard and the IFAC Guidelines on Environmental Management Accounting. Surprisingly, the UN Manual makes no reference to the 2002 version of the GRI Guidelines that were available at the time it was issued. There is also considerable variation between the principles adopted for preparing and presenting performance indicators. ISO 14031 does not identify any such principles. Amongst the other three proposals, the only common principle is reliability (or credibility). Comparability and clarity (or understandability) appear in both the UN Manual and the GRI Guidelines but not in the UK Reporting Guidelines. Relevance is only cited in the UN Manual although the GRI has taken the view that it is covered by the principle of materiality. Strictly, the two are not identical as an item may be relevant but not material. The UK Reporting Guidelines include the principles of accountability and transparency, neither of which are specifically listed in the UN Manual or the GRI Guidelines, although it might be argued that such qualities are collectively covered by the GRI principles: shareholder inclusiveness, sustainability context, completeness, balance, accuracy and timeliness. Clearly, the concepts and principles underlying the proposals are different in several important respects and further work in this area will be necessary in developing satisfactory guidance for preparers and users. Whilst there may be some merit in considering different approaches, this is unlikely to encourage adoption on a broad scale. 133 3 Key features of environmental indicators In addition to the conceptual divergence, there is substantial variation between the different proposals as regards the range of environmental indicators advocated and the impacts covered. In this paper, it is convenient to discuss the way in which indicators address: - Emissions to air and contribution to global warming, - Water use and discharge, - Waste and emissions to land, - Materials, use of resources and recycling, - Energy use, - Biodiversity, - Environmental protection expenditure, - Impacts of products, services and transport. This grouping of environmental issues is similar to that adopted in the GRI Guidelines except that the GRI aspect covering Emissions, effluents and waste (involving 10 indicators) has been divided between Emissions to air and, as a separate group, Waste and emissions to land (including spills). For simplicity, the separate GRI aspects covering the impacts of Products and services and Transport have been dealt with as one group and Environmental protection expenditure has been taken to include the compliance aspect, such as fines and sanctions. The chosen grouping does not necessarily reflect an order of importance although the increasing concerns about climate change and scarcity of water are reflected in the prominence given to these issues. Emissions to air and contribution to global warming Greenhouse gases are the main cause of climate change and various mechanisms are used to achieve a reduction in their emission. Several indicators are therefore designed to measure emissions and to demonstrate the effectiveness of an organisation’s initiatives to combat climate change, including the impacts of its products and services. The UN Manual is concerned with the emissions of energy users rather than the global warming contribution of energy-producing companies, the agricultural sector or forestry. Global warming gases are defined as the six gases listed under the Kyoto Protocol. An enterprise’s global warming contribution over a 100 year time frame is expressed in kilograms or tonnes of carbon dioxide equivalent per year. Renewable energy is assumed to have no global warming contribution and “for the time being” other global warming gases (e.g. methane) from the use of energy and transport services are not considered. The resulting ecoefficiency indicator “global warming contribution per unit of net value added” is disclosed, together with the contributions for each category of global warming gas and management policy on energy use, objectives and measures to achieve targets. The UN Manual has a section concerned with ozone-depleting substances that may exist either as part of a “use system”, i.e. goods and equipment (such as refrigerators and fire extinguishers) or as a substance sold in pure or blended form. Ozone-depleting substances “added by the reporting entity” through its operations should be reported by weight and ozone depletion potential, with disclosure of the “dependency per net value added”, the total amount of ozone-depleting substances recognised during the period, together with the management policy. GRI has five indicators that concern emissions to air and contribution to global warming: - EN 16 Total direct and indirect greenhouse gas emissions by weight, - EN 17 Other relevant indirect greenhouse gas emissions by weight, 134 - EN 18 Initiatives to reduce greenhouse gas emissions and reductions achieved, EN 19 Emission of ozone-depleting substances by weight, EN 20 NO, SO and other significant air emissions by type and weight. EN 16 calls for the total greenhouse gas emissions from the six gases listed under the Kyoto Protocol, in tonnes of carbon dioxide equivalent. The supporting guidance refers to different conversion methodologies and compilation guidance. For example, the Corporate Accounting and Reporting Standard issued by the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute provides guidance on emissions data that should be provided as standard as well as additional information that is optional. The standard disclosure requires separate emissions data for each of the six greenhouse gases as well as carbon dioxide emissions from biologically sequestered carbon, e.g. burning biofuels. This is rather more demanding than EN 16. No reference is made to the UN Manual. The indicator includes direct emissions and indirect emissions resulting from the generation of purchased electricity, heat or steam. EN 17 deals with other relevant indirect greenhouse gas emissions. Organisations are expected to disclose the total weight of emissions in tonnes of carbon dioxide equivalent, including those arising from the organisation’s activities, such as employee commuting and business travel. Emissions resulting from imported electricity, heat or steam are excluded. As well as calling for the identification of any initiatives to reduce greenhouse has emissions, EN 18 requires the reductions achieved to be quantified in tonnes of carbon dioxide equivalent. EN 19 calls for disclosure of the emissions of ozone-depleting substances in tonnes, excluding emissions from products during their use or disposal. Other significant regulated air emissions are addressed by EN 20, which requires their identification and quantification, including disclosure of the measurement method used. The UK Guidelines include five indicators that concern emissions to air and contribution to global warming: - KPI 1 Greenhouse gases, - KPI 2 Acid rain and smog precursors, - KPI 3 Dust and particles, - KPI 4 Ozone-depleting substances, - KPI 5 Volatile organic compounds, - KPI 6 Metal emissions to air. Three of these: KPI 1, KPI 2 and KPI 5, taken together, cover similar ground to the corresponding indicators in the UN Manual and the GRI Guidelines, although differences in scope and classification will hinder comparisons with data prepared on another basis. The UK Guidelines emphasise that indirect greenhouse gas emissions should be reported separately from direct emissions. It is also noted that “companies may decide to report on impacts that occur outside their normal financial reporting boundaries and this is common practice in the case of greenhouse gas emissions.” Reference is made to the UK and European Trading Schemes, although there is no suggestion that key performance indicators should include information about the impacts of emissions trading. KPI 3 requires that dust and particles emitted should be reported in metric tonnes per year, by size of particle. KPI 4 requires ozone-depleting substances to be reported by type in metric tonnes per annum. Any estimation method used should be stated. The indicator is expected to be disclosed mainly by businesses that use air conditioning, refrigerators and certain types of fire extinguishers. The use of ozone-depleting substances is being phased out internationally as a result of the Montreal Protocol 1987. KPI 6 calls for metal emissions to air to be reported in metric tonnes per year, with a discussion of the type of metal, the mass emitted, particle size and whether emitted from a point or dispersed source. 135 ISO 14031 suggests the use of indicators covering the quantity of specific emissions per year and per unit of output, the quantity of waste energy released to air and the quantity of air emissions having ozone-depletion potential or global climate change potential. It seems unsatisfactory that the UN Manual excludes the emissions of energy-producing companies. There is no agreement as to whether emissions should be reported on an absolute basis or per unit of output (as in ISO 14031) or per unit of net value added (as in the UN Manual). This is an important question that will need to be resolved in developing a standard approach. As regards providing separate emissions data for each of the six greenhouse gases listed in the Kyoto Protocol, as required by the WBCSD Standard, this is clearly dependent on the nature of the reporting organisation and its emissions. Some of the indicators proposed in the UK Guidelines, such as the emissions to air of dust, particles and metal, would only be relevant to a small number of reporting organisations but their measurement in such cases may be a problem. Only the GRI Guidelines focus on initiatives to reduce harmful emissions, providing an opportunity to focus on the positive aspects and to demonstrate improvement. Water use and discharge The scarcity of water supplies, particularly in certain regions, and the potential ecological impacts of water discharge are matters of increasing concern. Efficient use of water and control of discharges is critical to operational performance and the avoidance of reputation risk. Measurements of water withdrawal, recycling or reuse, discharge and consequent impacts on habitats are therefore of importance to a wide range of stakeholders. The UN Manual specifically excludes water suppliers and distinguishes between offstream use (most commercial, industrial, agricultural and domestic applications) and instream water use, such as power generation. Water consumption is the difference between water received and off-stream return flow, e.g. release of cooling water. The eco-efficiency indicator derived is “water consumption per unit of net value added” and associated disclosures cover the amounts of water received from each source, return flow, wastewater treatment and management policy. The GRI Guidelines include indicators: - EN 8 Total water withdrawal by source, - EN 9 Water sources significantly affected by withdrawal of water, - EN 10 Percentage and total volume of water recycled and reused, - EN 21 Total water discharge by quality and destination, - EN 25 Identity, size, protected status and biodiversity value of water bodies and habitats affected by the organisation’s discharges of water and runoff. EN 8 requires the total water withdrawal from all sources during the reporting period in cubic metres per year. Water suppliers are not specifically excluded, nor is any adjustment proposed for cooling water returned to a water source. EN 9 is concerned with impacts on the ecosystem caused by lowering the water table due to water withdrawal. The information to be provided includes the size of water source or sources, whether designated as a protected area and the biodiversity value. Where an external supplier is involved, the original water source should be reported. EN 10 calls for total volume of water recycled and reused per year and as a percentage of total water withdrawal reported under EN 8. EN 21 deals with water discharge and quality, excluding collected rainwater and domestic wastewater. The total volume of planned and unplanned water discharges is reported in cubic metres per year by destination, treatment method and whether it is reused by another organisation. Quality is determined according to national regulators of standard effluent parameters. Under EN 25, information is provided about any water bodies that are 136 significantly affected by the reporting organisation’s discharges, including the volume of the receiving water body, its biodiversity value and whether or not it is a protected area. The UK Guidelines deal separately with water abstractions and emissions to water: - KPI 14 Water use and abstraction, - KPI 7 Emissions of nutrients and organic pollutants, - KPI 8 Metal emissions to water, - KPI 14 is concerned with water abstraction for public water supply and for direct use by industrial or agricultural processes, rather than supplied water, which is reported as a supply chain impact. Reuse or recycling is expected to be discussed but not quantified. KPI 7 addresses emissions to water that can cause pollution and disruption to habitats. Guidance is provided on measurement procedures, resulting in disclosure of the volume and content of effluent discharged and the number and volume of any spills that have contributed to water pollution. In the case of metal emissions to water, KPI 8 identifies a number of sectors and processes that may give rise to pollutants and requires disclosure of the emissions in kilograms per year, together with details of the sampling and monitoring technique used. ISO 14031 proposes the use of indicators quantifying the water used per unit of product, the quantity of water reused, specific materials discharged to water per unit of product and the quantity of waste energy released to water. The exclusion of water suppliers (as in the UN Manual and in ISO 14031) is a marked contrast with the focus of the UK Guidelines, which are only concerned with public water supply and suggest reporting water use impacts separately as a supply chain impact. The release of cooling water, treated as a deduction from water received in the UN Manual but not giving rise to any adjustment in the GRI Guidelines, is another area of difference that needs to be borne in mind when making comparisons between performance indicators based on different proposals. Emissions of metals, nutrients and organic pollutants, as proposed in the UK Guidelines, are only likely to be relevant to a small number of reporting organisations. Waste and emissions to land The disposal of waste, particularly hazardous waste and accidental spills, can have a significant impact on the environment and is increasingly the subject of regulation, fines and penalties. On a more positive note, in addition to shrinking the environmental footprint, reduction of waste usually has several financial benefits for an organisation through improved process efficiency and reduced transport costs. Indicators are therefore designed to measure the effectiveness of related policies and controls. The UN Manual identifies waste as a non-product output with a negative or zero market value, distinguishing between mineral and non-mineral waste. Disclosure comprises the weight or volume of waste generated per unit of net value added and includes waste treatment by incineration, landfill and temporary on-site storage. The management policy is disclosed, together with information about any schemes for energy recovery from the conversion of waste. The GRI Guidelines include indicators: - EN 22 Total weight of waste by type(hazardous and non-hazardous) and disposal method, - EN 23 Total number and volume of significant spills, - EN 24 Weight of transported, imported, exported or treated hazardous waste and percentage of transported waste shipped internationally. 137 EN 22 distinguishes between hazardous and non-hazardous waste and requires the total weight of waste to be classified by type and disposal method (as between recovery, reuse, recycling, incineration, landfill, on-site storage, composting or deep well injection), with a statement as to how the disposal method has been selected. EN 23 requires an organisation to state the total number and volume of recorded spills, irrespective of whether these affect soil, water, air, biodiversity or human health. For those spills that result in a liability included in the organisation’s financial statements, information about the location, volume and material involved should be provided. Hazardous waste is addressed by EN 24, which requires the total weight of transported, imported, exported or treated hazardous waste to be identified and separately disclosed. The UK Guidelines include: - KPI 9 Pesticides and fertilisers, - KPI 10 Metal emissions to land, - KPI 11 Acids and organic pollutant emissions to land, - KPI 12 Waste (Recycling, recovery and landfill), - KPI 13 Radioactive waste. KPI 12 deals with non-hazardous waste whereas the other KPIs concern hazardous waste. A distinction is made between landfill, recovery (including waste incineration as a source of renewable energy), recycling and reuse. Disclosures include the total amount in metric tonnes per year, the proportion disposed of in each way and whether an estimation method has been used. In the case of pesticides and fertilisers (KPI 9), in addition to the total weight applied, the total area treated should be reported. Metal emissions to land arising from industrial activities are reported in metric tonnes per year and whether an estimation method has been used. KPI 11 deals with spills and methods of estimation. The number of spills should be reported, with the volume of any significant spills and whether an estimation method has been used. Radioactive waste (KPI 13) is classified in three levels. Guidance is provided on measurement procedures and the reporting practice in each case. ISO 14031 suggests the use of a number of possible indicators regarding waste and emissions to land. These include the total quantity of waste for disposal per year and per unit of product, the quantity of material sent to landfill per unit of product, the quantity of hazardous, recyclable or reusable waste produced per year and the amount or type of wastes generated by contracted service providers. Other indicators might be the quantities of waste stored on site, waste controlled by permits, waste converted to reusable material per year and the quantity of hazardous waste eliminated due to material substitution. Further examples deal with the quantity of effluent discharged per year and the quantity of effluent per service or customer. Disclosure of separate performance information relating to hazardous waste, which is not proposed in the UN Manual, is likely to be considered important by some stakeholders. Instead, the UN Manual distinguishes between mineral and non-mineral waste, which seems less significant and may cause difficulty in compiling the data. Accidental spills, which are specifically addressed in the GRI Guidelines and would be covered by the UK Manual (as KPI 11 in the case of spills to land and by KPI 7 in the case of water pollution) are not dealt with in the UN Manual or in ISO 14031. Where such accidents occur, they are normally an important aspect of performance to report. 138 Materials, use of resources and recycling Conservation of resources through reduced raw material consumption and the use of recycled materials is widely regarded as a prerequisite for sustainable development and may also contribute to lower operating costs. As consumption increases, particularly in developing countries, restraint over resource use becomes critical. Indicators are designed to assist in monitoring the efficiency of material flows and the ability to use recycled input materials. The UN Manual does not include any specific eco-efficiency indicators dealing with materials use and recycling. The GRI Guidelines include: - EN 1 Materials used by weight or volume, - EN 2 Percentage of materials used that are recycled input materials. EN 1 is concerned with conservation of global resources and calls for disclosure of the total weight or volume of materials used, including materials purchased from external suppliers and those obtained from internal sources. The total may include raw materials that are part of the final product, semi-manufactured goods or components and materials used in processing or packaging. The total weights or volume of non-renewable materials used (such as minerals, metals, oil, gas and coal) and of direct materials used are reported separately. EN 2 requires disclosure of the percentage of recycled input materials as a proportion of the total materials used. The UK Guidelines cover the use of resources: - KPI 15 Natural gas, - KPI 16 Oil, - KPI 17 Metals, by type, - KPI 18 Coal, by type and method of extraction (deep mine or opencast), - KPI 19 Minerals, by type, - KPI 20 Aggregates, by type, - KPI 21 Forestry, by type of wood, source area and whether from sustainably managed forests, - KPI 22 Agricultural produce, including foodstuffs such as meat and fish, tobacco, rubber and other crops. The resources used are stated per annum in cubic metres or barrels of oil equivalent, metric tonnes extracted or cubic metres, as appropriate. ISO 14031 includes a wide range of examples of performance indicators covering materials, the use of resources and recycling. Amongst the management performance indicators listed are the number of products designed for disassembly, recycling or reuse and financial savings through reductions in resource use, prevention of pollution or waste recycling. Operational performance indicators include the quantity of materials used per unit of product, the quantity of processed, recycled or reused material used, the quantity of packaging materials discarded or reused per unit of product, the quantity of auxiliary materials recycled or reused, the quantities of raw materials and hazardous materials used in the production process. Other indicators deal with the use of material by contracted service providers, such as the amount of hazardous materials and the amount of recyclable and reusable materials. ISO 14031 also suggests measuring the quantity of materials used during after sales servicing of products. It may not always be meaningful or practicable to disclose the total weight of direct materials used, as required by the GRI Guidelines. The UK Guidelines propose separate indicators, by weight or volume, for the use of non-renewable materials, such as natural gas, 139 oil, metals, coal and minerals, whereas the GRI Guidelines require this information as a single figure. Aggregates, forestry and agricultural produce, covered by the UK Guidelines, are not mentioned by the GRI Guidelines. For certain organisations, separate data for the use of these resources may be relevant. For all the indicators on material use, there may be uncertainty as regards whether measurement should take account of material inventories at the beginning and end of the reporting period. (This problem may apply to other performance indicators although it is perhaps more significant in the case of material use). Recycling and reuse of materials is only addressed in the GRI Guidelines and in ISO 14031 but the related data may be helpful in monitoring the use of resources. Energy use Organisations normally use energy directly, from such sources as coal, natural gas or diesel, and/or indirectly, from the purchase of electricity or other forms of imported energy. Efficient use of energy and the minimisation of environmental impacts can be monitored using information about consumption of energy from different energy sources and reductions achieved. Any initiatives to provide energy-efficient products and services offer a competitive advantage and the impact of such initiatives may be a relevant indicator. The UN Manual is concerned with energy users rather than energy producers. The impacts of energy use are dealt with in the context of greenhouse gases and contribution to global warming. A number of different forms and sources of energy are considered and tables of calorific values for a wide range of fuels in different countries (based on OECD figures) are provided. For the purpose of eco-efficiency reporting, energy is valued by its capacity to perform work, and the resulting indicator, after application of a factor to convert to thermal energy, measures the energy requirement per unit of net value added. This is disclosed, with the total energy requirement for the period and the amounts for each energy source, together with the related management policy. The GRI Guidelines include: - EN 3 Direct energy consumption by primary energy source, - EN 4 Indirect energy consumption by primary source, - EN 5 Energy saved due to conservation and efficiency improvements, - EN 6 Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives, - EN 7 Initiatives to reduce indirect energy consumption and reductions achieved. Under EN 3, primary sources include direct non-renewable sources such as coal, natural gas, and fuel distilled from crude oil, whereas direct renewable sources include biomass, solar, wind, geothermal and hydro energy. Total energy consumed is derived from direct primary energy purchased, plus direct primary energy produced less direct primary energy sold. Total energy consumption is stated in joules, by primary source and a table is provided to convert volumes of primary energy sources to gigajoules. EN 4 concerns indirect energy consumption, i.e. energy used indirectly through the purchase of electricity, heat (or cooling), distilled fuel (e.g. diesel, LPG), steam or other forms of imported energy. Using data from providers, an organisation is required to estimate the amount of primary fuels used to produce intermediate energy, i.e. for most organisations, electricity, and the corresponding primary energy consumed in its production, together with the total amount of indirect energy used, analysed by renewable and non-renewable sources. EN 5 identifies the total energy saved due to conservation and efficiency improvements. A single figure is disclosed for the total amount of energy saved, measured in joules. Energy saved as a result of reduced production capacity or outsourcing should not be included. EN 6 140 deals with initiatives to provide energy efficient or renewable energy based products and services. As well as describing the initiatives, an organisation is expected to quantify reductions in the energy requirements achieved during the period. Where normalised data is provided, assumptions are stated or industry standards used. EN 7 calls for a description of initiatives to reduce indirect energy consumption, with an estimate of the extent to which indirect energy use has been reduced in four different areas and a statement of assumptions and methodologies used. As previously explained, the UK Guidelines deal with resource use, including extraction from energy sources such as natural gas, oil and coal, but do not propose any specific disclosures from the viewpoint of energy consumption or conservation. ISO 14031 suggests the use of indicators covering the total quantity of energy used per year or per unit of output, the quantity of each type of energy used, the quantity of energy used per service or customer, and the quantity of energy units saved due to energy conservation programmes. For energy producers, the key indicators are the quantity of energy generated with, by products or process streams, and the land area used to produce a unit of energy. For organisations with a vehicle fleet, examples also include the average fuel consumption. Of the proposals examined, only ISO 14031 extends the application of energy use indicators to the energy generated by producers. This is likely to be useful information in monitoring total energy demand and trends, although transmission from one region to another may distort the analysis. In the case of the UK Guidelines, energy use is only measured from the viewpoint of consumption of resources such as natural gas, oil and coal by volume or weight and there is no requirement to convert to energy units such as gigajoules. This is a relatively complex area in view of the different conversion factors involved, but the resulting performance indicators can be informative in saving energy and minimising environmental damage. Only the GRI Guidelines specify performance indicators that focus on the positive aspects, such as savings in an organisation’s energy consumption and initiatives to provide energy-efficient or renewable energy based products and services. Biodiversity Stakeholders are commonly interested in any negative or positive impacts on biodiversity resulting from an organisation’s operations. Consequently, information about any operating sites that are situated in an area sensitive to risks associated with biodiversity and any significant risks that result from the operations may be particularly relevant, together with any initiatives to reduce or control harmful impacts or to protect or restore natural habitats. The UN Manual makes no reference to biodiversity. The GRI Guidelines include: - EN 11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high diversity value outside protected areas, - EN 12 Description of significant impacts of activities, products and services on biodiversity in protected areas and areas of high diversity value outside protected areas, - EN 13 Habitats protected or restored, - EN 14 Strategies, current actions and future plans for managing impacts on biodiversity, - EN 15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk. EN 11 calls for geographical information about land owned, leased, managed in, or adjacent to, protected areas and areas of high diversity value, the type of operation and position in relation to the protected area, the size and location of the operational site, its 141 position in relation to the affected area and the biodiversity value affected. EN 12 requires a description of significant impacts of activities on protected areas, particularly the nature of the impact, the area and species affected, duration of the impact and extent to which it may be reversible. EN 13 deals with the size and location of areas of habitats protected or restored and measured the extent to which negative impacts are prevented or redressed and whether restoration has been independently verified. EN 14 seeks a statement of the organisation’s strategy for managing impacts on biodiversity, together with any actions or plans to manage diversity risks. EN 15 calls for information about the conservation species with habitats in areas affected by operations, indicating the level of extinction risk in one of five levels. The UK Guidelines do not include a specific KPI for biodiversity on the grounds that “there is no single, universally accepted method for measuring the impacts of company activity on biodiversity”, although brief reference is made to the GRI indicators and to industries with significant impacts on biodiversity, such as extractive industries, natural resource use and agriculture, as well as the relevance of indicators dealing with emissions to water. ISO 14031 lists only one example of a management or operational performance indicator that addresses biodiversity: the number of sites with wildlife programmes. However, the standard includes a wide range of environmental condition indicators that relate to biodiversity as regards the condition of the external environment rather than the direct results of an organisation’s impacts. Such examples are grouped under the headings air (6), water (6), land (7), flora (8) and fauna (4) — a total of 31 indicators. From the above, it is clear that the proposals differ widely as regards their treatment of biodiversity. All the aspects discussed so far have been measured from the viewpoint of the organisation’s performance. It is therefore illogical that the numerous examples in ISO 14031 are treated as environmental condition indicators, i.e. measurements of external conditions rather than an organisation’s impacts. The UN Manual makes no reference to biodiversity and the UK Guidelines cite the absence of an agreed methodology as grounds for not suggesting a KPI for biodiversity. Consequently, the only relevant proposals are those in the GRI Guidelines, which are very comprehensive and seem likely to offer a sound basis for measuring an organisation’s impacts on biodiversity. Environmental protection expenditure Environmental protection expenditure may be incurred voluntarily, as a matter of policy, or to comply with requirements or prohibitions. In the event of non-compliance, the organisation may be subject to fines or sanctions. Measuring the related expenditure enables an organisation to assess the costs and efficiency of its environmental initiatives, where such initiatives are in place, and the direct costs of any non-compliance. Reporting this expenditure, which may be small in relation to the impacts on reputation, is often relevant to stakeholders. Neither the UN Manual nor the UK Guidelines include any performance indicators concerning environmental protection expenditure. The GRI Guidelines incorporate: - EN 28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations, - EN 30 Total environmental protection expenditures and investments by type. EN 28 applies only to significant fines for non-compliance with environmental laws and regulations, for which the total amount is reported. It also calls for the number of non- 142 monetary sanctions and cases brought through dispute resolution mechanisms. Where a reporting organisation has not identified any such non-compliance, a brief statement to that effect is to be included. EN 30 requires the disclosure of total environmental protection expenditures and investments by type, within the categories: 1. Waste disposal, emission treatment and remediation costs. 2. Prevention and environmental management costs. The costs to be included are widely defined and include certain personnel costs, external services, research and development. ISO 14031 includes several management performance indicators that relate to environmental protection. Such indicators might cover the number of management levels with specific environmental responsibility, the number of employees who have environmental requirements in their job descriptions or who are participating in environmental programmes, the number of or costs attributable to fines and penalties, the costs (operational and capital) associated with environmental aspects of a product or process, the return on investment for environmental improvement projects, progress on local remediation activities and the number of local clean-up or recycling initiatives, sponsored or self-implemented. The disclosure of performance indicators about sanctions and cases under dispute required by the GRI Guidelines is relatively specific although it is possible that an organisation would need to add a narrative description or explanation to accompany the bare numbers. ISO 14031 features indicators about numbers of management levels and employees with environmental responsibility. This is not specifically covered in the GRI Guidelines, nor is the quantification of environmental costs suggested in ISO 14031, or the financial returns arising from environmental improvement projects. However, the measurement of such returns has not been adequately defined by ISO or any other standard setter. Impacts of products, services and transport The environmental impacts of products and services during their use and from their disposal may be more significant than the impacts during their production. Although environmental impacts during the production phase, such as those due to transporting materials or members of the workforce, can be material, it may be more pertinent to measure the effect of any action by the reporting organisation to reduce the negative impacts from use or disposal of its products and services. Within the European Community, it is relevant to note that there are EU Directives dealing specifically with the disposal of vehicles and electrical or electronic equipment. Neither the UN Manual nor the UK Guidelines put forward indicators that would capture the downstream environmental impacts of an organisation’s products or services. The GRI Guidelines include: - EN 26 Initiatives to mitigate environmental impacts of products and services and extent of impact mitigation, - EN 29 Significant environmental impacts of transporting products and other materials used for the organisation’s operations, and transporting members of the workforce. EN 26 seeks to address the way in which an organisation is dealing with the environmental impacts of goods and services arising from their use and disposal. Organisations are required to report initiatives to mitigate environmental impacts of products and services in relation to materials use, water use, emissions, effluents, noise and waste, together with an estimate of the extent of mitigation during the period and the assumptions adopted. Other impacts of products and services are covered by GRI indicators dealing with 143 water use, reuse or recycling of products and initiatives to provide energy-efficient products and services. Under EN 29, the environmental impacts of transportation relating to the organisation’s operations are identified and described. The impacts are either quantified, with an explanation of the criteria and methodology used, or the reason for not including such data is stated. ISO 14031 suggests the use of indicators dealing with the number of products with explicit “product stewardship” plans or with instructions regarding environmentally safe use and disposal, the number of products introduced in the market with reduced hazardous properties, the percentage of a product’s content that can be reused or recycled, the duration of product use and the number of units of energy consumed during use of the product. The standard also highlights the number of vehicles in the fleet with pollution-abatement technology. The approaches in the GRI Guidelines and in ISO 14031 cover similar ground although the emphasis is rather different. As regards environmental impacts of products and services, the GRI indicators focus on an organisation’s initiatives and quantification of their effect, whereas ISO 14031 calls for numbers of products with an appropriate “warning system” but does not look for an estimate of its effectiveness. Environmental impacts of transporting products, operating materials and members of the workforce, which may be significant for some organisations, are only required as a GRI performance indicator; the other proposals are silent as regards indicators covering these issues. 4 Credibility and assurance As mentioned in the earlier discussion of conceptual underpinning, reliability (or credibility) is the only principle that is common to the UN, GRI and UK proposals. How can the user be confident that the performance indicators presented are reliable? Users may differ in their needs and focus, so questions may arise as to the identity of the user and their particular focus. The needs of internal users may not be identical to those of external stakeholders, whose concerns are sometimes identified through a process of stakeholder engagement. However, reliability remains a common objective. The UN Manual identifies reliability as one of the four main qualitative characteristics of eco-efficiency indicators. It also states that the application of such characteristics and appropriate guidelines “normally results in eco-efficiency statements that convey what is generally understood as a true and fair view of, or as presenting fairly, such information.” In the case of environmental data, the accountancy profession believes that a statement of this nature attaches expectations that may be difficult to support, given the subjectivity of much of the information. [11] Without raising excessive expectations, however, a reasonable degree of reliability is desirable and should normally be achievable. The GRI Guidelines emphasise reliability as a principle for defining report quality and suggest three tests for reliability based on balance, presentation and materiality. In addition to any system of internal controls, GRI recommends the use of external assurance. The Guidelines call for a high-level strategic statement that includes an organisation’s policy and current practice with regard to seeking external assurance, the scope and basis of any assurance provided and the organisation’s relationship with the assurance provider. Whilst a variety of possible approaches are mentioned, the Guidelines stipulate a number of key qualities for effective external assurance. The UK Guidelines state that “the use of independent third party assurance statements adds credibility to a business’ reporting and provides an important feedback mechanism for the business”. The Guidelines mention that a number of organisations provide this service and refer to the assurance framework AA 1000 issued by AccountAbility [12]. 144 ISO 14031 is essentially concerned with internal reporting, based on the application of ISO standards on environmental management systems designed to provide reliable information, including environmental performance indicators. All of the proposals analysed refer to the importance of reliable data and, whilst the needs of internal users and different groups of external stakeholders may vary, the credibility of performance indicators is important. Many organisations are concerned to obtain some form of assurance as a safeguard against the risks created by the use of unreliable information. For example, the completeness and accuracy of data forming the basis for performance indicators, particularly those on emissions, waste and recycling, may be open to question, due to problems of definition, recording or measurement. There are some key criteria to be borne in mind if the information is to be regarded as credible. Indicators need to be defined with sufficient precision to ensure that preparers and users have a uniform understanding as to the information included, its limitations and context. This should embrace completeness, reliability, neutrality and clarity. There should be relatively little scope for individual judgement in deciding what information to report or omit. Definitions and measurement methods need to be sufficiently precise to avoid uncertainty and to ensure that different organisations in similar circumstances do not present significantly different data. The degree of flexibility should be minimal so as to reduce the scope for bias or manipulation of a performance indicator. An explicit statement defining each indicator and the basis of compilation is important in meeting these criteria, whether the indicator is used internally or published externally. Much of the information used in preparing environmental and other sustainability indicators is expressed in non-financial units and may not be subject to the same degree of control as financial information. It may therefore result in performance indicators that are unreliable. It is also the case that organisations are often concerned with the possibility that performance indicators may present an unfavourable picture and may see an apparent benefit in omitting or “adjusting” certain data. In addition to installing a process of internal check, the credibility of performance indicators is therefore enhanced by external verification or assurance. As yet, there is no generally accepted standard for assurance in relation to environmental reports and different approaches are under development. 5 Conclusions Comparison of the proposals reviewed in this paper reveals a marked divergence and some overriding conclusions: - Standardisation of environmental performance indicators in the foreseeable future is unlikely in view of the different approaches adopted by interested parties. - Coverage of the impact groups varies significantly between the different proposals, revealing gaps in some areas and substantial detail in others. - Convergence on the underlying concepts and principles and on some key environmental performance indicators will be difficult to achieve without an increased degree of coordination and cooperation. - The GRI Guidelines incorporate a comprehensive set of performance indicators for most environmental aspects (as well as social and economic aspects) and offer a reasonable prospect of global acceptance by “interested” organisations in the medium term. - Key performance indicators are identified (as core indicators) in the GRI Guidelines, whereas other proposals do not offer any equivalent differentiation. The GRI distinction between core indicators and additional indicators may be helpful to organisations in identifying KPIs. 145 - - - - 6 The needs of different groups of users, both internal and external users, are likely to differ significantly but are unlikely to be served in either case by information that is not reliable. Internal controls over the measurement and presentation of environmental performance indicators should preferably be supported by an independent external assurance process to enhance reliability of the information. It is important to support quantitative information about environmental performance with appropriate narrative explanation. The GRI requirement for disclosure of an organisation’s management approach is particularly helpful in this regard. A large number of detailed issues, such as the treatment of environmental performance by water and energy suppliers (excluded in the UN Manual), adjustment for opening and closing inventories in measuring material usage and the use of absolute numbers rather than ratios, will need to be resolved if convergence is to be achieved. References 1. Global Reporting Initiative, Sustainability Reporting Guidelines (Global Reporting Initiative, Amsterdam, 2006). 2. PricewaterhouseCoopers, Guide to key performance indicators — communicating the measures that matter (PwC, London, 2006). 3. Institute of Chartered Accountants in England & Wales, Sustainability: the role of accountants (ICAEW, London, 2004). 4. Department for Environment, Food and Rural Affairs/ Trucost, Environmental Key Performance Indicators — Reporting Guidelines for UK Business (DEFRA, London, 2006). 5. United Nations Conference on Trade and Development (UNCTAD), A Manual for the Preparers and Users of Eco-efficiency Indicators (UNCTAD, Geneva, 2004). 6. Schaltegger S and Sturm, Okologieinduzierte Entscheidungsinstrumente des Managements (Luneburg, 1989). 7. International Federation of Accountants (IFAC), Guidelines on Environmental Management Accounting (IFAC, New York, 2005). 8. World Business Council for Sustainable Development (WBCSD) and World Resources Institute, The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (WBCSD, Geneva, 2004). 9. International Organization for Standardization, Environmental Management — Environmental Performance Evaluation- Guidelines ISO 14031 (1999). 10. Federation des Experts Comptables Europeens, Towards a Generally Accepted Framework for Environmental Reporting (FEE, Brussels, July 2000). 11. International Auditing and Assurance Standards Board (IAASB), International Standard on Assurance Engagements 3000: Assurance Engagements Other Than Audits or Reviews of Historical Information (IFAC, New York, 2003). 12. Institute of Social and Ethical AccountAbility, Assurance Standard AA 1000 (ISEA, London, 2003). 146 Environmental Key Performance Indicators and Corporate Reporting Jiří Hřebíčeka, Petra Misařováb, Jaroslava Hyršlovác a Institute of Biostatistics and Analyses, Masaryk University, Brno, Czech Republic [email protected] b Faculty of Business and Economy, Mendel University of Agriculture and Forestry, Brno, Czech Republic c Faculty of Chemical Technology, University of Pardubice, Pardubice, Czech Republic 1 Introduction The Environmental Performance (EP) of an organisation is defined as results of an organisation's management of its environmental aspects. In the context of environmental management systems these results can be measured against the organization's environmental policy (i.e. overall intentions and direction of an organization related to its environmental performance as formally expressed by top management), environmental objectives (overall environmental goals, consistent with the environmental policy, that an organization sets itself to achieve) and environmental targets (i.e. detailed performance requirements, applicable to the whole organization or parts thereof, that arise from the environmental objectives and that need to be set and met in order to achieve those objectives), and other environmental performance requirements. Environmental performance evaluation (EPE) is the subject of international standard ČSN EN ISO 14031 Environmental management — Environmental performance evaluation — Guidelines (further ISO 14031). EPE is defined as follows: Process to facilitate management decisions regarding an organisation’s environmental performance by selecting indicators, collecting and analysing data, assessing information against environmental performance criteria, reporting and communicating, and periodic review and improvement process The standard ISO 14031 describes two general categories of indicators for EPE: Environmental Performance Indicators (EPIs); and Environmental Condition Indicators (ECIs). There are two types of EPIs: - Management performance indicators (MPIs) provide information about management efforts to influence the environmental performance of the organisation’s operations. - Operational performance indicators (OPIs) provide information about the environmental performance of the organisation’s operations. Indicators ECIs provide information about the condition of the environment. This information may help an organisation to better understand the impact or potential impact of its environmental aspects, and thus assists in the planning and implementation of EPE. The decisions and actions of an organisation's management are closely related to the performance of its operations. 147 Environmental performance criterion is described by ISO 14031 as an organisation's environmental objective, target, or other intended level of environmental performance set by its management. The Figure 1 provides an outline of the EPE process, as the known Deming’s “PLAN – DO – CHECK – ACT” management model. Figure 1: Process of EPE Planning environmental performance evaluation (PLAN) Selecting indicators for environmental performance evaluation Developing and using data and information (DO) Colle cting data Data Analyzing and converting data Information Assessing information Reporting and communicating Reviewing and improving environmental performance evaluation (CHECK & ACT) Hřebíček and Pitner (1998) proposed information system ISEPE, which may evaluate organization's environmental performance against its environmental policy, objectives, targets and other environmental performance criteria. An organization without environmental management system may use EPE and information system ISEPE to assist in identifying its environmental aspects40, determining which aspects be treated as significant, setting criteria for its environmental performance, and evaluating its environmental performance against these criteria, (Hřebíček 1997). The process EPE defined in ISO 14031 is too general including methods how to choose appropriate EPI and ECI and set environmental performance criteria. Therefore, we present several approaches for selecting key environmental performance indicators in the paper. 40 i. e. in ISO 14031: element of an organisation's activities, products or services that can interact with the environment. A significant environmental aspect is an environmental aspect which has or can have a significant environmental impact. 148 2 Selecting key indicators with respect to Recommendation 2003/532/EC In Annex I of Commission Recommendation 2003/532/EC, on guidance for the implementation of Regulation (EC) No 761/2001 of the European Parlament and of the Council allowing voluntary participation by organisations in a Community eco-management and audit scheme (EMAS) concerning the selection and use of environmental performance indicator, is the guidance on the selection and use of environmental performance indicators for the purpose of producing the EMAS environmental statement of organisation. However this guidance is too general. Its major categories OPIs, MPIs, and ECIs as well as most subcategories correspond directly to relevant indicator categories used in ISO 14031. However the subcategories products supporting the organisation's operation, transport, employee involvement, administration and planning, purchasing and investments and health and safety are specific for EMAS. Basic principles of development of environmental indicator systems (Hřebíček, Pitner 1998) and Commission Recommendation 2003/532/EC are: comparability: indicators should enable a comparison and show changes in the environmental performance, balance between problematic (bad) and prospective (good) areas, continuity: indicators should be based on the same criteria and should be taken over comparable time sections or units, timeliness: indicators should be updated frequently enough to allow action to be taken, clarity: indicators should be clear and understandable. Further in Recommendation 2003/532/EC is highlighted, that organisations should select indicators which enhance their management. Indicators which do not contribute to the management of the organisation will ultimately not be incorporated in day-to-day management and hence will have little effect in improving environmental performance. In short, only those key performance indicators could be chosen which enable the employees and management to perform their tasks better. The Recommendation 2003/532/EC consider following criteria in the selection of appropriate key performance indicators: a) Indicators should give an accurate appraisal of the organisation's performance. It is important that the organisation can have a correct assessment of its environmental performance. The indicators should represent environmental performance as accurately as possible, providing a balanced illustration of environmental aspects and impacts.41 In addition to absolute values of environmental impacts, measurement units may also address the environmental impact per unit of product or service, per turnover, gross sales or gross value added (eco-efficiency indicators) or the environmental impact per employee. b) Indicators should be understandable and unambiguous. For reasons of both credibility and management control it is important that indicators should be clear and understandable to the user and correspond to the users' information requirements. Indicators should be coherent and concentrate on essential data. For reporting purposes data is often aggregated or normalised. Whilst this may allow for a succinct presentation it is important that the end result is easily understood. For instance reporting against an internal index for in-house recycling may not be understandable if the method for generation of that index is not explained in simple terms. Normalising data against a 41 i.e. in ISO 14031: any change to the environment, whether adverse or beneficial, wholly or partially resulting from an organisation's activities, products or services. 149 base year may allow for year on year comparison but may not reflect all aspects of environmental performance. c) Indicators should allow for year on year comparison.This aspect ensures that it is easy to follow the development of EP of an organisation. The importance of the correct selection of indicators at the beginning of the reporting process can be demonstrated in the requirement for year on year comparison. d) Indicators should allow for comparison with sector, national or regional benchmarks. One of the essential requirements for comparison of indicators is that they are generated the same way. The organisation should take care to apply the ‘common standard’ when creating their indicators. Organisations should ensure that they are aware of these benchmarks and that if reporting against these aspects then the indicators they choose should allow for direct comparison with these benchmarks. e) Indicators should allow for comparison with regulatory requirements.For both internal management and external credibility, organisations should be able to demonstrate how they are performing in relation to regulatory requirements. Where regulatory requirements exist for the environmental aspect to be reported, organisations should include these requirements in the same table or graphical representation as the performance. Before deciding on the key indicator to be used for tracking an environmental aspect an organisation should ask itself the following questions: a) Can the data represent the environmental impact of the organisation? b) Can the indicators enable the quantification of environmental targets? c) Does the data support the management process of the organisation? d) Is the data understandable without complicated explanation? e) Will data in this format be usable year on year? f) Are any existing legal limits for this aspect incorporated? g) Can the data be compared with relevant benchmarks for this aspect? Creating environmental information can be expensive and time consuming. Environmental performance indicators should therefore be cost-effective and appropriate to the size and type of organisation and its needs and priorities. They should address primarily those environmental impacts that are most significant and which the company can influence by its operations, management, activities, products and services. They should also be sensitive enough to reflect significant changes in environmental impacts. In addition, organisations should make the optimum use of the environmental information they collect. To this end the indicators should fulfil the dual purpose of assisting the management of the organisation and providing information to stakeholders. Depending on an organisation's capabilities and resources, the use of environmental performance indicators may initially be limited to those aspects considered most relevant, with the initial scope being gradually widened over time. 3 3.1 Further approaches for selecting key environmental performance indicators United Nations approach At the United Nations Conference on Trade and Development was published “A Manual for Preparers and Users of Eco-efficiency Indicators” (2004). This UN Manual sets out a range of eco-efficiency indicators, defined as the ratio between an environmental and a financial variable, i.e. indicators are ratios composed of an environmental item divided by a financial item. Eco-efficiency is therefore increased by reducing the environmental impact while 150 increasing the value of an enterprise (Schaltegger/Sturm 1989). Accounting principles in the UN Manual are based on the document “IASB Framework for the Preparation and Presentation of Financial Statements”, particularly the characteristics: understandability, relevance, reliability and comparability. For each of the eco-efficiency indicators, the accounting policy adopted is disclosed. 3.2 Global Reporting Initiative (GRI) approach GRI G3 Guidelines (http://www.globalreporting.org/ReportingFramework/) are the third and the last generation of GRI Guidelines. They were published in 2006 and they are results of several years’ development and improving Guidelines from 2002. Figure 2: GR3 Reporting Framework These guidelines are divided into several parts; each of them is devoted to certain aspect of GRI reports. G3 defines requested content of reports, framework of information and their quality. Guidelines prescribes part of report (Strategy and analysis, Organisation profile, Report parameters, Governance) and contain the list of performance indicators in three area covering corporate reporting and such can be observed and implicated in the GRI report. There are: Economic Indicators, Social Indicators and Environmental Indicators. The Economic Indicators illustrate: Flow of capital among different stakeholders; and Main economic impacts of the organization throughout society. The Social Indicators illustrate: Employment; Labor/Management Relations; Occupational Health and Safety; Training and Education; and Diversity and Equal Opportunity. The Environmental Indicators concern an organization’s impacts on living and non-living natural systems, including ecosystems, land, air, and water. They cover following areas: Materials; Energy; Water; Biodiversity; Emissions, Effluents, and Waste; Products and Services; Compliance and Transport. 151 3.3 The UK Reporting Guidelines approach The UK Reporting Guidelines42 (2006) „Environmental Reporting Guidelines — Key Performance Indicators (KPIs)“ help companies address their most significant environmental impacts, identify environmental risks relating to company performance, and report on these in a way that meets the needs of their shareholders and other stakeholders. Reference is made to the GRI G3 framework as well as the Guidelines on Environmental Management Accounting issued by the International Federation of Accountants and the Corporate Accounting and Reporting Standard (http://www.iasplus.com/ifac/ifac.htm) issued by the World Business Council for Sustainable Development and the World Resources Institute (http://www.wri.org/). The UK Guidelines identify three general reporting principles: transparency (including the definition of boundaries and explanation of processes to manage risk), accountability (including stakeholder engagement and third party assurance) and credibility (including the use of an EMS and policy for supply chain management). 4 Key environmental performance indicators for corporate reporting There is substantial variation between the different proposals as regards the range of environmental performance indicators advocated and the environmental impacts covered. In this paper, it is convenient to discuss the way in which indicators address: - Emissions to air and contribution to global warming The GRI G3 Guidelines have four indicators that concern emissions to air and contribution to global warming: EN 17 Greenhouse gas emissions EN 19 Other significant air emissions by weight EN 23 Other relevant greenhouse gas emissions The UK Guidelines include five indicators that concern emissions to air and contribution to global warming: KPI 1 Greenhouse gases KPI 2 Acid rain and smog precursors KPI 3 Dust and particles KPI 5 Volatile organic compounds KPI 6 Metal emissions to air - Water use and discharge The GRI G3 Guidelines include indicators: EN 9 Total water withdrawal by source EN 10 Water sources and related habitats significantly affected by withdrawal of water EN 11 Percentage and total volume of water recycled and reused EN 21 Total water discharge and quality EN 25 Water sources and related habitats significantly affected by discharges of water and runoff The UK Guidelines deal separately with water abstractions and emissions to water: KPI 14 Water abstraction KPI 7 Nutrients and organic pollutants KPI 8 Metal emissions to water - Waste and emissions to land The GRI G3 Guidelines include indicators: EN 20 Total amount of waste by type and destination 42 http://www.defra.gov.uk/environment/business/envrp/guidelines.htm 152 - - - - - EN 22 Total number and volume of significant spills EN 24 Weight of transported, imported, or exported waste deemed hazardous The UK Guidelines include: KPI 9 Pesticides and fertilisers KPI 10 Metal emissions to land KPI 11 Acids and organic pollutant emissions to land KPI 12 Waste (Recycling, recovery and landfill) KPI 13 Radioactive waste Materials, use of resources and recycling The GRI G3 Guidelines include: EN 1 Weight of materials used EN 2 Percentage of materials used that are recycled EN 27 Percentage of products sold that is reclaimed at the end of the product’s useful life by product category The UK Guidelines cover the use of resources: KPI 15 Natural gas KPI 16 Oil KPI 17 Metals KPI 18 Coal KPI 19 Minerals KPI 20 Aggregates KPI 21 Forestry KPI 22 Agricultural produce Energy use The GRI G3 Guidelines include: EN 3 Direct energy consumption broken down by primary energy source EN 4 Indirect energy consumption broken down by primary energy source EN 5 Percentage of total energy consumption met by renewable sources EN 6 Total energy saved due to conservation and efficiency improvements EN 7 Initiatives to provide energy-efficient products and services EN 8 Initiatives to reduce indirect energy consumption Biodiversity The GRI G3 Guidelines include: EN 12 Location and size of land owned, leased or managed in, or adjacent to, protected areas EN 13 Description of significant impacts of activities on protected areas EN 14 Areas of habitats protected or restored EN 15 Programmes for managing impacts on biodiversity EN 16 Number of IUCN Red List species with habitats in areas affected by operations, broken down by level of extinction risk Environmental protection expenditure The GRI G3 Guidelines incorporate single indicator EN 30 requiring total environmental protection expenditure by type, within the categories: ƒ Waste disposal, emission treatment and remediation costs ƒ Prevention and environmental management costs. Expenditure on fines for non-compliance with environmental regulations is addressed under EN 28. Impacts of products, services and transport The GRI G3 Guidelines include: 153 EN 26 Initiatives to manage the environmental impacts of products and services and extent of impact reduction. Above indicators need to be defined with sufficient precision to ensure that preparers and users have a uniform understanding as to the information included, its limitations and context. This should embrace completeness and reliability, neutrality, and clarity. There should be relatively little scope for individual judgement in deciding what information to report or omit. Definitions and measurement methods need to be sufficiently precise to avoid uncertainty and to ensure that different organisations in similar circumstances do not present significantly different data. The degree of flexibility should be minimal so as to reduce the scope for bias or manipulation of a performance indicator. An explicit statement defining each indicator and the basis of compilation is important in meeting these criteria, whether the indicator is used internally or published externally. 5 ICT support of corporate reporting with KPI We have continued in development the prototype of web information system ISEPE for corporate reporting, which is able to choose key performance indicators KPI and easy communicate with both internal and external interested parties (employees, EMS team, company managers, public and external interested parties and other report readers), (Hřebíček, Kokrment, Ráček 2004), (Fiala, Hřebíček, Ministr, 2005), (Kokrment, Hřebíček, 2005). We have used in communication processes in EMS and EPE as an output and input format mainly in XML (when it is possible) since 2002, but it was used also its native format with necessary conversions, because large volume of input data to EPE is stored in existing company information systems. Processing general EMS records/data into KPI and EPE documents/reports is customized for various interested parties in various forms (XHTML, PDF, text, etc.). Each document/report contains data from three main categories: basic part, which includes all the records/data for processing and choosing appropriate KPIs, which are subject of communication/reporting (but not all these data are contained in the final customized document/report); information about interested parties — target group and foreword for specific target group. These data are transformed to the structure demanded by specific target group. Next step is application of the design for target group. Finally the data are sent to serialization process, which produces final document/report in XHML, PDF format. There are many high-quality open source ICT tools for generating, validating XML documents. We have used Cocoon (http://cocoon.apache.org/) since 2002. The Cocoon is as an open source web development framework for publishing documents. It is written in JAVA language. Cocoon generates XML data according to the requests from web browser, further it generates some SAX (Simple API for XML) event. The data are then passed to further component, which can perform some transformations with them (usually using XSLT). These transformed data are then passed to serialization, where is generated final document (in PDF, HTML, XHTML, text format…). Processing documents/records/ reports into their final version is customized for various target groups in various forms (XHTML, PDF, text, etc.). 154 6 References 1. Department for Environment, Food and Rural Affairs/ Trucost (2006) Environmental Key Performance Indicators — Reporting Guidelines for UK Business (DEFRA, London, 2006). 2. Fiala, J., Hřebíček, J., Ministr, J., (2005) Using information and communication technology in company corporate reporting. In Proc. Environmental Accounting. Sustainable Development Indicators.: 24-25. September 2005, Prague, Czech Republic, pp. 324-330. 3. Global Reporting Initiative (2006) Sustainability Reporting Guidelines (Global Reporting Initiative, Amsterdam, 2006). 4. Hřebíček, J. (1997) Environmentální indikátory a hodnocení environmentálního profilu v informačním systému EMS. Životné prostredie,.5: 242-245 5. Hřebíček, J., Pitner, T. (1998) Analysis of information systems for environmental performance evaluation. Acta Universitatis Mendelianae Bruenesis, Brno: MZLU Brno, XLVI, 45-56. 6. Hřebíček, J., Kokrment, L., Ráček, J. (2004´) Workflow support of corporate environmental communication and reporting. In 18. International Conference Informatics for Environmental Protection EnviroInfo 2004. Sh@ring. Geneve, Schwitzerland, pp. 194-207, 2004. 7. Hřebíček, J., Kokrment, L. (2005) Standardization of Environmental Reporting in the Czech Republic. In Environmental Accounting and Sustainable Development Indicators.. Praha : Jan Evangelista Purkyně University in Ústí nad Labem, Charles University in Prague, 2005. s. 309-317. 8. Hřebíček, J., Kokrment, L. (2005) Environmental Communication and its Standardization in the Czech Republic. In Proceedings of Sustainability Reporting Bombay 2005. Bombay, India : Sustainability Reporting, 2005. 9. International Organization for Standardization (1999) Environmental Management — Environmental Performance Evaluation-Guidelines, ISO 14031 (1999). 10. United Nations Conference on Trade and Development (UNCTAD) (2004), A Manual for the Preparers and Users of Eco-efficiency Indicators (UNCTAD, Geneva, 2004). 155 Sustainability Accounting versus Environmental Accounting Jaroslava Hyršlová, Jan Vávra Faculty of Chemical Technology, University of Pardubice, Czech Republic [email protected], [email protected] 1 Introduction The sustainable development concept represents a model of society development reacting on the new situation of the current world, which changed radically in the previous decades. The industrial model of economy was historically formed in different economic, social and civilisation conditions, in the time when it seemed that there were sufficient sources, as well as space, for unlimited growth, unlimited consumption, and unlimited waste production. However, at present, the mankind already touches and exceeds limits of the carrying capacity of the planet, and such economic development becomes unsustainable. Before creation of the sustainable development concept, the society was lacking reflection of the natural environmental limits of economic growth. The economic growth was generally regarded as the measure of growing well-being, and successful development of the society in general. However, at present, the attention is focusing, especially in the developed countries, on the qualitative side of development, and, in this connection, the need to achieve sustainable development is emphasized. Sustainable development is not a simple and exact category, but something which people must achieve if they want to ensure life-giving conditions for continuation of the mankind. In the simplest form, it means a development which may be sustained in the long term. It represents such value orientation of the mankind, and such trend of development of human society, when basic needs of all inhabitants of the Earth are met, when possibilities and freedoms of the present generation are not at the expense of possibilities and freedoms of the future generations, and when harmony between the mankind and nature is achieved (inner life-giving value of nature and rights of the other living species are respected). Thus, the general sustainable development principles include: - Seeking of balance between ideals of humanism and protection of non-human nature; - Preferring long-term considerations to momentary profit; - Humility and respect for everything formed without our merit. Especially industrial companies contribute very significantly to sustainable development. This article focuses on the issue of sustainable development of a company. Its attention focuses, in particular, on sustainability accounting which can be regarded as an important tool for promotion of the sustainable development concept into the practice of industrial companies, and on its links to the environmental accounting. 2 Sustainable development and company From the point of view of a company, it has to be distinguished between a corporate sustainability and a company which accepts the sustainable development concept and makes 156 efforts that its business activities are in accordance with this concept (thus, it is on the way towards sustainability) [8]. Business in accordance with the sustainable development concept requires changes in all business processes. It is necessary to set objectives and targets the company wants to achieve and which will mean that the company will have achieved sustainability. It is necessary to implement a whole number of measures and procedures into the company practice, reducing negative impacts and strengthening positive effects in order to achieve compliance with the company sustainability objectives. Thus, business in accordance with the sustainable development principles means that the company is on the way towards sustainability. Sustainability is the final objective the company tries to achieve. In the business practice, it is necessary to concentrate on the process of achieving sustainability. Thus, for execution of all management functions (i.e., planning, implementation management, as well as control activities) for support of decision-making processes, it is purposeful to have access to information on sustainable development aspects and on the company performance from the point of view of sustainable development. Sustainability accounting is collecting, analysing and communicating this information. Thus, it becomes the key tool for the management the final objective of which is a corporate sustainability. Development of sustainability accounting, as a relatively new accounting sub-system, could, in principle, proceed in two ways [7]: 1. It could regard sustainability accounting as a completely new system. 2. It could consider sustainability accounting as a development phase of conventional accounting (thus, financial, cost, and management accounting). An advantage of the first approach could be seen in that if a new system were developed, it would enable full use of completely new way of thinking in economic, environmental, as well as social relations. These considerations would be only subsequently integrated as a part of the accounting system. But, certainly, the second way is closer to the practice, i.e., gradual modification of the existing accounting, requiring less dramatic changes. Within the framework of the second approach, it is simultaneously purposeful to use environmental accounting, which can be certainly regarded as a very important part of the sustainability accounting. 3 Environmental accounting as a part of sustainability accounting In the recent years, various approaches to the conception of environmental accounting were gradually developing (for example, [1; 4; 5; 6; 9; 10]). Environmental accounting is regarded as a system providing (collecting, recording, evaluating and communicating) information on environmentally induced financial impacts and on environmental aspects/impacts of a defined economic system (for example, company, plant, etc.) [6]. According to this definition, the subject-matter of environmental accounting is formed by environmentally induced financial impacts and environmental aspects and impacts. Development in the field of environmental accounting was influenced, in a significant way, in particular by information needs of the stakeholders. The environmental accounting system must provide information serving to support their decision-making in conditions when the company approach to the environment influences the business success. Thus, environmental accounting represents a tool which may help the company management both in the field of improving environmental performance and in the field of improving economic performance; thus, in meeting the concept of environmental-economic efficiency (eco-efficiency). However, environmental accounting does not focus solely on the area of eco-efficiency. Efficiency is only one of the aims the management tries to achieve. Also the 157 other of the aims cannot be neglected - namely effectiveness, which belongs among important criteria of rational procedure of the business process. It expresses the relation between the used sources and obtained economic benefit. Within the framework of sustainable development, effectiveness concerns the level to which the sustainability objectives are met. Thus, environmental accounting must measure also effectiveness and investigate partial factors of its increasing. However, neither the eco-efficiency concept nor environmental accounting includes the third pillar of sustainable development — the social area. But focusing on eco-efficiency does not mean rejection of the sustainable development principles. Improvement in the field of eco-efficiency can significantly help in promoting the sustainable development concept into the business practice. Where disadvantages of environmental accounting based on conventional accounting principles (i.e., representing certain development phase of conventional accounting) may be seen? 1. Environmental accounting is based on the same principles as the conventional accounting (narrow perspective, it focuses only on the company — entity concept; accrual concept; prudence concept). 2. Monetary measurement in financial accounting has been criticized since it is based on different types of measures — historical, current, replacement, net present value — which in financial accounting are then added together as though they are similar, but do not in practice produce useful, comparable information [8]. 3. Environmental accounting excessively emphasizes monetary expression of the environmental impacts; small emphasis is given to information expressed in physical units, and to qualitative information. 4. Accounting does not enable full understanding of environmental impacts, and environmental performance and social performance are not sufficiently interconnected with economic performance [2; 3]. In spite of the above-mentioned defects, environmental accounting represents an important tool focusing on two sustainable development pillars, namely on environmental — and economic aspects of business, and their mutual relations. Thus, it is logical that development of new approaches to measurement, analysis and communication of information on a company sustainable development is based, in particular, on the concept of environmental accounting. Development of sustainability accounting is, essentially, a kind of evolution process on environmental basis. Thus, environmental accounting may be unambiguously regarded as a part of sustainability accounting. Sustainability accounting recently represents a new challenge. The main emphasis should be placed on environmental and social problems, and on efficiency and effectiveness. It is necessary to re-evaluate, in particular, non-financial information closely relating to sustainable development, i.e., environmental and social information, information concerning relation between environmental problems and economic performance (eco-efficiency), as well as information focusing on relations between social problems and economic performance (socio-efficiency). The accounting should primarily focus on future, and it should meet information needs of all important stakeholders. If company sustainability is regarded as results of management efforts taking into account sustainable development principles, then sustainability accounting has to be discussed within the framework of so-called sustainability triangle — see Figure 1. It integrates economic, environmental and social aspects, i.e., environmental and social management with conventional company management. Sustainability accounting, as an important tool of this management approach, should provide information supporting decision-making processes with the aim to improve eco-effectiveness, socio-effectiveness, eco-efficiency, as well as socio-efficiency. 158 Figure 1: Structuring of information needs for sustainable development of a company, and sustainability triangle [11] Economic effectiveness Economic Eco-efficiency Socio-efficiency Integration Ecological Social Eco-justice Ecoeffectiveness 4 Socioeffectiveness Characterization of sustainability accounting Any company which sets sustainable development as a strategic objective, will sooner or later encounter question how to measure company sustainability, i.e., how to set targets, and via which measures and procedures the set targets should be achieved. Thus, there arises a need to collect, record, analyse and communicate information on economic consequences of environmental and social activities. This information need has to be met, and there must be developed new tools enabling promotion of the sustainable development concept into company practice. Also the existing accounting system should be adapted to the new information needs. It should express financial consequences of environmental and social aspects of business. The term "sustainability accounting" emphasises that this system is a part of the company information system, which uses accounting methods with the aim to provide highquality information supporting company development towards sustainability. Sustainability accounting cannot be separated from sustainability reporting. Accounting information itself, if it is not communicated to its users, cannot contribute to sustainable development of a company. Reporting is also necessary for evaluation of the situation and development of the company concerning sustainable development. In view of problems with content of the term "sustainable development", sustainability accounting cannot unambiguously formulate its content and functions yet. It is only possible to characterize the required information the system should provide: this information should be, in particular, non-financial information, focusing on the future, and it should meet information needs of important stakeholders. Implementation of sustainability accounting into company practice surely is not easy. Its aim is, in particular, improvement of the company sustainability. Thus, it concerns interdisciplinary cooperation; managers responsible for the individual sustainable development aspects, and accounting workers, must work in mutual cooperation. Attention has to be paid to company inputs and outputs, as well as to the transformation process. Moreover, interested parties (stakeholders) have to be involved into the process, in order that the information is clear and reliable and atmosphere of mutual trust is created. Exact 159 definition of the content of the individual pieces of information, and their reliability, represent the foundation stone for successful management of company sustainability, and for evaluation of company performance. High-quality and reliable information then can serve to support decision-making processes with the aim to achieve sustainable development of the company, and it can be used also in the field of communication with the stakeholders (in particular, with employees, customers, owners, etc.). Especially reliability of information is very important for communication with external stakeholders; the information must be verifiable. Within the framework of sustainability accounting, it is surely necessary to pay attention also to indicators expressing the company performance in view of sustainable development. The company performance may be expressed by means of qualitative information (for example, the company intentions, description of activities), as well as by means of quantitative indicators (environmental and social impacts and their economic consequences). As stated above, purpose of sustainability accounting is provision of high-quality and relevant information which will serve to support sustainable development of a company. Thus, sustainability accounting (on the level of a company) may be defined as a system which concerns collecting, recording, analysing and communicating information on [7]: 1. Environmentally and socially induced financial impacts; 2. Environmental and social impacts of an economic system (for example, company, production site, workplace, etc.); 3. Mutual relations among environmental, social and economic issues constituting the three dimension of sustainability. In addition to the main aim of the sustainability accounting, S. Schaltegger, M. Bennett and R. Burritt mention still the following benefits of the system for the company [8]: − Synergy and coordination of the individual activities, improvement of their effectiveness, and provision of detailed look at them; − Simplification of measurement of the company performance; − Important tool for communication of the company with stakeholders, and improvement of communication within the company; − "Involvement" of the public in the company matters. Extent of information, which sustainability accounting should cover, is relatively broad. Certain specific needs and functions ensue from legislative pressures on the companies. Further requirements ensue from needs of the company (thus, in particular, from the management needs) aiming at mitigation of impacts of the company activities and products on its surroundings. There are many reasons (motives) why a company pays attention to environmental and social aspects of its business activities. If the company publishes its position from the point of view of sustainable development, then its prestige may be strengthened, and its reliability for the public is increased. If the company accepts the sustainable development concept, and is aware of its meaning for future generations, it is better prepared to react on changes in the field of legislative regulation from the state bodies. Voluntary environmental and social activities, exceeding the framework of legislative measures, may bring also significant economic effects to the company, i.e., improvement of its performance. Each of the above-mentioned motives requires different information from sustainability accounting. All this information is beneficial for the company. The first motive creates the need of providing relevant information into which stakeholders (in particular, the public and customers) are interested. The second motive focuses on meeting of requirements ensuing from the existing legislative regulations, as well as in connection with the planned changes; thus, it concerns, in particular, registration function of accounting, and ensuring of 160 its cogency. The third motive very closely relates to the effort to improve the company performance, with respect to competitive advantage. In view of the above-mentioned information needs, the subject-matter of sustainability accounting may be summarised only generally. The system should collect, record, analyse and communicate, in particular, the following groups of information: 1. Information ensuing from requirements of laws and other regulations (for example, in the Czech Republic, Act No. 76/2002 Coll., on IPPC and on IPR; REACH; laws relating to safety and health at work). 2. In the field of voluntary activities of companies, this concerns providing of information on their economic, environmental and social costs and benefits, meeting of requirements ensuing from acceptance of voluntary commitments (for example, in the case of chemical industry, the Responsible Care initiative), and other information relating to environmental and social impacts, to costs and benefits of other voluntary activities of the company contributing to sustainable development. 3. Information supporting decision-making processes of the management. This concerns very broad range of information on the actual, as well as potential, benefits and costs of the company activities, relating to setting of the company targets in the field of sustainable development, their implementation, as well as subsequent controlling, both in the strategic and tactical-operative levels. The aim of these activities is to improve the company performance. 5 Conclusion Development in the field of creating and use of the environmental accounting system showed that it is a system serving to support decision-making processes in conditions when the company approach to the environment influences its business success, and, thus, it is interesting for the stakeholders. If a company is aware of the importance of the sustainable development concept, and it wants to implement this concept in practice, then the system of environmental accounting surely represents an important tool of promoting of this concept into business. In spite of the fact that environmental accounting focuses only on two of the sustainable development pillars (environmental and economic aspects of business), it forms part of sustainability accounting, and its importance as an environmental management tool persists. Sustainability accounting is, essentially, further development phase of environmental accounting. It broadens its subject of interest also by social aspects of business and their economic relations. Thus, it provides environmental and social information, information concerning relation between environmental problems and economic performance (eco-efficiency), as well as information focusing on relations between social problems and economic performance (socio-efficiency). Sustainability accounting should primarily focus on future, and it should meet information needs of all important stakeholders. It should provide information supporting decision-making processes with the aim to improve eco-effectiveness, socio-effectiveness, eco-efficiency, as well as socio-efficiency, and, thus, to help the company in its way towards sustainability. 6 Acknowledgements This work was supported by the Grant Agency of the Czech Republic under project No. 402/06/1100. 161 7 References 1. EPA (United States Environmental Protection Agency) (1995) An Introduction to Environmental Accounting As A Business Management Tool: Key Concepts And Terms (EPA 742-R-95-001) Washington, United States Environmental Protection Agency, Office of Pollution Prevention And Toxics (MC 7409). 2. Epstein M (1996) Measuring Corporate Environmental Performance: Best Practices for Costing and Managing an Effective Environmental Strategy Chicago, Irwin. 3. Figge F, Hahn T, Schaltegger S and Wagner M (2002) The Sustainability Balanced Scorecard: Linking Sustainability Management to Business Strategy Business Strategy and the Environment Vol. 11, No.5, 269-284. 4. Gray R (1993) Accounting for the Environment New York, Markus Weiner Publishing. 5. Gray R et al. (1996) Accounting and Accountability: Changes and Challenges in Corporate Social and Environmental Reporting London, Prentice Hall Europe. 6. Schaltegger S and Burritt R (2000) Contemporary Environmental Accounting Sheffield, Greenleaf Publishing. 7. Schaltegger S and Burritt R (2006) Corporate Sustainability Accounting. A Catchphrase for Compliant Corporations or a Business Decision Support for Sustainability Leaders? in Schaltegger S, Bennett M and Burritt R (Eds.) Sustainability Accounting and Reporting Dordrecht, Springer 37-60. 8. Schaltegger S, Bennett M and Burritt R (2006) Sustainability Accounting and Reporting. An Introduction in Schaltegger S, Bennett M and Burritt R (Eds.) Sustainability Accounting and Reporting Dordrecht, Springer 1-33. 9. Schaltegger S and Stinson C (1994) Issues and Research Opportunities in Environmental Accounting (discussion paper 9124) Basel, Wirtschafts-wissenschaftliches Zentrum WWZ. 10. Schaltegger S et al. (1996) Corporate Environmental Accounting Chichester, Wiley and Sons. 11. Schaltegger S, Burritt R and Petersen H (2003) Corporate Environmental Management: Striving for Sustainability Sheffield, Greenleaf. 162 Moving beyond Orthodox Methods: How to Benefit from Online Reporting for Communicating Sustainability Issues Ralf Isenmanna, Jorge Marx Gómezb a Institute for Project Management and Innovation (IPMI) and Research Center for Sustainability Studies (artec) University of Bremen, Germany [email protected] b Department for Business Information Systems Carl von Ossietzky-University Oldenburg, Germany [email protected] 1 Introduction Corporate sustainability reporting has its roots both in environmental or in non-financial reporting respectively (DTTI et al. 1993; UNEP and SustainAbility 1994). It follows a development path towards a concept of balanced reporting, usually communicating the three pillars of environmental, social, and economic performance and its mutual interrelations, in business terms often called the triple bottom line approach (Elkington 1997; Clarke 2001). In the 10 years since sustainability reporting first became a topic of broader interest in academia, business, and government, it has rapidly grown to a field of research with increasing relevance for companies and capital markets, even in the eyes of investors (Kolk 2004; KPMG 2005, KPMG and UNEP 2006). At present, sustainability reporting seems to become part of companies’ daily affairs, even entering (to a certain extent) the business mainstream. Hence, for a growing number, not just for some pioneering companies, the question is now how to report on sustainability issues, and no longer whether to report at all. While the field is still evolving, as sustainability reporting matures and practice develops into a more sophisticated stage, companies have to realise that the “honeymoon period” (DTTI et al. 1993) in which comprehensive reports received media and public attention just for the fact that they publish reports at all rather than for what was disclosed is over. Nowadays, a substantial amount of information is required. However, further to the relevance of contents, issues of communication style also become of greater importance (Hund et al. 2004), in particular interactivity (Isenmann and Kim 2006), target group tailoring (Isenmann and Marx Gómez 2004; Brosowski and Lenz 2004), and stakeholder dialogue (WBCSD 2002). Due to cross media availability and other innovative opportunities offered by the internet and its associated technologies and services, companies are entering a new transitional stage of online reporting (SustainAbility and UNEP 1999; Wheeler and Elkington 2001; SustainAbility 2002). In this contribution, we provide an outline of how to benefit from online reporting for communicating sustainability issues, while developing from early environmental and sustainability reporting stages towards a more sophisticated digital approach. As the overall aim, the contribution attempts to bridge the gap between the business-driven field of sustainability reporting and its different facets on the one hand and on the other, the technology-intensive area of online reporting, information management, and business information systems. Although research in both domains is still quite disparate, recent progress in information and communication technologies (ICT) enables an array of unique capabilities to be employed for closing this gap. 163 The internet in particular and its associated technologies, services, and markup languages like XML (eXtensible Markup Language), XBRL (eXtensible Business Reporting Language) and EML (Environmental Markup Language) provide powerful tools, to the benefit of all groups involved in or affected by sustainability reporting (GRI 2004), be they managers, accountants, employees, members of the financial community, customers, suppliers, local authorities, non-governmental institutions, pressure groups, or organisations focused on benchmarking, rating and ranking. The insights presented here are part of a research initiative embedded in the environmental informatics community focused on the use of informatics methods and the application of current internet technologies and services with the goal to improve sustainability reporting at corporate level (Lenz et al. 2002; Isenmann et al. 2003a, 2003b; 2004, 2005; Brosowski et al. 2004; Arndt et al. 2006). This research initiative is supported and promoted through four institutions located at German Universities: - Institute for Project Management and Innovation (IPMI)/Research Institute for Sustainability (artec), University of Bremen, - Department of Business Information Systems and Operations Research (BISOR), University of Kaiserslautern, - Institute for Technical and Business Information Systems, Otto-von-GuerickeUniversität Magdeburg, and - Department for Business Information Systems, University of Oldenburg. These institutions provide different intellectual resources from outstanding scholars with profound experience and international reputation (Fig. 1). This makes it possible to combine different knowledge and expertise needed for such an interdisciplinary and challenging enterprise, including the areas of: sustainability management, stakeholder management, corporate online reporting, project management, business information systems, database management, internet technologies and web services, mark-up languages, document engineering, software engineering as well as ERP (Enterprise Resource Planning) systems, EIS (Environmental Information Systems), and CMS (Content Management Systems). Figure 1: Milestones of the environmental informatics’ research initiative, illustated here in terms of document engineering and software engineering EnviroInfo, Expert Groups, Working Groups Document engineering Vienna 2002 - Harmonisation Berlin 2001: DTDs 1st level - EML-initiative - Proposal DTDs (env. reports) (env. reports) - Case studies - Analyses - Benchmarking Berlin, Graz 2006: - GRI G3 guidelines Berlin, Brno 2005 - XBRL taxonomy - XSL style sheets Geneva 2004 -- media-oriented Movement to Stuttgart, Cottbus 2003 -- content-specific -- Schema (XSD) - Harmonisation -- (sustainability reports) - Process model for DTDs 2nd level developing style sheets - Process model for (env. reports) developing schemas - Development of - Single source multiple a software proto- media approach type - Publishing framework Cocoon Zeit - Refining software components, modules Software engineering 164 - Workflow engine - Recommender engine - Interfaces for ERP, CMS, env. information systems 2 Trends pushing companies towards sustainability online reporting Advanced environmental and sustainability reporting is a multi-faceted, rapidly developing field, influencing a company’s communication strategy and image profile as well as its organization, staff and particularly its ICT capabilities (Skillius and Wennberg 1998; Isenmann and Marx Gómez 2004; Isenmann and Bey 2007). Despite certain difficulties companies are struggling at present, there are — among others (Palenberg 2006, KPMG 2005, 2006) — three crucial trends facing companies today and in the near future (Line et al. 2002; Isenmann 2004): - integration of economic and social issues into environmental reports, - provision of reports on various media and - fine tuning reports according to users’ needs and preferences. Together, these key trends are setting the scene for any forward-looking approach in the field and thus they are taken as drivers to stimulate companies’ efforts to improve their practices and push them towards sustainability reporting while using the internet. 2.1 From free-standing environmental reports towards integrated reports At the early environmental reporting stages — in the late 1980s and early 1990s — reports are initially thought of as the primary vehicles or core instruments for environmental communication, addressing a wide range of target groups, produced in many cases as single documents and issued for a certain period of time (Brophy and Starkey 1996; Mesterharm 2001). Companies used these documents for disclosing their environmental performance, often including the following topics: top management statement, management policy and system as well as input-output-inventory of environmental impacts of production processes and products (UNEP and SustainAbility 1994; Lober 1997). As the field matured, however, it then became apparent that a narrow perspective exclusively focused on communicating environmental performance ignores at its peril important interrelations with economic indicators and social aspects. In order to integrate these issues crucial for sustainability, many companies are in the process of broadening their communication strategy and thus the scope of reports’ contents. This is a still ongoing process of gradual integration. For a number of companies expanding the scope of reporting it is a rather challenging task, requiring resources and expertise in the pursuit of a high quality standard. The trend for expanding the scope of reporting has a number of reasons and is thus promoted by several drivers (Kaptein and Wempe 1999; Morhardt 2002; GRI 2002): - Many employees are environmentally and socially conscious and prefer working for a company that “feels” the way they do and “acts” accordingly. Integrated reporting helps to increase employee’s job satisfaction and loyalty because well informed employees are less likely to change companies. - Further, there is a growing sensitivity in the public for the concept of sustainability taken as a whole. This increasing awareness closely linked with the demand for corporate transparency and credibility have compelled many companies to think hard about their “licence to operate”. - A number of critical customers tend to discriminate companies when the commitment expected for environmentally and socially responsibility is missing. Thus, reporting on 165 - - - - - - - such matters is at least a reasonable defensive action companies can take against being stigmatized as insensitive. Moreover, financial analysts, bankers and insurance agencies all want assurance that companies are doing their business well. For example, Dow Jones Sustainability Asset Management, Innovest and the Investor Responsibility Research Center are three of the major influential actors within the financial community that take companies’ environmental and social performance explicitly into account, not just business indicators in monetary terms as this is usually done. Directly related to the above, institutional investors such as pension funds and ethically motivated organizations are increasingly expecting that companies disclose their environmental and social responsibility. Recently, Morley Fund Management (2001) — one of UK’s largest insurance and pension fund managers — has been urging large companies listed on the London stock exchange to publish environmental reports. In response to the growing demand, several companies particularly in the food, beverage, communication, media and finance sectors think it cannot hurt to have a good sustainability reputation (KPMG 2002, 2005) and thus they provide additional information, e.g. on the protection of the biosphere, greenhouse gas emissions and ozone depleting gases, biodiversity and reduction of environmental health and safety risks to employees and communities. Leading edge companies, global players, multinationals and a growing number of sensitive middle-sized companies may need integrated reports nowadays. Because their range of influence extends across borders, their responsibilities also extend beyond basic compliance with national law and regulations and hence they are going to define their responsibilities on a global scale, often according to the triple bottom line approach. A number of governmental initiatives and other institutional programmes elevate sustainability reporting, e.g.: the European Commission with its “green paper”, promoting a European framework for corporate social responsibility (COM 2001) and its communication concerning the business contribution to sustainable development (COM 2002), the recommendations for communicating corporate social responsibility of CSR Europe (2000) as well as the framework and guidance on sustainable development reporting, proposed by the World Business Council for Sustainable Development (2003). A rather forceful project is the GRI (Global Reporting Initiative), a non-governmental international organization that was launched in 1997 as a joint initiative of the Coalition for Environmentally Responsible Economics (CERES) and the United Nations Environment Programme (UNEP). The goal of GRI is to enhance the quality, rigour and utility of sustainability reporting, particularly by developing globally applicable guidelines. Despite its voluntary nature, GRI has a truly catalysing role for stimulating the inclusion of social and financial performance in environmental reports and vice versa, perhaps finally converting them into sustainability reports. As Morhardt (2002, 32) has argued, “its guideline will become the de facto standard for sustainability reporting worldwide” and thus companies “almost cannot avoid meeting the GRI standard in any case.” (Morhardt (2002, 38) Taken as a whole, companies’ movement towards integrated reporting is often not driven by altruism alone, but also by self-interest. Some are going to create a new type of competitive advantage and think of integrated reporting as a current way to differentiate themselves, enhancing their success in the marketplace (Andrews 2002; Clausen et al. 2001). Yet others are disappointed when their polished free-standing environmental reports receive little response today. One reason may be the phenomenon 166 that reports are often poorly targeted to the needs target groups actually have (Lober 1997, 16). Another reason could be the “plateau effect” (Wheeler and Elkington 2001, 5), i.e. the fact that single environmental reports will probably receive much less media attention and public perception than at the early stages because they have to a certain extent become business as usual. Hence, companies are thinking about appropriate ways to move from “additive reporting”, frequently with limited success, towards integrated sustainability reporting, hopefully reaching a greater audience. Summing up, we see that the early stages of non-financial reporting have been focused primarily on companies’ environmental issues. Now that more and more companies have committed to sustainability as the vital challenge for the 21st century, the future focus will become more comprehensive, i.e. gradually being supplemented with economic and social issues. This trend is increasingly referred to as sustainability reporting, and links environmental issues closely with economic and social ones. Sometimes, this integration is seen in terms of “making values count” (ACCA 1998), “linking values with value” (KPMG 2000) or just understood as a matter of combining shareholder value, eco efficiency and corporate citizenship (CSR Europe 2000; SER 2001). In terms of corporate sustainability, all efforts mentioned above recognise the recent rapid increase of interest in sustainability matters, and are also in response to demand from some of the companies’ target groups. This will mean a need to move from free-standing environmental reports towards a more balanced approach, including environmental performance as well as economic and social aspects, and therefore a challenge. 2.2 From print media reporting towards cross media reporting In the early years most companies prepared environmental reports in the form of documents solely available on print media (CICA 1994; SustainAbility and UNEP 1999). More recently, however, the internet has rapidly become a more popular reporting medium because of technological progress in ICT applications and internet technologies in line with their overall penetration in corporate business as well as increasing access of the public (Isenmann and Lenz 2001, 2002; Rikhardson et al. 2002; Andrew 2003; Lodhia 2004). Today many companies produce paper-based reports offering electronic versions available on the WWW as supplements — and in some cases replacements. Perhaps surprisingly, at present, print still dominates whereas the internet electronic versions are frequently viewed as a supplement. Since environmental reporting has become business commonplace (to a certain degree) and hence more sophisticated, companies — especially some in environmentally sensitive industries — have been paying increasing attention to and experimenting with alternative reporting methods. One consequence of such behaviour is the increasing level of environmental reporting in its different forms. Thus companies are providing reports in different formats, presentation styles and on several media: - For example, Beiersdorf (1996) produced its 1996 environmental protection and safety report in a hardcover edition. - Likewise, AEG (2000) called its 2000 environmental report a “green paper”, a tome with a huge collection of environmental statements according to EMAS of about 200 pages. - Heidelberg (2000) provided its 1999/2000 environmental report in a fashionable hard cover folder with a spiral binding and hands-on index features. - Daimler Benz (1997) produced its 1997 environmental report in the form of a newspaper, whereas EPCOR Group (1997, 1998) created its 1997 and 1998 environmental reports as small booklets. 167 - - In addition to reports on print media, some companies provided CD-ROMs, for example Hoechst (1996) and Swiss Air (1995/1996). Unilever (2000) produced its 2000 environmental performance report as a digidisc, a smart CD-ROM in the form of a business card. Henkel’s (2000) CD-ROM 2000 — which is called eco communication 6 — contains a considerable collection of publications, including milestones in eco management and several other documents. As a supplement to its environmental report, Merck (1999) produced a more entertaining CD-ROM in 1999, providing a mix of infotainment, ecotainment and emotainment, available in two languages. The content can be updated via the internet, including sound and hypermedia features. It is true that some companies have produced environmental reports in different forms on print media the number of companies to have distributed electronic reports on CD-ROMs is small. Nonetheless, the rapidly emerging medium through which environmental reports are disclosed is the WWW. Confirming this trend, Jones and Walton (1999, 416-417) have clearly made the point: “Whatever the nature of the current debate, it is evident that the internet is becoming an increasingly popular medium for companies to communicate their environmental reports.” Moreover, borrowed from SustainAbility and UNEP (1999, 20-21; closely Jones and Walton 1999, 425), the internet is seen an “indispensable tool” to pass premature reporting stages providing environmental reports solely on print media towards approaching an integrated (online) reporting system, producing reports cross media, i.e. to make these available on different media, truly meeting users’ needs and preferences for accessing information. The rationale as to why more and more companies are using the internet as a reporting “enabler” or “facilitator” can be seen in the unique capabilities provided by it (Fig. 2). Compared with traditional media, the internet embraces a broader range of beneficial characteristics which are vital for current environmental or sustainability communication respectively. Figure 2: Comparison of media and their beneficial nature used for environmental communication (after Jones and Walton 1999, 414) Text Still image 9 9 Capabilities Medium Print Fax 9 Moving image 9 9 Video Video conferencing PC disk CD-ROM Internet 9 9 9 9 9 9 9 Interactio n Simulated 9 Audio/Tape Phone Sound 9 9 9 9 Simulated 9 Simulated 9 9 Simulated 9 9 Simulated 9 9 Simulated 9 In order to gain greater conceptual clarity on using the internet, Isenmann and Lenz (2002; similar Isenmann 2006) proposed a generic classification framework, arranging its overall usefulness in terms of reporting along four categories: 168 - - first, benefits concerning the underlying purposes of reporting, e.g. disclosing performance, improving efficiency, polishing reputation, improving image and engaging employees; second, benefits concerning certain reporting processes, e.g. in terms of automation, efficient production and multiple-utilization of contents; third, benefits concerning the report contents, e.g. retrieval, tailored views, personalized reports on demand; fourth, benefits concerning the report design, e.g. online/offline availability, navigation, hypermedia features, interactivity and dialogue. Despite its unique capabilities (Fig. 2) and the wide range of technical benefits mentioned above, the internet is often seen as yet another channel for dissemination (Lober 1997; Andrews 2003; Lodhia 2004), frequently used as a platform with public access just for providing reports that are available as Portable Document Format (PDF) files.43 Today, many reports put on the internet still have a clear print media focus and are merely available in a layout-oriented data format, representing mere electronic duplicates of hard copy reports on print media. This is true for standalone environmental reports as well as for sustainability reports. In the words of Elkington and Priddey (1997, 52), a number of companies “seem to have got stuck in the rut of thinking in terms of the printed page”. In a number of cases, e.g. the 1996 environmental report of RheinLand Versicherungen (1996), the 1999 environmental report of Bayerische Landesbank (1999), the 2000 environmental statement of Badische Stahlwerke (2000) and the 1999 sustainability report of Dresdner Bank (2000), one can see this print fixation in the note “printed on recycled paper”. Further, many reports are initially prepared for hard copy are then translated by external multimedia agencies or internet services companies into HyperText Markup Language (HTML), the common formatting language used by the WWW, and then directly transferred to the internet, still. This orthodox reporting practice is confirmed through empirical findings: - Based on an exploratory survey, a total of 121 environmental reports available on the internet in Germany 2000 were analysed (Isenmann and Lenz 2002). This survey was carried out by the Department of Business Information Systems and Operations Research at the University of Kaiserslautern, Germany. The goal was to evaluate environmental reports on the internet according to its technical standards and concerned the extent to which its specific benefits have been exploited. In line with an underlying classification framework highlighting three methods prototypical for internet use (Fig. 3), it was found that most of the reports can be called “converted”, i.e. using the internet merely for presentation; a number of reports can be considered “enriched”, i.e. using the internet as an additional channel for distribution; of the reports analysed, surprisingly no report could be called fully “integrated” , i.e. using the whole potential of this computerbased medium. 43 PDF is a document format, primarily used for reproducing hard copy reports and other documents on the Internet. A report stored as PDF file retain design, layout and formatting features and thus has exactly the same appearance as the underlying hard copy document. Although PDF is an offline-document format that could be downloaded, such a file can also incorporate some interactive features of a website, for example hyperlinks. These opportunities have made PDF the format of popular choice for electronically distributing reports although produced with a clear print focus. PDF can be opened, viewed and printed via Acrobat Reader, a freely available software tool. Miele’s (1999) environmental statement as well as Cherry’s (1998) environmental statement clearly demonstrate that PDFs incorporating well-designed hyperlinks could be in fact a suitable and cost-saving alternative, particularly for small and medium sized companies. 169 Figure 3: Methods of internet use prototypical for environmental reports Method of internet use Report style Description and characteristics Medium just for presentation “Converted” Replica of a paper-based report, just converted in an electronic version, offline (PDF, RTF) or online (HTML) “Enriched” Electronic version, but still with print media focus, translated into HTML with some nice multimedia features “Integrated” Cross media focus, stored as XML-file, featured with multiple linking and complex hypertext structure Reporting facilitator - Closely linked to the insights above, there is another empirical analysis of how the internet is currently being used for environmental reporting, carried out by ACCA (2001). This analysis was based on two samples: first, 240 companies within the UK, EURO and Global FTSE 100 Indexes were surveyed; second, 42 UK FTSE 100 companies producing electronic reports in 2001 were analysed. Three distinct ways of using the internet were found. These are called “piggy-back”, “integrated” and “standalone” (Fig 4). Figure 4: Methods of internet use prototypical for environmental reports Method of internet use Report style Medium used for presentation “Piggy-back” Paper-based report, hosted within company’s website (PDF) “Integrated” “Indispensable tool” “Standalone” Description and characteristics Two different realisations: – Short hard-copy summary report, with references to the URLs where further information can be found – “Piggy-back” approach, but its HTML version has some additional features incorporated No hard-copy report, solely on the internet To conclude, despite some diversity in detail and although the terms used are different, both analyses demonstrate that there are substantial differences between current environmental reports available on the internet and some diversity as to how to make use of the internet taken as a whole, whether it is used primarily a means for presentation, a channel for distribution or performing reporting processes. When analysing such environmental reports on the internet in the context of its technical benefits, it might be helpful to use such classifications, perhaps providing a basic tool: first, from a reporting company’s perspective, for developing a clear strategy concerning internet-based environmental reporting, probably for moving away from “converted“ environmental reports towards “enriched” or fully “integrated” ones; second, from a benchmarking institution’s point of view, for rating and ranking reports in terms of internet-specific features. On the basis of the insights above, one might ask if it is sufficient that environmental reports still be directly translated and uploaded to the internet without creating more added value. An increasing number of target groups will probably no longer be satisfied when provided solely with reports on print media or mere electronic duplicates of them. Especially 170 professional users in the financial community such as financial analysts, investment consultants, brokers, private and institutional investors, banks, and insurance companies as well as ranking or rating organizations need updated and fine tuned environmental reports, preferably available online44 and prepared for machine processing without any need to capture the data in an electronic form once again. Such a scenario may not be irrelevant. On the contrary, this could make good business and environmental sense for two main reasons: first, because non-financial reporting is becoming increasingly relevant for decision making in the field of the financial community (Edwards and Andersen Consulting 1998); and second, since multiple inquiries companies are receiving from a variety of target groups are a really timeconsuming and costly exercise (Axelrod 2000). Rather than endure these procedures, companies are recognising the value in having a readily available tool for providing the information needed. All in all, it is cross media reporting that seems to be needed, but cross media reporting based on the internet.45 Such an approach enables companies to provide reports and other communication vehicles on a single source, be it a common database or another kind of repository. Consequently, the question should not be how to translate a hard copy report with its strict print media focus while expending great effort to adapt to other media. Instead, the question in fact should be how to create a cross media reporting system containing relevant content to produce different reporting instruments on various media on demand. In technical terms, such a system is called a (web) content management system, appropriate to perform single source multiple media publishing. A content management system allows content to be stored, retrieved, edited, updated, monitored and then output to cross media in a variety of ways (Kartchner 1998). It usually includes a database along with workflow and editorial tools. Resulting from this, the report’s content has to be structured in small modules or substantial entities — in terms of computer scientists these are called semantic components — and stored in a suitable data format e.g. XML. XML has already proved its usefulness for providing fine tuned environmental reports on different devices and various media. Borrowed from Jones and Walton (1999, 416), according to the second trend there is a need to define an environmental reporting system “that develops environmental disclosures in a holistic manner in all media.” In contrast to a monolithic recommendation either for print media or computer-based media, we argue for a cross media reporting approach that relies on an underlying ICT infrastructure, instead of being based on the internet and using the benefits of XML, supporting the whole reporting workflow. Such an approach keeps companies in a position to provide environmental/sustainability reports and other communication vehicles on a variety of media, based on a single data source that serves as a shared publishing basis. Bearing this in mind, it is not going to be a case of either print media or computer-based media, or one of of 44 Gassen (2001) observed a really interesting phenomenon: Due to increasing Internet use in the field of financial reporting, he analysed impacts that reports’ data format will have on user-friendliness and quality assessment. More precisely, he tested, whether a report should be provided exclusively offline as PDF file or if it would be more useful disclosing reports’ content online via HTML. Maybe surprisingly, the results strongly demonstrate that HTML was clearly preferred, for example in terms of time needed to answer certain questions, smaller data transfer, correctness of data users are searching and usability. Perhaps, the findings are in contrast to insights of the early stages of environmental reporting when PDF is thought of a fairly proper and cost-saving format used for CERs available on the Internet. Further, for companies starting with a paper based report – as many still do – producing PDFs can be a first step to provide reports on the Internet because this could be performed with little effort without reengineering the reporting workflow. 45 For a first step in providing a communication systems cf. Henkel’s variety of instruments, including special interest articles, CD-ROM, site reports, open house events, sustainability ratings, reports, direct dialogue, Internet platform, consumer information, press releases and other vehicles relevant within this field: <http://www.she.henkel.com/com/html/content/main_05-01.htm>, 2003-03-13. 171 either paper-based reports or internet-based ones, but of both (Charter 1998; Isenmann and Lenz 2001). 2.3 From “one size fits all” reports to customized reports In addition to the developments towards integrated and cross media reporting dealt with above, the third trend is referred to as a movement away from “one size fits all” reports towards a more tailored approach. It is characteristic for customized reporting to take into account the requirements of several standards, guidelines, and the different needs of a number of users, and then to produce reports precisely meeting all these requirements and needs. There is broad consensus that such customization or target group tailoring is vital for the success of advanced environmental/sustainability reporting (Isenmann and Kim 2006). Although that goal is often mentioned in reporting frameworks, concepts and guidelines, current practice reaveals that there is still significant room for improvement, even for the best reporters. In total, customized reporting and the provision of fine tuned reports remains largely unrealized, still challenging companies in the near future but clearly lacking thus far. Throwing more light onto methods of customized reporting is argued to be a real step forward on the way to sustainability reporting. Hence, customization should be seen as an integral part of companies’ efforts to improve current practice and finally approach advanced reporting stages. Customization however is not as simple a process as it may appear at first glance. On the contrary, such an enterprise represents a challenging and multifaceted problem requiring both identification of relevant target groups and clarification of their particular needs, and also a pool of report content that companies are willing to disclose, preferably arranged in a specific document structure appropriate for automated machine processing through ICT applications. Analyses and empirical findings have shown that clear target group tailoring is usually still lacking in current practice. This is true for all kinds of non-financial reports on print media as well as on computer-based media (KPMG 2002). Of the majority of reports available, usually a variety of target groups is addressed, but their specific information needs are heterogeneous and thus these needs cannot be fully satisfied through an orthodox practice or easily be met just by “business as usual” via one universal document (on print media), mostly produced as “one size fits all” report. Employees, customers, suppliers, local authorities, legislators, neighbours, consultants, financial analysts, investors, insurance agents, media representatives, and members of rating and ranking organizations that are all identified as key addressees need more and more target group tailored, individualized or even personalized reporting instruments. This is also true for companies’ top managers who hold an exceptional position, for local authorities who claim a specific right to know and also for banks and insurers who require confidential information. Moreover, distribution channels and design preferences may differ a lot from one another. Taken together, all the users above expect that companies’ reports truly address their real needs. - For example, with growing general environmental awareness, employees are interested in the environmental performance of their employers and companies. They want to be informed about targets and activities related to the environmental management system. Further, they want to understand how companies are perceived by local community groups. Employees wish to see their company as a going concern, recognising that environmental performance might have some influence on this. - In supply chains and other manufacturing networks, suppliers exchange information with participating business partners. Establishing partnerships implies extensive environmental communication along the whole supply chain or network (Lippman 2001). These groups need environmental information regarding resource efficiency, 172 - regulatory compliance, new product and service opportunities, especially in terms of extended product stewardship, and other environmental liabilities. Investors, including institutional and private shareholders, financial analysts and investment consultants, are increasingly interested in environmental issues and their financial interrelations since these groups have noticed that environmental reports make good business and environmental sense (Blumberg et al. 2000). Many investors expect that environmental performance will influence financial performance and shareholder value (Kiernan 2001). For example, in November 2000 a group of 39 financial investors, managing combined assets excess of $ 140 billion, sent a letter to CEOs of the 500 largest U.S. companies urging them to provide sustainability reports (SocialFunds 2000). Publishing merely one (paper-based) report — most often prepared as a “one size fits all” document — shows significant shortcomings in each case because it is rather difficult to meet heterogeneous information needs and individual preferences via a single uniform vehicle. As a result of this complexity, producing one (paper-based) report actually means making compromises. A “report designed to appeal to everybody may end up serving nobody’s real needs.” (DTTI et al. 1993, 6) However, it is very laborious — and probably expensive as well — to produce a great number of tailored reports on print media through orthodox practice, because companies usually address a variety of target groups. The above-mentioned limits are closely linked with difficulties involved in using print media for communication for which they are often poorly suited. In the words of Mach: “An organization needs to send the right messages through the right distribution channels to the right audiences. To accomplish this, it may need a variety of communications vehicles — not just a single report. One size doesn’t fit all in today’s internet world of mass customization.” (cited in MacLean and Gottfrid 2000, 248; likewise Wheeler and Elkington 2001, 2 claim that companies may provide the “right mix of information in the right format at the right time”.) Approaching customization and providing fine tuned reports companies may use the internet as an excellent means while reaping the benefits of XML. These tools provide several unique capabilities, e.g. the benefits of employing push and pull technologies for efficient information supply, rapid and cost-saving distribution and provision of updated data and tailored information on demand: Initially, the internet was designed as a pull technology, indicating that users “pull” the information they need from a company’s website, i.e. they “pull” a certain website from a server to their local client browser. Users “surfing” or “browsing” the internet are then seen in an active role. The principle again illustrates that reporting companies “push” information to a wide audience through certain distribution channels, perhaps via email, newsletters, the WWW and a number of newer technologies (Isenmann and Lenz 2001). In a more detailed fashion, customized reporting based on the internet could be implemented through three different approaches (Lenz 2003; Isenmann and Marx Gómez 2004; Isenmann and Kim 2006): - The first approach is called stereotyping, a basic method of customization employing standard user-profiles. These profiles record information needs that are thought of as characteristic of a specific group of users (e.g. illustrated in the columns in Fig 9). Stereotypes are usually based on an analysis of empirical studies and then refined for a certain company via questionnaires and interviews with its key target groups. Using stereotypes, a customized environmental reporting system provides different, but frequently static views of a report, perhaps dependent on a certain target group users are assigned to. For example, employees probably have a view of a report different from 173 - - customers, and thus a company may prepare a set of tailored reports, particularly highlighting the information the company expects that to meet the needs of the group primarily addressed. This is the way that a number of users may prefer: They are provided with a pre-selected report, probably meeting their needs and likely to suit their preferences. One step beyond, the second method of customization is described as individualization. Through this more sophisticated method, users are able to create their own reports, they then become “reporters” themselves, selecting the information they need, either according to their current preferences or in line with a certain guideline. Individualization offers more interactivity. Tailored reports that users request, however have to be produced dynamically through a (web) content management system. In order to manage its administration well, it is helpful to employ user-profiles. These profiles record users’ preferences perhaps regarding their target groups (data view), density (status), media (kind of data), breadth (topical selection), depth (specification), time (timeliness and date of availability) and the form (style, layout, format) in which the report is to be prepared. The third method, customization can be accomplished as personalization. Personalization is seen as the most sophisticated approach because it records personal data in addition to the users’ preferences. Recording personal data, e.g. name, address etc., however is a sensitive issue that needs to be treated very carefully to prevent misuse. For that reason, any procedure of recording personal data should be voluntary, reversible and made transparent to the user. Furthermore, its employment should be strictly limited to fine tuning communication vehicles. Implementing personalization mirrors an insight stated early in the field when the focus in environmental reporting was focussed on reaching the target groups addressed (CICA 1994, 40): “The choice of audience will directly affect the presentation of information, its tone, sophistication, emphasis, etc.” Indeed, customization seems to be very useful for reporting companies and the target groups addressed. From a company’s perspective, customization is an opportunity to extend reporting success and multiply the number of target groups actually reached; from a target group’s point of view, customization is seen as a requirement for truly meeting their needs and thus for tracking companies’ performance over time. One approach of customized environmental reporting worth emulating may be BP’s data desk,46 or just recently provided by O2.47 It offers various ways to tailored access and fine tune environmental information, also linked with financial and social issues within BP’s websites. Users can take a specific view and create their Website for their specific needs. Another feature probably important for customized (online) reporting based on the internet is its capability to gain deeper insights into users’ information needs and preferences. 46 Just visit BP’s website on “environmental and social” <http://www.bp.com/environ_social/index.asp#> and then leading to the data desk: <http://www.bp.com/datadesk02/selections.asp>, access 2003-01-18. Closely related to the above, but in the field of financial reporting, Software AG offers several features to provide tailored views on its online financial report, visit <http://213.68.23.41/de/index.htm>, 2003-01-18; for further details cf. Isenmann and Kim (2006). 47 Cf. O2 Corporate Responsibility Report 2005/2006, <http://www.o2.com/cr/personalisedreporting.asp>, 200705-29. O2 has launched a new, individualized reporting feature. This reporting service allows you to tailor the content, within this resource, to certain specific information needs and preferences. Users can create a tailored report in one of two ways: by selecting pages as 'clippings' using the check-boxes at the foot of each page; or by using the dynamic contents list which can be accessed from this page. 174 This can be performed directly through online analyses or indirectly by observing users’ pattern via web mining tools. Today, such tools are standard features of current web servers.48 Summing up up, we can say that the early incarnations described in terms of “one size fits all” reports served their purpose well in past years because they helped to communicate companies’ environmental/sustainability performance to a wide range of target groups. If reports are too detailed or too fragmented, requirements could have prevented interested companies from establishing reporting as a common business practice. As they moved forward, however, further improvements and an increasing demand for different views will bring about true customization, not just piecemeal engineering if an advanced reporting stage is ever to be achieved. As such, it will require taking the different needs of different users into account and providing tailored, individualized or even personalized reports on demand. Customized online reporting, linked with a balanced integrated approach and cross media availability will become crucial as more companies produce reports and claim to be providing useful information on environmental/sustainability issues for a variety of target groups. Although environmental reporting serves a wide range of purposes and despite the fact that companies are targeting a diverse group of key users, most of them may emphasise the importance of three trends mentioned above, i.e.: first, providing a set of contents that target groups expect, including environmental issues as well as its economic and social counterparts, leading to a more integrated approach; second, cross media reporting seen as producing vehicles on various media in order to reach target groups addressed through the channels they actually prefer; third, customized reporting understood as finding out ways that users want to see reports and what they expect to see in reports. Together, these key trends are taken as drivers to stimulate companies’ efforts to improve their practice and push them towards sustainability reporting, rather than reporting merely through the internet. 3 Using media-specific benefits of the internet for sustainability reporting In the field of advanced environmental and sustainability reporting, reports available on the WWW have become one of the most fashionable topics since the inception of environmental reporting (Kerkhoven and Nelson 1994; Ollier 1996; Butner 1996; Elkington and Priddey 1997; Charter 1998; Jones and Walton 1999; SustainAbility and UNEP 1999; Isenmann and Lenz 2001, 2002; Wheeler and Elkington 2001; Isenmann 2004; Marx Gómez and Isenmann 2004; Isenmann and Bey 2007). The driving force that underlies this trend and promotes its use is the rapid development of internet technologies and services and associated technologies. Together, these technical means offer unique capabilities that could be employed to improve reporting. In contrast to the many empirical studies and conceptual articles about successful environmental reporting using the internet (SustainAbility and UNEP 1999; ACCA 2001; Shepherd et al. 2001; Weil and Winter-Watson 2002; Scott and Jackson 2002; SustainAbility 2002; Rikhardson et al. 2002; Andrew 2003; Lodhia 2004), however, a detailed and structured underlying framework is missing. In pursuing greater conceptual clarity, a comprehensive classification of internet-specific benefits is proposed and illustrated in the extract below (Fig. 5). 48 Web mining is an evaluation procedure supported through software analysing Internet protocols, cookies and other foot prints while surfing or browsing on a company’s websites. It gathers information on how many users have visited a reporting website, who they are, where they are from, which websites they have read or which are preferred ones. 175 Figure 5: Classification framework of internet-specific benefits for CSR communication (Isenmann and Lenz 2002; Isenmann 2006) Category of benefits (i) Benefits concerning communication purposes (ii) Benefits concerning the workflow along the production of communication tools Possible realisations Resource controlling Information, disclosure Rationalisation Easy administration of communication tools (iv) Benefits concerning communication style Learning issues and concerns Customisation Efficient digital preparation of communication tools Communication vehicles (iii) Benefits concerning communication contents Dialogue, two-waycommunication Fast distribution of communication tools Smart presentation of communication tools Additional information ... ... ... ... Customised selection (data view) Topical selection, retrieval Internal links: e.g. CSR division External links: e.g. guidelines, NGOs, stock exchange, ranking ... Online-, offlineavailability Navigation Hypermedia Feedback mechanisms ... This classification is based on a review of current approaches found in the literature dealing with internet-based environmental reporting. Methodically, the classification rests on two heuristics, and has shown its usefulness in several empirical studies. The classification appears schematic, not photo-realistic. However, it constitutes a helpful scheme for surveying the impressive array of benefits the internet could provide for environmental reporting in a broader sense. In addition, it may also be used to imagine ways to progress towards sustainability reporting. For the latter purpose, a multitude of benefits could further be organized in terms of a threestep-strategy: - Step 1: The internet facilitates the consolidation of complementary information that used to be contained inr free-standing reports, e.g. the incorporation of financial and social issues into environmental reports. - Step 2: The internet provides skilful connection and smart cross-linking among standalone environmental, economic, and social reports in the sense of a virtual compound document, featuring hyperlinks, perhaps pointing to the company’s environmental department, the stock exchange or rankings. These hyperlinks are employed to assist user navigation so that users always feel comfortable without “being lost in cyberspace” when browsing through such virtual reports. - Step 3: The internet can help to provide customized sustainability reports. Some target groups may wish to get a short divisional sustainability report. Some others may prefer a sustainability report in a more detailed fashion, just including two “dimensions”, e.g. economic and environmental issues, while still others may be interested in an allinclusive sustainability report with detailed disclosure of environmental, economic, and social interrelations. Computer scientists, ICT experts and a number of other reporting professionals recommend that employing XML helps to realize the internet-specific benefits outlined above (Arndt and Günther 2000; DiPiazza and Eccles 2002; Glushko and McGrath 2005). Due to the multitude of technologies associated with it, we understand XML to be a collective term that incorporates all the means shown below (Fig. 6). 176 Figure 6: XML-technologies, used for advanced environmental/sustainability reporting eXtensible Linking Language XLink Linking XSL Transformation Document Object Model / Simple API for XML XSLT DOM /SAX Application programming Transforming XML Schema / Document Type Definition eXtensible Markup Language XSD / DTD XML XML Namespaces Defining structure and content Meta language Integration XSL Formatting Objects Ressource Description Framework XSL FO RDF Formatting Processing meta data XML Path Language/XML Pointer Language XPath / XPointer Addressing / Identifying For example, XML has several advantages compared to HTML, and thus it is considered a preferred data format for reporting. The suitability of XML is based on its characteristics of multiple-usability, exchangeability and the separation between contents (semantics), report structure (logical order) and representation (layout and style). XML is structure-oriented and appropriate for advanced internet applications. XML-documents consist of plain text, and they can be validated by machine processing. Furthermore, XML offers a number of opportunities to improve reporting workflow and helps to allocate human and organizational resources more efficiently, supporting all core processes ranging from automated preparation and effective administration to fast distribution and smart presentation, and also facilitates teamwork along the reporting procedures, inside and outside the company (Fig. 7). 4 Framework for sustainability online reporting The framework for environmental/sustainability online reporting is illustrated along four elements (Fig. 8), proceeding from the outside to the inside, or from inter-organizational aspects to corporate ones respectively (Lenz 2003; Isenmann and Marx Gómez 2004): - stakeholder analysis, - analysis of stakeholder information requirements, - XML-based document engineering, and - ICT architecture. This framework serves as a guideline on how to exploit the media-specific capabilities that the internet and its associated technologies provide, bringing definite improvements in the areas of environmental communications, information management and organization, and perhaps smoothing the way to sustainability online reporting. 177 Figure 7: XML-specific opportunities for online reporting Reporting process Preparation ICT-specific challenges XML-specific benefits XML-technologies • Data stored in documents • Standardised document structure • Trend for standardisation • Powerful hyperlinks • Schema (XSD), document type definition (DTD) • Need for teamwork Administration • Data stored in documents • Clear data structure • Demand for customisation • Integrated communication • Need for teamwork Distribution • Multitude of accessibility Presentation • Automated generation • Markup via metadata • Single source cross media publishing • Push and pull principle • Hypermedia features • Smart presentation • XML parser (DOM/SAX) • XML database • RDF • XSL FO • Data formats suitable for XML processing • Cross media distribution • Demand for customisation • Xlink, XPointer, XPath • Customised presentation • XSLT and XSL FO • XSL parser • Presentation independent from structure and contents Figure 8: Technical framework for sustainbility online reporting Information demand Conceptual element (1) - Stakeholder analysis Information supply Conceptual element (3) - XML-based document engineering (DTD, schema, taxonomy) Conceptual element (2) - Information requirement analysis Cross matching Technical element (4) - Reporting system (web content management system, software tool, ICT architecture) 4.1 Stakeholder analysis The starting point of any internet-based environmental/sustainability (online) reporting system is stakeholder analysis identifying the primary users and typically asking: Who are the relevant stakeholders (including the critical ones), i.e. who are the key target groups inside and outside the company that require information via environmental/sustainability reporting? Generally, there are two ways of identifying them on the one hand, with a deductive approach or on the other with an inductive one: According to the deductive approach, initially all stakeholders could be considered relevant or called a target group who are involved in or affected by a company’s environmental impacts and activities. Perhaps, as certain stakeholders claim some exclusive information rights, they may be seen as specific users. For example, this is true for 178 companies’ top managers who hold ultimate liability, for local authorities who have a specific right to know and also for banks and insurers who require confidential information. Regardless of their particular information rights, it could be fruitful to address these users as groups anyway. Despite its usefulness, the deductive approach should be combined with an inductive one for this task. Stakeholder analysis represents a company-specific task influenced by certain circumstances, e.g. size, industry, products, processes, location, environmental impacts, stakeholder relations, communication strategy, environmental management, strategic goals etc. Hence, an empirical analysis could validate the number of relevant stakeholders found through the deductive approach. Lenz (2003) provides a thorough stakeholder analysis. He reviewed a multitude of empirical studies that identified key target groups and primary users’ needs in the field. Based on his in-depth survey he identified 12 key target groups, arranged in four groups: - Financial community, including investors, insurance agents and financial analysts; - business partners, including employees, customers and suppliers; - diffuse groups, including media representatives, neighbours and consultants; - normative groups, including local authorities, respective legislators, pressure groups and standard setting institutions. The users within a certain target group can be identified by the fact that they have relatively homogeneous information needs, at least to a certain extent. 4.2 Analysis of stakeholder information requirements Following stakeholder analysis and the identification of primary users, a reporting organization should study the information needs and other preferences expected to be satisfied in report form and content. Such an analysis of stakeholder information requirements leads to the question: What are the relevant contents that target groups expect, and what are the preferences they want to be fulfilled regarding form, layout, design, media and distribution channel? At present, little work has been done on conceptualizing users’ information needs, especially as concerns distribution channels, presentation styles and the media favoured. Hence, van Dalen (1997) complains about a lack of more profound insights into users’ information needs and preferences. Answering to this need, Lenz (2003) provides an analysis of stakeholder information requirements. He reviewed five major empirical studies that analysed users’ information needs (Fig. 9), including the studies of DTTI et al. (1993), CICA (1994) and Azzone et al. (1997). Together, the analysis of stakeholder information requirements clearly demonstrates that employees, customers, suppliers, local authorities, legislators, neighbours, consultants, financial analysts, investors, insurance agents, media representatives and members of rating and ranking organizations have heterogeneous information needs. These different needs cannot be fully satisfied or easily met just by “reporting as usual” through orthodox practice, via one universal document (on print media), mostly produced as a one size fits all report. Users are increasingly expecting target group tailored, individualized or even personalized reporting instruments. Thus it is crucial to find out what target groups want, to identify their needs and preferences. The results of the two analyses discussed above lend themselves to the creation of specific user profiles. For each of the core target groups, a profile of their information needs will be established that addresses content requirements, preferences as to the reporting form and secondary requirements such as distribution channel etc. 179 Public/media Env. sensitive investors Investors Env. pressure groups Neighbours Local authorities high priority Suppliers important Customers less important Employees Figure 9: Information needs of key target groups for environmental reporting (Lenz 2003, 232) Organisation Commitment of top management Overall structure and relationship between sites Corporate culture, working climate, leadership Compliance Logistics and traffic (products and employees) Deposits of waste Complaints/legal proceedings/judgements Production process General information/survey Current state of environmental technology Environmental pollution (noise etc.) Environmental activities Emissions/waste/recycling Consumption of energy and resources Health and safety Plants Environmental risks Prevention of accidents/risk management Products General information/survey Environmental impacts Impacts on human’s health Life cycle design/product stewardship Research & development New environmentally sound products Environmental management system Environmental policy Environmental goals Organisation/responsibilities/responsive persons World wide standards Participation/training/motivation of employee Environmental instruments and programmes Continuous improvement/performance Eco balancing Environmental auditing External verification Stakeholder communication Promotion of environmental reports Dialogue with the public Dialogue with local authorities Cooperation with suppliers and business partner Financial indicators Environmental expenditure Cost savings Environmental investment Environmental reserves Penalties, damages, legal proceedings Environmental accounting Financial-environmental interrelations Financial risiks (amount, probability, insurance) Chances (new processes, products) 4.3 XML-based document engineering The results of stakeholder analysis and deeper insights into stakeholder information requirements have been used for XML-based document engineering, indicating the ICT180 intensive area where contents, document structures, procedures, and the design of reporting instruments and other communication vehicles are defined. This leads to the questions: What should an environmental/sustainability report prepared as an XML document look like? What contents should be included? Who should be addressed? On what devices should the report be available? Which standards or guidelines need to be adhered to? Here, certain aspects of report structure, contents and layout are explicitly considered. The core of XML-based document engineering is to develop standardized document structures, in form of so-called XML-based DTDs (document type definition) or schemas (XSD) as its successor. A schema defines the semantics and overall pool of contents in a basic structure for a certain group of documents, in this case, for sustainability reports. From this pool of structured contents, customized reports that precisely meet the requirements of specific users, user groups, or on the other hand, guidelines, can be prepared in an automated fashion by machine processing. In terms of document engineering, a schema consists of several elements representing the contents and their corresponding attributes, specifying semantics and indicating these elements (Glushko and McGrath 2005). Consequently, a schema determines what elements can be used within a XML document. Further, a schema describes how elements can be arranged, and which attributes certain elements may carry. The development of a schema for sustainability reporting is a sophisticated undertaking because a number of different requirements must be taken into account. For demonstration purposes, we developed a comprehensive schema (Lenz et al. 2002; Isenmann et al. 2003a; Brosowski et al. 2004) (Fig. 10). This XML schema meets the “Sustainability Reporting Guidelines” of the GRI, released in 2002, and a number of other reporting requirements, e.g. the revised European Eco-Management and Audit Scheme “EMAS II” (EC 2001), the international standard ISO 14001 on “Environmental Management Systems” (DIN 1996), the German standard DIN 33922 “Environmental Reports for the Public” (DIN 1997), the first international guideline on “Company Environmental Reporting” proposed by UNEP and SustainAbility (1994), its German counterpart “Environmental Reports — Environmental Statements. Guidelines on Preparation and Distribution” recommended by future e.V. and the Institute for Ecological Economics Research (1994), and a recently published publicly available specification (PAS) on “Data exchange between ERP Systems and Environmental Information Systems” (Lang et al. 2003). Currently, this schema is blended into an already existing XBRL Financial Reporting Taxonomies Architecture (FRTA) (Arndt et al. 2006). This reference architecture for sustainability reports based on XBRL meets the current requirements of GRI’s G3, the third generation of GRI-guidelines, released in October 2006 (GRI 2006). All in all, employing an XML schema offers an impressive array of technical benefits and helps improving a company’s information management. Further, communication with target groups can be fine-tuned. In total, on the basis of an XML schema, companies can provide sustainability reports at the user’s choice. In other words, reporting à la carte seems to be possible, prepared by machine processing, and generated in an automated manner. 181 Figure 10: Schema for sustainability reports, illustrated 4.4 ICT architecture Reaping the media-specific benefits that the internet and XML may offer requires an appropriate ICT architecture, suitable to operate XML-based DTDs/schemas and appropriate to provide single-source multiple media publishing. For that reason, a three-tier web application is proposed: - The basic data layer contains several sources where DTDs/schemas, stylesheets, user profiles and a number of other XML-documents are stored. These sources include relevant data, metadata and thesauri. The data layer is managed through a database server. - The application layer contains different services and applications to generate and distribute reports in an automated manner by machine processing. This complex layer is used as a data integrator responsible for system management and is accessed through an application server. - The presentation layer represents an interactive user interface that is used for submitting users’ information needs as well as for presenting reports. The presentation layer provides easy access via a standard internet browser, e.g. Netscape Navigator or Microsoft internet Explorer. The procedure of a sustainability online reporting system is depicted below (Fig. 11): 182 t Web Server (III) o r Session Management Authentification Pipelines Cocoon s Database Server (I) • ¬ n Servlet Container (II) Users SSL Figure 11: XML-based web application for advanced environmental/sustainability online reporting Elements Java Database Connectivity Pool q p Database Management System XSL XML XSD Web Application User profiles External Web Application The reporting system — representing the technical element (in Fig. 8) — combines the three conceptual elements mentioned above and implements the cross-matching of supply (conceptual element 3) and demand (conceptual element 1 and 2) through a suitable ICT architecture. The aim is then to provide truly customized reports. If an ICT-supported reporting system is based on a single data source, then it usually provides “single source, multiple media” publishing. Using such a reporting system, the report content has to be structured in either small modules or substantial entities — computer scientists call them “semantic components” — and stored in a suitable data format, e.g. as XML files. In order to present efficiently an environmental/sustainability report prepared as an XML document smartly, Cascading Stylesheets (CSS) might be used analogous to HTML documents. Except for a few extensions, however, CSS can only change representation i.e. layout and style of elements, while the contents and structure of the underlying document remain consistent. Now, customized environmental/sustainability reports are possible without any need to change the underlying XML document (environmental report). Several components can be extracted, consolidated according to a certain structure and then presented in a tailored manner that exactly meets the user’s specific information needs or the requirements proposed by certain emerging guidelines. For demonstration, we developed a set of XSL (eXtensible Stylesheet Language) style sheets (Fig. 12), providing a total of twelve combinations: This set of stylesheets demonstrates how certain contents can be extracted from the same underlying XML-based report, and how these contents might be arranged and presented according to certain user preferences or exactly meeting the requirements of regulations or guidelines in an automated fashion. 183 Figure 12: Set of different views based on an underlying XML-based sustainability report through specific XSL style sheets Layout Print media Content Satisfying investors’ needs Disclosing issues prototypical for SMEs Fulfilling the requirements of EMAS II • Plain text • Table of contents • PDF Computer-based media • Hypertext structure • Multimedia features • Navigation • HTML Processing in Environmental Information Systems • Plain text • Marked with tags • XML Meeting the GRI guidelines Taken together, the framework describes a comprehensive and fully ICT-based reporting approach in a broader sense, including its variety of added value features. Due to its fully supported underlying ICT infrastructure, an internet-based online reporting system of this kind provides a set of important contents, different media, corresponding distribution principles, and various presentation styles. The ICT architecture discussed above has been implemented in a software prototype as a practical application (Isenmann et al. 2004; 2005). At the heart of its ICT architecture lies Cocoon, a Java-based, modular structured, open source publishing software (Apache 2003), able to perform XML-based DTDs/schemas, and suitable to provide individualized or even personalized environmental/sustainability reports. The system can be considered an adaptable online reporting system even providing personalized reports, truly able to accommplish one-to-one-communication on the fly. In sum, companies are in a position to make progress in customization step by step, starting with stereotyping and next moving towards an individualized or personalized online reporting system. The reason why we have employed Cocoon lies — among other advantages — in its powerful and sophisticated application capabilities. The modular application components could be arranged flexibly, serially grouped in so-called pipelines where different reports are then created dynamically on the basis of an XML-based DTD, thus exactly meeting each user’s individual needs. At present, this customized environmental reporting system is implemented as a prototype, but soon it will be implemented in a number of German SMEs. Those may be regarded as pioneers in the field of corporate online reporting, at least in terms of customization and using the internet for environmental/sustainability reporting properly. Numerous target groups are no longer satisfied solely with reports on print media or mere electronic duplicates. Professional use in the financial community, e.g. investors, financial analysts, investment consultants, brokers, private and institutional investors, banks, and insurance companies as well as ranking or rating organizations need updated and finetuned reports, preferably online and prepared for machine processing without any need to capture the data in an electronic form once again. This makes good business and environmental sense for two main reasons: environmental/sustainability reporting is becoming increasingly relevant for decision making; and responding to multiple inquiries that a variety of stakeholder groups are directing to companies is very time-consuming and costly (Axelrod 2000). Rather than endure these procedures, companies are recognising the value in having a readily available tool for providing the information needed. Pioneering companies will implement internet-based applications in the near future. Verie Sandborg, Baxter International’s manager of environmental health and safety requirements regards a good environmental or sustainability report as excellent source material to use when responding to formalized requests for environmental/sustainability information (Axelrod 2000, 5). 184 Many of the questions asked are already answered in comprehensive reports. However, it would be helpful to have a fully online reporting system: users could extract the information they need from a publishing database, and create an automatically generated customized report themselves, i.e. users are generate their own “reports à la carte”, merely selecting keywords, clicking on preferences on a menu or choosing a certain guideline — perhaps creating a sustainability report in accordance with the GRI guidelines at one’s fingertips (Marx-Gómez and Rautenstrauch 2001; Isenmann et al. 2004, 2005). 5 Conclusions DiPiazza and Eccles (2002, 127), two experts in the field of corporate reporting, state that “corporate information, in all its growing quantity and complexity can be — and in reality must be — communicated more effectively with the use of new technology. Reported information needs to break away from the constraints of paper-based formats.” For some companies, internet use for advanced environmental and sustainability reporting might seem to be a nice extra or just a buzzword in comparison to orthodox practice and the traditional reporting focused on print media. The unique capabilities and benefits of online reporting, however, elevate it beyond the status of a mere buzzword. internet technologies and services, employed with XML and incorporated into a Web content management system can do more than offer new channels for report distribution or presentation. The WWW is a service for distributing and presenting reports, including hypermedia features, online information and global access around the clock. Furthermore, information management can be improved in various ways: environmental data are captured from different data sources, combined despite different data formats, analysed for decision making, professionally mastered and hypermedia-featured, tailored according to specific information needs and certain guidelines, distributed and presented, e.g. via email, cross media, fax, or ordinary mail. Furthermore, the content and design of reports will be transformed: online availability, downloads, additional environmental documents, interactivity, feedback opportunities, contact details, automatic order forms, environmental electronic forums, hyperlinks, graphically designed websites, navigation, search engines, web rides, regular updates, and site promotion are some of the form and content capabilities that are already implemented to a certain extent. All in all, the internet is considered a “reporting facilitator”. Sensing that traditional environmental reporting might have its limits, more companies are considering improving their reporting practice and increasing the use of reports in general. On improving environmental reporting, Volkswagen (2003) makes the point: “’Glossy brochures which are not real are worthless’. A classic glossy brochure makes little sense in this context. What is required here is to harness modern, flexible and cost-effective information technologies and channels — means which are also within the reach of small and medium-sized companies, and not just the global players. The internet provides numerous possibilities along these lines.” With this in mind, one major challenge seems to be using the internet properly. Online reporting supports companies in moving away from traditional environmental reporting practice towards more advanced sustainability reporting. The latter is a powerful means for those companies that have already been publishing environmental, economic, and social reports for a long time and for those with experience using the internet professionally for their business activities. For companies new to such online reporting, substantial initial costs and problems may be incurred, e.g. to put in place the data capture, data storage, metadata management, data analysis, and decision support which are seen as basic ICT prerequisites. Moreover, to establish a workflow will result in at least some initial costs. However, many companies no longer see managing sustainability reporting 185 as an extra cost or burden on hard-pressed management, as from a long-term perspective, the attainable benefits may exceed the costs by far. Thus, it is recommended here that companies weigh the costs and benefits of such advanced sustainability reporting approaches against the target groups’ information needs and the companies’ resource capabilities to meet such needs. The goal of this article has been to shed more light on moving away from early environmental reporting stages towards sustainability reporting, bringing to the surface tacit opportunities using the internet and the benefits of its associated technologies as a reporting backbone for companies’ underlying ICT infrastructure. Such a forward-looking approach may be a harbinger for a groundbreaking shift in the field, but at a minimum it will lead to progress in terms of reporting along three dimensions: - Companies’ workflow could be performed more efficiently, supporting all the core processes from automated preparation and streamlined administration towards fast distribution and appropriate presentation. internet-based reporting can also facilitate the teamwork of different departments involved in text editing and other procedures, both internally and externally when co-operating with suppliers, intermediaries and rating or ranking institutions. - The scope of the reports’ contents could be expanded gradually, integrating economic, environmental, and social issues according to companies’ capabilities and communication strategies, but also to meet stakeholder needs. 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World Business Council for Sustainable Development (WBCSD) (2002): Communications and stakeholder involvement guidebook for cement facilities. Report prepared by the Battelle Memorial Institute (Ohio) and Environmental Resources Management (London). <http://www.wbcsdcement.org/pdf/final_report1_2.pdf>, 2003-09-18 105. World Business Council for Sustainable Development (WBCSD) (2003): Sustainable development reporting. Striking the balance. Geneva: WBCSD 190 Cerebral – a Web Based Sustainability Reporting Software Jorge Marx Gómez, Ralf Isenmann, Teméd Ilán, Jens Meyer, Thomas Path, Ruben Schorling Carl von Ossietzky Universität Oldenburg, Germany [email protected], [email protected], [email protected], [email protected], [email protected], [email protected] This paper describes the software cerebral. First the main motivation behind this project will be discussed and the main goals presented. Next the architecture of the software will be described, followed by the current state of development. The last part is the conclusion followed by an out view for the project. 1 Introduction This document represents an abstract of the work of the project group cerebral, which is an abbreviation for ’Corporate Environmental REporting for Business Related AffiLiates’49 and is derived from the project’s overall objective. Therefore, the project’s main goal is to develop a software system for advanced sustainability reporting. Sustainability reports have its roots in environmental reports which contain an overview of activities and achievements of the enterprise in terms of the sustaining development. Sustainability reporting includes the three most important topics of sustainability: economy, ecology and social aspects and the mutual interrelation between each of them. The importance of these reports has grown in the last years. Laws and the competition between organisations advanced the relevance of ecologic reporting to some interest groups like for example customers or stakeholder. In a few years, sustainability reporting will be obligatory for companies like a balance. To achieve our project’s goals, the existing software tools had been analysed in a market analysis. Further it has been analysed how enterprises are publishing their report so far. Thereafter the requirements for our project had been build that need to be fulfilled in order to lead the project to a success. The software is also interesting for small and medium-sized enterprises (SME). At the latest if the government decides to pass a law that forces all enterprises to publish these reports, the SMEs may also use this software. This enables them to reduce the costs to publish the sustainability reports since they are now able to publish those reports for themselves. The following sections first show the main goals of the project. Thereafter overall software architecture is explained and the standards for sustainability reports that the software supports are described. At last the conclusion reports the status of the work done so far and what still needs to be accomplished. 1.1 Standards When companies want to generate a sustainability report, they can do that in any way. It is not necessary, that the report is structured or follows any agreements. No guideline exists, which 49 http://www.cerebral-group.de 191 is legally obligated. Because of this situation, it is very difficult if not impossible to compare sustainability reports. The evaluation of such a report is therefore less significant. To solve this abuse it is necessary to establish several standards which are concurrent. EMAS II,50 GRI G351 or ISO 1400152 are three standards for example, which are applied to these problems. 1.1.1 EMAS The Eco-Management and Audit Scheme (EMAS) is the EU voluntary instrument which acknowledges organisations that improve their environmental performance on a continuous basis. EMAS registered organisations are legally compliant, run an environmental management system and report on their environmental performance through the publication of an independently verified environmental statement. They are recognised by the EMAS logo, which guarantees the reliability of the information provided. The EMAS II standard includes no core elements. It is only guidance for the companies how to generate a sustainability report. The report is validated through an evaluator. 1.1.2 GRI G3 The “Global Reporting Initiative” is a large multi-stakeholder network of thousands of experts, in dozens of countries worldwide, who participate in GRIs working groups and governance bodies, use the GRI Guidelines to report, access information in GRI-based reports, or contribute to develop the Reporting Framework. The GRI provides a framework and a guideline for sustainability reporting which makes creation of sustainability reports easier. The GRI framework has established itself as a standard for sustainability reporting. The G3 is the third generation of the GRIs Sustainability Reporting Guidelines. The G3 is building on the G2, which in turn are an evolution of the initial Guidelines. The G3 Guidelines provide universal guidance for reporting on sustainability performance. This means they are applicable to small companies, large multinationals, public sector, NGOs and other types of organizations. The G3 consist of principles and disclosure items, which include the performance indicators. The principles help reporters define the report content, the quality of the report, and give guidance on how to set the report boundary. Principles include those such as materiality, stakeholder inclusiveness, comparability and timeliness. Disclosure items include disclosures on management of issues, as well as performance indicators themselves. The indicators are subdivided in core and additional elements. The core elements have to be in a classificated report, only the additional indicators are optional. Additionally there are other elements such as Sector Supplements and National Annexes that respond to the needs of specific sectors, or national reporting requirements. The Reporting Framework is free to use. The Guidelines identify information and material that is relevant to most organizations and of interest to most stakeholders for reporting the three types of Standard Disclosures: 50 http://www.emas.de http://www.globalreporting.org 52 http://www.iso.org 51 192 Figure 1: Application Level Criteria Profile Disclosures that set the overall context for understanding organizational performance such as its strategy, profile, and governance. Management Approach Disclosures that cover how an organization addresses a given set of topics in order to provide context for understanding performance in a specific area. Performance Indicators Indicators that explicit comparable information on the economic, environmental, and social performance of the organization. Sector Supplements For every industrial sector (e.g. touristic, transportation...) there are also specific indicators on which a company has to report. The GRI offers so called “Application Levels”1. Theses Application Levels communicate how much of the Reporting Framework has been used in the reporting process. There are 3 levels, A, B, C, each with the option of recognizing external assurance (“+”) at any level. Since all G3-based reports must declare their Application Level it is vital that a report complies with the GRI guidelines, Database and the structure of a GRI Report. [5] 1.1.3 ISO 14001 The ISO 14000 environmental management standards exist to help organizations minimize how their operations negatively affect the environment (cause adverse changes to air, water, or land), comply with applicable laws, regulations, and other environmentally oriented requirements, and continually improve on the above. ISO 14000 is similar to ISO 9000 quality management in that both pertain to the process (the comprehensive outcome of how a product is produced) rather than to the product itself. As with ISO 9000, certification is performed by third-party organizations rather than being awarded by ISO directly. The ISO 19011 audit standard applies when auditing for both 9000 and 14000 compliance at once. 193 ISO 14001 is the standard against which organizations are assessed. ISO 14001 is generic and flexible enough to apply to any organization producing any product or service anywhere in the world. The ISO 14001 Standard is mostly used in addition to the GRI G3 or the EMAS Standard. This standard does not guide to the correct report, it only specifies the basic conditions on how a sustainability report has to be generated. 1.1.4 Standards in our report The software which is being developed by the cerebral-software contains the different standards and types of reporting offered by GRI. It is possible to create your own sustainability report but you also can use the software to make the report fulfil the GRI Guidelines. In our project we integrate the GRI G3 standard in a first step. In the future the EMAS standard will also be added. The reasons for integrating the GRI G3 standard at first are manifold. The main reasons are: 1. The GRI G3 standard is used international in sustainability reporting. However the EMAS standard is only accepted and implemented in Europe. 2. The GRI G3 standard is more specificated, because of the many indicators. The EMAS standard is only guidance. 3. Much more companies use the GRI G3 standard than the EMAS standard. 4. The GRI G3 standard will be enhanced in the future. The process of the development is very simple. The EMAS standard very fixed and not very innovative. The software which is being developed by our group contains the different standards and types of reporting offered by GRI. It is possible to create your own sustainability report but you also can use the software to make the report fulfil the GRI Guidelines.[5] 2. Goals of cerebral The project’s main goal is to develop a system for web-based sustainability reporting. Integrating several standards the completed system will guide the user to publish a standardconform report by offering an automated assistant which leads through the different steps of creating a sustainability report. After publishing the report to the World Wide Web the system allocates it to an interested customer, stakeholder or any other faction. 2.1 How the software works in general The first step for a publisher while creating a new sustainability report is to login to the system’s administration front-end which is separated from the normal customers-area. The whole software is working as a web-application so the users can use an internet browser to access it from wherever they want and regardless of which operating system they use. Every single report is handled as a kind of project which has to be created at first. As a matter of course it is possible to manage several different reports at the same time or to archive old reports which can be accessed by the fractions if the user wants them to be. After starting the creation of a new report the user has to decide which sustainability report standard he wants to follow. It is the project’s aim to offer the following standards: GRI G3, EMAS II and ISO 14001. If the user doesn’t want to use one of these standards he has the possibility to create a report on his own and with his self-devised structure. If one of the report guidelines the system offers is used, the user can decide whether he wants to use the automated assistant 194 which guides him step-by-step through the creation-procedure of his report. For sure it is possible to elide one or more chapters which are given through the selected standard or to adjourn the work and continue it later. It is also possible to delegate the work on different parts of the report to other users, colleagues or authors. Thus multiple users can be engaged in creating one sustainability report at the same time. In every part of the report the automated assistant alleges the information which has to be published to fulfil the selected standard. If the report leaves out one necessary information it can still be published but it will not be marked as standard conform. After having finished the work on the report it can be published by the system whereupon it is readable for everyone on the customer-area. 2.2 Most interesting features The whole reporting-system is web based, which means that all changes, inputs and outputs can be viewed via a web browser on any operating system even on a PDA or any other kind of internet connected terminal. Besides the platform independence it even doesn’t matter where the user is located when he is connected to the internet at least. On the administration side a feature that was already mentioned is the automated assistant which guides you through the report creation process. There is a build-in rights management to allocate various user rights to different persons working with the whole system or just a single report. For example there can be “Administrators” who gain access to the complete software or “Authors” for a special part of a report who are only allowed to write their particular article. Reports collected throughout the years can be managed or compared with each other. They can stay published or become unpublished or be used as a model to create a new report. In the customer-front-end an interesting feature will be the “Info cart”, a kind of shopping cart for information gained by one or several reports. It is possible to use predict collections of information to fill an Info cart but also to fill it on your own with the specific information from the report you want to filter out. Predict collections will be “stakeholder”, “economical” or “ecological” for example for users who are only interested in ecological aspects. For sure, these collections can be edited afterwards. That way every user can create his individual sustainability report. These composed reports or the whole report itself can be viewed and transformed in several formats like HTML, PDF, XML and others. In addition a web usage mining system collects information about the actual user’s and all other user’s behaviour on the websites and suggests other parts of the report or articles that could be interesting. The whole system uses modern web technologies where possible. So JavaScript and AJAX (Asynchronous JavaScript and XML) are integrated at many points to improve the usability for the user. For example, there will be a form validation checking as many userinputs as possible just as they are typed in. The system can be adapted to every company’s corporate design by using a flexible XML/XSL template engine. [10] 3 Architecture In this section the architecture will be presented. As you can see in Figure 2 the software uses a so-called 4-tier architecture. Each layer has a clearly defined task to handle and there is no overlapping functionality between each layer. The communication between each layer is realised by web services discussed later in this chapter. The fourth tier handles the database and has to manage the storage of all data. For example the sustainability reports are persistently stored here. 195 The third layer contains the application logic. The functional computations are made here and the results are send to the presentation layer (tier 2). This layer transforms the functional computations provided by the application layer into a human-understandable form. Tier 0 describes the presentation on client side. The advantages of this architecture is on one hand is the improved maintainability and the simple replacement of components. This comes of cost of the performance, but since actual hardware is fast and the bandwidth of actual internet connections is big enough there is no subjective decrease in performance recognizable. The main goal for developing this architecture was the “one-size-fits-all” approach. So the software fits perfectly for big enterprises with their own information landscape as its uses the standard software components like an application server or a web server. In addition the separation into clearly delimited layers of actions it suits well for small and medium enterprises since it is possible for them to share an application server and only establish the web server on their own. So the architecture is very cost-effective. Figure 2: The architecture of the cerebral software 3.1 Database and the structure of a GRI Report One of the first steps that were necessary was to model the GRI guidelines in a digital form. Due to the complexity of sustainability reporting it was necessary to create several individual XML Schema Definition files (so called XSDs, which describes the structure of an XML document. The advantages of using XML will be discussed in the following chapters). The result was a variety of complex XSD files which are able to store all the data needed for a sustainability report. These files are used to describe the structure of a GRI compliant sustainability report. These files are also the base of the database which in this case is IBM DB2 Version 9 [1]. The IBM DB253 software can handle, store and process all kinds of XML data with ease [2] [9]. It also can use the XSD files to make a database structure of the data which is to be stored. This helps retrieving and processing the data all along the way. Below there is a part of the documentation of a XSD file. In this example it is a very small extract of 53 http://www-306.ibm.com/software/data/db2/ 196 the “economic performance” XSD. The elements EC1 to EC4 are indicators which are defined by the GRI guidelines. In this figure above you can see a small part of one of the XSD files. Like these four indicators (EC1-EC4) all other indicators which are described by the GRI have been modelled and implemented. There are overall fifteen XSDs which fully describe the GRI G3 guidelines in a digital form. While using this format the database is able to process data which is available in XML format. We are using the XML format because it has become a standard in describing data and its structure. The XSD files are capable of storing normal text, tables, links to graphics/audio/video and much more. So this flexible format ensures that if there are any changes in the sustainability guidelines it is possible to easily adjust to the new circumstances. Figure 3: Extract of the economic performance XML-scheme 3.2 The Presentation Layer Since the separation of model and view there are clear tasks the presentation layer has to do. There is a tomcat-server used to provide the services needed. Since the presentation of all features the server provides will exceed the length of this paper, two substantially important features will be presented. [4] 197 3.2.1 The publishing Framework cocoon An important feature of the cerebral software is the use of the cocoon publishing framework.54 This framework enables us to freely choose an output-format [12] for the sustainability report (like HTML, PDF, … ). Internally the structure of the report (and the other components) is represented in the Extensible Mark-up Language, or short XML. The usage of XML makes it possible to define the structure of data. So it is best suited to handle a sustainability report, which is, in from the data view, a collection of key figures and text elements put into a context. Also the use of XML allows us to refine the input data. This is substantial to create a report al carte. It is possible to extract snippets from the XML input data in put the snippets together to form a new report. Additional to the XML handling and the export into several formats, the cocoon framework copes with several other tasks like the session handling, the logging functionality needed for the web usage mining and others. [8] 3.2.2 Cascading Style Sheets To make it possible for enterprises to integrate the software in their corporate identity there is a need for making the presentation modular and the design itself replaceable. Especially the homepage itself has to be integrated in the corporate identity, so there is a special focus on solving this problem. The solution for this problem is the use of cascading style sheets, or short CSS. In CSS each functional element (like the navigation bar or the homepage header) is defined as a box, which could be freely moved around. Additional to that, CSS defines the use of pictures and colours, so there is no need anymore to define these in the HTML code itself. To replace the design with another, there is only to be the CSS file used to be replaced. 3.3 Application server – JBoss The primary task of an application server is to handle the business logic and data access of applications. There are several different application servers available these days and we decided to use JBoss55 in its current version 4.2.0. [4] [7] 3.3.1 JBoss features JBoss is a Java EE-based application server implemented in Java and is currently developed by Red Hat. Some of the features, the JBoss application server provides, are: - Open source, - Clustering, - Load balancing, - Build in Web server (Tomcat), - Web services, - Platform independent, - support of Enterprise JavaBeans, - Hot deployment. 54 55 http://cocoon.apache.org/ http://labs.jboss.com/ 198 The fact that JBoss is open source and platform independent makes it available for everyone and is especially a good solution for smaller companies. The support of clustering and load balancing makes JBoss also interesting for bigger companies who want to develop very large business applications. 3.3.2 Enterprise JavaBeans The business logic for our project is written in Enterprise JavaBeans (’EJBs’). The EJB specification was first developed by IBM and later adopted by Sun Microsystems. The specification intends to provide a standard way to implement the back-end business code typically found in enterprise applications. An EJB container (like JBoss) can hold three major categories of beans: - - Session Beans: ƒ Stateless Session Beans, ƒ Stateful Session Beans, Entity Beans, Message driven Beans. The EJB types we currently use in our project are Stateless Session Beans and Entity Beans. The task of Entity Beans is to give us easy access to our data base and to load and store objects without having to bother with SQL-Queries. Each Entity Beans also represents a table in the data base. The Stateless Session Beans contain the real business logic of the application. They check for example if the user has the rights to execute a certain method or registering a new user after checking if his registration data are valid. Session Beans use the above mentioned Entity Beans to store user data persistent in our data base. 3.4 Web services The second import technology the software uses are the web services. They are needed to realize the communication between the layers discussed in the introduction of this chapter. Another main goal for developing this architecture is the “Service-Oriented- Architecture” approach, which takes the focus off the highly interlinking of software components to a loose coupling by offering the functionality as services. The state-of-the-art standard doing this is the web services. They provide the functionality in an index system comparable to the yellow-pages for humans. The needed functionality can be selected from this index and is called over the internet using the HTTP protocol. So the functionality can be accessed freely over the internet (if there a no security techniques implemented). This technology fits also perfectly into our “one-size-fits-all” approach as the use of it aids the customer in the replacement of components and the sharing of resources. Another advantage of web services is that they are platform independent. The caller of a function needs not to know in which specific programming language a function is written to use it. Since web service calls are enveloped in XML they can be used freely from every system. [3] 199 4 State of Development In this section we give an overview about the state of development of our work. After explaining the functionality of the prototype we will explain how occurring problems have been solved and which problems still exist. At the end of this section we will give an outlook and try to make clear how the software is able to give a basis for future work. 4.1 Improvements of the Architecture At the moment the architecture works correctly: The presentation layer receives the web requests from the user and passes them to the Logic Layer. The logic layer obtains the necessary data from the database and sends it back to the presentation layer. The Cocoon Framework prepares the data are accordingly and returns an XHTML-file. [8] Because the communication is working the team is working on the logic and the presentation layer. The logic layer already provides the functionality for login/logout, user management and the info cube. This includes creating and editing user accounts and user groups and the assignment between the groups. The presentation layer is actually working on the representation of these provided functions so that they can be tested immediately. 4.2 Prototype You can see in Figure 4 a screenshot of the prototype. As you can see it is three-divided into the menu box, the content box and the box for user specific information such as the login windows and the information cart. It works like most of the websites: The menu box gives you an overview about the most important content such as ecological, economic and social information. By selecting a certain topic the system will gather the information and show it in the content box. If the user is interested in a particular topic he can add a text element to his information cart. By clicking on the information cart you will get an overview about the selected text elements and get information about whether the self constructed sustainability report matches the GRIs requirements or not. 4.3 Problems During the work we were confronted by several problems. The following passage will give a short overview: Web Services One of the biggest problems we had to solve was the Web Services because they are not supported by every framework. It has been really difficult to establish the connection between the JBoss-Application server and the Cocoon-Framework. JBoss 4.2 Until the JBoss 4.2 was released it was necessary to use an additional Tomcat web server to deploy the presentation layer. Therefore every change and every correction of the source code took us a long time and the deployment was not as fast as we hoped. IBM DB2 Another big problem was the IBM database. It was shutdown by unknown reasons so it had to be started again quite frequently. This was another reason why the deployment took us so much time. 200 Testing There is no suitable and free test framework (e.g. JUnit [6], with which our application can be tested. Individual components (like the JavaBeans or the Web services) can be tested, however not the entire project. Figure 4: Screenshot of the actual prototype 4.4 Future Work Working with a functional prototype we now concentrate on implementing the features. The login already works and the presentation layer gets a session id from the logic layer. The team of the presentation layer now focuses on the logout and the shopping cart while the logic team is working on the editorial logic. That includes create, editing and deleting text elements and connecting them to form one sustainability report. 201 5. Conclusion The development of an online sustainability reporting system is a complex assignment. During the implementation period we’ve encountered more than once an unexpected problem that hindrance us: Using well known and widely used free and open-source software — such as jboss1, tomcat,2, cocoon 3, etc’ — as basis components for the general architecture, one could think should assure stability based on the enormous experience and support gathered by the online community. Yet the use of ’Out of the box’ solution exposes us to serious integration problems that force us in several cases to adapt those technologies to our needs at the low level implementation: E.g.: a central concept in the software architecture is the use of web-services — which assure components undependability. Unfortunately the cocoon framework does not support the use of web-services in a satisfactory manner. An interesting problem that we’ve encountered during the project was the pluralism of standards and lack of well defined guidelines. This problem reflects the very same problem that enterprises encountered during the generation of a sustainability report and emphasise us the need for our software. In order to allow freedom and flexibility, all standards — such as GRI, EMAS etc’ — should be supported by the system. However, the integration of different standards and different indicators into a single data base schema is not obvious. As an initial implementation, we’ve chosen to base the database structure on the GRI standard. This project has more than the single goal of developing a functional piece of software. As a research oriented project there are also the pedagogic and scientific aspect to take into consideration. All these factors influence the decision of the most suitable comprehensiveness for the project. In spite of the limited time frame of one year given us, we’ve chosen not to limit ourselves to a smaller application, but to develop full functional online sustainability reporting framework. Following the top-down approach, we have put the foundation for the architecture to which the single features will be integrated. Though we might not have enough time to implement all the features that are on our wish-list, we do hope that the fruit of our work we’ll be put into use by future projects. As this project has only reached its midpoint, there are many developments to be expected in the near future. 6 1. 2. 3. 4. 5. 6. 7. 8. References Whei-Jen Chen, John Chun, Naomi Ngan, Rakesh Ranjan, and Manoj K. Sardana. Redbook, DB2 Express-C: The Developer Handbook for XML, PHP, C/C++, Java, and .NET. IBM Corp., September 2006. Online under http://www.redbooks.ibm.com/redbooks/pdfs/sg247301.pdf. Whei-Jen Chen, Art Sammartino, Dobromir Goutev, Felicity Hendricks, Ippei Komi, Ming-Pang Wei, and Rav Ahuja. Redbook, DB2 9 pureXML Guide. IBM Corp., Januar 2007. Online under http://www.redbooks.ibm.com/redbooks/pdfs/sg247315.pdf. Andreas Eberhart and Stefan Fischer. Web Services, Grundlagen und praktische Umsetzung mit J2EE und .NET. Hanser Fachbuchverlag, 1. edition, 2003. Dieter Eickstaedt and Thomas Reuhl. Java mit Open Source- Tools . J2EE-Projekte mit Tomcat, Struts, ANT und Jboss. Markt+Technik, 2003. Global Reporting Initiative. G3 Leitfaden, 2006. Online under http://www.globalreporting.org/NR/rdonlyres/A1FB5501-B0DE-4B69-A90027DD8A4C2839/0/G3GuidelinesENG.pdf. Johannes Link. Softwaretests mit JUnit. Dpunkt Verlag, 2005. Torsten Langner and Daniel Reiberg. J2EE und JBoss. Hanser Fachbuchverlag, 2005. Stephan Niedermeier. Cocoon 2 und Tomcat. Mit CD-ROM. Galileo Press, 2005. 202 9. Diane O’Shea, Cynthia M. Saracco, Don Chamberlin, and Rav Ahuja. Redbook, DB2 9: pureXML Overview and Fast Start. IBM Corp., Juni 2006. Online under http://www.redbooks.ibm.com/redbooks/pdfs/sg247298.pdf. 10. Ralph Steyer. AJAX mit Java-Servlets und JSP. So bringen Sie Speed in Ihre Webpraesenz. AddisonWesley, Muenchen, 2006. 11. Christian Ullenboom. Java ist auch eine Insel. Programmieren mit der Java Standard Edition Version 5. Galileo Press, 2006. 12. Isenmann, Ralf., Jordan Tobias, Marx Gómez Jorge: Workflow Supported Creation and Administration of XML Based Sustainability Reports; Proceedings of 20th International Conference on Informatics for Environmental Protection (EnviroInfo-2006), Graz, (Austria), pp. 95-98. 203 Multicriterial Valuation of Environmental Projects Jana Soukopová Faculty of Economics and Administration, Department of Public Economics, Masaryk University, Brno, Czech Republic [email protected] 1 Introduction Projects from the field of the protection and formation of the environment (environmental projects) have, as opposed to public projects a range of specifics that are related to the problem of sustainability, which main goal is to preserve the environment for future generations in as little changed form as possible. Therefore they are not only valuated according to their economic effectiveness, but also from a view of their impact on the environment. In such evaluation a range of problems, that are not that obvious in other fields of the public sector, are met. Valuation of environmental projects is interfering mainly with the problem of assesment of effectiveness these projects. A large number of indicators (such as environmental, economic, financial, technological or social) define the effectiveness of environmental projects. According to some of the indicators, the alternative investment project is suitable for putting it into practice, according to others, it is not. Therefore, while evaluating the environmental projects it becomes difficult to choose the most effective projects whose realization would bring the most significant benefit to our country and our economy. It is possible to get objective answers about the effectiveness of the alternative investment projects by evaluating them according to multicriterial methods.56 2 Multicriterial valuation Multicriterial valuation are usually classified according to the character of the set of the decision variants to multicriterial valuation of variants, whereas the problem of the permissible variants is set in a form of a definite list, and to multicriterial programming, whereas set of permissible variants is defined by a set of conditions which the decision variants have to comply with in order to be permissible. In order to evaluate environmental public projects, we only take into account the methods of multicriterial valuation of variants, as when evaluating the public projects, we always evaluate projects from a closed problem (list) of variants of a project. The formulation of the problem to valuate multicriterial variants is as follows: A list of variants A = {a1, a2, ..., an}A and a list of valuation criteria K = {k1, k2, ... , kk} are given. Each variant ai,i = 1, 2, …, n is defined according to these criteria by criterial values (yi1, yi2, …, yik). Fiala, Jablonský, Maňas (1994) then express the mathematical model of the problem of multicriterial valuation of variants in a form of a criterial matrix: 56 The most well-known classification of valuation methods of public project, created by Bénard (1991), divides these methods according to the number of the assumed criteria of valuation to two groups, mono-criterial and multicriterial methods of valuation. At present both groups of methods are used to valuate the environmental projects, i.e. in static as well as dynamic form. 204 Y = (yij) D = {ai1, ai2, ..., aim } is then set m of selected variants of projects, where 1< i1<…< im, 1 < ij < n, j = 1, … m . Now I could adduce the comparison of two multicriterial methods which are convenient for environmental valuation – The point method and the weight sum approach method. Both methods rank among methods based on partial valuation of variants. 2.1 Point method The Point method is the most using multicriterial method of environmental valuation. The evaluator assigns a particular score from a selected scale (see above) to an individual option in relation to the given criteria, where the better a given option is rated, the higher the point evaluation in relation to this criterion. The number of points of the point scale depends on the evaluator’s ability to distinguish it, which does not have to be the same for all the criteria. However, a maximum (or a minimum) score assigned to the best (or the worst) value of the criteria shall be the same for all of the criteria. At the same time with the individual evaluation, there is not excluded a case, when none of these variants reaches an extreme score is done (it can be a hypothetically set number). The valuation of variants is calculated in this method as follows: hi = ∑ v j y ij , k (1) j =1 hi is valuation of ”i” option, i = 1, 2, …, n , yij are values of the criterial matrix Y, is the normative weight of “j” criterion, j = 1,2, …, k vj and variants ai are ordered in a way that the highest the value hi, the more the “i” option is preferred. The weight sum approach is another of the methods often used. The method is used in case of qualitative criteria valuation most frequently. There is a problem with preferences of evaluator – first problem of the method. Each evaluator assigns a number of points for each criterion and each project. There is a problem of relevant valuation. Second problem of the point method is simple weighing of criteria. Therefore I´d recommend for environmental valuation using mix of quality and quantity criteria and Weight Sum Approach method. where 2.2 Weight Sum Approach method This method is based on a principle of maximalization of the benefit, whereas it presupposes the linear function of the benefit. When used, there a normalized criterial matrix R = (rij) is created, elements of which are gained from criterial matrix Y and its rows complying with optimal57 (I), or basaline variant58 (B) using the transformation equation: rij = 57 58 yij − B j I j − Bj . (2) Optimal variant is such a variant that reaches the best values in all of the criteria. Baseline variant is such a variant that reaches the worst possible values in all of the criteria. 205 This matrix represents a matrix of the benefit value of “i“ variant according to “j“ criterion. It is clear from the relation that the criterial values yij are transformed linearly in a way that rij ∈ <0,1>, where the Ij equals value 0 and Bj equals value 1. When the additive function of the benefit is used, then the benefit of the variant ai equals: u (ai ) = ∑ v j rij , i=1, 2, ..., n . k (3) j =1 The variant that reaches a maximum value of benefit is then selected as “the best“, or the projects are ordered according to the falling value of the benefit function. This method and using mix of quality and quantity criteria could eliminate a problem of preferences by the point method. Problem of preferences could eliminate some mono-criterial methods too. Monocriterial methods for the valuation presume the existence of one predominant criterion, to which other criteria can be transformed. This criterion would be profit in the private sector, or one of the financial ratio. However, when evaluating environmental public projects, this criteria would be most often the level of cost, or another ratio indicator related to expenses. Most of the mono-criterial methods are based on a presumption that it is possible to quantify the cost of the valuated offer, i.e. in monetary units. In practice the most common mono-criterial methods to valuate nvironmental public projects are: cost minimalising analysis, cost effectiveness and cost-benefit analysis. These methods come under the so-called cost-output methods. The main advantage of valuating the environmental public project by means of monocriterial methods is that these methods provide clear valuation of effectiveness of these projects in a form of one a financial or a cost indicator and easily measure the projects in relation to each other. However, they also have their minuses. The easiest method CMA does not take into account the aspect of time, and if we use equation C = C0 + ∑ n t =1 where C C0 Ct t r Ct , C → min (1 + r ) t (4) is the total cost, is the capitalized cost, is the operational cost in year “t“ is a given time period, is the discount rate,59 to calculate the total cost, yet its great weakness is, that upon valuation it omits the benefits of environmental projects, and therefore does not take into account the impact on the environment. CBA is indeed the most complex mono-criterial method, but also the most difficult method to perform, that can be used when deciding on the realization of environmental investment. Its important benefit is the consideration of the time aspect. This analysis enables the calculation of benefits for the environment also in a long-term horizon and thus it provides an integrated economic view of the realization of measures. Therefore when the effectiveness of the projects is assessed, there can be also used the long-term basis of effects, which is a significant feature of investments to protect the environment. The main 59 In theory, the discount rate defines the best possible benefit of alternative investment to the valuated investment, whereas the benefit should be achievable at the same risk. (Soukopová 2005). 206 disadvantage is the difficult valuation of environmental benefits in monetary units. Thus it is possible to realize it by means of non-market valuation methods, that together form an apparatus for the area of valuation of the environment (more e.g. Tošovská 1997, Soukopová 2005). However, this valuation is very costly and moreover, it often does not lead to the desired relevant results. Moreover, the mono-criterial methods lose their main advantage, in case of the preferential methods, which are a comparison based on the financial, or the cost indicator, that clearly provide information on effectiveness or non-effectiveness of the valuated investment, independent from the preferences of the applicant. Actually, the monetary value of these benefits is estimated by subjects that are bound with them, and they often overestimate their value. Then it is possible to solve this problem by means of non-preferential methods, substitution markets, or to use the third of the given mono-criterial methods, the cost-effectiveness analysis. It does not require the valuation of benefits in monetary units, but in physical units and natural units. It can be the amount of pollution, impact on the environment and other at environmental projects. Valuation by the CEA method seems very easy, but there also arise various problems relating to the selection of the output indicator. The most substantial cases are when there are more benefits, or it is not possible to compare individual benefits mutually (more e.g. Soukopová 2005). Therefore it brings a question if it is possible to compare individual benefits mutually at all in the area of protection of the environment. Moreover, although it is a clear advantage that all of the mono-criterial methods, from the group of the dynamic methods, take into account the aspect of time, they also meet a problem of fixing the discount rate. A suitable amount of the discount rate is discussed in the public sector very much, in theory as well as on practical level, i.e. in cases when it concerns long-term public projects. It is evident that a low discount rate will mostly influence those public projects, that yield a profit in a long time period. The lower the discount rate is selected, the more profitable the long term projects would appear and vice versa. Multicriterial methods evaluate environmental public projects not only on the basis of one criterion, but more criteria. Inclusion of this fact means to approach the reality more, and therefore a better possibility to implement the decision made. At the same time it also brings certain difficulties to include all the information and to find a compromise decision that would reflect influence of all of the criteria of the decision. To evaluate the environmental public projects, multicriterial methods are widely used. It is so, because the influence on the environment is better evaluated according to more criterias. These criteria are either qualitative, or quantitative. As aforesaid, an evident advantage of the multicriterial methods is their closer approaching to reality and real decision criteria, where we do not evaluate according to one criterion, but more criteria, often colliding with each other. Nevertheless, these methods also have their weaknesses. The scales approach does not take into account the preferences of individuals and the importance of the criterias. This weakness is solved by the point method to evaluate on the basis of qualitative criteria and the weight-sum approach to evaluate on the basis of the quantitative criterias. Yet there still arises a question that if we had a relevant evaluation and we selected the most effective project according to it, would it be possible to guarantee that we selected the right criteria? And in case the criteria were selected appropriately, were the weights of the evaluation set properly? 207 3 Conclusion Evaluation of public project from the field of protection and formation of environment brings various particularities. The project approach to public expenditures tries to focus on the objective, goals and final effects of the resources invested. Corresponding cost are related to them. Therefore it is important to implement environmental accounting in order to optimalise the decision-making on environmental public projects. Then, were not the investment realized, all the cost that arised would be evident. Optimal decision on what project to chose cannot be done without their economic evaluation (economic analysis). There are various methods of economic analysis to evaluate public projects, that valuate the public projects on the basis of one, or more criterias. The essence of the economic approach to analysis and valuation of public projects is to aspect of common sense in negotiations of the participating subjects in a view that a rational conduct lies in effective use of restricted sources in order to reach the goals at the maximum, or desirable benefits. Lately, it has been often stressed that a choice of a suitable method to evaluate the public projects in the Czech Republic is still a weak part of the evaluation process. In the article I tried to analyse and evaluate advantages and disadvantages of two multicriterial methods. The result of this analysis, as well as from a view of practical experience with evaluation shows that it is recommended to combine multicriterial and monocriterial methods of evaluation, or even more methods of evaluation; whereas at least one method should be from the group of mono-criterial methods, and one method from the group of multicriterial methods. In case of multicriterial methods of valuation, I would recommend either the point method, or the weight-sum approach, primarily because they are both simple while taking into account the preferences of the evaluator and the importance of the criterias of valuation. all of the methods aforesaid, where their choice would be left on the evaluator, depending on the character of a project. All of them have their strengths and weaknesses that can be unsurmountable, or absolutely irrelevant for a given project. As for the mono-criterial methods of valuation, in order to valuate the environmental public projects, I would recommend all of the methods aforesaid, where their choice would be left on the evaluator, depending on the character of a project. All of them have their strengths and weaknesses that can be unsurmountable, or absolutely irrelevant for a given project. 4 1. 2. 3. 4. 5. References Bénard, J. 1991, Public economics III., EÚ ČSAV, Prague, ISBN 80-238-5978-1. Fiala, P., Jablonský, J. a Maňas, M. 1994, Multicriteria decision-making, UEP, Prague, ISBN 80-70709748-7. Soukopová, J. 2005, Valuation methods of public projects, Brno, Thesis work, Faculty of Economics and Administration, Mendel University of Agriculture and Forrestry in Brno, Brno. Soukopová, J. 2006, Metody mimotržního oceňování a jejich využití pro hodnocení environmentálních veřejných projektů. In The System of Accounting and Reporting for Sustainable Development at Microeconomic and Macroeconomic Levels. 2006. Brno : University in Pardubice, 2006, SBN 80-7194866-7. pp. 209-216, 8 vol. Tošovská, E. 1997, ‘Techniques of non-market valuation‘. In Moldan, B. aj. 1997. Economic aspects of protection of the environment. 1st ed. Praha, Univerzita Karlova, Vydavatelství Karolinum, p. 138–151, ISBN 80-7184-311-3. 208 Environmental Disclosure in the Mining Sector in Latin America and South Africa Marina Mitiyo Yamamoto*, Luiz Fernando Distadio, Ronaldo Campos Fernandes University of São Paulo, Brazil * Corresponding author: [email protected] 1 Introduction Over the past decades the environmental issue has become target of many concerns in the business world, especially after the big accidents relating multinational companies. There are damages caused by companies to the environment that can be restored or not physically depending on its nature and also there are the financial compensations by the corporations to the society. Additionally to the environmental accidents, the scarcity of the natural resources and the nature degradation incited economical, political and social debate around the present situation and the foresights to revert this scenario. It is common ground that the one of the greatest causer of the environmental degradation is the big companies itself, looking for progress at any cost. In order to preserve the natural resources and the environmental quality, the regulatory bodies have been trying to intervene on this subject, creating an impact on the companies´ behavior and performance. The related required actions involve investments on equipments, technologies, education among others, and that tend to increase the cost, decreasing the companies’ competitiveness in a short term. However, the benefits should also be analyzed together, especially in concern to sustainability on the long run and the way the regulations are implemented, allowing companies to better plan and to adapt to this new scenario. There is a consensus in the society that some economical sectors are extremely aggressive to the environment, such as paper and cellulose, mining, chemical and petrochemical. Those sectors would be more affected by the pressure of the society to a change its policies aiming the environment preservation and showing this in its publications. Paper that examined environmental information show that just post-1960 this information have been appeared, Hogner (1982) examined annual reports of US Steel for the years 1901 to 1980 and Guthrie and Parker (1989) investigate the disclosure policies of a major Australian corporate of its annual report over 100 year period, both found the same evidences. On the 80´s, influenced by serious ecological accidents involving companies, the pressure of the society increased, forcing the companies to review their position about this issue. Walden and Schwartz (1997) analyzed 57 American annual reports from 1988 to 1990 (before and after the Alaskan Exxon Valdes accident in 1989) and found evidence of a change on the environmental disclosure. The same conclusions were found on previous studies (Hogner, 1982; Gunthier and Parker, 1989; Patten, 1991) conclude that companies can respond to the pressure of the society after ecological accidents, increasing the environmental disclosure. The academic researches about environmental information have been increased lately. Some subjects such as Walden e Schwartz (1997); Ribeiro (1998); Richardson e Welker (2001); Nossa (2002); Sylvie et al (2003); Calixto e Ferreira (2005), Gasparino (2006); 209 Jenkins et al (2006) broach a specific sectors, environmental performance, developed countries and others. Even though, most of mining companies are located in Australia, Canada and in the U.S., those countries are not included in this study because it focuses on the developing countries, and a comparison with developed countries would jeopardize the results, showing the obvious economical and social differences. The mining sector was chosen due to its significance in the GDP (Gross Domestic Product) of the developing countries and its non sustainability characteristic, that means once the ore is extracted, it can not be replaced, aggravated by the fact that once the mine is exhausted, the companies just abandoned it, what increases the damage caused. The aim of this paper is to study the discretionary disclosure of the environmental information practiced by mining companies that work in Latin America and South Africa, based on Verrecchia (1990 and 2001) and Dye (1985, 1990 and 2001). 2 Theory Review 2.1 Environmental Information Disclosure Disclosure is defined by Gibbins et al (1990) and Lev (1992) as qualitative and quantitative accounting information communicated by the company through its formal and informal channels and its main objective is to provide useful data to users. The disclosure level of the accounting information depend on some external factors, such as: the environment, the requirements of the users, information from the society and its competitors, the disclosure of population’s social economic data such as tax payments, investments and the existence of a structured capital market (Yamamoto and Salotti, 2006). The disclosure ways, mandatory and non-mandatory, are subject of many discussions. However the regulation is reactive, is a regulation and the companies must abide by, while non-mandatory is proactive, the companies inform what they regard as important. Recent studies about the voluntary disclosure theory are presented by Verrecchia (2001) and Dye (2001), where they review make critical analysis and propositions on the subject. Verrechia (2001) proposes three ample research categories about accounting disclosure: based on association, on judgment and on efficiency. The research about environmental disclosure based on the association (as an exogenous process) and the changes of investor’s behavior in the capital markets studies the effects of environmental disclosure on investors` behavior, mainly in relation to stock prices. The disclosure based on judgment tries to identify which reasons make companies disclosure information (endogenous process), in other words, which reasons make the company to disclosure it environmental information. Finally the disclosure based on efficiency, in this category the discussion is around which ways of disclosure are more efficient, which are unconditionally preferred. An important issue of the discretionary disclosure theory is the informative asymmetry problem and the cost-benefit relation of the disclosure. The problem caused by the informative asymmetry is the adverse selections, in absent information the risks are higher and investors do not invest otherwise a higher return rate. Following this idea, the company should be willing to disclose as much as possible in order to keep its cost of capital low (Healy and Palepu, 2001). There is of common ground that the environment should be preserved and conserved, and that are some industry sector extremely aggressive to the environment such as paper and cellulose; chemical and petrochemical; mining among others. Considering that, the companies of these sectors have to face the pressure of the society as a whole, not only from the investors, to inform their actions related to this subject, such as the image risk in case of the 210 lack of information and consequently possible rise of the cost of capital, rejection of their products, reduced number of investors, etc. Thus disclosure theory can be used to provide some evidences how the environmental disclosure is going on around the world. According to GRI (Global Reporting Initiative - 2002), sustainability reports contribute to decrease the volatility of the stock prices and the cost of capital as well. These reports may contain relevant information to the market analysts, meaning that higher disclosure contribute to a better perception of the companies’ risk profile. The stakeholders can get the environmental information through some different sources; the companies’ mandatory or voluntary disclosure; third parties such as sector researches which interfere on the companies’ disclosure level. The alternative sources of environmental information which the content is not under the companies’ control may influence the decision of the company to voluntarily disclose this information. Researches from Al-Tuwaijri et al. (2003) tested and concluded, among other hypothesis, that companies with good environmental performance have a higher disclosure than those with low performance. This result is consistent with the discretionary disclosure theory, wherein all good news is always disclosure because the disclosure cost is low. This paper concludes also that companies use the discretionary disclosure to project a proactive environmental image, by some times providing simple information about environmental performance, even not been good due to adverse selection. Clarkson et al (2006) in their study concluded that there is a positive relation between environmental performance and disclosure level in the social and environmental reports or website corroborating to the results found by Al-Tuwaijri et al. (2003). Companies with better environmental performance indicators tend to disclose this information. Environmental disclosure is the set of information related to the past, present and future regarding the environmental activities management and its performance as well as the possible financial implications cause by this management. This information can appear in many ways, qualitative, quantitative, in the body of the financial statements or in notes to financial statements and others. Environmental information is related to past or futures costs for pollution control, acquisition of equipments and other initiatives, costs of restoration, current and future litigations, water reutilization, air and solid materials, description of the pollution control process, commitment to the process of polution reduction, discussion about existing regulations and recommendations, environmental control and preservation, awards, environmental auditing and others. Frequently the environmental information are through the annual reports that in some cases contain an environmental or sustainability report. Since there is no standard of environmental disclosure, the researches of this information, as well as its comparability, are jeopardized. 2.1.1 Mandatory and voluntary environmental disclosure Environmental information disclosure is mainly voluntary for most of companies. Some international bodies help to develop better practices and transparency of the environmental information, strongly suggesting its adoption. The most important international bodies are Intergovernmental Working Groups of Experts on International Standards of Accounting and Reporting — ISAR, the Global Compact an initiative of UN — United Nation and the Global Reporting Initiatives — GRI. The GRI — Global Reporting Initiative was created by CERES, and its guidelines aim to: provide environmental disclosure principles and specific content to prepare the Sustainability Environmental Report (SER), help the organization to show the adequate 211 picture about economics, social and environmental performance and promoting the comparability among the sustainable reports and benchmarking the evaluation performance of sustainable. There is a supplement specific for mining and metal sectors which identify the significant operations aspects with regards to sustainable developing discussion of these corporations (GRI, 2005). Nowadays the CERES says that approximately 600 companies around the world reporting support in a GRI guide lines. Some developed countries, generally with a strong capital market, started to require some environmental information that affects the financial situation of the company through Securities Exchange Commissions. In the United States, the SEC — Securities Exchange Commissions start to require some environmental disclosure, such as costs of adjust to the environmental legislation through the SFAS n. 5. In Canada the CICA — Canadian Institute of Chartered Accountants settled the section 3060 in 1990, requiring the provision of environmental expenses. According to Sylvie at al (2003) the studies considering these two countries showed that mandatory environmental disclosure is important and relevant to the capital market, even though some aspects of the disclosure may become voluntary because the rules are not sufficiently complete and objective. 2.2 Previous studies According to Clarkson et al (2006), the studies about environmental disclosure investigate some important aspects, such as the relevance of the environmental performance and the results showed that this information are very valuable for the investors who seek to know the environmental demands in different settings (Richardson and Welker, 2001) and Hughes (2001)). Other studies analyze which factors are going to affect the decision to disclose, or not, potential exigibility, especially when the disclosure is voluntary. Sumiani et al (2007) analyzed the 50 biggest Malaysian companies and, through its annual reports, as a whole looking for evidences of environmental disclosure. They approached the certification issue by ISO 14001 standards and its possible relationship with the environmental disclosure in Malaysia. In global terms, this study points events that fomented a great international pressure, i.e. the oil slick in Alaska in 1989, the frightening publications about the ozone layer and global warming on the 90´s and the increasing deforestation in many countries. Concerning the ISO 14000, the study indicated that the system of environmental management helped companies to improve its performance, also creating a structure that enable a prevention and detection of the inconsistent points according to the environmental laws; the basic difference mentioned in this study between ISO 14000 and ISO 14001 is that in the latter the certification is extended to the external parts of the company, including the commitment to the environmental procedures. As a result, Sumiani et al (2007) found a higher environmental disclosure of the companies with this certification. They also analyzed the relationship between certification and disclosure, by country, pointing Japan as the country with more certificated companies and also with higher environmental disclosure. The authors concluded also that the level of the environmental information disclosure by the Malaysian companies is low, the companies report mainly qualitative information. Yusoff et al (2006) studied the differences of the environmental disclosure of the top 50 companies in Australia and Malaysia, regarding the “state-of-art” and the factors influencing the environmental disclosure decision of the analyzed companies. They analyzed the 2002 and 2003 annual reports. The results indicated a better and higher environmental disclosure in the Australian companies. However, it is important to mention that the Australian regulation is 212 better than the Malaysian’s one. Another important point is that either positive or negative results are disclosed in Australia, while in Malaysia only the positive ones were disclosed. In consonance with other studys, the authors also pointed the ISO 14001 certification as the mainly factor that influenced the environmental disclosure in Malaysia. Jenkins et al (2006) analyzed the top 10 global mining companies and indicated the existence of a great variety of the disclosure levels and disclosure practices, showing that there is not an international standard for such reports. The study indicated that the social and environmental reports disclosed individually are more sophisticate than those disclosed within the corporate annual reports in the following elements: wider scope of issues; the development of integrated policy statements and codes of conduct; accordance with the GRI guidelines; increasing levels of external verification of data contained in reports; and, increasing take up of reporting over the internet. The authors asserted that there were evidences of a maturation process of the environmental strategies and guidelines in the Australian mining companies even though the lack of standards hampered considerably its comparability. Peck, Philip and Sinding, Knud (2003) studied the society’s pressure on the mining companies, due to its aggressive characteristics. The pressure is more evident in the U.S., Canada and Australia, where this sector has been chocked. The companies were ranked according to its environmental disclosure in order to establish those with higher commitment to provide information to its stakeholders. The rank follows two dimensions: motivation and openness; and, data richness and performance reporting ability. The motivation and openness are essentially an external dimension, are parts connected to the strategic communication and the administrators and stockholders consider important and relevant. The second dimension, data richness and performance reporting ability, wherein the companies get the opportunity to show their own criteria, reflecting the level and how the disclosure policies have developed, if reflects their statements and pretesion included in the previous dimension. From the definition of the two dimensions, the authors established four categories: `reporters´, `hoarders´, `starters´ and `resisters´. The companies ranked as reporters are the best, disclosing information with quality and a good level of details and significantly better than the others. The resisters are the worse, do not attend the establish criteria, with no environmental disclosure policy, even when there are evidences that the information exists, but the company is not willing to share it. In the intermediated levels there are the starters, the companies are still in an initial phase, disclosing just little qualitative information; and the hoarders, which are better than the starters, where the company disclosed the information but not in details, or its accessibility is not so good. The research sample contains the top 30 global mining companies that use the website as a way to disclosure the environmental information. The analyzed period is from 1998 to 1999, available in 2000. The research results point that the best companies, `reporters´, were the Australians, followed by the Canadians, `hoarders´. The `resisters´, the worse rank, were located in the U.S. and the `starters´ located in developing countries such as Brazil, South Africa, and others. 3 Methodology and Empirical Research The following research can be classified as empirical and documental. According to Vianna (2001), documental research is based on the analyses of documents from many different sources and selected according to the topic of the study, the questions to be answered and the goals to be reached through the investigation. In order to evaluate the mining companies disclosure, both qualitative and quantitative, we use content analysis method that according to Frost (apud Jenkins and Yakovleva, 2006) is a research technique for making replicable and 213 valid inferences from data to their context. There are many papers about social, ethical and environmental information disclosure that used the content analysis to gather disclosure data in the Annual Reports according to Guthrie e Abeysekera (2006). Researchers of this area have been using mainly content analysis to gather empirical evidences. However, the focus of this technique is a little restrict, thus the researches combine it with other techniques. Therefore, the content analysis and case study were used to compare and analyze the mining companies’ policies and practices disclosure which exploits resources in Latin American countries and South Africa. 3.1 Description of the study The companies were chosen based on the following criteria: 1. Location — Mining companies operating in Latin America and South Africa, that means not necessarily only local companies but transnational either. 2. Listed/public companies — Companies were listed on their domestic Stock Exchange or/and in New York Stock Exchange The content analysis was based only the available data relative to 2004 and 2005 on the corporate web sites, such as: - Annual Report; - Social Environmental Reporting; - Financial Statements. The publication of environmental information still does not have a standard in a way to allow its location. For that reason, in this study we considered as the source of data the Annual Reports. The annual reports are also not standardized a level to be used as the only source of data. Nevertheless, the research was segregated according to its source, Annual Report, Sustainability and/or Social Environmental Report, and Financial Statements even though most of the times all those reports are considered as part of the Annual Report. 3.2 - - Research Limitations The study was restrict to the information on the documents above described and available on the corporate websites, therefore information available only on the website was not considered. This procedure avoid two identified problems: the information´ updated is generally not indicated and the enlargement of the analyzed period (annual reports relating 2004/2005 and the gather were in 2006/2007); The gathering information procedure was restrict to the information on the questionnaire applied; An advanced statistic analysis was not possible due to the small sample and data. Therefore, after the selection, the analyzed companies in this paper are: Table 1: Number of companies analyzed Country South Africa Bolivia Brazil Chile Mexico Peru Total Number of companies 8 1 6 2 3 5 25 214 Countries like Argentina, Uruguay, Paraguay, Venezuela, Ecuador, Colombia and others, were not included in this research because its companies do not publish the minimum data required. Lastly, the sample end up with 25 companies (APPENDIX 1). 3.3 Data collection The analysis were based on a questionnaire which contains 35 disclosing items, considered relevant for the environmental disclosure (APPENDIX 2). Each item was evaluated according to the following criteria: a. A score from 0 to 2 was given to the questionnaire items, according to the disclosure. The goal was to check the disclosure level of the reports/statements, thus the companies with disclosed complete and punctual item got a higher score than those with just mentions it textually. Table 2: Score of the items Points Requests 0 No disclosure of the analyzed item. 1 The item was mentioned textually 2 The item was mentioned textually and quantificated in monetary or other general measure standard (Km2, m3, weight, etc). b. c. d. e. f. 3.4 Identification which countries and companies had a better and bigger disclosure of the analyzed items; Identification the most published items, what ever of the country; Identification the most published items considering the individual situation of each country; Identification the most complete information incidence by country, that means, the 2 points items; Identification where in the report the items were placed, i.e., Note to Financial Statements, Sustainability Report among others. Results description and analysis After the data selection and analysis, the results were segregated in 5 categories: score of the companies, complete information frequency, amount of answered item, non disclosure items and the vehicle for disclosure. 3.4.1 Score of the companies The results of the companies´ score are in the following graphic, where the total score of each company during the analyzed period is presented. 215 Figure 1: Total Score by company 30 26 24 25 21 20 20 21 19 19 16 15 14 14 13 13 11 8 7 7 55 5 33 2 Table 3: Average by Countries Countries Brazil South Africa Peru Bolivia Mexico Chile CVRD Ferbasa CSN Caemi SOBOCE Trans Hex Harmony Metorex Gold Fields Ashanti Assmang BHP African Gold 0 1 MMX 1 2 3 2 3 4 3 0 2004 9,50 6,88 5,00 16,00 11,00 5,50 0 1 Southern Volcan 5 Atacocha Milpo 4 5 10 9 8 Lima 5 5 8 Grupo México Peñoles 5 11 10 9 Autlan 8 8 9 SQM 10 13 Paranapanema Bio Bio 15 2004 2005 2005 11,17 6,75 6,00 26,00 15,33 9,00 For a better understand the countries´ score, the companies that graded more points were highlighted, and segregated by country in order to verify the differences between them. The companies that scored over 10 points in, at least, one period are listed in the following Table 4: Table 4: Companies higher scores Country/Company South Africa BHP Biliton Limted Bolivia Sociedad Boliviana de Cementos S.A. Brazil Caemi CSN Cia. Vale do Rio Doce — CVRD Ferbasa Paranapanema Chile Sociedad Química e Minera de Chile S.A. Mexico Grupo Mexico Industria Peñoles Peru Southern Peru Cooper Corporation 216 2004 2005 14 14 16 26 7 21 9 8 11 11 19 10 13 13 9 13 10 21 20 24 19 15 The company with the highest score in 2005 was Sociedad Boliviana de Cementos, followed by Industria Peñoles from Mexico. In 2004 the higher scored companies were: the Brazilian CSN and the Mexican Industria Peñoles, respectivelly. In addition the Table 5 shows the most disclosed items in the evaluation. Table 5: Most disclosed items Item Description 1 Past and current environmental expenditures/operating costs 7 (c) Water treatments 8 Control, installations, facilities or processes described 10 Land rehabilitation and remediation 19 Environmental management system 2004 34 13 13 16 15 2005 38 17 18 14 18 As regards the most evaluated disclosed item was Past and Current Environmental Expenditures/Operating Costs (1) in the two years it can be explained by its generic characteristic. The Table 6 presents the more evaluated items. Table 6: Frequency of most disclosed items Countries South Africa 2004 Item 1 10 19 Score 12 8 6 2005 Item 1 10 19 Score 13 8 6 Brazil Peru 1 10 7c 6 7f/8/10 5 1 6 8 3 - 1 11 7c 7 19 6 1 6 7a 3 8 5 The information’s score were analyzed in each country. We can observe that some information are higher scored in a country than another, i.e., item number 10 (land recover) is frequently reported in South Africa, but not in Peru, or item 8 (control and installation of equipments or description of process) is more often disclosed in Peru, but not in South Africa. Anyway the item 1 (current or past environmental operational costs or expenses) was the most frequent in the 3 countries in both periods corroborating the global analysis. 3.4.2 Complete informations’ frequency Additionally, to better check in which countries the disclosure is higher and more complete, we selected the number of item that scored 2. The Table 7 shows the average frequency that the companies were graded 2 for the disclosure information, by country. Table 7: Complete informations’ frequency average Countries South Africa Bolivia Brazil Chile Mexico Peru 2004 1 5 3 1 1 1 2005 1 11 3 1 2 1 In South Africa, Chile and Peru, in average, just one item scored 2, while in Brazil it was 3. In Mexico and Chile, in average, the just one item scored 2 in 2004 and in 2005 Mexico increase to 2 items scored 2, 217 In Bolivia, the sample is constituted by only one company, its frequency were 5 and 11 in 2004 and 2005 respectively. The Table 8 presents the amount companies and the items that scored 2, to show the number of companies and the items that were graded 2: Table 8: Complete informations’ frequency Countries Companies South Africa 8 Brazil 6 Peru 5 Mexico 3 Chile 2 Bolivia 1 2004 11 15 5 2 1 5 2005 11 18 4 5 2 11 In South Africa 11 items disclosed had score 2 for all 8 companies in 2004 and 2005. The same analysis can be extended for the others countries. 3.4.3 Amount of the answered items For another point of view, the items disclosed were highlighted without considering the score 2, this analysis can provide an interpretation about extension of disclosed items, so that means, the aim was to consider so broad was the company’s disclosure relating to the quantity of items. The Table 9 presents this information. Table 9: Answered items by country Companies South Africa African Rainbow Minerals Gold Limited Anglo Gold Ashanti Ltd. Assmang Group BHP Billiton Limited Gold Fields Limited Harmony Gold Mining Company Limited Metorex Limited Trans Hex Group Ltd. Bolivia Sociedad Boliviana de Cementos S. A. Brazil Caemi CSN CVRD Ferbasa MMX Paranapanema Chile Cementos Bio Bio S. A. Sociedad Química e Minera de Chile S. A. Mexico Cia. Minera Autlan Grupo México Industria Peñoles Peru Cementos Lima S. A. Compañía Minera Atacocha S. A. 218 2004 2005 7 3 4 9 8 5 2 6 4 4 4 9 9 5 2 6 11 15 5 16 7 4 1 9 8 14 8 7 1 11 2 8 5 11 2 8 21 2 17 22 2 2 4 3 Compañía Minera Milpo S. A. Southern Peru Koper Corporation Volcan Compañía Minera S. A. 0 14 0 3 11 1 Industria Peñoles (México) disclosed the most quantity of items, 21 and 22 in 2004 and 2005, respectively. The Figures 2 and 3 illustrate the distribution of companies regarding the quantity disclosure items, considering their relative position. Figure 2: Disclosure Items in 2004 2004 Gold Fields African Gold Ashanti Metorex Autlan Bio Bio MMX 1 Volcan Milpo Peñoles Grupo México Lim a Atacocha SQM Southern BHP Harm ony Caem i 2 Ferbasa CVRD Paranapanem a Trans Hex Quartile 25% 50% 75% 100% CSN 4 SOBOCE Assm ang Circle 1 2 3 4 3 The indicated circles (1, 2, 3 and 4) represent the quarters of the companies sample analyzed, considering the most answered items in 2004, was 21 items. On circle 4 are the companies that answered at least 75 % of all 21 items. On 3 are considered the companies from 50 % to 75 % answered items, on circle 2 companies from 25 % to 50 % and on circle 1 less than 25 % of the answered items. Figure 3: Disclosure Items in 2005 2005 Gold Fields Metorex Autlan SQM Ashanti African Gold Bio Bio Lim a Volcan Atacocha Milpo MMX Quartile 25% 50% 75% 100% 3 Harm ony Caem i Ferbasa Assm ang Circle 1 2 3 4 2 1 Grupo México Southern BHP SOBOCE 4 Peñoles CVRD CSN Trans Hex Paranapanem a It is noticed that the evolution of some companies, like Grupo Mexico evolved from circle 2 in 2004 to circle 4 in 2005. Generally speaking, firms increased the number of items 219 disclosed in 2005 compared to 2004. Only the CSN and African Gold decreased their performance in this period. 3.4.4 Non disclosure informations After checking disclosed information, we could also identify a group of information that was not disclosed by any analyzed company in any country. The following Table 10, shows that in 2004, 6 items were not disclosed while in 2005, only 3, in other words, the disclosed items increase. Table 10: Non disclosure information Description 5 Past and Present litigation 9 A substantive description of employee training in environmental management and operations 20 Certification of environmental programs by independent agencies 21 Environmental end products/services 25 Existence of terms and conditions applicable to suppliers and/or customers regarding environmental practices 30 Carbon credits (*) The items 5, 9 and 21 were disclosed in 2005, because this, they weren’t considered in 2005. 2004 0 0 0 0 0 2005 * * 0 * 0 0 0 3.4.5 Vehicle of Disclosure Finally, we identified the preferences of the companies related to way to disclosure, through Annual Reports, sustainability report or Financial Statements (generally in the notes). The incidence of the information on the annual and sustainability reports were higher than those found on the financial statements, as represented on the following Tables 11 and 12: Table 11: Location of the information Countries Annual Report 2004 2005 South Africa 30 28 Bolivia 0 0 Brazil 24 30 Chile 5 7 Mexico 10 19 Peru 1 3 Sustainability Report 2004 2005 14 15 11 15 16 14 0 0 21 22 0 0 Notes 2004 0 0 2 5 0 3 2005 0 0 5 9 0 8 In South Africa the most common way to disclosure was through annual reports, in which 30 and 28 items in 2004 and 2005 respectively; while in Mexico the main source was the environmental and sustainability reports. In Bolivia it was exclusively through sustainability report. The least used way to disclosure was through financial reports (notes of Financial Statements). The following table contains the weighted average by country. This average is not jeopardized by the differences in the number of companies. 220 Table 12: Location of the information (average) Countries Annual Report Sustainability Report South Africa Bolivia Brazil Chile Mexico Peru 2004 4 0 4 3 3 0 2005 4 0 5 4 6 1 2004 2 11 3 0 7 0 2005 2 15 2 0 7 0 Notes 2004 0 0 0 3 0 1 2005 0 0 1 5 0 2 The table showed similar results than those on Table 11, even using the weighed average. In the Bolivian case the analysis was jeopardized because it is a sample with only one company. 3.5 Results Relating to countries and companies this study showed Brazil as the host country of the largest number of companies with high disclosed items /high score, followed by South Africa and Peru. In a segregated analysis, Mexican firms outperformed their Brazilian peers in terms of disclosure, although there were only three group Mexican companies in the sample. The Bolivian firm presented the highest score among all companies in 2005. In an individual company analysis, Sociedad Boliviana de Cementos S.A., CSN (Brazil), Chilean Industria Peñoles and Southern Peru Copper Corporation were taking turns as the top-ranked company in environmental disclosure between 2004 and 2005. The Bolivian company addressed more environmental items than any other firm in the sample. As regards to information disclosure, the most disclosed item was Past and Current Environmental Expenditures/Operating Costs (1) in both years. Subsequently Water Treatments (7c), Control, Installations, Facilities or Processes Described (8), Land Rehabilitation and Remediation (10) and Environmental Management System (19) were also among the top disclosed items. South Africa, Brazil and Peru shared the item Past and Current Environmental Expenditures/Operating Costs (1) as the top disclosure point, but there were differences concerning the subsequent environmental items with the highest disclosure rates. In Brazil, the second most disclosed item was Water Treatments (7c), while in Peru it was Control, Installations, Facilities or Processes describes (8). Considering just the numbers of the disclosure items, not the points, there is a little change in the period (21 to 22 items), however the companies have been increase the number of information in this setting. We also identified some environmental items that were not mentioned by any company in our study. In 2004 the absent items were: Past and Present Litigation (5), A Substantive Description of Employee Training in Environmental Management and Operations (9) Certification of Environmental Programs by Independents Agencies (20), Environmental Products and Services (21), the Existence of Terms and Conditions Applicable to Suppliers and/or Customers Regarding Environmental Practices (25), and Carbon Credits (30). In 2005 we observed an improvement as these last three items were addressed by at least one company in the sample. There were some notable items such as Renewable Energy Use (7a), Environmental Research and Development (27) and Environmental Awareness and Education Programmes (28) where there were increases of more than 100 % in their level of disclosure. 221 Lastly, the results also showed that the preferred instruments for disclosing environmental information were the annual report and the sustainability report, with the financial statements lagging behind. 4 Conclusions and considerations for future research This study shows that the environmental disclosure level of the mining companies with operations in selected countries are still in the earliest stages, even though it changes from country to country, none of them stood out with an excellent disclosure level. From the 35 research’s selected items, only 22 were disclosed and the company with higher score of 26 points was the Bolivian firm. Although some critics can be made to the criteria used in this paper, for giving more importance to the quantitative data, the results were the same in either way, qualitative information, accordant quantitative items disclosured analysis. The results of this study corroborate with the findings presented by Peck and Sinding (2003), they classified mining companies in developing countries as starters. These companies have initiated an environmental reporting about general matters, environmental policies and the development of environmental management system, but do not have quantitative information on environmental data. The authors also found that Australian companies have the most complete environmental reporting (reporters), followed by Canadians (hoarders). The fact that companies based in developed countries are top-ranked in terms of environmental disclosure meets our initial perception that social-economic development has significant influence on the level of disclosure. Our assessment is that environmental disclosure and actual initiatives from the mining industry in Latin America and South Africa are still scarce, albeit the global acknowledgment towards the necessity of sustainable growth and environmental preservation. Some of the reasons for this is due to the economic importance of the industry within each of the countries in this study and their current stage of social-economic development, where the lack of long term planning is still predominant as well as the need of natural resources exploration as a mean of wealth creation. Another reason for the low level of environmental disclosure might be due to the low importance attributed by investors on this issue, according studies by Yamamoto (2005) and Malacrida (2003). In other words, apparently the level of environmental reporting is not being reflected on the stock performance (value relevance); consequently companies do not feel compelled to fully disclose environmental information. Suggesting solutions to increase the environmental disclosure in developing countries is to make it mandatory through specific regulations. This measure, although subject to certain criticism from pro-self regulation researchers, has been efficient in promoting best practices in environmental reporting and in the stakeholder education process. Paper made by Burrit, Roger L. (2002) analyzed three initiatives in Australia, two of these are mandatory requirements — section 299 corporate disclosures required under the 2001 Corporations Act and section 516 disclosure -1999. One other initiative voluntary — Public Environment Report (PER) — showing that the impact of mandatory disclosure seems to have been effective increasing the provision of information. This research brings important contributions for assessing our current standing on environmental disclosure. 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Teoria da Divulgação Voluntária Aplicada ao Mercado de Capitais Brasileiro sob a Perspectiva da Governança Corporativa. Tese de Livre-Docência. Universidade de São Paulo. Brasil. 2005. 37. YAMAMOTO, M. M.; SALOTTI, B. M.. Informação Contábil — Estudos sobre a sua Divulgação no Mercado de Capitais. Ed. Atlas. São Paulo 2006. 38. YUSOFF, H.; LEHMAN, G. International Differences on Corporate Environmental Disclosure Practices: a Comparison Between Malaysia and Australia. University of South Australia. 4th International Conference on Accounting and Finance in Transition 10-12 April 2006, 2006. Appendix 1 Company 1 2 3 4 5 6 7 8 African Rainbow Minerals Gold Limited AngloGold Ashanti Ltd. Assmang Group BHP Billiton Limited Gold Fields Limited Harmony Gold Mining Company Limited Metorex Limited Trans Hex Group Ltd. 1 Sociedad Boliviana de Cementos S. A. 1 2 3 4 5 Caemi CSN Ferbasa MMX Mineração e Metálicos Paranapanema 6 Vale do Rio Doce 1 Cementos Bio Bio S. A. 2 Sociedad Quimica e Minera de Chile S.A. 1 Cia Minera. Autlan 2 Grupo México 3 Industria Peñoles Stock Exchange South Africa JSE NYSE JSE NYSE NYSE NYSE JSE JSE Bolivia BBV Brazil BOVESPA BOVESPA/NYSE BOVESPA BOVESPA BOVESPA BOVESPA/NYSE/LATIBEX Chile BCS BCS/NYSE Mexico BMV BMV BMV Peru Site http://www.arm.co.za http://www.anglogoldashanti.com http://www.assmang.co.za http://www.bhpbilliton.com http://www.goldfields.co.za http://www.harmony.co.za http://www.metorexgroup.com http://www.transhex.co.za http://www.soboce.com http://www.caemi.com.br http://www.csn.com.br http://www.ferbasa.com.br http://www.mmx.com.br http://www.paranapanema.com.br http://www.cvrd.com.br http://www.cbb.cl http://www.soquimich.cl http://www.autlan.com.mx http://www.gmexico.com http://www.penoles.com.mx 1 Cementos Lima S.A. BVL http://www.cementoslima.com.pe 2 3 4 5 BVL BVL BVL/NYSE BVL http://www.atacocha.com.pe http://www.milpo.com.pe http://www.southernperu.com http://www.volcan.com.pe Compañía Minera Atacocha S.A. Compañía Minera Milpo S.A. Southern Peru Copper Corporation Volcan Compañía Minera S.A. 224 Appendix 2 Environmental Item Past and current environmental 1 expenditures/operating costs Future estimates of environmental 2 equipment 3 Financing for environmental equipment Description Any historical, and/or future estimation or budgeted environmental expenditure, spending, operational costs, foreseeable liabilities Any environmental information on equipments acquired for environmental improvement purposes of operations including financial applications for that matter 4 Environmental cost accounting Any cost accounting on environmental management operations, financial operations etc. 5 Past and present litigation 6 Potential litigation Any information such as court cases, compounds, fines regarding misconduct of operations that describe 7 Environmental data: a) Renewable energy use b) Efforts for energy reduction c) Water treatments d) Process of water double-cycle e) Greenhouse gases emissions f) Reforest processes Control, installations, facilities or 8 processes described Use of any kind of sources renewable of energy. Any measures that aims the reduction of energy comsumptiom, wathever in the company departments. Process that reduces or mitigates the rubbishes discharged due the company's activities. Any measures that promotes a water double use meaning a reduction of the water consumption When the company declares that its activity expel greenhouse gases (CO2, NO2 e metano CH4) Any initiative promoting the areas recuperation through reforesting them. Any environmental information including environmental actions taken either in input or process stages. For example, environmental control measures, installation of environmental control systems, acquisition of special plant or equipment. A substantive description of employee training in environmental management and Any description of an employee training that is been done or planned relating to enviromental operations/management. 9 operations 10 Land rehabilition and remediation Any information on land care and improvements done for the purpose of sustaining the environment and nature. 11 Conservation of natural resources Any information on environmental initiatives such as minimizing wastage, controlling operational wastes, the usage of environmental friendly raw materials in production and others. Any information on the setting-up of special environmental departments, environmental teams or committees and even officers responsible for monitoring and controlling the operations to avoid damages or violation of rules of nature destruction. 12 Departments or offices for pollution control CEO statement on environment Any statement from the CEO or chairman about the environmental performance, the performance in letter to shareholders (soft company's purposes for promoving the corporative sustainability or other material information on this subject. 13 disclosure) Discussion of regulations and Any information on the stewardships, benchmarking and compliance of various 14 requirements environmental acts, regulations. Environmental policies or company 15 concern Any information on company's does and concerns on the importance of preserving the working/operational environment and external environment. It may also include corporate environmental policy established. 16 Environmental goals and targets Any information on company's environmental objectives, aims and goals on future environmental undertakings or improvements. 17 Awards for environmental protection Any information on company's achievements or accomplishment in obtaining any environmental recognition or awards such as environmental reporting awards or other green award at corporate, national or international level. 18 Environmental audit Any information on security, control and monitoring periodical measures on environmental management operations by appointed internal or external team. Information may include audit work carried on specific company's site, branches and others. 225 Current Levels of Environmental disclosure in the Oil, Gas and Refinery Industry in China Xiaomei Guo, Fang Wang, Hua Tian Center for Accounting Studies of Xiamen University/School of Management, Xiamen University, Fujiang, PR of China [email protected], [email protected], [email protected] 1 Introduction. The oilgas and refinery industry plays an important role in the development of economic. Recently, as the Chinese economic grows rapidly, the reliance on oil and gas industry has increased. In fact, the thirst for oil is such that the Chinese economic is now an oil- imported country rather than a self sustained country as it used to be. However, public opinion about the industry is poor. For one thing, this industry is highly restricted, with some huge companies having almost monopoly power in the market. The industry on the whole has gained extremely high profits from the increasing rise of oil, which is more attributed to its advantages in having access to the natural resources than its good operating ability. Yet the industry seems to pay little to their social responsibility. Accidents of pollution by oil and chemical companies were reported frequently, and in 2005, some of the companies cut down oil supplies to press for the government’s approval for price increase. The public was angry and questioned the oil companies of their social responsibility. As the dislike against this industry increase, since March 2006, the Chinese government has levied a new tax over this industry to cover up the cost of natural resources. It is obvious that this industry should do something to justify their existence. Disclosing environmental information is one way to communicate the company’s awareness of its social responsibility. Environmental disclosure refers to disclosure relating to the natural environment, environmental protection and resource use. The development of environmental disclosure has gone hand in hand with social disclosure, which discloses the interactions of a company with the community, employees, and society at large. The practice of corporate social and environmental disclosure has grown considerably for almost two decades (Gray, 1990, 1995). It encompasses both the voluntary and mandatory disclosure. The mandatory disclosure usually appears in the annual report, a report that is required by regulator and produced by all listed companies. However, literature shows that although the level of social and environmental disclosure has increased over the years, companies still provide relatively little detailed social and environmental information in their annual reports, and it is often qualitative and not quantitative (Harte & Owen, 1991; Adams etc, 1995).The annual report usually includes more information than required by the law, some voluntary environmental information can be found in the annual report. Furthermore, voluntary disclosure can also appear in a stand-alone report, named as environmental report, HSE report, or sustainability report. Literature shows companies operating in so-called environmentally-sensitive industries such as mineral extraction, oil and gas, chemicals and forestry are more likely to provide social and environmental disclosure (Patten, 1991, Neu etc,1998).This seems to be true in China. The first stand alone environmental report appeared in the oil and gas industry in 2000, published by Petrochina. Environmental obligation can bring about contingent liability, and many accounting standards require the assessment of environmental liability in the annual report (Rubestein, 226 1992).As it is audited, the environmental disclosure in the annual report has a certain degree of credibility as compared to other forms of disclosure. For the stand –alone environmental reports, efforts have been made in setting generally accepted or recognized standards. The United Nations Commission on Transnational Corporations-Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) made the earliest effort. ISAR made detailed recommendations for disclosing environmental information in 1991(UN, 1991). Another effort is made by WBCSD, which provide case reports built on the concept of eco-efficiency indicators.(WBCSD,1996). More recently, the Global Reporting Initiative (GRI) has developed reporting guidelines for the social, environmental and economic aspects of organizational performance (Cottrell &Rankin, 1998).In China, there is no rule governing the preparation of environmental reports or social reports, so the forms and content of such reports are at the will of the corporations. Most literature on environmental disclosure studies the trends in the America or the Europe, and founds that corporate social and environmental disclosure varies from country to country due to differences in accounting regulations, governmental actions, national culture, economy, the existence of pressure groups, and the severity of social and environmental problems (Harte & Owen, 1991;Williams and Ho,1999;Roberts &Gray, 1995) In China, not many empirical findings have been made on environmental disclosure. Some authors studied the environmental disclosure in the prospectus of listed companies. Geng and Jiao have studied the status of environmental disclosure in the prospectus for the period of 1992-1999, of 25 listed companies from the environmental sensitive industry, including gas, paper, electricity, and so on. (Geng &Jiao, 2002) found some environmental information, including qualitative and quantitative information was disclosed. Other authors studied the disclosure in both prospectus and annual reports found that more information is disclosed in the prospectus than in the annual report, and the amount of environmental information in the prospectus increased over years. (Chen & Wang, 2005; Ji & Wang, 2005) As the data is taken from the prospectus, which is a one time media for information disclosure, the constituency and trend of disclosure of the same company can not be observed. Based on questionnaire, Li and Xiao made an investigation on some companies (Li & Xiao,2002) and found that the disclosure was not consistent, lacks credibility and comparability. But there is demand for environmental information. Little study has been made on the annual reports of listed companies. As the public press for corporate social responsibility increase, there is great need for social information including environmental information from the public. This is especially true for the oil and gas industry, an environmentally sensitive industry. If the press for oil from the economic keeps increasing, China will soon run out of its oil supply and the Chinese oil company will have to find new sources from abroad. Finding the current levels of environmental disclosure in this industry has some strategy implication to the development of Chinese economic. So in this article, the authors studied trend of environmental disclosure over 5 years (from 2001-2005), using content analysis and a case study of top 12 Chinese listed companies in the oil, gas and refinery industry. The purpose is to offer a review of the changes in the content and the methods of environmental disclosure and give some explanation of the factors that drive the development of such disclosure. The paper also gives some suggestions to the regulator to enforce more verifiable environmental information disclosure. 227 2 2.1 Findings of the current levels of environmental disclosure-an analysis of top 12 oil companies Methodology Since there is no guidance on disclosing environmental information in China, data from different companies, though from the same industry are not comparable. In fact, the media and form of environmental disclosure varies form company to company. But a temporal method of analysis of the trend in environmental disclosure is possible. Because the industry has the first EHS report in China dated back to 2000 and annual reports of listed companies for the period under investigation are available. In this research, the authors also look at the companies’ homepages to find further environmental information, if any. A second method used in this research is the content analysis method, a ‘research technique for making replicable and valid inferences from data to their context Krippendorff 1980; Frost, 1995) The method is widely used in corporate environmental disclosure research (Guthrie & Mathews, 1985). The author use this method to explore and compare the disclosure of environmental performance and policy statements in the annual reports and stand alone environmental reports, if any, of the top 12 oil, gas and refinery companies in China. In this way the author hope to find out the trends and nature of environmental disclosure for the oil, gas and refinery industry and the implication for future disclosure. 2.2 Design of the study The classification of the oil, gas and refinery industry varies. In this research, we use the criterion suggested by China Securities Regulatory Commission, due to its authoritative position and impact in China. In the guidance published by CSRC, oil and gas is coded of B03, while oil and refinery is codedC41.So the industry under this study covers only companies coded B03 or C41.We choose the listed companies that has disclosed annual reports successively from 2001-2005, from the database of China Center for Economic Research, ranking them by their market value to find out the top ten companies. (See Appendix 1 for the list of the companies). These companies are all listed in China. Since some of the largest oil companies which met the criterion above are listed overseas only, such as PetroChina Company Limited PTR and CNOOC Limited (CNOOC), we also include these companies in the research. So there are 12 companies under research. As the total number of listed companies in the oil, gas and refinery industry is 17 (in domestic market) .The sample chosen can be representative of the industry. 2.3 Key findings Table 1 summarizes the results of the study, indicating the total number of corporations reporting at least some environmental information in the years from 2001-2005 and the results by their place of markets (overseas or domestic). Table 1: Environmental disclosure by Chinese Companies in oil, gas and refinery industry during 2001-2005 2001 2002 2003 2004 2005 Freq. Pct. Freq. Pct. Freq. Pct. Freq. Pct. Freq. Pct. Domestic 3 30 % 3 30 % 4 40 % 5 50 % 5 50 % Overseas 2 100 % 2 100 % 2 100 % 2 100 % 2 100 % 228 From Table 1, it can be seen that the level of environmental disclosure increase gradually from 2001-2005. But the increase was quite slow. During this period, only two more companies increase the environmental disclosure. By the end of 2005, less than half of the top ten oil companies listed in China have made environmental disclosure. The level of disclosure of companies listed overseas is better than that of companies listed domestically. Table 2 shows the temporal development of environmental disclosure of the top 12 companies by market capitalization from 2001-2005.From the period of 2001-2005, only two companies, both of which are listed abroad, published stand alone HSE report or CSR report.. Five companies disclosed no environmental data during this period. Three companies use both homepages and annual reports as means of environmental disclosure, while the rest two companies use annul report as the only means of environmental disclosure. So annual report is the most common means of environmental disclosure. Table 2: The development of means of environmental disclosure from 2001 to 2005 1.PTR 2001 2002 2003 2004 2005 2.Sinopec 2001 2002 2003 2004 2005 3.CNOOC 2001 2002 2003 2004 2005 4.SPC 2001 2002 2003 2004 2005 5.YPC 2001 2002 2003 2004 2005 6.Qilu 2001 2002 2003 2004 2005 7.ZPC 8.SOFD 9.SRC 2001 2002 2003 2004 2005 10.WPC 11.MPC 12.YXPC Annual Report HSE Report √ √ √ √ √ √ √ √ √ √ CSR Report homepages i √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ × 2001-2005 None 2001-2005 None √ √ √ √ √ × × × 2001-2005 None 2001-2005 None 2001-2005 None × × × i. since we could not find out the set up date of the homepages, the finding is based on the content of their websites on the date of study (Jan 29,2007) 229 Table 2 shows great differences in the means of environmental disclosure between companies listed at home and overseas. In addition to annual reports, overseas oil companies use separate reports to communicate environmental information to stakeholder. PTR published HSE report form 2000, making it the earliest company to publish such report in China. CNOOC published its first CSR report in 2005.But none of the companies listed at home published separate report to disclose environmental information. Table 2 also shows that the level of environmental disclosure in the homepages is positively related to the size of the corporations. Small sized companies have no environmental disclosure on their homepages, content and design of which is rudimentary, containing very little information. Some of the companies have no homepages at all. While companies of larger size have sophisticatedly designed homepages and detailed environmental information, with downloadable reports available. As the annual reports is the most important means of environmental disclosure for domestic listed companies, we made a study on the content of the annual reports to find further evidence of the environmental information. Environmental information can be disclosed in a separate report, the director’s report, the section of accounting policies, financial statements or the notes of accounts. Table 3 shows the location of the environmental disclosure for the ten companies in the annual in 2001 and in 2005. Table 3: Use of different parts of annual report in environmental disclosure 2001 Freq. Percent Separate report 0 0% Director's report 3 30 % Accounting policies 1 10 % Financial statements 0 0% Notes of accounts 1 10 % 2005 Freq. 1 4 3 0 2 Percent 10 % 40 % 30 % 0% 20 % Again, there is a little increase in the locations of environmental disclosure, yet little environmental cost or revenue or liabilities can be found in the financial statements. We also review each annual report to check whether there is any qualitative, quantitative of financial information. Qualitative information contains all verbal disclosure. Quantitative information is environmental information measures by volume. Financial information refers to information expressed in monetary terms (Guthrie and Parker, 1989). We find that there is an increase in the various types of information disclosed, but by the end of 2005, most information is qualitative, the number of quantitative or financial information is still limited. Table 4 is the summary of the result. Table 4: Character of environmental disclosure by Chinese corporations General Qualitative Quantitative 2001 2005 2001 2005 2001 2005 Freq. Freq. Freq. Freq. Freq. Freq. Domestic 3 5 3 5 1 2 Overseas 2 2 2 2 2 2 3 Financial 2001 Freq. 1 2 2005 Freq. 2 2 Conclusions Though many research have shown greater level of environmental disclosure by companies over years, data from the Chinese oil companies indicate low level of environmental disclosure, nearly half of the corporation in this industry disclose no environmental information, a signal that environmental issues have not been on the agenda of the operations 230 of the companies. Despite the low level of environmental disclosure in the oil and gas industry, there is a slow increase from 2001 to 2005. Overall, companies with overseas capital disclose more environmental information than companies with only domestic shareholders. One factor may be that foreign shareholders have more environmental awareness, and the requirements of disclosure in overseas market are more complicated and detailed than those in domestic capital markets. Companies with large size disclose more environmental information than companies with relatively small size, indicating worse level of disclosure for other companies in this industry not in the list of the study. One factor may be that larger companies are under more public pressure and pay more attention to their social image. Most of the environmental information disclosed is qualitative in nature, which is the similar result of many researches. Due to the qualitative nature of disclosure, little comparability exists between the disclosures of different companies. One suggestion for increasing the level of environmental disclosure for this pollution sensitive industry is to enforce regulation of environmental disclosure. The newly published Accounting Standards in China are in line with major ISAR, requiring the appraisal of environmental liabilities, inclusion of disposal cost of sites. It is possible that future environmental disclosure will increase. 4 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. References Adams, C.A., Hill WY. Roberts C.B. 1995. Environmental, employee and ethical reporting in Europe. In: ACCA research report, 41. London: Certified Accountants Educational Trust. Chen, Yao., Jianming Wang. 2005. An Analysis on Disclosure of Environmental Data of Public Companies in Material Industry. Environmental Protection. 5:66-71(in Chinese). Cottrell, G., Rankin ,L. 1998. Developments in environmental reporting in the resources industry: future directions in Australia. PriceWaterHouse Coopers. Frost ,G. 2000. Environmental reporting practices by Australian companies. In: 12th Asian Pacific conference on international accounting issues. Beijing, October 21-24. Geng, J., R Jiao. 2002. Discussion on environmental accounting information disclosure in listing companies. Accounting Research.1:143-47 (in Chinese). Gray, R.H., 1990.Corporate social reporting by UK companies: A cross-sectional and longitudinal analysis-An interim report. Paper presented to British Accounting Association. University of Dundee. Gray,R., Kouhy, R.and Lavers, S. 1995 Corporate social and environmental reporting: a review of the literature and a longitudinal study of UK disclosure. Accounting, Auditing & Accountability Journal.8(2):47-77. Guthrie,J.,and Mathews,M.R. 1985.Corporate social accounting in Australia. Research in corporate social performance and policy.251-277. Guthrie,J., and Parker, L.D.. 1989.Corporate Social Disclosure practice: A comparative international analysis. Advances in Public interest accouting.67-93 Harte, G., and Owen,D. 1991. Environmental disclosure in the Annual Reports of British companies: a research note. Accounting, Auditing & Accountability Journal.4(3):51-61. Ji, Shan., Jianming ,Wang .2005. Environmental disclosure in the petrochemical industry in China.Economics.5 :125-126 (in Chinese). Krippendorff ,K.,1980. Content analysis: an introduction to its methodology. Newbury Park, California: Sage Publications; p. 21. Li, Jianfa., Hua,Xiao., 2002. Environmental reporting in China:current status and future outlook.Accounting Research.6:42-50 (in Chinese). Neu, P., H, Warsame and K, Pendwell. 1998.Managing public impressions:environmental disclosures in Annual Reports. Accounting Organizations and Society.23(3):265-282. Patten, DM.1991. Exposure, legitimacy, and social disclosure. Journal of Accounting and Public Policy.10:297-308. Roberts, CB., and SJ,Gray.,1995.Factors influencing voluntary annual report disclosure by US, UK and continental European multinational corporations. Journal of International Business Studies.26(3):555-572. Rubenstein,D.B.,1992. Bridging gap between green accounting and black ink.Accounting Organizations and Society.501-508. 231 18. United Nations Commission on Transnational Corporations. Intergovernmental working group of experts on International Standards of Accounting and Reporting., 1991.Accounting for environmental protections Measures, Economic and Social Council .E/C/10/AC.3./5. 19. WBCSD.,1996. Eco-efficiency leadership:for improved economic and environmental performance.Worl Business Council of Sustainable Development. 20. Williams, SM., Ho Wern Pei.,1999. CA. Corporate social disclosure by listed companies on their web sites: an international comparison.The International Journal of Accounting 34(3):389-419. Appendix: List of Companies under study Listed abroad Listed at home PetroChina Company Limited PTR CNOOC Limited (CNOOC) China Petroleum & Chemical Corporation (Sinopec) Sinopec Shanghai Petrochemical Company Limited (SPC) Sinopec Yangzi Petrochemical Company Limited (YPC), Sinopec Qilu Company Limited (Qilu), Sinopec Zhongyuan Petroleum Company Limited (ZYPC), Sinopec Shengli Oil Field Dynamic Group Co., Ltd (SOFD), Shijiazhuang Refining-Chemical Co.,Ltd (SRC), Sinopec Wuhan Phoenix Company Limited (WPC) Maoming Petro-Chemical Shihua Co., Ltd. (MPC) Yueyang Xingchang Petro Chemical Co., Ltd. (YXPC) 232 Session C Accounting of Environmental Activities “Issues related to the different activities that make up an economic system with a focus on their relevance from an environmental perspective were dealt with in Session C. Different aspects were discussed in the six contributions presented during the session, ranging from economic analysis to statistical production, from transition to market economy to corporate communication tools.” (Cesare Costantino, Istat) 233 234 Liberalisation of Trade in Environmental Services — Methodological Approaches Eva Tošovská Economics Institute of the Academy of Sciences of the Czech Republic, Prague, Czech Republic [email protected] 1 Introduction Current focus on the liberalisation of international trade in services — on European Communities and on other international organizations level — involves also sector of environmental services. In this context is very often repeated cliché that „trade liberalisation in environmental services sector has a strong potential for a win-win result for both trade and the environment“ (if all trade-distorting measures are reduced, environmental services can be made more readily available, liberalization in this sector contributes to overcoming domestic resistance to change, expanded market opportunities can encourage technological progress, as well as providing economies of scale and increased efficiency, etc). However, especially liberalization of trade in environmental services is no easy task and it is connected with many open methodological and practical problems. This process urgently requires to be parallely acompany with strict regulatory control through technical standards, licensing requirements, exclusive contracts and economic needs tests. Measures to ensure strengthened environmental protection (for example, to avoid distortiones which favour end-of-pipe technologies over cleaner technologies, etc.) are still a key feature in many environmental services regimes. This type of liberalization also requires effective institutions to address market failures and ensure public policy objectives. In fact, liberalization without regulation, which is in place prior or at least at the same time as liberalization occurs, is not beneficial. Liberalization will always produce „losers“, at least in the short time (for example, private sector involvement typically leads to the introduction of fees-for-service where there previously have been none or significant increases in existing nominal fees for services supplied by the government).60,61 The negative impacts of liberalisation on vulnerable industries in developing countries, and sections of populations without the purchasing power to access privately-delivered environmental services, such as sanitation, has often been expresed by those countries. The scale of issues connected with liberalization of environmental services is very broad. As the deeper research of environmental services’ liberalization process is at the beginning within granted project, in my presentation I will devote my attention on following introductory topics: - to characterize the specific features of environmental services and development of this sector, - to shortly assess the process of environmental services’ liberalization under World Trade Organizations (WTO), 60 More see Krajewski, M.: Environmental Services…2004. See also Environmental Services: The “win-win” role of trade liberalization in promoting environmental protection and economic development, OECD, COM/TD/ENV(99)93/FINAL, 2000. 61 235 - 2 to review the current state connected with classification of environmental services for purposes of international trade. Development of environmental services’ conception. Historically, environmental services had long been considered to offer less potential for trade expansion than environmental goods, given many technical, institutional and regulatory barriers. The market played a limited role in environmental services because the major public infrastructure services were largely provided by state or its regional and local subdivisions either directly or through special public entities. This was mainly for two reasons62 - some environmental services may have the characteristics of public goods (e.g. sanitation and sweeping services for public spaces), which no single firm has an economic incentive to provide because the non-exclusive and non-rival character of a public good does not promise adequate returns, - some environmental services may require comprehensive distribution or collection networks and equipment infrastructure (e.g. sewage collection systems) and the high level of investment required tends to create conditions of natural monopoly. Typically, the supply of water or the collection of sewage are considered natural monopolies. Governments provided such services until recently so as to ensure equitable access to these services and to control or subsidise the cost to consumers. For reasons mentioned above, many environmental services can be considered as services of general interest according to the new European terminology.63 Over the past decade or so, domestic and international markets for environmental services have begun to emerge. This shift is resulted from many factors. On general level, environmental services sector is more and more important due to the global nature of many environmental issues. That is why there should be genuine interest in ensuring that reliable and competent environmental services are as widely available as possible. There is also an increased demand for environmental services due to general movement by governments and various industries toward preventing, reducing, or correcting environmental degradation. There are some goods that are quite closely associated with a particular environmental service — so much so that one could say that growth in their consumption and trade is highly correlated with the expansion of that service. But fundamental role plays the decision in many countries to commence domestic privatisation and demonopolisation of public utilities, which may generate foreign investment and competition in services. There is also a demand by business to „outsource“ environmental services that are better left performed by professionals. Outsourcing allows them to concentrate on their core activities, and to shift some of liability of meeting environmental regulations to other companies. Key market drivers are also compliance with policy objectives and other legal requirements at EU and national levels (for example, water quality targets) and the adoption of worldwide environmental standards. The role plays also the consolidation among service providers and the global reach of large engineering firms. Trade in environmental services is clearly responding to the demands of clients in developing countries. 62 See Environmental Goods and Services, The Benefits of Further Global Trade Liberalisation, OECD 2001, p. 16. 63 See European Commission, White Paper on services of general interests, COM(2004), 374, 12 May 2004, The term „Services of general interest“ is broader than the term „services of general economic interest“ and covers both market and non-market services which the public authorities class as being of general interest and subject to specific public service obligations (p.22). 236 3 The WTO services negotiations The long-termed effort of World Trade Organization (WTO) in the liberalization of services resulted in the General Agreement on Trade in Services (GATS) which entered into force in January 1995 as a result of the Uruguay Round negotiations. It is the first multilateral trade agreement to cover trade in services, including environmental services. The GATS distinguishes following four modes of supplying services: 1. Cross-border supply is defined to cover services flows from the territory of one member into the territory of another member, generally via fax, post or Internet (e.g. transmission of architectural and engineering specifications for environmental projects, reports of specialist environmental consultants, etc.), however, many environmental services are in situ activities for which cross-border supply is not technically feasible. 2. Consumption abroad refers to situations where a service consumer (or his property) moves into another member’s territory to obtain a service (e.g. tourism, ship repair). 3. Commercial presence implies that a service supplier of one member establishes a territorial presence, in another member’s territry to provide a service. 4. Presence of natural persons consists of persons of one member entering the territory of another member to supply a service. - - Obligations contained in the GATS may be categorized into two groups: horizontal obligations which apply directly and automatically to all members and all services, regardless of the existence of sectoral commitments (principle of mostfavoured-nation (MFN) treatment, which forbids any form of discrimination between services and service suppliers originating in different countries, transparency, requires WTO members to publish all trade-related measures and establish national enquiry points to respond to other members’ information requests), all EC member states accepted within horizontal commitments, that services considered as public utilities (mode 3 — commercial presence) may be subject to public monopolies or to exclusive rights granted to private operators. Czech Republic puts in a claim with respect to limitations on national treatment limitation on real estate acquisition by foreign natural and legal entities. Foreign entities may acquire real property through establishment of the Czech legal entities or participation in joint ventures. Acquisition of the land b y foreign entitites is subject to authorization. specific commitments whose scope is limited to the sectors where a member has decided to assume market access and national treatment obligations. Each WTO Member is required to have a Schedule of Specific Commitments. It is a document which identifies the services sectors, subsectors or activities subject to Market Access and National Treatment obligations and any limitations attached to them. Market access is a commitment to guarantee a certain level of access in specified sectors.It may be made subject to following types of limitations: a) the number of service suppliers, b) the value of service transactions or assets, c) the number of operations or quantity of output, d) the number of natural persons supplying a service, e) the type of legal entity or joint venture, f) the participation of foreign capital. A national treatment commitment implies that the Member will not adopt discriminatory measures that benefit domestic service suppliers. Specific commitments may be undertaken with regard to any of the four modes of services supply. Members may choose 237 not to make any commitment („unbound“) or they may commit to guaranteed market access and national treatment without limitations (full liberalization). According „Consolidated Schedule of specific commitments“, Czech Republic made commitments to full liberalization in following sub-sector of environmental services and modes of supply: Table 1: Environmental services — commitments to full liberalization (Czech Republic) Sub-sectors of environmental Limitations on market Access Limitations on National services Treatment A. Sewage services Modes 2) Modes 2) CPC 9401 Modes 3) Modes 3) B.Refuse disposal services Modes 2) Modes 2) CPC 9402 Modes 3) Modes 3) C. Sanitation and similar services Modes 2) Modes 2) CPC 9403 Modes 3) Modes 3) Cleaning Services of Exhaust Modes 3) Gases CPC 9404 Noise abatement services CPC 9405 Nature and landscape protection services CPC 9406 D. Other environmental protection services Source: European Communities and their member states — consolidated schedule of specific commitment, S/C/W/273, 2007 These commitments apply only to the relations between the Communities and their member states on the one hand, and non-Community countries on the other. Specific commitments may be modified not earlier than three years after their entry into force. Within European Communities there is a relative high degree of openess of member countries towards trade in environmental services.But worldwide, some experts in this sector64 pointed out that progress in liberalising environmental services within the GATS framework — despite potential for generating „win-win“ outcomes for the economy and the environment — has been limited. They argue that a major barriers to progress in environmental services liberalisation is uncertainty about the development impact of environmental services liberalisation in developing countries and uncertainty on the interpretation of the GATS rules on domestic regulation. Those two reasons act as a constraint on countries‘ willingness to make new commitments for trade liberalisation in environmental services. WTO members have been using a bilateral „request-offer“ approach as the main method of negotiating new „specific commitments“ in services (under which one country request another to open up a particular service sector in a particular way, and the recipient country could consult with the asking one and then decide whether to open the named sector in the way requested). There is no comprehensive WTO documentation of the request between members. The United States, for example, has opened up its noise-vibration abatement services in all four modes of supply.65 At the Hong Kong Ministerial Conference in 2005, WTO Members decided to allow a group of members tu submit a „plurilateral request“ on services. On February 2006, the European Communities, the United States, Canada and several other countries circulated a 64 See Colin Kirkpatrick, Clive George, Serban S.Scrieciu: Trade Liberalisation in Environmental Services: Why So Little Progess? Global Economy Journal: Vol.6. iss.2, art.4. 65 According Colin Kirkpatrick,...2006. 238 collective request for a number of large developing countries to open their environmental services markets to foreign services providers. Specially, the request asks them to open up their sewage, refuse disposal, sanitation, cleaning of exhaust gases, noise abatement, nature and landscape protection, and other environmental protection services in specific ways. However, it explicitly excludes any request for water for human use (i.e. the collection, purification and distribution of natural water).66 During market access negotiations in service trade in WTO in April 2007 have been stated the lack of substantive results from plurilateral talks in the first half of 2006, that is why the US, a key demandeur, to refocus on the bilateral approach again. A delegate concluded that the combination of bilateral and plurialteral negotiations in service trade better responds to the differing approaches favoured by various members.67 4 Statistical systems and classifications related to trade in environmental services classification Currently, an internationally agreed framework for the compilation and reporting of statistics of international trade in services in a broad sense represents „Manual on statistics of international trade in service“ (Manual), developed and published jointly by six organizations68 in 2002. Following the GATS and to clarify how trade in services takes place, the Manual describes four modes through which services may be traded internationally mentioned before. In order to facilitate countries’ adoption of this framework, the Manual seeks consistency with international standards related to trade in services, especially:69 - System of National Account, 1993 (1993 SNA) — it provides an account called the „rest of the world“ (or „external transactions account“), within this account is „external account of goods and services“, in which trade in goods and trade in services are separately recorded, - Fifth edition of the IMF Balance of Payment Manual (BPM5), the balance of paymets statement systematically summarizes transaction that take place between an economy and the rest of the world, transactions between residents and non-residents consist of those involving goods, services and income and others, - Central Product Classification, version 1.0. (CPC version 1.0), for services, it is the first international classification covering the whole spectrum of outputs of the various industries, CPC version 1.0 is fully harmonized with the „Harmonized Commodity Description and Coding System“ (HS) of the World Customs Organization, - International Standard Industrial Classification of All Economic Activities, revision 3 (ISIC, Rev.3), it is a standard classification of productive economic activities linked as far as possible with the way economic processes are organized in units. The Manual is innovative in that it recommends extending the BPM5 classification of transactions by type of service to provide more detail through the Extended Balance of Payments Services Classification (EBOPS).This extending, however, does not involve environmental services.70 The Manual makes some recommendations for foreign affiliate 66 According „EC, other table request for liberalisation of environmental services“, Bridges Trade BioRes, voll.6, No.4, 2006. 67 See Bridges Weekly Trade News Digest, vol. 11, No.13 from 18. April 2007. 68 By United Nations (UN), European Commission (EC), International Monetary Fund (IMF), Organization for Economic Co-operation and Development (OECD), United Nations Conference on Trade and Development (UNCTAD), World Trade Organization (WTO). 69 More in “Manual on Statistics of international trade…2002. 239 trade in services statistics. It also moves beyond existing statistical framework in the area where services in one country are provided by individuals (or natural persons) from another country moving to the first country on a non-permanent basis to take up employment. Regarding to general assessment of the Manual, we fully agree with already expressed opinions that although it extends the concept of trade in services, it does not extend the concept of services, and it conforms almost entirely to existing international statistical standards. For a range of services — firstly for environmental services — there is insufficient agreement on a detailed taxonomy and corresponding statistical treatment. Some further development work, beyond their treatment in the Manual, is recommended. That is why the fundamental problem in environmental service trade negotiations represents classification of environmental services. The main instruments used in the WTO is „Services sectoral classification list“ (so called W/120) derived from the Provisional United Nations Central Product Classification (provisional CPC). This „List“ should be considered as a negotiating list rather than as a statistical classification. The 12 major categories in the W/120 list are: 1) Business services, 2) Communication services, 3) Construction and related engineering services, 4) Distribution services, 5) Educational services, 6) Environmental services , 7) Financial services, 8) Health-related and social services, 9) Tourism and travelrelated services, 10) Recreational, cultural, and sporting services, 11) Transport services, 12) other services not included elsewhere. The Table 1 compares subsectors of environmental services in W/120 with provisional CPC and CPC version 1. Table 2: Environmental services subsectors in W/120, provisonal CPC and CPC version 1. GATS, W/120 sectoral Provisional CPC, division 94 CPC version 1.0, division 94 classification. 6 Environmental services Sewage and refuse disposal, Sewage and refuse disposal, sanitation and other env.protection sanitation and other env. protection services services A. Sewage services 9401 Sewage services 941 Sewage services 94110 Sewage treatment services 94120 Tank emptying and cleaning services B. refuse disposal services 9402 refusal disposal services 942 Refuse disposal services 94211 Non-hazardous waste collection services 94212 Non-hazardous waste treatment and disposal services 94221 Hazardous waste collection services 94222 Hazardous waste treatment and disposal services C. Sanitation and similar services 9403 Sanitation and similar 943 Sanitation and similar services services 94310 Sweeping and snow removal services 94390 Other sanitation services D. Other 9404 Cleaning services of exhaust 949 other environmental protection gases services 70 In EBOPS are „environmental services“ mentioned only within head 9.“ Other business services“ as 9.3.5.1 „Waste treatment and depollution services“. This component includes the treatment of radioactive and other waste, stripping of contaminated soil, cleaning up of pollution including oil spills, restoration of mining sites, and decontamination and sanitation services. Also included are all other services that relate to the cleaning or restoring of the environment. (see Manual, p.49). 240 9405 Noise abatement services 9406 Nature and landscape protection services 9409 Other environmental protection services 86931 Metal waste and scrap recycling services, on a fee or contract basis, 86932 Non-metal waste and scrap recycling services, on a fee or contract basis In CPC, version 1.0 there are in addition other sub-components which are very closely connected with „environmental services“, for example: 83131 Environmental consulting services and 83222 Landscape architectural services, or 96421 Botanical and zoological garden services, and 96422 Nature reserve services including wildlife preservation services. In the last decades, many countries felt that — from an environmental-policy perspectives — the WTO/120’s classification of environmental services is too narrow and does not include all the services that could benefit the environment. Especially this „list“ does not take into account the new characteristic features of the environmental services sector ( for example combination of new regulatory requirements, the emergence of private sector involvement in the supply of environmental services, the shift in environmental regulatory approaches from „end of pipe“ control to pollution prevention through the adoption of technologies for cleaner production, etc.). That is why the list is subject of many objections, namely: - WTO/120 is mainly focuses on utility-infrastructure services supplied to the general community and largely overlooks the provision of environmental services directly to industry, - WTO/120 is not organized according to the provision of services for specific environmental media, - in W/120 the broader category of solid waste management is missing, - W/120 focus on traditional „end-of-pipe“ approaches with little or no coverage of pollution prevention and sustainable resource management services, - W/120 does not cover the design, engineering, research and development and consulting services. For the time being it is true, that the Committee on Trade and Environment WTO predominantly engages in clarifying the concept of environmental goods and a little attention is devoted on classification of environmental services. Experts of the OECD and Eurostat has developed more comprehensive classification of environmental services71 which better reflects the structure of enterprises supplying environmental services. The starting point for this work is an adaptation of the Classification of Environmental Protection Activites (CEPA) in the SERIEE. OECD/Eurostat environmental services classification: 1. Pollution management group Provision of services for: - Air pollution control, - Wastewater management, - Solid waste management, ƒ Hazardous waste collection, treatment and disposal, ƒ Waste collection, treatment and disposal, ƒ Waste recovery and recycling, - Remediation and clean-up of soil, surface water and groundwater, 71 See The Environmental Goods and Services Industry, Manual for data collection and analysis, OECD, Eurostat 1999, pp.12-13. 241 2. 3. - Noise and vibration abatement, - Environmental research and development, - Environmental contracting and engineering, - Analytical services, data collection, analysis and assessment, - Education, training, information, - Other, Cleaner technologies a product group Services for: - Cleaner/resource-efficient technologies and processes, - Cleaner/resource-efficient products, Resource management group Services for: - Indoor air pollution control, - Water supply, - Recycled materials,72 - Renewable energy plant, - Heat/energy saving and management, - Sustainable agriculture and fisheries, - Sustainable forestry, - Natural risk management, - Eco-tourism, - Other (e.g. nature conservation, habitats and biodiversity). The comparison between W/120 and OECD/Eurostat classification shows that W/120 focus mainly on „pollution management group“ and many of the other environmental services is covered in the „other“ category. Some experts73 also pointed out that „there is also an overlap between the OECD/Eurostat classification and some of the other GATS sectors, for instance, business services, construction and related engineering services, and education services“. For the time being, there are diverse approaches to update the existing classification of environmental services that could be used when countries submit their requests and offers within GATS. One of the suggestions has been a „core“ approach proposed by the EU with regard to environmental services. According to the EU, „core“ services are those which can undisputedly be classified as „purely“ environmental and where the services are classified according to the environmental media. The EU has proposed a seven-part classification for core environmental services,74 which better reflect the trade and sectoral realities: 1) Water for human use and wastewater management, 2) solid and hazardous-waste management, 3) protection of ambient air and climate, 4) remediation and cleanup of soil ad water, 5) noise and vibration abatement,¨ 6) protection of biodiversity and landscape, 7) other environmental and ancillary services. It is evident that the mutually exclusive character of the W/120 list is preserved and that the EU suggested classification is consistent with but not identical to the OECD/Eurostat 72 Manufacture of new materials or products from waste or scrap, separately identified as recycled. See C.Kirkpatrick: Trade in Environmental Services: Assessing the Implications for Developing Countries in the GATS, ICTSD, Issue Paper No. 3, September 2006. 74 See GATS 2000: Environmental Services, Proposal from the EC and their member States, December 2000. 73 242 categories. The EC’s approach has received broad support from other WTO members, with the exception of the classification of water for human use as an environmental service. European Communities, together with US and some WTO members, supported also so called „cluster“ approach concerning services that are not environmental per se, but which are important to the provision of environmental services. These conceptual services, such as design, engineering, research and development and consulting services that have an environmental „end-use“ would be subject to a special „cluster“ or „checklist“. This approach could then aid WTO members who during negotiations could also schedule commitments as an environmental sub-component of these other sectors. But this approach is not fully accepted by majority of WTO members. The United Nations Conference on Trade and Development (UNCTAD) proposed four categories of environmental services:75 - environmental infrastructure services (such as water and waste management), - non-infrastructure, commercial environmental services (such as noise abatement, nature and landscape protection, cleaning of exhaust gases), - remediation services with environmental end-use (such as engineering or construction services), - support services. We can see that currently many of different environmental services classification exist. However, it is necessary to pointed out that no classification is obligatory and WTO members are free to use any classification they prefer or to develop a classification of their own. But they have to provide a sufficiently detailed definition to avoid any misunderstanding as to the scope of the GATS commitment. Although the use of the Service Sectoral Classification List (W/120) is not mandatory, most WTO members have used it as a basis for scheduling their commitments. Finally, there is necessary to stress one serious problem associated with the liberalization of trade in environmental services, which would be useful to develop more.. It is the connections between trade in environmental services and trade in environmental goods. From practice is known that environmental goods, technologies and services are increasingly provided commercially on an integrated basis, whether „horizontally“, or „vertically“. That is why the timing of the liberalisation of trade in services needs to be considered in relation to discussions on market access for environmental goods. An authors examine synergies between trade in environmental services and trade in environmental goods pointed out that potential benefits of simultaneously liberalising trade in environmental services and in environmental goods are likely to be much greater than liberalising trade in either one or the other. For example, within OECD working paper No. 2005-176 authors, after describing the nature of each environmental service, identify broad categories of goods used in the performance of those services and note that for some goods environmental services are what is driving growth in their markets. There is also international commitment to further liberalisation of trade in environmental goods and services accepted by WTO Ministers of their 2001 Declaration, mandated negotiations on „the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services“.77 But process of liberalization of services is dealt with under GATS and voluntary commitments in services only cover those sectors and 75 See Environmental Goods and Services in Trade and Sustainable Development: Note by the Secretariat, TD/B/COM.1/em.21/2 Geneva 2003. 76 See Steenblik, R., Drouet, D., Stubbs, G.: Synergies between trade in environmental services and trade in environmental goods, OECD Trade and Environment Working Paper No. 2005-01, 19.7.2005. 77 SEE Doha Declaration from 14 November 2001, paragraph 31 (iii). 243 „modes of supply“ that are explicitly scheduled by member of the WTO. There is no compulsion on WTO members to open up a particular sector if there are regulatory and public policy concerns about the potential impact.78 This situation is in contrast to trade in goods, where essentially all tariffs must be bound for WTO members. Many other methodological issues is open for further examination. 5 Acknowledgements This contribution has been treated within grant “Consequences of the Liberalization of Environmental Services” of Grant Agency of the Czech Republic, No 402/07/1580 6 1. 2. 3. 4. 5. 6. 7. 8. References Environmental Goods and Services, the benefit of further global trade liberalisation, OECD 2001. Krajewski, M.“ Environmental Services of General Interest in the WTO: no love at first sight, JEEPL 2/2004. Services Sectoral Classification List, WTO, MTN.GNS/W/120, WTO 1991. Environmental Services: The „win-win“ role of trade liberalisation in promoting environmental protection and economic development, COM/TD/ENV(99)93/FINAL, OECD, September 2000. Colin Kirkpatrick: Trade in Environmental Services: Assessing the Implications for Developing Countries in the GATS, ICTSD, Issue paper No. 3, September 2006. Manual on Statistics of International Trade in Services, UN, European Commission, IMF, OECD, UNCTAD, WTO, Statistical Papers, Series M No.86, Department of Economic and Social Affairs Statistics division, 2002. Steenblik R., Drouet D., Stubbs, G.: Synergies between trade in environmental services and trade in environmental goods, COM/ENV/TD(2004)23/FINAL, OECD Trade and Environment Working Paper No. 2005-01, July 2005. Tošovská, E.: Liberalizace obchodu environmentálními službami v rámci Všeobecné dohody o obchodu službami (Environmental Services trade Liberalization within the General Agreement on Trade in Services), Politická ekonomie, No. 5, 2001. 78 More see Colin Kirkpatrick,Clive George, Serban Scrieciu: :“Enhancing the Contribution of Trade Liberalisation in Environmental Services to Sustainable Development, Impact Assessment Research Centre, Paper No.13/2005. 244 NAMEA Activities at Eurostat — More than 10 Years of Experiences Stephan Molla*, Julio Cabecab, Elisabeth Mollgaardb a Wuppertal Institute for Climate, Environment and Energy, Germany *corresponding author: [email protected] b Eurostat, Luxembourg, Luxembourg 1 Introduction The paper is divided into three parts. It starts with an historical overview on Eurostat’s NAMEA activities. Secondly, it provides an brief description of Eurostat’s most recent NAMEA-survey conducted in 2006. Finally, it presents some results from this survey. 2 History Eurostat activities in the area of NAMEA79 are embedded in the Environmental Accounts programme of Eurostat (see e.g. The European Strategy for Environmental Accounting). Since the mid 1990ies, Eurostat is one of the main international bodies promoting methodological harmonisation and implementation of NAMEA accounts at statistical authorities in Europe. In NAMEA, environmental information is compiled consistently with the way economic activities are represented in national accounts. This framework divides the economy into industry and household categories and shows how each industry or the households contribute to a variety of environmental concerns.80 Further, the NAMEA framework is an integrated element to the UN’s ‘System of Integrated Environmental and Economic Accounts’ (SEEA) presented by the United Nations and others.81 The NAMEA framework is suited to all kind of environmental pressures variables (e.g. air emissions, water, waste etc.). However, NAMEA on air emissions is the most advanced. The NAMEA framework that was initially developed by the Dutch national statistical office (CBS) in the early nineties has been gradually adopted and adapted by EU countries significantly supported by Eurostat’s environmental accounting programme. In 1994, the NAMEA system was identified by the European Union as a relevant part of the framework for environmental satellite accounts of the National Accounts.82 79 National Accounting Matrix including Environmental Accounts. Eurostat (2001): NAMEAs for air emissions 2001 edition. (Detailed Tables Theme 2 Economy and Finance), Luxembourg: Office for Official Publications of the European Communities. 81 United Nations, Eurostat, International Monetary Fund, Organisation for Economic Co-operation and Development and World Bank (2003): Handbook of National Accounting – Integrated Environmental and Economic Accounting 2003 , United Nations publications Series F, n° 61, rev. 1, New York. 82 Commission for European Communities (1994): Directions for the EU on environmental Indicators and Green National Accounting; The Integration of Environmental and Economic Information Systems, Communication from the Commission to the Council and the European Parliament, COM (94) 670, Brussels, 1994. 80 245 In October 1995, a series of NAMEA workshops83 started on the initiative by Eurostat and were followed by a Eurostat Task Force on NAMEA air emissions. Important milestones were the development of standard tables in 2000 which were supposed to support countries in compiling NAMEA air emission data and to facilitate and harmonise EU-wide data collection. The standard tables were revised in 2002 in order to improve the comparability of data between countries as well as with other air emission statistics. Mandated by the Environmental Working Group and the task force, Eurostat started preparation of a ‘NAMEA for Air Emissions — Compilation Guide’. A draft guide was tabled at the meeting of the Task Force "NAMEA air emissions" on 26-27 June 2003. A final draft version — dated August 2003 — was tabled at the 2004 Plenary Meeting (joint meeting of the Working Groups "Environment Statistics" and "Environmental Accounts" Meeting of 4–6 October 2004). The ‘Compilation Guide’ will be finalised in 2007. Four ‘waves’ of data collection by Eurostat took place until today: - In 1998/1999, Eurostat collected reports from pilot studies on NAMEA-air from 12 Member States and Norway. In a 1999-publication,84 those national experiences with NAMEA air emission are summarised and data are presented in a comparative way. - In June 2000, a systematic collection of economic data and related air emissions started with the help of so-called NAMEA-air standard tables (version 2000). In 2001, a Eurostat publication85 under the ‘Detailed Tables’ series presented results from this data collection round. Time series range from 1990-1998 and the geographical coverage comprises the 15 former EU Member States, Norway and Czech Republic. - In June 2004, a third collection round started based on the meanwhile revised standard tables (version 2002). This time, all 25 new EU Member States were approached and time series ranging until 2001 were requested. The response rate to this collection round has been less satisfying so far. Results are partly documented in a Eurostat working document.86 Two publications (Staistics in Focus, SiF) were published based on this survey data (In 2006, two Statistics in Focus dedicated to this topic have been issued: (a) "Economic activities and their pressure on the environment 1995-2001", SIF 2/2006; (b) "Manufacturing industry 1995-2003: Economic activities and their pressure on the environment", SIF 16/2006). - In June 2006 a streamlined NAMEA-Air-questionnaire was sent out to 29 countries. Until October 2006, Eurostat received data from 20 countries. Currently, the data are validated and will be published soon. In the future, it is expected that Eurostat’s activities in the area of NAMEA-Air will gradually evolve to a routine leading to biannual up-dates of the data (available online) and publication of ‘Statistics in Focus’. Thereby, the value of NAMEA-Air for policy support is expected to 83 October 1995 (1st NAMEA workshop in The Hague, jointly organised by CBS and Eurostat); March 1997 (2nd NAMEA workshop, Luxembourg); November 1998 (3rd NAMEA workshop); June 2000 (4th NAMEA workshop). 84 Eurostat (1999): Pilot studies on NAMEAs for air emissions with a comparison at European level 1999 edition. (Studies and Research Theme 2 Economy and Finance), Luxembourg: Office for Official Publications of the European Communities. 85 Eurostat (2001): NAMEAs for air emissions 2001 edition. (Detailed Tables Theme 2 Economy and Finance), Luxembourg: Office for Official Publications of the European Communities. 86 Eurostat – Unit E5 (2005): National Accounting Matrix Including Environmental Accounts for Air Emissions – Country analysis of the main industries producing Greenhouse Gas Emissions (draft prepared by Katarína Markošová and Ute Luksch). Eurostat Doc. EA1/0 11/3.0/(2005) tabled at the Meeting of the Working Group "Environment and Sustainable Development" Sub-Group "Environmental Expenditure Statistics” and the Working Group “Economic Accounts for the Environment” 11 -13 May 2005, Luxembourg. 246 increase (e.g. through incorporation into macro-economic modelling and/or integration with input-output analyses). 3 The 2006-NAMEA-survey The survey started on 12 June 2006 and deadline for responses was set to end of August 2006. The electronic questionnaire (a simplified and streamlined version of the NAMEA-air standard tables) was launched through a letter to all countries. For each country, the electronic questionnaire was pre-filled based on data available at Eurostat from former surveys. The prefilled questionnaires were placed on a protected internet library (CIRCA). The countries were asked to confirm or revise pre-filled data and to up-date the time series. Further, countries were asked to provide certain meta information related to NAMEA activities in their respective countries. During the survey period ad hoc technical support was provided to Denmark, Poland, and Austria. On 13 September, a reminder was sent to those countries which had not replied until this date. Altogether, 24 countries reacted on the survey. 20 countries provided data in the one or the other form (Czech Republic, Lithuania, Luxemburg, and Malta sent notifications that no data can be expected in the short term). 16 countries provided data in the form of filled 2006-questionnaires. 4 countries provided data in a different format (BE, CH, HU, and IE). The consultant transferred those data to the 2006-questionnaire in close consultation with the respective counties. None of the countries made use of the pre-filled data. Moreover, countries preferred to send new (revised) time-series. 4 Data validation The data validation of the 2006-survey is divided into several sub-tasks: - Pre-checks of incoming filled questionnaires, - Development of check-procedures to facilitate data validation, - Comparing survey data with auxiliary data (UNFCCC, CLRTAP, IEA). 4.1 Pre-checks of incoming filled questionnaires As a first step, procedures needed to be developed in order to pre-check incoming data. These procedures were discussed and developed jointly with Eurostat’s IT-staff during a meeting on 12 October 2006. The pre-checking includes: - Processing the original 2006-questionnaire for automatic reading (i.e. checking whether questionnaires have been filled correctly; removing misplaced footnotes etc.). - Preparing overviews (i.e. mapping of which parts of the questionnaire have been filled etc.). - Reading EXCEL-files into ENVSTAT (for further validation within ENVSTAT). 4.2 Development of check-procedures to facilitate data validation In order to facilitate the data validation an automatic check-procedure was developed by an IT-consultant. Ideally, the NAMEA questionnaire aims at air emission, energy and economic data broken down by 60 industries (NACE 2-digit level) — see rows 5 to 65 (in the 2006- 247 questionnaire). The A60-level (2-digit divisions) allows full compatibility with Eurostat’s monetary Input-Output Tables. In anticipation of the fact that some countries may not be able to report data by A60level, the questionnaire offers the alternative option of filling so-called interim aggregates (see rows 66 to 84 in 2006-questionnaire). Those interim aggregates are certain groupings of 2digit divisions. E.g. row 66 (A_B) is a grouping of the 2-digit-divisions 01, 02 and 05. The list of interim aggregates has been proposed by the former task force (standard table). One problem is that the interim aggregates are partly nested within each other. Table 3 provides an overview on how the interim aggregates are related to each other and how they are related to the 2-digit divisions (A60-level). As can be seen from Table 3, the interim aggregates can be allocated to two clusters: 1. Interim aggregates II (A10): they refer to 8 classes which are comparably broad. If, in addition, one considers two of the 2-digit-divisions (namely, 45 ‘construction’ and 55 ‘Hotels and restaurants’) one obtains the full range of all industries making up ‘industry totals’. 2. Interim aggregates I (A36): they refer to 12 classes which are medium broad. They are not covering the full range; i.e. are not making up industry totals. Therefore, several 2digit classes need to be added in order to make up the industry totals. The check-procedure was developed to check for each country and each single variable (13 air pollutants, 2 energy use variables, 4 economic variables) and comprises the following elements: 1. Calculation and adding (and flagging) of interim aggregates if sub-components are available whilst interim aggregate is not given (e.g. calculating interim aggregate A0102 from the two 2-digits A01 and A02). 2. Controlling interim aggregates whether they equal the sum of sub-components if the latter are available (e.g. whether interim aggregate A01-02 is equal to sum of single 2digits A01 plus A02). 3. Controlling industry totals (e.g. whether sum of all sub-components equal to industry total as given in questionnaire). 4. Controlling household totals (e.g. checking whether the three sub-components of household emissions equal to total of household emissions). 5. Providing an overview on data availability for the three different levels of resolution (A10, A36, and A60) for each county and each variable. 4.3 Comparing survey data with auxiliary data (UNFCCC, CLRTAP, energy balances) In a next validation step, survey data were compared with auxiliary data. National population statistics (from Eurostat) were used as a generic auxiliary variable in order to calculate and cross-check per capita figures of the single NAMEA-variables. For the actual air emission and energy use data, several sources were approached to obtain auxiliary data (see Table 1). 248 Table 1: Relation between interim aggregates and NACE-2-digits 2-digit level row 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 NACE code IND varname SUB_TOT A01 AA 01 Agriculture, hunting and related service activities AA 02 BB 05 Forestry, logging and related service activities CA10 CA 10 CA 11 Mining of coal and lignite; extraction of peat CA11 CA12 CA 12 Mining of uranium and thorium ores CB13 CB14 CB 13 CB 14 Mining of metal ores DA15 DA 15 Manufacture of food products and beverages DA16 DA 16 Manufacture of tobacco products DB17 DB 17 Manufacture of textiles NACE code interim aggregates II row IND varname NACE code A 69 CA12_CB13_CB14 AA 01-02 A_B 01-05 66 A_B 68 C C 10-14 70 D D 15-37 77 E E 78 G G 50-52 Extraction of crude petroleum and natural gas; service CA 12 - CB 13 - CB 14 Other mining and quarrying DB18 DB 18 Manufacture of wearing apparel; dressing; dyeing of fur DC 19 DD 20 Tanning, dressing of leather; manufacture of luggage DD20 DE21 DE 21 DE22 DE 22 Publishing, printing, reproduction of recorded media DF23 DF 23 Manufacture of coke, refined petroleum products and DG24 DG 24 Manufacture of chemicals and chemical products DH25 DH 25 Manufacture of rubber and plastic products DI26 DI 26 Manufacture of other non-metallic mineral products DJ27 DJ 27 Manufacture of basic metals DJ28 DJ 28 Manufacture of fabricated metal products, except DK29 DK 29 71 DA 72 DB17_DB18_DC19 DA 15 - DA 16 DB 17 - DB 18 - DC 19 Manufacture of wood and of products of wood and cork, Manufacture of pulp, paper and paper products 73 DE DE 21 - DE 22 74 DF23_DG24 DF 23 - D G24 75 DL DL 30-33 76 DM DM 34-35 Manufacture of machinery and equipment n.e.c. DL30 DL 30 Manufacture of office machinery and computers DL31 DL 31 Manufacture of electrical machinery and apparatus n.e.c. DL32 DL 32 Manufacture of radio, television and communication Manufacture of medical, precision and optical instruments, DL33 DL 33 DM34 DM 34 DM35 DM 35 Manufacture of other transport equipment Manufacture of motor vehicles, trailers and semi-trailers DN36 DN 36 Manufacture of furniture; manufacturing n.e.c. DN37 DN 37 Recycling E40 E41 EA 40 EA 41 Electricity, gas, steam and hot water supply F FA 45 Construction G50 G 50 Sale, maintenance and repair of motor vehicles and G51 G52 G 51 G 52 Wholesale trade and commission trade, except of motor HA 55 67 Fishing, fish farming and related service activities DC19 40-41 Collection, purification and distribution of water Retail trade, except of motor vehicles and motorcycles; Hotels and restaurants I60 I 60 Land transport; transport via pipelines I61 I 61 Water transport I62 I 62 Air transport I63 I64 I 63 I 64 Supporting and auxiliary transport activities; activities of J65 J 65 Financial intermediation, except insurance and pension J 66 J 67 Insurance and pension funding, except compulsory social J66 J67 IND varname A_Q 0Total industries A02 B H interim aggregates I row 79 I60_TO_I63 I 60-63 80 I I 81 J J 65-67 81 J J 65-67 83 K K 70-74 82 K70_TO_Q99 84 O O 60-64 Post and telecommunications Activities auxiliary to financial intermediation K70 K 70 Real estate activities K71 K 71 Renting of machinery and equipment without operator and K72 K 72 Computer and related activities K73 K 73 Research and development K74 K 74 Other business activities L L 75 M M 80 Education Health and social work K70-Q99 Public administration and defence; compulsory social N N 85 O90 O 90 Sewage and refuse disposal, sanitation and similar O91 O 91 Activities of membership organization n.e.c. O92 O 92 Recreational, cultural and sporting activities O93 O 93 Other service activities P95 Q P 95 Q 99 Activities of households as employers of domestic staff 90-93 Extra-territorial organizations and bodies Table 2: Sources for auxiliary variables used to validate 2006-NAMEA-survey data NAMEA variable Emissions of greenhouse gases: CO2, N2O, CH4, HFC, PFC, SF6 Emissions of SOx, NOx, NH3, NMVOC, CO, PM Auxiliary data and sources Notes and filename United Nations Framework Convention on Climate Change (UNFCCC): Greenhouse Gas Emission Inventories Source: National Inventories submitted to UNFCCC (submission year 2006) File for the latest year reported: 2004 TABLE 10 s1 to s4: EMISSIONS TRENDS 1995-2004 URL: www.unfccc.int accessed, 7 Feb 2007 WebDab 2006 — EMEP activity data and emission database URL: http://webdab.emep.int/ accessed, 7 Feb 2007 This online emission database is provided by EMEP (co-operative programme for Cyprus and Malta do not submit to UNFCCC. For Luxemburg Table 10 is not available. For Poland, only year 2004 is available. 249 For those missing countries, EEA datasets were used. AuxiliaryUNFCCC_GreenhouseGases.xls AuxiliaryEMEP_CLRTAP_ExpertEstimations.xls Energy use monitoring and evaluation of long range transmission of air pollutants in Europe) and contains all emission data (except Large Point Source data) officially submitted to the secretariat of the Convention on Long-range Transboundary Air Pollution (CLRTAP) by Parties to the Convention. Auxiliary data were downloaded from the website-section: "Expert Emissions used in EMEP models" (These emission data are based on officially reported emissions to the extent possible, but some of the officially reported data have been corrected and gaps filled). Eurostat’s NewCronos online database: Energy Statistics (balances) The category downloaded is termed: “Gross Inland Consumption — all products” Table: nrg_100a Supply, transformation, consumption — all products — annual data Unit: 1000toe Thousands tons of oil equivalent (TOE) Indic: en100900 Gross inland consumption URL : http://epp.eurostat.cec.eu.int/ accessed, 7 Feb 2007 29 countries years downloaded: 1995-2004 Switzerland is missing AuxiliaryEnergyGIC.xls With the help of those auxiliary variables several unit errors were detected and corrected in consultation with respective national statistical institutes. In one case, new data for one air emissions parameter was sent. 5 Estimation of EU-aggregates The 2006-NAMEA-survey reveals considerable data gaps regarding coverage of the 29 countries, 19 parameters (13 air pollutants, 2 energy uses, 4 economic variables) and time (9 years: 1995-2003). Further, there are considerable data gaps regarding the breakdown of industries (the 2006-NAMEA-questionnaire offers three disaggregation levels: A10, A36, and A60). The overall objective is to estimate: - time series 1995 to 2004, - for several EU-aggregates: EU15, EU25 and EU27, - at A36-level of disaggregation, - for 8 air pollutants87 (CO2, N2O, CH4, SOx, NOx, NH3, CO, NMVOC), and - 2 energy uses.88 (decided at meeting on 21 March 2006) 87 The response rate for remaining air pollutants (HFC, PFC, SF6, PM, CO2-from-biomass) was too poor to conduct reasonable estimates. 88 Missing economic variables (gross values added, output) are not estimated from the 2006-NAMEA-survey base since Eurostat provides already estimates for those (see www.euklems.net) which are to be used for the further integrated environmental-economic analyses. 250 In general, a bottom-up approach is applied, i.e. in a first step missing values are estimated for single countries in order to arrive at aggregate estimations for EU15, EU25 and EU27. Two cases of “data-gaps” can be distinguished (see Table 3): - In ‘case A’ certain values are given/available for a certain industry-item. However, some years are missing; in other word: the time-series for a certain item is incomplete. The available values are also called “neighbouring values”. - In ‘case B’ no values of a certain item are given; i.e. the item is completely missing. The entire time series is missing. There are no “neighbouring values” which might be employed for estimation. Neighbouring values are existing, but incomplete time series No neighbouring values are existing; i.e time series is completely missing case B case A Table 3: Overview on estimation procedures items estimation procedure NAMEA total - ECON_TOT use annual-%-change of auxiliary variable (e.g. from UNFCCC or CLRTAP inventories, or energy balance) to complete time series household totals - EP_HOUS industry total - SUB_TOT industry breakdown - A10 industry breakdown - A36 industry breakdown - A60 NAMEA total - ECON_TOT use auxiliary variable (e.g. UNFCCC/CLRTAP total) household totals - EP_HOUS use average split between subcategories derived from auxiliary-aggregate of countries for which data are available industry total - SUB_TOT industry breakdown - A10 industry breakdown - A36 industry breakdown - A60 no estimation In a first step, time series of items are completed. Existing (neighbouring) values are extrapolated to the missing years with the help of annual percentage changes of auxiliary variables (e.g. for CO2, the UNFCCC inventory data are used as auxiliary). This extrapolation is applied for all items (i.e. levels of industry-breakdown) implying the assumption that subitems (e.g. emissions of the electricity industry) develop linear to the total (e.g. emissions of total economy). After this first step, EU-wide auxiliary-aggregates are generated from those countries for which data are available (now in complete time series). Evidently, the number of countries for which data are available varies for pollutants and industry-breakdown-level. The following Table 4 provides the example for CO2. It gives the number of countries used to form the auxiliary-aggregate for the several industry-breakdown-levels and EU groupings. Table 4: Number of countries to form EU auxiliary-aggregates for the different industry-breakdown levels (example CO2) A2 A10 A36 EU15 EU25 EU27 12 9 6 16 11 6 17 12 6 As Table 4 shows, the number of countries to form auxiliary-aggregates decreases with increasing resolution of industry-breakdown. For instance, for A2-level (i.e. distinction between industry emissions and household emissions) 12 countries out of EU15 are available. For A36-level, only 6 country-data are available to form auxiliary-aggregates for EU. 251 In the next estimation step the auxiliary-aggregates are used to estimate missing countries. This is done in a hierarchical order. First, the A2-level is estimated. For instance in the case of CO2, the three EU15 countries for which A2-level is missing are estimated. The CO2-total as provided by UNFCCC inventory is split into industry and household emissions using the respective shares from the auxiliary-aggregated derived from 12 existing countries. Then A10-level is estimated for 6 missing EU15 countries by applying the respective auxiliary-aggregate of available 9 countries. The estimate obtained from superior level (i.e. total industry emissions as derived from A2-level) is then split into 10 industries using the available 9 countries’ split as a reference. Finally, the A36-level is estimated starting from the 10 industries’ estimates derived in previous step. For the countries where A36-level data is missing, those are sub-allocated to 36 industries using the average distribution in auxiliary-aggregate which comprises 6 countries as reference in this case. As a result of the above described estimation procedures one obtains full-fledged data sets for all 27 countries comprising original as well as estimated data. This full data set is then aggregated to three EU country groupings: EU15, EU 25, and EU27. Single-country estimates are not supposed to be shown. They only serve as an interim step to obtain EU estimates. 6 Aggregating air emissions to three major impact categories In order to facilitate analyses it is common to aggregate several air emission parameters to so called impact categories. Three impact categories are derivable from the 8 air emissions for which NAMEA estimates are conducted: - Global Warming Potentials (CO2, N2O, CH4), - Acidification (SOx, NOx, NH3), - Tropospheric Ozone Formation Potential (NOx, NMVOC, CO, CH4). The impact categories are derived through aggregating several air emissions to one number applying certain weighing factors. Table 5 presents the weighing factors applied. Table 5: Weighing factors applied for environmental impact categories related to air emissions Impact category Unit Air emission Weighing factor Global Warming Potential (GWP) CO2-equivalents Acidification (ACID) SO2-equivalents Tropospheric Ozone Forming Potential (TOFP) NMVOC-equivalents CO2 N2O CH4 SOx NOx NH3 NOx NMVOC CO CH4 1.0 310 21 1.0 0.7 1.9 1.22 1.0 0.11 0.014 252 7 Results Figure 1: Decoupling of environmental pressures from total economic output, EU25 1995-2004 Figure 2: Direct environmental pressures by industries versus private households — EU25 1995-2004 — Global Warming Potential 253 Figure 3: Direct environmental pressures by industries versus private households — EU25 1995-2004 — Acidification Figure 4: Ranking of industries according to their direct environmental pressures — EU25 2004 — Global Warming Potential 254 Figure 5: Ranking of industries according to their direct environmental pressures — EU25 2004 — Acidification Figure 6: Environmental-economic profiles of selected industries — EU25 255 Figure 7: Industry-specific decoupling of environmental pressures from economic output, EU25 1995-2004 Figure 8: Industry-specific eco-efficiencies (Global Warming Intensities) — EU15 1995-2004 256 Figure 9: Structural Decomposition — Global Warming Potential — EU25 — change 1995-2004 Figure 10: Structural Decomposition — Global Warming Potential — EU25 — change 1995-2004 — differentiated by economic sectors 257 Environmental Management Accounting for Municipal Waste Reduction with Utilisation of Cleaner Production (Consumption) Principles Ilona Obršálová, Marcela Kožená, Ticiano Costa Jordão, Robert Baťa Faculty of Economics and Administration, University of Pardubice, Czech Republic [email protected], [email protected], [email protected], [email protected] 1 Introduction The Environmental Management Accounting (EMA) on the micro-level does not only have to be an issue to be used in companies. In the municipalities, similarly as the principles of environmental management systems which may be applied in regional conditions as REMS (Regional Environmental Management System), it is possible to apply the principles of EMA in an effective way into the activities that may significantly regulate the diverse anthropogenic impacts within a territory. Information for management is a key issue for environmental management systems. The role of the environmental accounting is beyond any doubt and experience from the application in companies shows a more and more important possibility of using cost-benefit analyses. From the whole scope of problems concerning the environmental management of a territory we have selected a part of generation of municipal waste and its management. Similarly to the conditions in a manufacturing process, the information for management is crucial. The paper analyses the possibility of using the principles of cleaner production/cleaner consumption and the environmental accounting as an alternative solution to the problem of the increasing volume of municipal waste in a municipality from the viewpoint of both public administration and private firms engaged in waste treatment. Application of the environmental accounting or alternative supporting tools for monitoring the impacts of anthropogenic activities on the environment has appeared to be necessary during recent years. The information provided by the standard accounting turns out not to be sufficient for responsible decision-making. It is necessary to differentiate from the environmental viewpoint, to extend and complete the system. The theoretical contribution of EMA lies in the fact that it explains a lack of effectiveness in waste generation, it quantifies profits from pollution prevention, and it has proven to be an appropriate tool for evaluating the influence of an activity in the surrounding area. This may be applied to the conditions in a municipality or a region with the same success. 2 Problem definition and description of the selected approach For the purposes of environmentally oriented management, the information about material and energy flows and related costs and revenues is of great importance. Other necessary information includes environmental aspects and impacts of anthropogenic activities and their influence on the results of management of municipalities and waste processing companies. The EMA is an important tool for building and appropriate functionality of the environmental 258 management system, enabling that important information on environmental aspects of a company’s business activity is included in decision-making processes. EMA is a large set of principles and approaches which deals with material and energy flows and cost data which are important for the success of environmental management activities. A systematic use of EMA principles makes it easier to find hidden environmental costs in the accounting system. If hidden costs are not identified, then the evaluation of the service in this case will not reflect all costs and the service is undervalued. EMA implementation may multiply the benefits obtained through other environmental tools. EMA requires good knowledge of physical impacts of activities on the environment and therefore, the EMA implementation is not only a task for accountants but it requires close cooperation of technicians, environmental engineers and managers for a correct evaluation of a company’s impact on the environment [4, 3, 1]. The application of EMA involves two basic pillars of sustainable development: the environmental and the economic aspects. It clarifies how these aspects are considered in internal decision-making processes. Within the traditional accounting system of a company, the information on environmental costs is hidden in comprehensive cost items and some environmental costs are not recorded at all (externalities). The management does not have all information available that is necessary for decision-making and for formulation and implementation of proposals and measures focused on mitigation of impacts of activities and services on the environment. In the case of measures that should prevent the origin of emissions released to the atmosphere, the discharge of waste water and to minimize the generation of waste directly at the source, their economic and environmental benefits are not evaluated correctly as a rule. EMA monitors and evaluates information from the financial and management accounting expressed in values (in monetary units) and the data on material and energy flows in mutual relations with the aim to increase the effectiveness of use of materials and energy, to mitigate the impacts of activities and services on the environment, to reduce environmental risks and to improve the satisfaction of stakeholders. All this may be used, with small modifications, for the purpose of supporting the implementation of an effective waste management in the territory. The paper examines the relations of extension of preventive approach of cleaner production into a cleaner consumption approach and the possibilities of EMA adoption. 2.1 Examined system and research objectives Important legal regulations have provided definitions of obligations that resulted in the gradual development of new approaches and plans for an appropriate waste management in individual regions of Czech Republic and in the country as a whole. On the regional level, these documents set themselves a task to be a tool for effective management in the field of waste treatment in the territory of the region and to create an outlook for business activities in this area. The whole planning process should also contribute to optimisation of expenses from public and private sources. As in any management field, the waste management is also influenced by the quality of the information available. If statistical surveys performed in the mid-1980s are omitted, it may be said that only after 1990, when the first legislation concerning waste was adopted and the systematic monitoring of waste generation and treatment took place, this information may really be used for the management purposes. The ISOH (Information System of Waste Management), which was completed with its own calculations (municipal waste production) and its own investigations (operated systems, comparative analyses, and impact assessment in the region surroundings), was selected to be the main information source. Movement of waste 259 between districts within the Pardubice region may only be monitored on the basis of the landfills registered. The Approach states that the viewpoint of total expenses minimisation applies in the case of waste movement and the nearest plant is decisive in the case of waste processing. Optimisation studies are not applied. The low level of applying the preventive approaches — principles of cleaner consumption in this case — is an imperfection of the current state of affairs. The low level of economic incentives and missing awareness of benefits and advantages of measures and investments in prevention of waste production and reduction of its dangerous properties is another problem. In spite of the aforementioned facts, both the Approach and the Plan face the lack of quality information. The expected origin of waste has been regulated by means of restrictions resulting from implementation of the EU legislation (e.g. problems concerning packaging materials, biodegradable substances, etc.). An estimate of expected financial funds necessary for construction and operation of new facilities including the general division of financial sources and creation of new jobs as an important social effect was made in the Approach. The direct increase in citizens’ expenses due to the technical equipment in the territory corresponding to the new waste management system in the Pardubice region is expected in the approximate amount of CZK 430-530 per person a year. The increase in the expenses incurred in relation to municipal waste included in the amount above may be estimated to be CZK 240-340 per person a year. The exact calculation is rather problematic due to more reasons. The well-known fact is based on the summary of statistical data concerning waste treatment (Table 1). That means, in our conditions the most frequent manner of liquidation is waste disposal on landfills, which is considerably cheaper for the waste producer than other manners — e.g. incineration or recycling. It is clear from the detailed analysis of impact of individual manners on the environment that liquidation and reuse of waste is not advantageous from the economic and environmental viewpoint when compared with preventive procedures preventing generation of waste. Viewed holistically (e.g. using the study entitled Life Cycle Assessment), end-of-pipe technologies may be surprisingly ineffective in ecological terms. This means that the total achieved reduction of the environmental impact is lower than the additional environmental influence caused by the investment. Regardless of that, such investments are still supported by means of “commandand-control” regulating mechanisms. Economic tools of this kind are not found in the Approach or in the Plan yet. The Approach gives their list as possible tools not worked out in the Plan (e.g. municipal leasing, communal mortgage credits, bank subsidies are listed as existing, and regional taxes and fees, insurance and security deposits related to environmental risks, payment of future costs for protection of the environment, reduced insurance in the case of ISO 9000/14000 certification or conclusion of administrative agreement, support of development of the market of secondary raw materials and recycled materials are listed as possible). The Approach also mentions other possibilities such as the creation of the so-called public private partnership as a specific financial and management tool for the needs of waste management. 260 Table 1: Methods of municipal waste treatment in the Czech Republic, 2002-2005 Code Manner of Use Amount (t) 89 2002 2003 2004 2005 D1 2 922 146 2 924 458 2 997 185 3 072 660 Depositing on or under the ground (landfilling) D2 11 652 18 117 4 074 2 079 Treatment by soil processes D3 12 872 Deep injection D4 Storage in surface reservoirs D5 34 414 6 D8 276 737 132 163 142 377 133 044 D9 3 692 8 835 6 577 8 210 D10 314 888 222 928 214 388 1 741 Depositing in special technically controlled landfills Biological treatment not otherwise specified, where the final products and compounds or mixtures that are disposed in one of the procedures set forth under designation D1 to D12 Physical-chemical treatment not otherwise specified, where the final products and compounds or mixtures that are disposed in one of the procedures set forth under designation D1 to D12 Combustion on land D12 202 212 227 2 253 Final or permanent depositing Source: Water Research Institute — Centre of Waste Management (VÚV T.G.M. — CeHO) For our thesis we have selected the results of the research of the possibility to interconnect EMA for management of waste treatment on the regional level with the principles of cleaner production. In the course of the last two years, the research has been carried out in the Pardubice region and in a few East-Bohemian towns (Dobruška, Opočno, Dvůr Králové, Nový Bydžov, Pardubice, Vysoké Mýto, Svitavy, Sezemice, Litomyšl, Česká Třebová) [2,5,6,9,12] in detail with the objective to verify the possibilities of application of EMS and environmental accounting principles into these systems and to develop preventive approaches. These principles will be described in the example of Sezemice. Participants examined in the analysed system included: - Population — production of municipal waste, - Firms engaged in logistics of waste collection, separation and processing, - Municipality — representative of public administration responsible for waste reduction. Investigation was made in the municipality of Sezemice, which has 3,100 inhabitants living mainly in mixed housing development (development of urban type, e.g. blocks of flats, historic buildings with mixed heating) and rural and villa development (e.g. one-family houses with gardens). The amount and kind of individual components of municipal waste (MSW) depend not only on the type of housing development and number of population but also on the population age distribution, which is — in the given case — as follows: 12 % in pre-production age, 17 % in the after-production age. The composition of waste in these two types of development is 89 Preliminary data. 261 further differentiated due to the different purchase behaviour of inhabitants from each housing development as well as the social background of population. These balances have been prepared for individual types of housing development according to the composition of waste in a timeframe, which unambiguously indicate the growing problem and the need to solve it. This may be observed not only through the technical solutions but also through the possibilities offered by detailed descriptions of material, energy and financial flows as well as through the combined applications of cleaner consumption elements. The results of balances have been compared with the possibilities of interconnection of information with firms further processing or disposing sorted or mixed waste (three firms in this case). The reason for the application of these approaches was, among other things, also the fact that while a solution is being looked for, it is very important to transform the information on the amount of waste and on lost raw materials (“non-product output”) to a monetary expression. This is important not only for the management but also for changes in consumer behaviour, when the argumentation in this manner is more effective than use of physical units. The knowledge of these facts is crucial for decision-making similarly as it is in the case of manufacturing plants. The following methodical procedures are used for a more accurate determination of municipal solid waste (MSW) instead of a mere conversion of the waste volume to its approximate weight using the volume weight of waste: - Method of determining the total amount of MSW on the basis of the number of journeys of waste disposal lorries, - Method of determining the total amount of MSW on the basis of average values of weekly specific amounts of MSW, - Method of determining the total amount of MSW on the basis of weighing the waste disposal lorries, - Combination or modification of these methods. The analogous procedure to that in a manufacturing process [10] has been used for the material and energy balances for the purposes of an analysis focused on use of cleaner production principles: - Definition of a balance area and balance environment, - List of all inputs and outputs of the balance area in the course of balance environment, - Flow-chart preparation, - Evaluation of balances. The balances are processed in physical units (Fig.1). The calculations are derived from normative (specific) values for different conditions of waste production. As for monetary expression, the municipality records revenues and expenses in the field of waste management. Revenues are fees collected from citizens and traders, while expenses include costs of mixed waste disposal, cost of bulk waste disposal, costs of dangerous waste disposal, costs related to the collecting place, and others. The current system of recording the revenues and expenses is not certainly EMA and it is necessary to create an extended approach. This may form one of the subsystems of the environmentally oriented management in the territory (municipality). 262 Figure 1: Conceptual material flow and application of EMA and cleaner consumption [5] in the Solid Municipal Waste Management T he M unic ipa l Wa st e 1 – Wa st e le ve l qua nt it y 2 – T im ing for ge ne ra t ion Product purchase A Gardening Consumption (B) Recycled material products Waste generation Deposition in titter bins for separate waste (D) Waste Composting (C) Further treatment Separated waste Deposition in titter bins for mixed waste (E) Incineration Waste generation Waste disposal Landfill gas generation Local combustion chambers incineration (F) Emission to the air Disallowed landfill (G) Soil and water pollution Fly-ash and slag generation Recycling 3 Conclusion It has been demonstrated that the environmental accounting may be extended into other specific cases. The EMA principles may be used as a supporting tool in the development of preventive procedures related to cleaner production/cleaner consumption. The first step is to create a detailed Information System (IS) for an exact overview of the individual streams of waste. The IS monitors the streams of domestic and commercial wastes and presents their composition separately. The next step is a monetary evaluation and monitoring of financial flows according to the EMA principles. This will enable an effective managerial decision-making aiming to prevent the generation of wastes (deposit-refunding systems, fee systems, environmental education to change consumer behaviour, etc.). While impacts on the environment are being assessed, the efforts for internalisation of external costs and use of non-market assessment are still left aside. 4 Acknowledgment This project was created within the research framework GA402/06/0084 “Modeling and Optimization of decision making processes in the municipal and regional administration” under the support of the Grant Agency of Czech Republic. 263 5 References 1. Bleischwitz, R., Hennicke, P. 2004. Eco-Efficiency, Regulation and Sustainable Business. Edward Elgar, Cheltenham. 2. Brettlerová, K. 2004. Analýza environmentálních nákladů v podniku Synthesia, o.z. Univerzita Pardubice, FES, Pardubice. 3. Burritt, L., Hahn, T. and Schaltegger, S. 2001. Current Developments in Environmental Management Accounting-Towards a Comprehensive Framework for EMA. Universität Lunenburg [online] [cited 5 Nov 2004] Available from internet URL <:http//:www.uni/lueneburg.de/eman/pdf_dateien/Burritt/Hahn.pdf>. 4. EEA.1999. Guidelines for defining and documenting data on costs of possible environmental protection measures. Technical report No 27, EEA, Copenhagen. 5. Hořeňovská, J. 2004. Využití principů čistší produkce pro snižování komunálního odpadu. Diplomová práce. Univerzita Pardubice, FCHT, Pardubice , pp. 40-86. 6. Knížková, I. 2005. Environmentální účetnictví. Univerzita Pardubice, FES, Pardubice. 7. Kramer, M., Brauweiler, J. and Ritschelová, I. 2005. Mezinárodní management životního prostředí.Svazek II. C.H.Beck, Praha. 8. [Online] [cited 5 Nov 2004] Available from internet URL <: http//:www.emawebsite.org 9. Stránská, P. 2005. Environmentální účetnictví. Univerzita Pardubice, FES, Pardubice. 10. Remtová, K. Čistší produkce. MŽP, Praha 2003. 11. United Nations Division for Sustainable Development. 2001. Environmental Management Accounting, Procedures and Principles, UN, New York, pp.32-51. 12. Urbanová J. 2006. Nakládání s odpady.Srovnávací analýza. Univerzita Pardubice, Fakulta ekonomickosprávní, Pardubice. 264 Comparing Financial Statement Reporting of Environmental Costs, Obligations, and Activities: A Review of Disclosures by Publicly-Traded Vehicle Manufacturers in Developed Nations Suzanne B. Summers Furman University, Greenville, SC, USA [email protected] Recent evidence suggests that the movement towards investing in more environmentally sustainable companies is gathering speed. More broadly, socially responsible investing (SRI) involves considering and screening potential investments with respect to multiple dimensions of sustainability. A consensus has been emerging among companies and investors that corporate responsibility for social and environmental issues is likely to pay off financially (Orlitztky, Schmidt, and Rynes, 2003). During the first half of this decade, mutual funds and stock indexes based on social responsibility tended to perform no better than comparable, broader stock groupings. More recently, however, SRI-based indexes have gained a the edge. The Global 100 outperformed the Morgan Stanley World Index by 13.5 % during 2005 (Holloway, 2006), and for the year ending in February 2007, the Dow Jones Sustainability Index (World) outpaced, by approximately 1.5 %, both the Dow Jones Wilshire Global LargeCap Index and the MSCI World index. There has been growth in the number of mutual funds and stock indexes that include sustainable companies, and the amounts of money flowing into SRI-oriented mutual funds has grown relatively quickly. In Europe SRI funds grew in excess of 50 % in 2004 (Knox, Maklan & French, 2005). Funds managed in DJSI-based investment vehicles amount to more than US $5 trillion, up approximately 30 % during 2006 (DJSI web pages). SAM (the Austrian company responsible for the DJSIs) reported that climate change continues to attract increased attention (DowJones/SAM, 2006), with more companies recognizing that climate change will have a major impact on their operations and product offerings. SAM also noted an increase in the implementation of risk management systems and assessments of the environmental impacts of potential investments. New sustainability mandates from pension funds, increasing interest among foundations, and an emerging market for sustainability-driven private wealth management were also noted in the latest DowJones/SAM annual review. This increasing pressure from institutional investors has also been noted by Sethi (2005). As a result, analysis of trends in sustainability reports filed with the Global Reporting Initiative (GRI) shows that the number of companies disclosing detailed sustainability information continues to increase. Competition for inclusion in “green” indexes, has been increasing, especially for large, highly visible companies such as those in the auto industry. For many companies, such a listing is considered a key means of attracting investors concerned with social responsibility (Business & the Environment, 2006). This paper examines the reporting activity of the 10 largest automobile companies, and considers this information in an investment context. Investor demand for more and better information on corporate environmental sustainability has clearly grown (Sethi, 2005). This 265 paper also considers the accessibility and usefulness of available information to potential auto company investors. 1 The automobile industry and sustainability In terms of the industry’s environmental impacts, Austin, Rosinski, Sauer, and le Duc (2003) reported that carbon constraints constitute a new and additional influence on competitiveness in the automotive industry. Carbon constraints are emerging in all major automotive markets around the world, led by the European Union, Japan, Canada and Australia. CO2 emissions and fuel economy standards of the industry’s products are not the only consideration, as auto makers are also accountable for emissions from factories. The ten largest automobile companies were selected for this case study. Two are based in USA, two Germany, two in France, one in South Korea, and three are based in Japan. In examining the auto companies’ annual reports, several questions were considered: Do the reports include or reference environmental information? Is environmental information readily available at the company’s web site, either within or alongside the annual report? And to what extent is reporting of environmental information standardized? Table 1: Automobile industry reporting of environmental information in annual reports. Company Report year General Motors 2006 Toyota 2006 Ford 2006 Volkswagen 2006 Daimler Chrysler 2006 Peugeot Citroen 2005 Honda 2006 Nissan 2005 Hyundai 2006 Renault 2005 Strategy Products Operations Finances Executives 2 1 2 25 12 13 7 1 8 10 2 1 1 10 28 13 3 0 4 14 0 0 0 13 8 4 2 0 9 10 22, $6 6 3 13, $2 3, $1 2 0 1 0 1 1 0 1 0 1 0 0 2 1 1 Reference to Co. Web Environmen- pages: tal report? Link to report? no yes no yes yes yes yes yes yes yes no yes no yes yes yes no yes no yes Strategy includes statements of corporate philosophy, policy, and goals of a non-product-specific nature. Operations includes plant, equipment, technology, and systems. Finances includes mentions of environmental costs, liabilities, and expenditures. For GM, VW, and D-C, specific dollar amounts were included, and represented here with a dollar sign followed by the number of times an environmentally-related amount was specified. Executives refers to the number of people, positions, or permanent committees devoted primarily to the natural environment. All 10 companies publish sustainability reports and make them available online. Most also use the information to apply for inclusion in sustainability-based stock market indexes. Competition for inclusion in sustainability indexes may lead companies to “spin” sustainability reports for the most favorable impression on investors. The reporting and disclosure of environmental information is becoming standardized through the Global Reporting Initiative (GRI). GRI has become the repository of corporate sustainability reports. There seems to be an emerging consensus to register reports with GRI, and for the “sustainable investment community” to gather and disseminate information with reference to GRI guidelines. For example, SustainAbility revised its ranking methodology for the 2006 assessment, making it complementary to the GRI--particularly the Reporting Principles of the new G3 guidelines introduced in October 2006. The new guidelines and SustainAbility’s revisions in part shift the focus to consider the extent to which business processes reflect sustainability impacts and performance. For the auto industry, GRI developed a supplemental section that addresses industry-specific issues, e.g., product recycling. 266 Table 2: Automobile company inclusions in sustainability indexes. Company GRI? GRI level Global 100? DJSI World? GM Toyota Ford VW D-C Peugeot Honda Nissan Hyundai Renault 2005 2006 2005 2006 2006 2003 no 2005 2006 2004 CI CI CI CI IA Ref no yes no no no no no no no no Ref CI CI no yes yes no yes no no no no no DJSI Europe? no yes no yes DJSI Eurozone no yes no yes DJSI DJSI UN Global Powertrain STOXX40? EUROCompact? Innovation STOXX40? Awards no yes no no no yes no yes no no no yes yes no no yes no yes 3 6 4 3 0 6 1 4 Blank cells signify non-applicability GRI is Global Reporting Initiative GRI level refers to one of four standards reports can meet: G3 — None of these companies registered a report in compliance with the recent G3 standards. CI — Content Index, the report contains a table of contents referencing sections within the report that contain, or explain the absence of, data required under the 2002 version of the Sustainability Reporting Guidelines. IA — In Accordance with the 2002 Guidelines. Ref - Report prepared “with reference to” or “based on” the 2002 Guidelines. DJSI is Dow Jones Sustainability Index Powertrain innovation awards contains the number of models (of total of 37) named by JD Power in 2006 2 Analysis Each of the 10 largest auto companies discussed the environment in annual reports, and some did so extensively. Each also discussed the environment in the context of company strategy. All but Nissan highlighted environmentally-oriented product advances (and it is noteworthy that Nissan had only one of 37 models cited by JD Power for environmental innovation in powertrains)(Greenbiz, 2006). All but Honda and Hyundai discussed the potential financial impact of environmental issues. In 18 % of these financial references, companies cited specific monetary numbers. For example, General Motors increased its “automotive cost of sales” by $1.4 million for 2005 to reflect an increase in “operation and maintenance costs for certain environmental sites” (p. 78, GM annual report, 2005). Three European companies, VW, D-C, and Peugeot, made the most references to the environment in their annual reports. All but Honda filed a sustainability report with GRI. It should be noted, however, that the two French auto makers’ reports at GRI are relatively old — Peugeot’s is from 2003 and Renault’s is dated 2004. Only Daimler-Chrysler’s current report is fully in accordance with the GRI’s 2002 guidelines, and none met GRI’s recent, more stringent G3 standards. In fairness, these new guidelines took effect recently, in October, 2006. Only Toyota made the Global 100, despite relatively few environmental references in its annual report. This sustainability index, though in only its third year, appears to be attracting a great deal of investor attention. The Global 100, generated by Innovest Strategic Value Investors, is a list of publicly-traded companies selected from 1,800 companies based on sustainability. The 100 are deemed to have the best developed abilities to manage environmental, social, and governance risks (Business Week, January 29, 2007). Toyota, Ford, and Daimler-Chrysler are among the 325 members of the DJSI World. Volkswagen, which had been a member for several years, was removed after 2005. Of the two most innovative companies in terms of their engine-transmission technologies (6 models each for environmentally innovative powertrains), Toyota is included in the DJSI World Index, but Honda is not. Daimler-Chrysler is included in all the DJSIs, and it participates in the UN Global Compact. Interestingly, D-C is included in DJSI World despite having no 267 models receive innovation awards. D-C did include extensive environmental information in its annual report, including 28 mentions of environmental aspects of its products. The Dow Jones Sustainability World Index (DJSI World) is comprised by more than 300 companies that represent the top 10 % of the leading sustainability companies out of the biggest companies in the Dow Jones World Index. DJSI STOXX Sustainability Index (DJSI STOXX) consists of the top 20 % (in terms of sustainability) of Europe’s 600 largest companies. The DJSI EURO STOXX Sustainability Index (DJSI EURO STOXX) contains the Eurozone (countries using the Euro) companies from the DJSI STOXX Sustainability Index. The Dow Jones STOXX Sustainability 40 Index (DJSI STOXX 40) tracks the performance of the largest companies in Europe that have been included in the Dow Jones STOXX Sustainability Index. The Dow Jones EURO STOXX Sustainability 40 Index (DJSI EURO STOXX 40) contains the largest companies in the Eurozone which have been included in the Dow Jones STOXX Sustainability Index (source-DowJones/SAM web pages). The UN Global Compact contains an environmental component, and some auto companies participate. Development of environmental guidelines has been led by the United Nations Environment Programme (UNEP), since its inception in 1973. The environmental compact requires reporting and evidence of progress (United Nations Global Compact web site, 2007). BMW AG, the 12th largest auto company, also appears to be among the leaders in sustainability. It is included in each DJSI, except for EURO Sustainability 40 (DJSI STOXX 40), the omission likely based on company size. It also participates in the UN Global Compact. For 2006 it replaces Ford as the SAM/Dow Jones “sustainability leader” in the automobile sector. BMW was also an early applicant for ISO 14001 certification (see brochure). BMW’s 2005/2006 “Sustainable Value Report” is registered with GRI as IA, joining Daimler-Chrysler with the only IA registrations of current (2006) sustainability reports. (Note that Ford’s 2003/2004 report was IA, as was the 2003 report of GM.) One interesting BMW initiative is its tapping of methane gas in a landfill to power its large South Carolina plant. BMW also earned waivers from the US EPA permitting much quicker plant expansions (than possible without the waivers). These waivers stemmed from the lowering of emissions of air pollutants over several years (despite increasing production). No BMW models were selected for JD Power alternative powertrain awards. 3 Observations None of the sustainability information is readily accessible, especially to individual investors. The calculation of sustainability scores, e.g., for DJSIs, is not transparent, though Dow Jones does publish the amount of weight given to some criteria, e.g., environmental performance (7 %). Data and information about the environment alone are difficult to locate and tend to be qualitative (the GM annual report information cited above is an exception. And where there are quantitative data on estimable environmental costs and liabilities, the information is highly likely to already be reflected in stock prices, if one subscribes to the notion of reasonably efficient stock markets.) It is difficult to imagine how to use the environmental information to distinguish among the auto companies. More difficult yet would be an investment decision comparing companies across different sectors of the economy. Investors are faced with an overwhelming amount of sustainability information, much of it unrelated to environmental sustainability. Sifting through all of the sustainability information to arrive at an environmentally-based investment decision presents a daunting task. First, the most widely reported, cited, and relied upon “green” stock indexes are based on the multidimensional construct, “corporate 268 sustainability”. This consists not only of environmental aspects, but also of corporate governance, community relations and support, and safe, fair treatment of employees. For example, in scoring companies for inclusion in its DJSI World Index, SAM/Dow Jones weights environmental performance as only seven percent of the total sustainability score. Another three percent is based on “environmental reporting”, which presumably means simply completing the questionnaire items regarding the natural environment will yield a perfect score on three percent of the questionnaire. An unspecified percentage weight is also based on “industry specific criteria”, but in sum, as little as 10 percent of the DJSI World Index may derive from environmentally-oriented data, with approximately 48 % of the overall score based on unspecified criteria. Unless investors are willing to rely on mutual funds (which themselves presumably engage in an environmental research process), stock indexes, or lists of sustainable companies, they must spend considerable time and effort to estimate the actual environmental sustainability of potential investments. Suppose an investor wanted to select an auto company based on environmental sustainability. A process such as the following would be only a beginning: 1) Locate sustainability reports for each potential investment, 2) Examine each company’s reported data on environmental dimensions of interest, e.g., GRI’s variable EN15, “Percentage of the weight of products sold that is reclaimable at the end of the products’ useful life and percentage that is actually reclaimed.” 3) Compare potential companies along these dimensions of interest, 4) Arrive at weightings of the importance of each variable, 4) Consider performance on these environmental issues against a larger financial outlook, and, after pursuing confirming sources of this information, and 5) Buy, sell, or hold. Environmental investors may be relatively unconcerned about a company’s stock’s performance, as the investment decision is driven in part by a set of values involving care for the natural environment. Perhaps this is a partial explanation for green investment vehicles’ failure, until recently, to outperform the broader markets. That is, green investors want their money to be in greener companies, whether or not there may be greater financial returns. Locating the greener investments appears to be a difficult task. Investors with primary concern for environmental performance face contaminated sustainability indicators. Timely environmentally-based investing may be practically impossible, as independent research may be necessary and company reporting (e.g., to GRI) involves long time lags. Furthermore, the melding of multiple dimensions of sustainability presents challenges to the environmental investor. Investors with primary concern for environmental performance are confronted with broader sustainability indicators that may mask the environmental dimension, or even work at cross-purposes to it. For example, in applying the broader concept of sustainability, some mutual funds screen for both environmental performance and “moral responsibility”(Investing, 2005). Some funds screen out companies that support abortion, contraception, or have policies perceived to undermine the “sanctity of marriage”. Therefore, some SRI funds invest in ways that would support an investor’s environmental values, while possibly undermining his or her “family values”. Vermeir, van de Velde, and Corten (2005) found that of Vigeo’s five sustainability dimensions (human resources, corporate governance, society and community involvement, environment, and clients and suppliers), society and community involvement related inversely to financial market performance. Vigeo is an independent, French social responsibility organization that has generated sustainability scores on European companies since 2000. There is an unknown amount of error in measuring a company’s sustainability, although the review here of environmental data contained in the sustainability reports suggests variability in the measurement and presentation of environmental data. The error will vary across companies, even within the same sector, and despite standardized reporting. As is “statistically true” of any actual relationship, data from more valid measures of environmental 269 performance would reveal a stronger relationship of company environmental performance to that company’s financial market performance. At minimum, more valid measures and more reliable reporting would permit better informed (environmentally-based) investment decisions. 4 Questions for the future Actual environmental performance is also being obscured by preoccupation with reporting. For example, SustainAbility, the UK-based sustainable development consultancy, has issued a report, along with the United Nations Environment Programme (UNEP) and Standard & Poor's, that ranked 50 sustainability reporting "leaders" on four aspects: Governance and strategy, management, presentation of performance, and accessibility and assurance (Baue, 2006). SustainAbility’s rankings were not of sustainability performance but rather sustainability reporting. This distinction helps explain why BP could be rated very highly despite the March, 2005 explosion at a BP refinery in Texas that killed 15 people and injured 170, and the March 2006 rupture in a BP pipeline in Alaska that led to a 200,000-gallon oil spill. The report does acknowledge the inherent limitations of sustainability reporting in reflecting the actual degree to which companies are achieving true sustainability. In conclusion, this review of the auto companies generates a number of useful questions, some of them worthy of research: Will the near future bring laws and regulations compelling submissions of sustainability reports, perhaps to the GRI? Will there be further relative growth in funds invested in green stocks and mutual funds? Will there be greater availability of environmental information on smaller companies? Will research show that the environmental component of sustainability has an independent, material effect on performance of financial instruments? Will there be availability of environment-only data to investors? Will there be growth in the availability of environment-only stock indexes to investors? Will there be greater emphasis on the quality, validity and meaning of the information contained in sustainability reports, as opposed to the current preoccupation with the mere existence and presentation of the information? Will there be consensus on, or evidence of, the importance to a company’s sustainable-financial value of several key environmental indicators? Of course the most important question of all is whether there will there be measurable improvements in the natural environment resulting from sustainability reporting and the increasing focus on green investing. 5 1. 2. 3. 4. 5. 6. 7. References Austin, D., Rosinski, N, Sauer, A. and le Duc, C.: 2003, Changing Drivers - The Impact of Climate Change on Competitiveness and Value Creation in the Automotive Industry, SAM and the World Resources Institute (WRI). http://www.sam-group.com/changingdrivers/pdf/ChangingDrivers_FullReport.pdf Baue, B.: 2006, Sustainability Reporting Improving, But Not Necessarily Contributing to True Sustainability, OneReport: The Sustainability Reporting Network. SRI World Group, Inc. http://www.one-report.com/article.html/2159.html?articleid=2159 Dow Jones Sustainability Indexes. 2007, DowJones/SAM web pages. http://www.sam-group.com/htmle/djsi/indexes.cfm Dow Jones Sustainability Index Adjustment. 2006, p. 8. Business & the Environment, Aspen Publishers, Inc. General Motors 2006 Annual Report, p. 78. http://www.gm.com/company/investor_information/stockholder_info/ Holloway, A.: 2006, Sustained Performance, Canadian Business, 79(5): 65-67. Investing, February 7, 2005, pp. 106-109. Fortune Magazine. 270 8. Knox, S. , Maklan, S., and French, P.: 2005, Corporate Social Responsibility: Exploring Stakeholder Relationships and Programme Reporting across Leading FTSE Companies. Journal of Business Ethics, 61: 7-28. 9. Orlitztky, M., Schmidt, F.L., and Rynes, S.L.,: 2003, Corporate Social and Financial Performance: A Meta-Analysis. Organization Studies, 24(3): 403-441. 10. Sethi, P.: 2005, Investing in Socially Responsible Companies is a Must for Public Pension Funds. Journal of Business Ethics, 56: 99-129. 11. United Nations Global Compact web pages. 2007. http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/environment.html 12. Vermeir, W., van de Velde, E., and Corten, F.: 2005, Sustainable and Responsible Performance. Journal of Investing, 14(3): 96-100. 271 Consequences of the Liberalization of Environmental Services Iva Ritschelováa, Eva Tošovskáb, Egor Sidorova, Jiří Študentc a Jan Evangelista Purkyně University in Ústí nad Labem, Czech Republic [email protected], [email protected] b Economic Institute of Academy of Science, Prague, Czech Republic [email protected] c Czech Environment Management Center, Prague, Czech Republic [email protected] 1 Summary of the current state of knowledge in the given scientific field For a long time, the prevailing opinion was that services, in comparison with goods, offer much lower potential for trade expansion. This opinion was based on a traditional view of the services sector, which stressed limited marketability, inaccuracy and non-storability of services, the characteristic feature of which was consumption at the moment of their production. For a long time, the provision of numerous services was the domain of the state. These were particularly services important for the development of infrastructure (telecommunication services), services characterised by economic goals (social and cultural services) and services, the provision of which was near to natural monopolies because they required a unified collection or distribution network (water supplies). Nevertheless, the position of services in international trade has significantly changed in recent decades. This has been particularly caused by the development and introduction of new technologies for the provision of services, e.g. satellite communication, removal of long-term operating monopolies in many service sectors, e.g. in telephone services, and also by the gradual liberalization of service sectors with previously limited access, e.g. banking, insurance, and many others. In developed countries, the services sector has become an increasingly important factor in economic growth, e.g. in most EU member states its share in GDP and employment amounts to approx. 70 %. An integral part of any classification of services is so-called “environmental services” that received relatively little attention in the past. Similarly to other kinds of services, environmental services have also seen dynamic development. Their traditionally narrow concept, which comprised particularly services connected with water supply for inhabitants, wastewater management, and waste management, turned out to be entirely insufficient in connection with increasing requirements for environmental protection and sustainability. Environmental services are connected not only with traditional equipment for pollution reduction and control in individual media together with rehabilitation activities, but they are also becoming an ever more important integral part of preventive technologies, new types of products, are involved in the management of natural resources, in the application of ecological design of products, and include environmental consultancy, audits or know-how. A relatively new activity having the character of environmental services is emission permits trading. The progress of privatisation and de-monopolisation of the environmental services sector that has been characteristic for most developed countries in recent decades has resulted in the gradual creation of the market for environmental services. 272 This market is stimulated by at least three factors: The first factor is dynamically growing trade in equipment and technologies for environmental protection that also includes environmental services, which is connected with the urgent need of many countries to complete or modernise municipal or industrial infrastructure equipment (particularly in the field of water and waste management). 90 - The second factor consists in the adoption of some environmental standards, which stimulates international trade in certain environmental products and services, e.g. the strategy of CFC replacement as a result of the Montreal Protocol, etc. - The third factor is the decision of governments of many countries to start the process of privatisation and de-monopolisation of domestic public facilities in the sphere of environmental services, which should create space for the entry of foreign capital. At present, primary attention is focused, particularly in the EU and WTO, on further liberalisation of services, which also fully applies to the sphere of environmental services. At present, in the internal EU market, there exist numerous barriers that keep service providers (particularly small and medium sized businesses) from expanding their activities across the borders of their states. All existing negotiations are inspired by the effort to break down barriers in the development of services between EU member states, and to form a uniform market for services providing competitive ability, which will contribute to sustainable economic development in the EU. It is obvious that the situation will be specific for each type of service. The position of environmental services in market liberalization, which is very sensitive due to the high achieved level of environmental protection, was analyzed only within a very limited scope in the Czech Republic in the past, and existing literature sources are very scarce. Therefore, deeper research into these problems is very relevant. It can significantly support the Czech Republic’s position in the negotiations related to the liberalization of environmental services. The position of services in the Czech Republic, which also means environmental services, must be understood in the context of the development of the national economy, and development of the EU economy. The economy of the Czech Republic is based on industrial production (up to 70 % GDP), i.e. it significantly falls behind in the share of services in GDP compared with the EU. It is characterized by low prices (the price level index of final household consumption expenditures amounts to approx. 55 % of the EU average), which together with low wages and salaries (unit labour cost amounts to 29 % of the EU average) enable us to offer one of the best labour price/labour performance ratios. This is one reason for the inflow of direct foreign investment. The Czech Republic is one of 4 EU countries with the highest gross fixed capital formation. One cannot expect that this comparative advantage of the CR will last for a long time. Very probably, this situation will start changing with further EU expansion. This trend should not be understood as a threat but rather as a challenge for the Czech economy. On a global scale in the field of competence ability, the Czech Republic has a worse position than the - 90 Nevertheless, in this context, one must truthfully record and analyse some activities that have the partial or full character of services (or so-called production services), and which are characterised by problematic or even negative influence on the local or global environment. For example, they are: transfers of some types of manufacture to developing countries with less strict “green legislation”, efforts to landfill or burn waste materials outside the territory of their origin, manipulating the expiry date (or warranty period) in the export of some kinds of pharmaceuticals, and herbicides, which in the chain of causalities affect the quality of the environment, and priory limitation of the purchase of licenses for the manufacture of herbicides, pharmaceuticals, etc. 273 states of the original EU 15. For example, in 2004, the Czech Republic was 40th in the evaluation according to the Growth Competitiveness Index. In the near future, the Czech Republic should be able to offer products and services with higher added value. To achieve this, it will be necessary to change many factors influencing the competitiveness of the whole economy, and the administration of public matters. An indicator of growing competitiveness is also the share of services in GDP, and environmental services have the potential to participate in this qualitative process. 2 Project objectives and strategies The subject matter of the project is to evaluate what the influence would be of nearly total liberalization of services according to the directive of the European Parliament91 and the Council of the European Union, and particularly the application of the “country of origin” principle to services in the field of environmental protection. To evaluate whether this direction was for the benefit of a high level of environmental protection or to assess what advantages and disadvantages result for the Czech Republic from liberalization in this specific sphere of services. The project focuses on problems connected with “environmental services” that are an integral part of all statistical classification of services. In connection with the effect in the liberalization trend in the services sector, a deeper analysis of these services for the Czech Republic — both at the theoretical methodological and application level — has essential importance at present. The project is divided into 2 levels: theoretical-methodological and application level. At the theoretical-methodological level, stress is put on: - Exploration of specific aspects of environmental services, and their classification into more universal categories. - Definition and classification of environmental services and taking into consideration their changing role in the period of transition in sustainable development (EU, GATS and other classifications). - Analysis of possibilities and limits of statistical description and statistical survey of environmental services. This should be compared with methods of describing environmental services on the basis of so-called soft data. - Identification and characterization of processes starting to be used in the sphere of environmental services, e.g. erosion of state dominance, progress of privatization and de-monopolization of this sector, etc. - Analysis of possible forms of liberalization of trade in environmental services (privatization, lease of public infrastructure service to private entities, stipulation of contracts on provisions of services, licenses, etc.). - Characterization of environmental services according to four basic ways of service provision in the WTO interpretation, i.e. service across the border, consumption or purchase of service abroad, commercial presence of a foreign provider of a service on the territory of another WTO member state, the physical presence of foreign citizens in another country for the purpose of service provision, etc. - Analysis of accepted liabilities of the Czech Republic in its approach to environmental services according to the General Agreement on Trade in Services (GATS), and their 91 Last year (2006), the Directive is being discussed by the European Parliament. Due to the compromise arrived at by the main political parties of the EP in the first reading (16th February 2006), the Directive was stripped of the principle consisting in the fact that a service provider operating in another country must adhere to the provider’s domestic laws. This matter was important particularly for the new member states. 274 comparison with the approach of the suggested directive of the European Parliament and the Council of European Union on services. - - 3 At the application level, stress is focused on the following areas: Description and analysis of the scope of the market of environmental services in the Czech Republic, which supposes a description of this sector and a record of its development by means of both soft and hard data. Evaluation of experience that has been obtained so far in individual forms of the entry of foreign providers of environmental services to the Czech market. Evaluation of the export potential of Czech providers of environmental services, analysis of existing limits and limiting factors for the purpose of enhancement of their entry to foreign markets. Summary The service sector continues to become a more and more important factor in the economic development of the developed countries. The share of this sector in GDP and in employment is about 70 % in most of EU member countries. Service sector liberalization has become a very current and broadly discussed theme in the EU because many barriers exist in the internal EU market that prevent small and medium-size enterprises from expanding beyond state borders. The main aims of liberalization are to eliminate barriers to the expansion of services among EU members and to create a unified and competitive services market that will support sustainable development in the EU. The project is focused on the problems related to the liberalization of services in the field of “environmental services”. A deep analysis of this liberalization becomes very important for the Czech Republic. The aims of the project are: to evaluate the impact of practically absolute service liberalization based on the European Parliament and the European Council Directive, and on the “Czech market of environmental services”, with an accent on the “origin country principle”; to evaluate the influence of this directive in promoting a very high standard of environmental protection; and, to evaluate the positives and negatives related to environmental services liberalization for the Czech Republic. 4 Acknowledgement This paper provides the basic information about new project of the Grant Agency of the Academy of Science, 402/07/1580, 2007-2009. 275 Standardized Methodology for Economic-SocialEnvironmental Result Based Administration Roy Martelanc*, Felipe Turbuk Garran University of São Paulo, Brazil * [email protected] 1 Introduction The paper upholds the idea that the answer to enhance the economic-social-environmental appraisal of public projects, activities, and regulations, is the worldwide standardization of the methodology. The burden is the cost of changing an established, yet partial, appraisal culture. The prize is the selection of projects with a growing positive impact on the economy, the society, and the environment. 2 The dual agency problem in the public sector 2.1 Corporate sector agency problem The agency problem can be stated as how to lead decision makers, i.e. the agents, to work in behalf of others, the principals. In the most commonly addressed agency problem in the corporate world, the principals are the shareholders and the agents are the administrators. The shareholders take few decisions; almost any relevant decision is made by the administrators and the legion of middle managers under them. All those decisions are made in the name of the best interest for the shareholders. However, it is clear that most administrators will actually run their companies in behalf of their own interests. That interests may be any combination of wage, bonus, fringe benefits, perks, power, status, sex, esteem, a career for family members, or the simple opportunity to put her ideas to work. The agency problem in the governmental sector is dual, as shown in Figure 1. As they will not manage the company they own, the shareholders have to guarantee that it will be managed as to maximize their objective, namely their wealth. The trick is to make the administrator’s objectives to be aligned with those of the shareholders. One classical solution is to monitor their actions and results with accountability systems, disclosure, ethical norms and auditing. Other classical solution is to make them profit handsomely with the results of their own work, usually paying them with stock or stock options. The idea is to produce an incentive strong enough to suppress most of the personal objectives and make the administrators pursue the objective of the shareholders while pursuing their own. This alignment of objectives is seldom, if ever, complete. As administrators are but human, in most cases there is a wide gap left between their objectives and the shareholders. As a consequence, the actual objectives of a corporation are a combination of the principal’s and the agent’s. 276 Figure 1: Agency problem in the corporate sector. Typical agency problem: shareholders x administrators. Other agency problems (shareholders x creditors, company x distributors, etc.) are not represented. shareholders administrators middle managers & common workers agency conflict in the corporate sector 2.2 Public sector dual agency problem In the public sector, there is a dual agency problem, as shown in Figure 2. One agency problem is between the citizen and the politician they elected to represent their interests. The other problem is between, at one side, the politicians and administrators and, on the other side, the career managers. At the top are the politicians, embodied with a set of missions that are partly derived from the needs of their constituents, partly from their own ideology, both restricted by the reality. They are the agents, acting in name and behalf of the citizens. In democratic societies, there are well-established electoral systems to make the politicians act accordingly to the needs of the people. Whenever they fail to meet the people’s needs, they risk losing support and, eventually, office. Even in democracy deviant or predemocratic regimes, non-performing rulers are likely to be ousted, usually in dramatic ways. Nevertheless, there have been uncountable situations in which politicians have consistently pursued objectives that were already known to be of low or negative economic, social and environmental net impact. They are able to do so by compensating with greater positive impacts in other fields. Upper administrators are usually selected by politicians among the available state managers or even among outsiders. Of course, the freedom of choice may vary greatly between countries and sectors, but it is usual for politicians to nominate most of the upper administrators. In common, upper administrators have the urge to have a great performance, as defined by the politicians in command. They have been selected among all others for their acceptance of and even willingness towards the objectives of their bosses. Their actions and results are regularly discussed and closely monitored. If successful, they may be awarded with promotions, power, and further opportunities for self-actualization. And they can be fired. 277 Figure 2: Dual agency problem in the public sector: Agency problems: 1st: citizens x politicians / administrators; 2nd: politicians / administrators; an objectives bypass of politicians / administrators by middle managers (doted). citizens politicians & administrators middle managers & common workers dual agency conflict in the government Whenever the administrators do not perform as required, they will fail both their mission and whom entrusted them. In some situations they may be readily replaced; in other cases, there are more elaborated demoting rituals; there are even situations when the administrators are deemed independent and there is little to do rather then wait until their term expires. The outcome is a reasonable similarity between the objectives of upper administrators and politicians. Although there are agency problems between politicians and upper administrators, it is reasonable to consider them less important and easier to solve than those between the citizen and the politician / administrator or than those between the politician / administrator and the career managers. Both politicians and upper administrations become principals when facing the career managers, the agents of the State. As any agent, middle managers are prone to seek their own objectives as compared with those of the principals. The list of personal objectives is the same as in the private sector: a combination of wage, bonus, fringe benefits, perks, power, status, sex, esteem, a career for family members, or the simple opportunity to put her ideas to work. The generic tools to solve this problem are the same as for the private sector. First, there is monitoring, i.e., control, transparency, ethical behavior enforcement, and auditing. Second, there is compensation, both material, as benefits, perks and promotions, and non material, as freedom of movements and public recognition. In the public sector, there is, however, a specific agency behavior that is hardly present in the private sector. Many middle managers do not rely on the intentions or quality of the decisions of politicians and, by extension, of upper administrators. Thus they may perform acts that will be regarded by the politicians / administrators as an agency problem related misbehavior, but actually are a reaction to the higher level agency problem that has the citizens as principals and the very politicians / administrators as the possibly misbehaving agents. 278 2.3 The performance of middle managers There are decisions with clear and vital impact on the overall results of an institution. In that cases, even a poor execution may produce a good performance. Most of the projects, activities and regulations, however, are not evidently viable and depend on the quality of management to achieve at least a fair performance. It takes a vast amount of small decisions to make an average project, activity or regulation become the success that politicians projected and citizens demanded. Upper administrators simply do not have both the information and the reach to do the job. Final results may depend heavily on the effort and quality decisions of middle managers. It is usual to ascribe the success of an army to the quality of its sergeants, as opposed to its generals; or the success of a church to its preachers. The same happens with more prosaic structures, such as health and educational systems, social and economical development agencies, environment protection offices, public banks, and an array of other institutions. There are many reasons that can make middle managers deliver sub-optimal results. Beyond simple reasons as lack of resources, competence and motivation, three objective related problems must be acknowledged: - Diverting objectives. Focus on internal issues rather than on the institution’s objectives can easily divert an institution from its society related mission and make it spend most of its energy with issues as overwhelming red tape, burdensome internal politics, and lack of pressure for results. - Diverse objectives. Whenever middle managers disagree with the politicians / administrators, they might perform their tasks without commitment, or even in a disruptive way. Sabotage is not unheard of. - Disarray of objectives. If the administrators are unable to design a set of common and coherent objectives and managerial indictors, each manager may follow the objectives she understands to be more fitted for the institution. The resulting conflicts and lack of focus usually consume much of the energy of the institution. - Most of decision making actually happens on mid management level. The problem of the politicians / administrators is how to make middle managers move diligently towards the objectives of the institution, the governing politicians, and society itself. The problem of the citizens is how to make the institutions work for themselves. 3 Two solutions for the agency problem 3.1 Objective seeking in the private sector On the corporate level, the objectives can be stated as maximize the wealth of the shareholders, i.e., a combination of share price and dividends. The means to solve the agency problem are to award the administrators with stock or stock options, thus aligning their objectives to those of the shareholders. As the administrators seek eagerly their own profit, they achieve the same objectives for the shareholders. This solution is not complete, since a gap between administrator’s and shareholder’s objectives still remains. This residual agency cost is usually much higher than the costs of monitoring and the value of the stock given to the administrators, but is difficult to reduce. There are attempts, but little practical results, in using the same wealth maximization metrics for middle management. The problem is that share prices react to a set of drivers, such as company results, global market fluctuations, speculative movements, expectations about future performance of the company. It is difficult to trace down the reasons of a share price increase to the performance of a division, group or an individual. 279 The answer is to use, for managerial purpose, a mix of indicators reflecting the results and their drivers. The metric for result is as easily determined as for wealth: profits. In practice, there are several measures of profit, as ROI and EVA, and this debate is not over in the private sector. Nevertheless, every corporation chooses a specific metric and turns into the objective of middle managers. All administrators and middle managers become self-driven profit maximizers. The business plans and budgets are the tools that make them comply with the strategic goals of the corporation. The same strategy and objectives are actively sought by every manager in the same company. A changing and competitive world requires a high level of performance, both from the individual and from the company. The occasional failures are to be accounted to a high competition level more than to lack of individual or group competence: it is difficult to win a tough game. Usually, the managers are empowered to change tactic level decisions so as to adapt to a changing business environment and to fix unsound previous decisions. The motivation level and the dedication of empowered and committed managers may be high. So may their performance 3.2 Task performing objective in the public sector One simple solution for the agency problems of a governmental institution is to separate the decision making from the implementation. The politicians / administrators make the strategic decisions and the middle managers have to implement them as determined. Sometimes, a whole public institution is contracted by some higher governmental unit. The contract may imply the institution has an objective function such as profit, just as for private firms, and that the attached service level agreement (SLA) is a restriction. Sometimes the middle managers must perform requirements that seem more as contracts. In this case, there is not even something as an explicit objective function; just the restriction functions. This kind of relationship implies the separation between making and implementing policy. The response of the individual or the institution can only be as good as the contract or SLA. When the task is formatted as a regular activity, there are defined some permanent indicators, such as client satisfaction, budget compliance and so forth. When the task is formatted as a regulation, the goals of middle managers are usually to follow exactly the regulations. When the task is formatted as a project, the toolset is the same of usual project management: specify the goals, the budget, the schedule, the check points, organize the team, monitor thoroughly the execution, make any changes needed to achieve success. The success of the project is defined as a function of the fulfillment of the goals on time and in the budget. The task performing solution for the agency problem transforms middle managers into executors of plans, accountable not for the final results, but for fulfilling all the tasks assigned to them. Their decisions are strictly bounded to those of the politicians, who need to be frequently consulted. Only they can make any significant decision. Since the 60s (McGregor, 1960), it is clear that most people are motivated by taking responsibilities and being rewarded for their achievements. To become simple task performers, with little decision making or responsibility taking of their own, is hardly motivating or morale building. As the challenges for middle managers are reduced by lack of autonomy, their competence is used at lower level than that of their private sector equivalents. 280 As a consequence, middle managers may become more oriented towards short-term and small-scope goals then to the broader objectives of the institutions they serve. The outcome of the irrelevance of final results to the implementers are sub-optimal results. Consistently, the politicians are the main people accountable for these results. 3.3 Objective seeking in the public sector A second solution for the agency problem is to make every public manager accountable for her part of final results of her institution, i.e., the department, agency, public company, etc. for which she works. The attitude of the managers changes from simply to perform the tasks she is given to seeking the very objectives of the institution. As seen, this is easier to achieve in the private sector. In the public sector, there are two main restrictions to the objective seeking solution. The first one is a different incentive system. This topic is not the main concern of this paper and will be here quickly discussed. Private sector solved this problem in a few different ways. One situation is that of a classical corporation, with: public control of voting shares, budget and other indicators based incentives, managers that stay a limited number of years in the company and must be rewarded on base of short-term performance. Another classical solution is entrepreneurship: the entrepreneur and maybe some of his close aids are fully and personally accountable and get all the thrill and all the profits. A third solution of the private sector is also common in the public sector. Some private companies and most public institutions have closed careers: people are expected to begin and end their professional lives working for the same company. The main personal objective comes to be the health of the company or institution, because that implies the financial health of the employees. As employees are staying forever, there is little need for short term financial rewards and, as a consequence, for detailed financial systems. The consequence is that the prevailing culture is focused on long-term results. The incentive system is based on peer evaluations and symbolic rewards. There are several well-known institutions that have closed careers and strong symbolic incentive systems: Japanese zaibatsus, any army, the catholic church, universities, and a roll of other private and public organizations. The second restriction to the objective seeking solution of the dual agency problem in the public sector is that results are far more difficult to measure than in the private sector. The objective function of a private company can be stated as the part of the economic value created by the company that it managed to retain for its shareholders. The objectives of other stakeholders may be treated, and usually are, as sheer restrictions. On the other hand, the state and most NGOs have the objective function of maximizing the net benefit for all the society, and maybe for more than just the human species. These objectives are of economic, social and environmental (ESE) nature. 4 - ESE Objectives The ESE objectives can be stated in levels of analysis as: The cash flow level. The net economic product generated, as in Kaldor-Hicks, allowing for the corrections of distortions as monopoly pricing, artificial exchange rates, and taxes, as in LMST. The social gain, that considers an array of non economic benefits and costs, not the least being distributional premiums. The environmental gain. 281 As shown in Figure 3, the environmental level encompasses the social one, that encompasses the economic one, that encompasses the financial one. Figure 3: The four levels of analysis. Financial level: the payments among the players. Economic level: the productivity gains. Social level: non economic impacts focused on human beings. Environmental level: noneconomic impacts focuses on the environment. financial level economic level social level environmental level 4.1 Cash flow The first level of results is the financial one. A financial result is the difference between financial inputs and outputs. It answers a simple but important question: who is financing whom? When the focus of analysis is one institution, the financial equilibrium must be granted. As any system and subsystem, the institution must be fully financed all the time or it will stop functioning. When the focus of analysis is whole society, the sum of all financial inputs is the same as the sum of all financial outputs. Society is a closed system on the financial level of analysis. As, by definition, all credits are matched by debits, this level of analysis is useful to check whether the system is well designed, i.e. whether any payment was left out or double counted. At the society’s level, the financial surplus or deficit of an institution is not actually a result, for it is matched at any time by an opposite result in some other organization. 4.2 Economic net benefits The economic level of analysis encompasses the financial one and adds the productivity gains generates by human activity. All economic benefits add on to the GDP. On the economic level, it is not important who gets the benefits and who pays for the costs of an activity, project or regulation. The famous Kaldor-Hicks theorem (1939 and 1939) 282 states that a change is beneficial whenever the winners could pay compensation to the losers or, alternatively, that the losers could not afford to bribe the winners. Actual compensation is not required, since it is acknowledged that changes throughout history certainly result in winners and losers and that the later eventually have to adapt themselves to the new situations. Economic impacts include: - The correction of monopolistic profits and income generation to unemployed workers, that are not actual production costs, as in Little and Mirrlees (1974) and Squire and Tak (1975). - The exclusion of taxes and the correction of foreign exchange rates, in order to express actual production costs Little and Mirrlees (1974) and Squire and Tak (1975). - The value of the travel time saved that will be used to increase work hours, thus production; the impact of the time saved that will be used for leisure, thus reduce worker’s fatigue, thus increase productivity of regular working hours, thus increase production. - The production lost due to the death of actual or future workers; health costs, that alternatively could be used to generate other benefits. - The present value of future increase of production, possible because of education. For all of this variables, it is needed to determine a methodology to be used to estimate the economic benefits or costs generated. 4.3 Social net benefits The social level encompasses the economic one and includes all non-economic direct impacts on human beings. It does not cover environmental issues because the human race is considered to be only a subset of the environment. Of course, it may be stated that human society is the most important part of all environment, at lest from human being’s own point of view. In the social level, there are variables as: - The distributional premiums, that are added on the net income generated for low income families and that are higher for the poorer ones. - The intrinsic value of benefits as: - years of life saved, above its economic value; - idle time, which can be used for recreation and/or the family; - education as a benefit itself, above its economic value. - The value of the increase in self-esteem granted by an array of social projects. It is apparent, from the simple list of the variables, that social level impacts are far more difficult to estimate than the economic ones. Different analysts could use very different approaches for the same variables. This heterogeneity could be solved by the use of the same parameters for variables as the value of distributional weights, or the value of the years of life saved for non-productive people, or the value of some ill defined increase in self-esteem. If the projects that generate these benefits are to be executed, it is because the existence of the value of the benefits is recognized by decision makers. To assign a value to these benefits more precisely is just a methodological problem. 4.4 Environmental net benefits The environmental level encompasses the social one and includes all impacts on the environment. Some of the variables are the intrinsic values of: - Global weather changing. 283 - Ecologic systems protection, biodiversity, living being suffering. The aesthetic and historical value of certain natural formations and buildings. Some common environmental issues, as urban pollution, have serious health implications and are better considered as both economic and social problems. It is clear that the precision of the appraisal of environmental impacts is even lesser than that of social ones. It is also clear that these impacts are valued by society and that the precision of this value is but a methodological problem. Hardly will two analysts value the same impact the same way, unless they use the same methodology to collect positive and negative impacts and the same methodology to establish their relative ESE value. 5 A Standardized Methodology 5.1 Low Appraisal Precision The list of variables needed to calculate ESE results is vast and varied, going from the time of travel saved, to the number of years of live saved, to carbon atmospheric emissions. Every one of those variables has to be operationally defined and measured, and that is not a small task. For each of the variables, there is the need to establish value parameters. The questions are as: what is the value of an hour of time saved; how much is the society willing to pay for one extra year of lifetime for one individual; what is the present value of the price society will eventually have to pay for global warming. As the level of analysis increases from the financial level to the environmental one, the precision of the appraisal diminishes, making harder the task of communicating the result or the value of a project. Any perceived imprecision is followed by lack of confidence of decision makers and controllers. Unsure decision makers may prefer to use a less precise language for communicating the value of their decisions, and, as a consequence, make worst decisions. Precision seeking analysts may waste too much time looking after suitable parameters, rather than using all available attention to build a better model. Currently, the appraisers may use the methodology of their own choice or built and may use a wide assortment of parameters to value the same phenomena. Even allowing for regional differences, sector specificity, and availability of data, the results may differ widely. As a result, two twin studies will hardly arrive at the same result. As a matter of fact, their results might be fairly different. The consequence of a weak ESE result appraisal is that worst projects, with high economic gains and high social or environmental losses may be accepted. In most cases, this happens not because of some perverse self-interest or influence, but as a natural response to the lack of confidence that genuinely follows the lack of precision. 5.2 Components of a Standardized Methodology The answer is the development of a standardized methodology to conduct ESE appraisals. A standardized methodology will dwarf the evaluation imprecision typical of ESE results. Much of the perceived imprecision of ESE evaluations are a consequence of the use of several different approaches for the same problems, thus allowing for too much discretion of the analysts or even for intentional bias. Decision makers in all levels need to know in advance the criterions that will be used to evaluate their proposals and performance. The components of a standardized ESE methodology may be stated as: - Standard modeling. Similar situations are to be modeled the same way. The variables must have the same meaning. 284 - - 5.3 Standard data collecting. Whenever possible, the data must be collected the same way. The audit of the process must be regulated. Standard parameters, as emission unitary costs, distributional premiums, value of life, VTTS and so on. Manualization. Analysts may spend a big part of their time building up methodology and searching for parameters that should be centrally collected. Thoroughly written manuals may make this task much simpler, plus proving to the executives that the methodology used in their case is sound. Standard presentation forms and audit. Implementation The methodology for financial accounting has been gradually evolving since its early birth in century XV. Many countries and groups of countries developed their own standards. Virtually every country enforces a certain accounting methodology, either issued by local governmental or non-governmental institutions, or issued by some other dominant country. Nowadays there is an international effort towards their convergence. The idea is to have a sole financial accounting language, so there is no need to translate the statements into foreign standards and there are no more misunderstandings about the actual meaning of accounting figures. The establishment of ESE evaluation standards can take much less time than for financial accounting standards. In a number of years, it can become so well known and enforced as financial accounting. Standard ESE evaluation methodology should grow more precise over time. To avoid the existence of parallel methodologies and the cost of an eventual convergence process, it should be born international. The task of standardizing the ESE appraisal methodology must be encompassed by some multilateral institution. After that, the focus of the critics of a certain methodological decision will no longer be the appraiser or her work, but some central commit-tee. The standard methodology is to be used as stated. Whenever an analyst thinks she can do better, she must ask some central committee. The committee may or not change the methodology for all users. However, before the answer, the analyst must complain to former standard. ESE evaluation began with economists. Ultimately, the accountants will inherit the task of reporting and controlling standardized ESE results. Some countries and regions already use somehow standardized methods for some variables, but they are far from a full standard methodology that could be used widely and without problems. There start point of standardization are the most common practices, although they may be too simple. Better something than nothing. Every time a methodological imperfection is agreed upon, the committee changes the standards. In a number of years, the methods in use will have converged towards a solid, well known, widely used, and reliable set. With similar evaluation approaches the ESE results may be easily compared, communicated, and trusted by decision makers and even the common citizen. 6 Conclusion The selection of appropriate public projects is an important step in the direction of ESE results maximization. Yet, many of the important decisions that lead to its maximization are taken in lower managerial levels, by maybe hundreds of managers. 285 When any manager operates accordingly to her own vision of what her goals might be, the combined result may be a fraction of its potential. As in the private sector, public managers use a clear set of objectives towards which they can orient their decisions. The answer for the public sector is to use a standardized ESE appraisal methodology to make decisions in all the levels of the organization. When the outputs of all managers are measured with a coherent set of ESE indicators, they become oriented towards the concrete interest of the society. When a task performing culture is changed for a ESE objectives seeking one, managers of all levels can be empowered, so they can and must make their own decisions and to be accountable for them. When all the managers of a public agency or enterprise strive to maximize a set of ESE objectives, their joint efforts lead to the maximum result for all the society. 7 Acknowledgement The authors wish to thank FIA Foundation for the financial support. 8 References 1. Boardman, Anthony et all. Cost-Benefit Analysis: concepts and practice. New Jersey: Prentice-Hall, 2001. 2. Fuggitt, Diana; Wilcox, Shanton. Cost-Benefit Analysis for Public Sector Decision Makers. Westport, CT: Quorumbooks, 1999. 3. Joyce, T. J et all. An Assessment of the Benefits of Air pollution Control: the case of infant health. Journal of Urban Economics,25, no.1, 32-51, 1989. 4. Maddison, D. A Cost-Benefit Analysis of Slowing Climate Change, Energy Policy, 23, no. 2/3, p. 337346, 1995. 5. McGregor, Douglas. The Human Side of Enterprise. McGraw-Hill, New York, 1960. 6. Newbery, D.M.G.. Road User Charges in Britain. The Economic Journal, 98, Conference 1988. 7. Kaldor, Nicholas. ‘Welfare Propositions in Economics and Interpersonal Comparisons of Utility.’ Economic Journal. 49(145): 549—52. 1939. 8. Hicks, John R. ‘The Foundations of Welfare Economics.’ Economic Journal. 49(196): 696–712. 1939. 9. Little, I. M. D and Mirrlees, J. A, project Appraisal and Planning for Developing Countries. Heinemann, London, 1974. 10. Squire, Lyn and van der Tak, Herman. Economic Analysis of Projects. United Nations, New York. 1975. 286 Session D Material, Energy and Carbon Accounting “There were ten contributions presented at Session D. They were very diverse: we climbed the ladder of scales starting at local and continuing to economy-wide level and the ladder of detail treating both substances and aggregated material/energy flows.” (Jan Kovanda, Charles University Environment Center) 287 288 The Material Flows Indicators in the Sustainability Measurement for Tourist Coastal Places Maria de las Nieves Suárez Sánchez Engineering Projects Department Technical University of Catalonia, Barcelona, Spain [email protected] 1 Introduction The coastal ecosystems lend a wide variety of services to the society, including the fuel provision, wood, power resources, and natural and cultural products, like the tourism and the diversion. On the other hand, the coastal ecosystems offer important services of regulation and support, for example, they stabilize the coastline and cushion the natural dangers, and purify contaminated waters. As the coasts have been assuming a "front door" function in the world-wide commerce and the logistics, these have been developed increasingly. This has caused the degradation of the ecosystems. When Spain began to position itself like one of the most visited countries in the world, in years 60 and 70, the proliferation of sport ports and urbanizations in forward edge of beach, throughout the Mediterranean coast, seemed not to finish. It was necessary to take care of the demand of services and lodging by the visitors, besides, to continue operating the place potentialities to assure benefits by more time. The consequence is the disturbed growth of a non responsible construction, with a great consumption of fossil energy, potable water waste, and uncontrolled generation and disposition of remainders. So, the Mediterranean coast has been modified and deteriorated by the construction and tourism industries interventions. The exigency of present sustainability, demand that the used resources to obtain the habitability, are integrated in a strategy that guarantees the closing of the material cycles in the technical processes. The objectives of the industries tourist and real estate are environmentally incompatible if they do not take control of planning. Nevertheless, it has been observed that the oriented actions to maintain and to increase the environmental quality and the resources, or the policies of reclassification of the ground not always have a positive impact, nor give the awaited results. The problem resides in the difficulty to coordinate all the variables that take part on the other hand in the evaluation of an urban system and, because the sustainability is a dynamic paradigm product of the political will, that it requires of the participation of the professionals and implies — coverall to the society. And this complex the planning task. This paper sets out to verify the possibility of application of a methodology conceived initially for the planning towards the sustainability of urban districts. With its adjustment to a case in the Spanish Mediterranean, it is tried to obtain an instrument of aid to the decision for the planning of the coastal tourist places, that describes quantitatively to the state of sustainability and its evolution in a determined temporary space, suitable for anyone site. With the development of a group of indicators relative to the reduction of the consumption in opened cycles — of the resources necessary to get the habitability, among other objectives of sustainability— it will be possible to conform an instrument that collaborates with the task of planning and decision of strategies of sustainable development. The information generated by the developed indicators and the creation and comparison of different hypothetical scenes of 289 sustainable development, the proposed actions will have to be oriented to obtain the environmental compatibility of the activities construction and tourist. 2 Sustainability measurement Actually, the debate approaches of the relationships among development, tourism and environment frames in the sustainable development paradigm. Supposedly alternative tourism of masses and tourism cannot evade from this paradigm which has originated a rich theoretical debate but also requires, greater advances in initiatives and concrete proposals, really operative. It is clear that a tourist destiny will lose its attractive natural one in just a short time if these practices are not controlled and well-planned. The challenge of the tourism, as a concept and sustainable activity, is to obtain a lasting development through the balance, preservation and improvement of the patrimonial set (natural, the built one, cultural and the social one). The tourism must be an activity with a cross-sectional character that promotes and valorises the environmental qualities of the places, regulating the human activities that modify the territory, based on the sustainable development of the current conditions. The human-intervention process has come generating an standardization phenomenon of the vacation places with the almost irremediable loss of its environmental values and the consequent diminution of its attractive capacity for the tourism (WTO, 2004). The result is a progressive destruction of the ecosystem and waste of the material resources — limited by the seasonality of the tourist demand. The amount of visitors in summer season and the proximity of the constructions to the coastal line, have consumed the vital space that serves as protection of the nature and exceed the carrying capacity of the beaches. 2.1 Sustainability objectives and the environmental indicators For this work, it has been made a route temporary to aim observe the of Sustainability Tourism Concept evolution and the organisms and organizations that have been the protagonists and authors of the main events and Literature. The OMT and the UN have been the main letter promoters, agreements and codes of conduct, guaranteed by the European Union and nationally, by the Ministry of Spanish Environment. The sustainability objectives have been changing without a doubt in the last 25 years, as well as the methods to reach them. The Objectives of Sustainability to elaborate the programs of sustainable development of any city are not conceived already without the direct participation of the society. In the sustainable tourist development, this one is integrated by the residents, visitors, tour operators and industrialists of the tourist and real estate industry, in addition to the local authorities, that are the people in charge of the design of the plans and their controlled pursuit. The residents and users of tourist surroundings and an urban system in general, need information effective and simplified to know the impacts that their daily activities have on the environment, expressed in units of measurement, such as the amounts of remainders that they generate or the citizen valuation of the quality of the services that they perceive. The professionals and planners require of a trustworthy methodology that can be adapted and be fed with parameters that show quantitatively, the evolution del urban system that wishes to control. One becomes necessary, therefore, to know the type and quality these excellent parameters for the measurement of the sustainability and its tendency. An indicator is a parameter or a value derived from a set of parameters that contributes information on a phenomenon. It shows a sign, a symptom or an index of something and is used to visually show the condition of a system. Also it is used to measure the advances towards the propose goals. Its meaning extends beyond the directly associate properties to the value registered by the parameter. The indicators are developed with a specific intention and 290 have a synthetic content (the OECD, 1994). The systems of indicators play an excellent role in the challenge to make the paradigm operative of the sustainability because they contribute to reinforce essential axes of the sustainable development like the strategic vision, the integral perspective of the development and the active participation of the local society. Among the environmental indicators — the OECD, AEMA, MMA — that at the moment are used for the sustainability measurement of a system, are developed those oriented more to value and to control the management of the energy and del water. Nevertheless, some deficiencies exist as far as which allow to know the flows materials of the urban system of a tourist place. So it is the case of knowing, in addition to kg CO2 generated by the use and consumption of energy or the litres of water consumed by inhabitant and day, another excellent data type for the reduction of the consumption of resources in open cycles. One becomes necessary to detect therefore, the key points to determine the sustainability of the building activity of a tourist system and to conform an indicators group to show the current state of the situation, by means of the measurement of his variables. This allows to contrast the results, assess them and to establish criteria for the performances towards the sustainability of the construction in the place and to control the evolution of the urban system. In order to calculate the metabolism of a city (buildings and equipment) it will be required to need its models management of: Energy, Water, Materials, and their symmetrical Remainders (to the air, the water, the ground or in heat form) and for it will be needed to resort to indicators that allow to establish the input streams and the flows of urban logout in study. When the rate of extraction of the resources is higher to the biosphere can generate or when the rate of generation of remainders is higher to which the biosphere can absorb, the material cycles remain opened (Cuchi, 2005; Pagès, 2006). This generates a non-sustainable situation which must be perceived by all the agents implied in the development of the urban surroundings, to be taken care of with planning and to be contained with actions. The closing of the cycles — that with the almost exclusive dependency of the fossil fuels to generate the energy that they require the flows of materials is an utopia — requires of strategies of planning, innovating management and control that collaborate with the biosphere in their complex task of natural renovation. The limited capacity of regeneration of the biosphere as the great recycler and renovator machine of the resources — attending al speech of the strong sustainability conditions and restricts the use and consumption of the non-renewable resources. And it must be in the sphere of the sustainability from where the new model is conceived. The construction of the indicators system, and coverall, as particular as the related to the material flow, faces a series of problems like the deficiency of a oriented strategic vision towards the sustainability that promotes the creation of new territorial and tourist information systems, among others. For the construction of the system of indicators in the sustainability measurement of the coastal tourist surroundings, the following objectives of sustainability have been determined: OBJECTIVE 1: The conservation and increase of the territorial value: The territorial package and of natural resources (ground, fluvial use of the territory and the space, nature/biodiversity, water and river basins): The preservation and increase of the natural surroundings, without denying the economic growth and this one, within the limits of the acceptable change. It is important to specially take care of zones vulnerable and degraded by obsolete tourist models. This guarantees, in the time and on the one hand, the availability of 291 resources for the local residents and their descendants and on the other hand, the satisfaction of the visitor when tourist attractive lasting the natural one. OBJECTIVE 2: The reduction of the resources consumption in opened loops (primary energy, urban water, resources and remainders) the closing of the cycles in the technical processes, through the reduction of the use of energies and non-renewable resources and fomenting the recycling and the minimization of waste and spills. OBJECTIVE 3: The improvement of the service infrastructure or facilities (quality of life of the residents and the visitors) and transportation for the satisfaction of the economic and social residents demands, and for the visitors satisfaction OBJECTIVE 4: The improvement in the distribution of the tourist pressure from the point of view of the relations between residents, visitors and constructed surroundings (distribution between the different classes from users based on the time). 3 Methodology Once determined the sustainability objectives that directly involve the development of the tourist destinies of the Mediterranean, based on the use and consumption of the resources (flows of materials), the tourist destiny was chosen for which it would be applied and would verify the methodology. This election was done taking into account the pertinence and reliability, and the viability to collect the data for the indicators. And next, the diagnosis of sustainability of the chosen area of study was carried out. 3.1 Case of study Alcossebre In the call Coast of Orange blossom (Castellón), in the municipal term of Alcala de Xivert, is Alcossebre, that it is contiguous to the North with Peñíscola, to the Northwest with the Natural Park of the Mountain range of Irta, to the South with the Natural Park of the Prat de Cabanes-Torreblanca and to the East with the Mediterranean Sea. Figure. 1: Location of Alcossebre in the Coast of Orange blossom, del the coastal Spanish Mediterranean. With a vegetation and typically Mediterranean fauna in the cliff surroundings steep that descend towards the sea, the mountains of Irta already constitute one of the most beautiful landscapes del the coastal Mediterranean that is one of the last virgin coastal strips of the Spanish coast. With an extension of 130 Km², this mountain range that still resists to the cityplanning attack that presses it by the north and the south, smoothly penetrates towards the sea from the valley and in steep slopes, constituting a magnificent coastal landscape of 15 km in which the calcareous cliffs (is here the second cliff in height of the Valencian Community) with the small coves are alternated, in which sand beaches, songs and gravel form. This surroundings are between 14 % of the Spanish coast that still is left virgin, being one of the few coastal mountain ranges of the western Mediterranean who maintains 292 characteristics only, in natural values (botanical and faunal), historical (castles and watchtowers), landscaping (low coast and marine cliffs) and hydraulic ones(humid zones, boulevards and depressions). As opposed to this coast, to 56 km of the end of Oropesa on the coast of Castellón, the singular archipelago but of the Valencian Community is located: the Columbretes Islands. This Natural Park (Decree 15/1988 of the Consell of the Valencian Generalitat), is declared also Zone of Special Birds Protection (Director CEE/409/79) and Zone Specially Protected of the Mediterranean by the Agreement of Barcelona (1976). These natural reserves are complemented with beaches of Alcossebre, a small destiny that began to develop tourist from years 60, pertaining al municipality of Alcala de Xivert. Located in parallel 40.25 North latitude and with 5039 inhabitants, Alcossebre offers very rich natural surroundings as far as landscapes, and diverse options for the familiar entertainment. Alcossebre next to Capicorb and Les Fonts, have been attracting great amount of national and international tourism for four decades by their singular beaches. Since then, the economic activities have become of producers of goods (agriculture) to suppliers of services (house for renting and restaurants). While the national visitors come to enjoy the summer vacations, mainly in the urbanizations that have been constructed for the temporary lodging, in front to beaches Romana, Carregador and Les Fonts, the French tourists, English and German, spend long seasons and many of them already have remained to reside. This represents a use of the house in winter season that must really be considered although, the greater tourist load is in the months of summer. People of all parts of Spain and the world, other neighbouring towns have come to be based in this one and, in search of the use opportunities that the industries tourist and real estate offer. The population is a nuclei set of Maghreb, Latin, orient and north European origin. This has brought like consequence a certain loss of the local identity, a transformation of the cultural and social values, and an increase in the demand of sanitary and educative services, although this also has favoured the repopulation of these places and the recycled one of houses before destined to go to ruin by the abandonment. In the last years, the tourist supply has been increased. No longer an almost virgin Mediterranean landscape is only offered, but that with the construction of the sport port now can be decided on nautical activities, such as navigation to candle and with motor, the diving in the small coves of gravel and dunes and the excursions to the Columbretes Islands. This supply attracts more than 150 000 visitors during the summer season, which surpasses by far, the lifting capacity of beaches and the environs. Since the zone counts on an historical patrimony (Castells of Alcala de Xivert and its parish, the Hermitage of Saint Benet and Santa Llúcia) and with a landscaping patrimony, like the Natural Park of the Mountain range of Irta, has been included in the recreational supply, routes of tracking indicated with observing points of native the vegetal species and fauna, visits to the historical sites and strolls in bicycle by the coastal dune cord between beaches of the Carregador and Romana, that include 6,000 square meters. This dynamics of growth and development of Alcossebre, requires every time more infrastructure for the lodging and the restoration, road construction and other equipment to satisfy the necessities with the visitors. This happens to the consequent degradation of the natural landscape in the first place, one demands extraordinary of no local resources and a generation of remainders that surpasses the capacity of management of the local authorities and the own nature. 293 Figure 2 In this work, it is described the sustainability diagnose of the place’s current situation, with the construction of a indicators system for the sustainability objective no. 2, defined before: To Close the Materials cycles Reducing the Resources consumption. 3.2 Relations between resources and users Description of the system of use of the resources: typology and distribution. The measurement of the use of the resources and concretely, the measurement of these in open cycles is directly dimensional of the insostenibilidad. The general consumption is divided in primary energy, water and production of urban remainders. In individual reference to national data as far as the electrical consumption becomes, whereas for the other two categories, the references are precise data of the analyzed territory. The resources consumption in a territorial analysis, can be organized in three levels: Use of matter, water and energy. In this case with the term Use it implies further on that consumption, speaks of the transformation that the resources suffer of the cycles closed to the open cycles. The problem of the opened cycles is a fundamental factor because it is a certain sign of non sustainable development. 1. Primary energy. The consumption of electrical energy at national level, was of 2,892 KWh/dwelling in 2006, of which, 61 % were used for implementation and preparation and 12 % for the hot water production for sanitary use. For that reason, in the analyzed territory a total consumption of electrical energy of 3.479.000 could be considered KWh for residential use. 2. Water resources. In 2003, in Spain were had 4,947 Hm3 of water to the urban public supplying, according to the Survey on Water Supply and Treatment. Of this amount, 81.3 % are distributed for the consumption of the families, municipal companies and consumptions. 18.7 % of the water available are lost in the public networks of distribution, flights, breakage, etc. The water consumption of the Spanish families, ascends to 2,603 Hm3, 65 % of the total consumption. The mean consumption locates in 167 litres by inhabitant and day, 1.8 % more than in 2002. (Source www.ine.es). In Castellón, the mean consumption is of 162 litres /inhab. day. 3. Production of urban remainders. In 2003, 24.583.907 tons of mixed urban remainders take shelter in Spain, 2,4 % more than in 2002. By communities, Illes Balears registers maximum (721 kg. For person and year) followed of Andalusia (642 kg). On the other hand, 3.002.795 tons take shelter of remainders deposited by means of systems of selective collection, which supposes an inter-annual increase of 16.4 %. According to the same source (www.ine.es), in Castellón it registers the amount of 620 kg/person and year. 294 The elaboration of the sustainability diagnosis creates certain methodological difficulties, specially, the selection of explanatory variables of the degree of sustainability of the development process and the establishment of reference thresholds that allow to interpret to what extent each variable fulfils the principles of the sustainable development. The indicators play a fundamental role in the social communication and the sensibility around the policies towards the sustainability, thanks to their explanatory value. One becomes necessary to detect therefore, the key points to determine the sustainability of the building activity of a tourist system and to conform a group of indicators that show the state of the situation, by means of the measurement of his variables. This allows to resist the results, to interpret them and to establish criteria for the performances towards the sustainability of the construction in the place and to control the evolution of the urban system. 4 Calculation of indicators OBJECTIVE: Reduction of Resources Consumption in opened loops. INDICATORS: Consumption of Energy, Water Consumption and Generation of non recyclable Remainders. The evaluation of the consumption of resources is implemented through the measurement of the consumption of these and in general, of the indicators that must measure their use and consumption in opened cycles, like representation of an automatic measurement of the sustainability of a system (water, energy and remainders), as well as of the total amount that is recycle of its symmetrical remainders. 4.1 Definition and description of the calculating method In individual, these indicators measure the incidence of the atmosphere constructed on the resources of the territory. Of the general consumption three fundamental categories are considered: 1. Consumption of energy: unit of measure: Kg CO2/m2 , 2. Water Consumption: unit of measure: liters/person and day, 3. Remainders Production: Unit of measure: Kg person and day. Some significant tables appear next where the nonrecycled water consumptions, energy and remainders are observed, by the residents (Resident) and visitors classified in three types: those of summer season (2 or 3 months to the year in second residence: Visitor 2) and the visitors of day or week ends single (Visitor 3). In Table 1 the mean consumptions are expressed, the critical and the optimal ones. The deviation of the values of the consumptions towards the critical threshold, would be speaking of a tendency towards the insostenibilidad of the place. Table 1: Consumption of Resources from Residents and Visitors 1st dwelling Residents media consumption ENERGY: unit of measurement Kg CO2/m2 30,50 Conditioned air 10,00 hot water 6,50 cooking 2,00 domestic appliances 10,00 lighting 2,00 WATER: unit of measurement: litre/person and day 162,00 NON RECYCLED REMINDERS: Unit of 1, 4 measurement: kg/person and day 295 critical consumption 53,00 18,00 13,00 7,00 12,00 3,00 215,00 1, 7 optimal consumption 16,80 5,00 2,50 2,00 5,30 2,00 75,00 0, 6 Visitor 2 ENERGY: unit of measurement KgCO2/per night WATER: unit of measurement: litre/person- night NON RECYCLED REMINDERS: Unit of measurement: kg/person per night 2nd dwelling Visitor 3 hotel, pension, etc media 710,00 288,00 1, 3 critical 900,00 450,00 1, 5 optimal 220,00 210,00 0, 4 In tables 2 and 3, the consumptions calculated and effective of each user system, thus as the optimal values (smaller consumption) and the critical (greater consumption). For the valuation of these particular indicators one analyzed the consumption relative to each users typology, to be able to calculate from these partial results, the average value annual relative to the three categories of consumption. In the case of the Residents it is estimated that its presence in the territory is of 300 days to the year and an average by 75 room of m2/hab., in familiar nuclei of 3 members. Table 2: Consumption per dwelling and year:Energy, Water and Waste Production of Residents. Residents 1: ENERGY Average Consumption (75 m2 per annual consumption dwelling) Kg CO2 *300:365) rooms: 2.027 4 575 7.622,075 Kg CO2 CRITICAL 7 950 13.244,918 Kg CO2 OPTIMAL 2 520 4.198,389 Kg CO2 2. WATER Average Consumption: litres/person annual consumption al dia *300:365) Residents: 5039 162 670.946 lt CRITICAL 215 890.453 lt OPTIMAL 75 310.623 lt 3. NON RECYCLED REMAINDERS Average Production: Kg/person per annual consumption day *300:365) Residents: 5039 1, 4 5.798,301 Kg CRITICAL 1, 7 7.040,795 Kg OPTIMAL 0, 6 2.484,986 Kg For the systems Visitors, a presence of 150 days is estimated per year, for Visitors 2 and 3, a presence of 40 days per year, with a 120 average of m2/ inhab. by house. Table 3: Consumption per dwelling and year: Energy, Water and Waste Production of the Visitors. Visitor 3 Hotel, pension, etc. Visitor 2 1: ENERGY Average Consumption (40:365) Kg CO2 pernoct. ´06 9.854,022 Kg CO2 126.645 CRITICAL 12.491 Kg CO2 OPTIMAL 3.053 Kg CO2 2. WATER Average Consumption 3.997 lt CRITICAL 6.246 lt OPTIMAL 2.915 lt 3. NON RECYCLED Average Production REMAINDERS 18.043 Kg CRITICAL 20.818 Kg OPTIMAL 5.552 Kg 296 In Figure 3 the referring results to the different categories from users appear. This separation is useful mainly for the following phases of evaluation of the development scenes. This way the reach of each territorial intervention as far as the consumption will be able to be controlled, of the different classes from user. Figure 3: State of the Sustainability of the Current Situation: Resources Consumption (water, energy and remainders), of the considered Users systems. RESIDENT Scale between +3 y -3 Energy Waste Visitors 2 y 3 Scale: +3 y -3 Visitor 1 Scale: +3 y -3 Energy Water Waste Energy Water Waste Water This can be seen in Table 4, generated with the collected data of each indicator (been of the present situation, in the specified unit of measurement) and set out consumption objectives where the states of greater or smaller sustainability are valued. The value of the state of the present situation has been obtained adding the consumptions of the different users. Table 4: Description of the table of calculation and the values of sustainability maximum (Optimal) and minimums (Critical). Resources Resident Visitor 1 Number of 5 039 Number of 14 829 Residents inhabitants in 2nd. Dwelling Max (+3) Current State Max (+3) Current Min (–3) Min (–3) State Energy KgCO2 4 198,39 7 622,08 13 244,92 3 760,00 52 642,95 76 785,78 Water Lt 310 623 629 530 890 453 1 645 410 4 570,58 7 312,93 Waste Kg 2 484,99 5 798,30 7 040,80 10 969 397 25 595,26 31 079,96 Visitor 3 lodging Max (+3) 6 070,06 6 557,78 12 491,01 Current State 22 171 594 8 993,53 40 596,80 No. Hotels=18 Min (-3) 28 104,78 14 052,39 46 596,80 m2 construction m2 rehabilitation incr.= 1.5 % m2 800 kgCO2/m2 500 lt/m2 200 Kg/m2 incr.= 1.5 % m2 250 kgCO2/m2 200 lt/m2 60 KgCO2/m2 In this table they are also observed, the amounts of kgCO2 emitted by use and consumption of energy, liters of water and kg of remainders that will have to manage if a controlled increase of single 1.5 % in the constructed or rehabilitated surface exists, considering a period temporary of 60 years. On the other hand, a Factor of Emergency M, that will have the function of regulating the sustainability so to speak, in agreement with other dynamic variables of the system in study settles down. In this case, the factor has been 297 considered with a value of 1. The resulting graph of the consumption of the resources of Alcossebre, acquires knowledge in Figure 4: Figure 4: Resources Consumption 4.2 Current situation state A time evaluated all and each one of the indicators that each objective of sustainability stops have recognized, obtains the following graph of radar where first part, which they correspond to the evaluation of the sustainability of the existing situation, with respect to the four objectives of sustainability is to the final values of. As it is observed in the following graph (Figure 5), the systems corresponding to the objectives that they have to do with the conservation and increase of the resources, his consumption and disposition, have the lowest values. This is that makes lack review thorough to find the deficiencies. 4.3 Strengths and weaknesses evaluation of the involved systems Analyzing the strongpoints and weaknesses in each system regarding to the sustainability objectives, this is, del System Territory, del System Resources, del System Infrastructure of Urban Services (Facilities) and the Residents-Visitors System. Thus, the main problems are identified. It has been determined, according to the resulting radar graphs or spiderweb graphs, that the system Residents-Visitors is the most attended , because the increasing participation of the society and the involved agents. In the Resources system, object of this study, it got a value of –0,7, that is to say, a current Non Sustainability Situation. Figure 5: State of the Current Situation in Alcossebre, Castellón. Valuation of the Sustainability Objectives. 298 4.4 Generation of three development scenes Three hypothetical scenes for the sustainable development of the case of study have seted out. In each scene it was tried to analyze in prospectiva the evolution of the place, by means of the maximization of some of the values obtained in the Current Situation State. Three differentiated scenes were defined and described, that allowed make an evaluation of the performance decisions. In each one, improvement actions seted out to reduce the consumption of resources and it was tried to visualize his evolution in the predetermined temporary space (60 years). Definition of the three hypothetical scenes of development: Scene 1. New construction of welcome tourist centers, located in strategic road nodes. Creation of an urban free zone, in proximity of beaches, with limited and controlled traffic. Scene 2. Total rehabilitation of all the existing buildings and creation of an urban free zone, in proximity of beaches, with limited and controlled traffic. Scene 3. Rehabilitation of the existing houses and deconstruction of those in critical situation, that allow the controlled creation of new welcome urban spaces, maintaining the structure of the local urbanization. Creation of an urban free zone, in proximity of beaches, with limited and controlled traffic. By means of this preconception of the analyzed surroundings, with respect to the handling of the balance of the sustainability objectives, a valid vision of the development of the place is obtained. This information could be of vital importance and interest for the administration and the planners. The indicators relative to the sustainability objectives were developed again, this is, they calculated and control tables were generated. The results are shaped in radar graphs (Figure 6), since it were made to generate the information relative to the Current Situation State. Algebraically adding the values of each scene in whatever to the sustainability objectives an answer is obtained that, from agreement with this methodology, could be most sustainable to long term. This, can allow to design strategies for the closing of cycles in the use and consumption of the resources and the territory. In the third hypothetical scene of development we found the best indices of sustainability as far as the Reduction of Consumption of Resources. Figure 6: Results of Calculation of the Indicators of the Objective “Reduction of Resources Consumption”, in the three proposed scenes. 1st. Scene 2dn. Scene 299 3rd. Scene Figure 7: Graph of Radar (spider web) that shows the results of the Calculation of the Indicators as far as the four Objectives of Sustainability, of the third scene of development. The obtained results show the level of balance among the systems settles down that integrate the four objectives and thus the development scenes will be generated which they will allow to the comparison of the propose actions and the later control of his evolution (in case that some of these scenes was adopted like planning model). In addition, they will allow to the improvement of each objective according to the circumstances and dynamic characteristics of the case of study. 5 Conclusion It Became a comparison and evaluation of the hypothetical generated development scenes, with the Current Situation State. In these phases the development scenes were compared that have seted out and they are evaluated with respect to the results of the Current Situation State. This comparison, shown in Table 5, was made particularly with each scene and with respect to each objective of sustainability. 5.1 Results contrastation We see that scene number Three -3- is the most efficient as far as the reduction of resources consumption in opened cycles. Besides, in the global evaluation, regarding to the Four -4sustainability objectives mentioned at the beginning of this report, planning according to scene 3, the tendency of the tourist activities in Alcossebre, he would be more sustainable in the long term. Table 5 CURRENT STATE Scene 1 Scene 2 Scene 3 Territory Facilities Resident/visitors Resources SUM –1,00 –0,20 –0,80 –1,00 –0,25 1,40 1,40 1,30 0,80 –1,30 1,00 0,80 –0,70 –0,60 1,80 1,90 300 –0,29 0,18 0,85 0,75 Figure 8: Graph of Radar (spider web) that shows the results of the Calculation of the Three Development Scenes, as far as the four Objectives of Sustainability with the Current State Situation Graph. 6 1. 2. 3. 4. 5. 6. 7. 8. References EEA (2006), The changing faces of Europe’s coastal areas (Evolución de las zonas costeras en Europa), Informe nº 6/2006 de la AEMA, Agencia Europea de Environment, Copenhague. OECD (Organisation for Economic Co-operation and Development) (1992) Good Practices for Country and Environmental Surveys and Strategies, OECD Development Assistance Committee, Guidelines on Environment and Aid, no 2, OECD, Paris. Cuchí, A., (2005), “Arquitectura i Sostenibilitat” , Apuntes del Curso “Impacto Ambiental de la Arquitectura”, del programa de doctorado “Ambitos de la Investigación en la energia y el medio ambiente en la Arquitectura”, de la ETSAB., UPC, Barcelona. PLAN DE ORDENACION URBANA Y TERRITORIAL DE ALCALA DE XIVERT, 2002. PLAN DE ESPACIOS TURÍSTICOS DE LA COMUNIDAD VALENCIANA, Título IV de la Ley 3/1998, de 21 de mayo, de Turismo, "Bases para la ordenación de los espacios turísticos". INSTITUTO NACIONAL DE ESTADISTICA: www.ine.es, febrero 2007. Vera, J.F., Ivars, J.A. 2003, “Measuring Sustainability in a Mass Tourist Destination: Pressures, Perceptions and Policy Responses in Torrevieja, Spain”, Journal of Sustainable Tourism, 11, 2&3, 181-203. Serafino, A., (2006), “La compatibilita´ambientale degli insediamenti turistici costieri: Uno instrumento di supporto alle decisioni per un approccio sostenibile”, Tesi di Dottorato di Ricerca, Dipartimento di Scienze e Tecnologie dell´ambiente costruito, Politecnico di Milano. 301 Tracing Chemical Flows in the Social Metabolism. Could it be REACHed? Márton Herczeg Department of Environmental Economics, Budapest University of Technology and Economics, Hungary [email protected] 1 Chemicals in the socio-economic system Economic development has been driven to a considerable extent by progress and innovation achieved by the chemical industry. This process has led to the marketing and use in different applications of ever-increasing numbers and quantities of chemical substances. More than 10 million chemical compounds (natural or man-made) have been identified. Of these, about 100 000 are produced commercially (200 to 300 new chemicals enter the market each year) and are potential subjects of concern. Figure 1: Sectoral breakdown of EU chemical industry sales Regarding the registration of the chemical products, the current situation in Europe is characterised by the fact that there are two groups of chemicals. By far the largest group are the 100,106 substances that were registered in the EU before 1981 — also known as existing substances and listed in the European Inventory of Existing Commercial Substances (EINECS). The second group only contains some 3,000 substances registered after 1981 — known as new substances — listed in the European List of Notified Chemical Substances (ELINCS). While all the new substances have undergone a certain degree of testing, hardly 302 any of the existing substances have been evaluated for possible effects on humans or the environment. When EINECS and ELINCS were established, the intention was that also the existing substances would be tested, but this has not happened. Only 141 of the existing substances have been identified as priority substances and are subject to comprehensive assessments. To date, only 17 assessments have been published and only four of them have been implemented into community legislation. The reasons are debated: the enormous amount of information needed for a single risk assessment, delayed reporting by the industry, lack of resources by Member States, bureaucracy, etc. Some also point out that producers have little interest in speeding up the process as sales are permitted until risk reduction measures are adopted. Such measures can only be taken after a full-fledged risk assessment and an extensive regulatory process. Substances being produced in volumes above 1,000 tonnes per year, also called High Production Volume (HPV) chemicals, are prioritised for assessment. But also the number of HPVs is considered too great for immediate risk assessment. There are 2,465 HPVs in the EU and only a few of them have a “full” data set, including long-term eco-toxicity results, degradation behaviour in various environmental compartments and a complete mammalian toxicity profile. To this end, the EU has identified a minimum package of information — known as a base set — needed to make an initial assessment. The data required to fulfil a base-set, but even data for prioritising is scarce: - 3 percent of the HPVs in the EU have a full data set, - 14 percent have data at the level of the base-set (including the above), - 86 percent have less than the base-set level (including the below), and - 15 percent have no data at all. 2 The new REACH Directive The aims of the new REACH Directive (Registration, Evaluation and Authorisation of Chemicals, issued in December 2006, entering into force on 1st June, 2007) are to improve the protection of human health and the environment from the hazards of chemicals, and to enhance the competitiveness of the EU chemicals industry. The new REACH directive will replace about 40 existing Directives once it comes into power. REACH will close the knowledge gap by providing safety information about chemicals produced or imported in volumes higher than 1 tonne/year per manufacturer or importer. The 'burden of proof' now will be on the industry. It has to be able to demonstrate that the chemical can be used safely, and how. All actors in the supply chain will be obliged to ensure the safety of the chemical substances they handle. As far as possible, animal testing will be minimised. Testing programmes involving animals, required for certain higher volume substances, need to be agreed with the competent authorities, through the evaluation procedure, before the experiments start. This is to ensure that the endpoints studied are relevant, that the scientific validity of the research is sufficiently high, and finally to ensure that the testing programme is not duplicating other studies. To minimise duplicate testing, data sharing between enterprises will be required. Innovation of safer substances will be encouraged under REACH through more exemptions for research and development; lower registration costs for new, safe substances; and the need to consider substitute substances for decisions on authorisation and restrictions. Industry will be responsible for assessing the safety of identified uses, prior to production and marketing. Authorities will be able to focus on issues of serious concern. The total cost of the implementation is expected to be in the range of 2.8 to 5.2 billion EUR in the next 10 to 15 years, while the health benefits will be in the order of magnitude of 50 billion EUR over a 30 year period according to the Commission’s Impact Assessment. Meanwhile it is likely that some substances will not be registered because manufacturers will not consider it 303 worthwhile to pay the cost of registration. The Commission estimates that this will be the case for approximately 1-2 % of substances currently on the market. The priority list of existing chemicals (http://ecb.jrc.it/existing-chemicals), in accordance with the Council Regulation (EEC) 793/93 on the evaluation and control of the risks of existing substances, covers 141 substances of primary concern. The priority list covers the most hazardous and harmful substances which require immediate attention because of their potential effects to man or the environment. In parallel to the extensive efforts made to get REACH entering into force, there are initiatives of the United Nations and the EU (White Paper on Chemicals, Safety Data Sheets, the ROHS Directive, the developing EU and UNEP Mercury Strategy, etc) to divert the most harmful substances from the socio-economic material streams or better control the substance flows. 3 Substance Flow Analysis In order to explore if any of the existing practices could serve as a methodology framework for a macro-level, Europe-wide, application to support these policy initiatives, the European Topic Centre on Resource and Waste Management (ETC/RWM) has carried out an extensive research in 2005 to examine the state and applicability of Substance Flow Analysis (SFA) methodology in selected European Environment Agency (EEA) member states. The objective was to assess, if the SFA methodology could be in favour of gathering information on chemical substances. The final report (EEA 2007/1) was published in January 2007. The following sections are based on the findings of the research group92 of the ETC/RWM. The concept of Material Flow Analysis (MFA) refers to a number of methodologies which can be used to provide information on industrial metabolism: the way materials and energy are utilized by the economy, transforming them as inputs to products or services, and other outputs such as waste and emissions to the environment. After having recognized the existence of environmental problems, and with the progress in environmental protection since the 1990s, Substance Flow Analysis (SFA) studies were first applied to trace and control the flow of hazardous substances. In general, SFA is applied for tracing the flow of a selected chemical (substance or group of substances) — e.g., heavy metals (mercury, lead, etc.), nitrogen, phosphorous, persistent organic substances, such as PCBs, etc. — through a defined system (e.g. society). An SFA identifies these entry points and quantifies how much of and where the selected substance is released. Policy measures may address these entry points e.g., by end-of-pipe technologies. Its general aim is to identify the most effective intervention points for policies of pollution prevention. SFA aims to answer the following questions according to Femia and Moll (Femia & Moll, 2005): - Where and how much of substance X is flowing through a given system? - How much of substance X is flowing to wastes? - Where do flows of a substance X end up? - How much of substance X is stored in durable goods? - Where are potentials to utilise substance X more efficiently in technical processes? - Where are options for substituting the harmful substance? - Where do substances end up once they are released into the natural environment? The impact of substance-specific findings is not restricted to government policy but includes industry itself, especially when related to certain products. 92 ETC/RWM experts and authors of the EEA report: Marton Herczeg, Rikke Carlsen and Robert Nemeskeri. 304 The strength of SFA is that it provides systematic, physical, quantitative information to design substance management strategies, in order to keep under control a certain harmful substance. SFA may reveal potentials to utilise substances more efficiently in technical processes and may help to identify options for substituting the harmful substance. However, the application of SFA is limited, because the substance needs to be identified as being relevant (i.e., it is not a tool o prioritise substances), and has no consideration of ‘hidden flows’ associated with foreign trade (Femia & Moll, 2005). Although, there is no formally standardised methodology accepted so far, SFA methodologies established by academia are available. In general SFA studies comprise the following three-step procedure according to van der Voet et alia (OECD, 2000). (1) definition of the system The system must be defined with regard to space (e.g. a city, province or country), function, time and materials. If necessary, the system can be divided into subsystems. To define the SFA system, choices must be made with regard to spatial demarcation, functional demarcation, time horizon, and materials to be studied. (2) quantification of the overview of stocks and flows The various categories of related processes, stocks and flows (of the studied substance) belonging to the system must be specified. (3) interpretation of the results Finally, these result in a flow chart: the specification of the “network of nodes” as illustrated on Fig. 2. This is an elegant method to visualise the often complex processes, tracing mass/volume of the substances in question. When an SFA is to be carried out it involves the identification and collection of data on one hand, and modelling on the other. Three models are applied in the SFA studies: accounting, static modelling and dynamic modelling (OECD, 2000) Accounting (or bookkeeping) is the first way to ‘model’ the system. The input for such a system is the data that can be obtained from trade and production statistics, and, if necessary, further detailed data to be recovered on the content of the specific substances in those recorded goods and materials. Emissions and environmental fluxes or concentration monitoring can be used for assessing the environmental flows. The accounting overview may also serve as an identification system for missing or inaccurate data. Missing amounts can be estimated by applying the mass balance principle. In this way, inflows and outflows are balanced for every node, as well as for the system as a whole, unless accumulation within the system can be proven. This technique is most commonly used in material flow studies, and can be viewed as a form of descriptive statistics. There are, however, some examples of case studies that specifically address societal stocks, and use these as an indicator for possible environmental problems in the future (OECD, 2000). Static modelling is the process when the network of flow nodes is translated into a mathematical “language”, actually a set of linear equations which are describing the flows and accumulations as dependents on each other. Emission factors and distribution factors over the various outputs for the economic processes, and partition coefficients for the environmental compartments, can be used as variables in the equations. A limited amount of substance flow accounting data is also required for a solution of the set of linear equations, but the modelling outcome is determined largely by the substance distribution pattern. Static modelling can be extended by including a so-called origin-analysis in which the origins of one specific problematic flow can be traced at several levels. Three levels may be distinguished: 305 direct causes, derived directly from the nodes balance (for example, one of the direct causes of cadmium load in soil is atmospheric deposition); - the economic sectors, or environmental policy target groups, directly responsible for the problem, identified by following the path back from node to node to the point of emission (for example, waste incineration is one of the economic sectors responsible for the cadmium load in soil); - ultimate origins, found by following the path back to the system boundaries (for example, the extraction, transport, processing and trade of zinc ore is one of the ultimate origins of the cadmium load in soil). Furthermore the effectiveness of abatement measures can be assessed with static modelling by recording timelines on substances (OECD, 2000). - Dynamic modelling is different to the static SFA model as it includes substance stocks accumulated in society, as well, in various materials and products in the households and across the built environments. Stocks play an important role in SFA in the prediction of future emissions and waste flows of products with a long life span. For example, in the case of societal stocks of PVC, policy-makers need to be supplied with information about future PVC outflows, as today’s stocks become tomorrow’s emissions and waste flows. Studies have been carried out on the analysis of accumulated stocks of metals and other persistent toxics in the societal system. Such build-ups can serve as an ‘early warning’ signal for future emissions and their potential effects, since one day these stocks may become obsolete and recognisably dangerous — as has happened with asbestos, CFCs, PCBs and mercury in chlor-alkali cells. As the stocks get discarded, they end up as waste, emissions, factors of risks to environment and population. In some cases, this delay between inflow and outflow can be very long indeed. Stocks of products no longer in use, but not discarded yet, are also important: old radios, computers and/or other electronic equipment stored in basements or attics, out-of-use pipes still in the soils, old stocks of chemicals no longer produced but still stored, sometimes in large quantities, such as lead paints and pesticides. These “hibernating stocks” are estimated by OECD (2000) to be likely very large. To estimate future emissions, which are a crucial issue if environmental policy-makers are to anticipate problems and take timely, effective action, such stocks cannot be ignored. Therefore, when using MFA or SFA models for forecasting, the stocks should play a vital part. Flows and stocks interact with each other; stocks grow when the inflows exceed the outflows of a (sub)system, and certain outflows of a (sub)system, are disproportional to the stocks. For this dynamic model, additional information is needed with regard to the time dimension of the variables: the life span of applications in the economy, the half life of compounds, the retention time in environmental compartments and so forth. Calculations can be made not only on the ‘intrinsic’ effectiveness of packages of measures, but also on their anticipated effects in a specific year in the future, and on the time it takes for such measures to become effective. A dynamic model is therefore most suitable for scenario analysis, provided that the required data are available or can be estimated with adequate accuracy (OECD, 2000). The study of the EEA found, that most progressive research and methodology development is spearheaded by a limited number of research groups in a handful of countries in Europe. Austria, Denmark, Germany, the Netherlands, Norway, Sweden, and Switzerland are among the countries that are considered to be the most advanced in the field of SFA applications (Bringezu, 2003 and OECD, 2000). Substances covered by the studies conducted in the above listed countries (Herczeg et. al., 2007) are summarized in Table 1. 306 SFA has been used to determine their main entrance routes to the environment, the processes associated with these emissions, the stocks and flows within the industrial system, and the resulting concentrations in the environment. Table 1: Summary on substances studied by SFAs in selected countries Country Substances and/or group of substances investigated Austria - SFA studies exist for the chemical industry on: fibre, fertilizer and plastic industry. - PCB, zinc (Zn), Silver (Ag) in wastewater in the city of Vienna. Lead (Pb), Nitrogen (N) and biotic carbon (C) balance of Vienna. Denmark - metals and heavy metals: aluminium (Al), arsenic (As), cadmium (Cd), chromium (Cr), cobalt (Co), copper (Cu), lead (Pb), mercury (Hg), nickel (Ni), tin (Sn) - organic substances: azo colorants, AMPA, brominated flame retardants, CFCs, HCFCs, HFCs, chloroparaffins, chlorophenols, dichlrofemethane, dioxins, orghanotin, flurocyclobutane, fluoroethane, fluorohexane, fluoropropane, formaldehyd, methylbromide, nonylphenols and nonylphenolethoxylates, PCB/PTB, phthalates, sulfphur-hexafluoride, tetrachloroethylene, trichloroethylene Germany - endocrine disrupting industrial chemicals: Bisphenol A; Dibutylphathalat, Benzylbutylphathalat; Nonylphenol, Alkylphenolethoxylate, - heavy metals: lead Pb, copper Cu, cadmium (Cd), aluminium (Al), - nutrients: nitrogen (N), phosphorus (P), potassium (Na), - chlorine (Cl) and PVC. The Netherlands - heavy metals: copper (Cu), zinc (Zn), lead (Pb), chromium (Cr), mercury (Hg), cadmium (Cd), nickel (Ni) - nutrients: nitrogen (N) and phosphor (P), - chlorinated compounds and plastics (PVC). Norway - heavy metals: chromium (Cr), arsenic (As), copper (Cu), lead (Pb), nickel (Ni), zinc (Zn), - tin organic substances and - organic compounds: Tetra chloroethene, Chlorophenols, Carbon tetrachloride, Trichloroethene, Absorbing substances, Dioxins, Nonylphenol and nonylphenoletoxylates, brominated flame retardants, phtalates and chloroparaffins, Short chained chlorinated paraffins, Brominated flame retardants, Biocides and biocidal products, Muskxylenes, perflouroalkylsulfonates (PFAS). - Few chemicals with endocrine effects, Hazardous substances in toner powder for laser printers and copying machines , PCB in building materials: grouting, concrete admixture, floor covering and paint/marine coating, Chemicals used in development and management of transport works, Endocrine disrupters in cleaning and car maintenance products, Paints and varnishes. Sweden - heavy metals (cadmium (Cd), chromium (Cr), copper (Cu), lead (Pb), mercury (Hg), nickel (Ni), zinc (Zn) and antimony (Sb), - organic substances (polybrominated diphenyl ether (PBDE), polycyclic aromatic hydrocarbons (PAH), alkylphenolethoxylate (APA), Di(2-ethylhexyl) phthalate (DEHP) and perfluorooctane sulfonate (PFOS) (currently ongoing study for Stockholm 2005-2007) Switzerland - heavy metals: cadmium (Cd) - organic compounds: vinylchlorid, halogenated solvents, dioxins and furans, polybrominated flame retardants, chlorinated paraffins. - other compounds: nitrogen (N), metallic/non-metallic substances in waste electronics. Source: Herczeg et. al. in EEA 2007/1 4 Aspects of applicability Country studies show that SFAs may provide much very useful information for policy making at national level. This information has been influencing policy development at European level, as well. The practice of the selected countries shows that SFA studies have been used for several purposes in different fields. These possibilities allow for a promising number of potential application forms or benefits of SFA studies beyond the national scale. 307 It is evident that the information SFAs provide would also be very useful for policy making at European level; but how, if at all, SFAs, on this large scale, could be carried out, needs to be carefully investigated. Aspects influencing the broader applicability of SFA are linked to the methodology, data and resource demands, and the great variety of substances and their properties. Table 2: Information provided by SFA studies Area Information Provided Production, - can help carry out a detailed analysis of the international market and trends in trade and consumption; consumption - can provide information on international market and trends in consumption at an overall level (used as background information); - can help identify the products in which the substance is present; - can identify the overall amount of the substance used; - can help trace the consumption and emission resulting from the presence of the substance as a trace element or contaminant in fossil fuels, wood, cement etc; - can help identify emissions and losses to air, soil, wastewater, solid waste, and hazardous waste from manufacturing processes and use of finished goods; - can help understand the use of a group of substance; - can provide information on the application and consumption of finished goods by areas of use; - can help trace substance import and production; - can provide information on production, import/export, and processing of raw materials and semi-manufactured goods. There are several examples from selected countries for the above-listed uses: e.g. PCB, lead (Pb) and zinc (Zn) studies in Austria and the Netherlands, studies on silver (Ag) in Vienna or SFAs on PCB, CFS, metals and heavy metals in Denmark. Regulation - can be used for the identification and the prediction of the effectiveness of potential and policy pollution abatement measures as a basis for priority setting; support - can assist the sound national and international regulation on the use of the substance; - may help clarify needs for action; - can help identify of most successful measures; - can help control the effects of already introduced measures; - can help identify the need for further studies and regulation; - can help monitor the effects of regulatory actions on consumption, emissions and waste generation; - may assist the projection of future developments; - can help ensure that regulatory actions directly address the main sources of emissions and wastes of the substance; - can provide input to economic assessments regarding the cost of substituting the substances, economic consequences of new regulation, and consequences of environmental taxes and fees; - can provide background information for regulatory actions to reduce hazardous substances in waste; - can provide information for European policies on chemicals; - can provide information for the future European integrated environmental assessments. Best examples from selected countries for the above-listed uses are the studies on heavy metals in the Netherlands and Denmark. Tracing flows - can help in the identification of missing flows; and - can be applied for the analysis of substance flow trends and their causes; understanding - can help identify major problem flows to the environment, together with an analysis of fate of their causes by stepwise tracing them back to their origins in society; substances - can help trace hidden leaks from processes in society (technosphere); - may help assess the degree to which material cycles are closed; - can help analyse recycling and material deterioration; - can help assist the quantity disposed of into waste treatment systems and emissions from those systems; - may provide a common understanding of the flows of the substance, including emissions and waste generation, to all stakeholders; 308 - can provide information on reporting on releases of hazardous substance; - can provide information on substances in waste used for development of life-cycle-based waste indicators. As tracing substance flows is the core of different SFAs, most of the studies may serve as examples for all the above. Human effects - can help explore the fate of substances, or explore unexpected exposure routes; - can provide a qualitative description of human exposure through the use and disposal of unfinished products. Best examples for these uses are the studies on endocrine disrupting industrial chemicals, conducted in Germany General - can serve as a support for systematic data acquisition; purposes - can be used as a screening tool, identifying issues for further investigation by other tools. - can help in the assessment of substitutes; - can help early appreciation of problematic substances; - can be used for building scenarios for future emissions and loss of substance. Several examples show how SFA studies have served these general purposes: e.g. PCB, lead and zinc studies in Austria and the Netherlands, studies on silver in Vienna or SFAs on PVC in Germany. Source: Herczeg et. al. in EEA 2007/1 First of all, SFA methodologies have not been put into a single standardised procedure. Therefore, one cannot easily expect comparative and consistent studies to trace chemicals in a consistent way. It is obvious that the need for standardisation would be the first step to emerge the SFA tool among the officially applied tools, like standard monitoring and sampling methods. Standardisation may also stimulate consistent data acquisition (Helias et al, 1997). There is a need for standardisation of the terminology used — just like for Material Flow Accounting from Eurostat, or for the System of Integrated Economic and Environmental Accounting (SEEA) methodology from the UN — for the definition of a technical framework and procedural guidelines for sound use. Data requirements of SFA studies are also very large. Databases or data sets needed are unavailable for a vast majority of the chemicals. Different sources of Input-Output databases (both at micro and macro levels) would be necessary if the current situation is to be improved. Most of the SFA studies are on substances, such as heavy metals and persistent organic compounds that are stable and non-reactive in normal environmental conditions; however, this is not the case with most of the chemicals. “Bulk” substances, such as nutrients (phosphorus or nitrogen) flows have also been studied and assessed; however, these analyses could be less precise due to the huge amount and complex forms in which these materials are present in the environment and the technosphere. It is important to stress that an SFA deals with a single substance. So, if measures are taken to reduce the use of the substance under study by replacing it by another substance, problems connected with this other substance are outside the scope of that study, unless the researchers adapt a more comprehensive approach. A Dutch study carried out by Eshkaki et al. (2004) tried to upscale an SFA on lead to EU level. This was not possible due to the lack of appropriate data. So detailed EU-wide SFAs, even for selected substances, are considered to be extremely difficult if not impossible, with the present data sources available. From the country overviews it seems that it is possible to prepare an SFA for a small and well-regulated country, like the Netherlands and Denmark, whereas it seems to be more complicated for large countries like Germany and France. 5 Case study: testing the transferability of SFA on Mercury As a complete (dynamic) EU-wide SFA for a selected substance is considered to be hardly feasible, the overview of a national level respective SFA, or more likely an inventory of the flows of the concerned substance, being extrapolated for Europe, would be a possible way forward. An overview for just one year, or a static analysis would not be that difficult either. 309 In order to getting prepared for the future phasing-out of Mercury, in year 2006 the Hungarian Ministry of Environment and Water initiated to map Mercury flows and stocks of the country. We have tested the transferability of the SFA methodology in a partly accounting, partly dynamic manner. We have used the SFA methodology to trace the flows of this highly toxic substance and establish the basis of a future policy intervention to phasingout Mercury in Hungary. Figure 2 shows the results of the SFA performed for mercury in Denmark back in 199293. The objective of the study was to describe developments in the use of mercury, as well as establishing the baseline consumption level prior to the enforcement of legislative restrictions on the use of mercury. The study covered a full analysis of the flow of mercury in the Danish society, including identification of applications and quantification of consumption, losses to relevant waste fractions, and emissions to the environment (air, water, soil) for each field of application (Femia & Moll, 2005). The findings of the study were used as basis to gather data and estimate Mercury flows in Hungary. Figure 2: SFA for Mercury (Hg), Denmark 1992/93 (all figures in kg per year) Source: Maag et al. 1997 in Femia & Moll, 2005 The Hungarian study aimed at identifying similarly the most important inputs, stock and outputs from the socio-economic system of the country. Information was gathered from industry, customs, trade and environmental statistics and data series. Although, the research is not fully completed at this stage, the most important flows are already considered to be identified. Some historical Mercury stock are expected to be still identified (e.g. old chemicals in agriculture). 310 Table 3: Mercury balance of Hungary (based on data for 2005 and 2006) Inputs Stocks Outputs Lighting manufacturing: 11001300 kg/year Laboratory equipments: 50-200 kg/year Lighting manufacturing: 32003400 kg used in vacuum pumps in closed system Dental purposes: 200 kg/year Thermometers: 182,5 kg/year Mercury switches: 800-1100 kg (in use until 2010) Mercury cathodes in chlorinealkali industry: 210000 kg in closed (on a single industrial site, phase out in 15 years) Hospitals: approximately 6476 kg (99 % recycled when broken) in old blood pressure meters and 45 kg in thermometers. Since year 2005 measuring the porosity of catalytic converters in cars requires an increasing demand of Mercury: approximately 48005200 kg/year (99 % recycling) Industrial thermometers: 80-100 kg/year (from 150-200 kg/year) Blood pressure meters: 64,76 kg/year (1 % loss from recycling) Catalytic converters measurements: 12-13 kg (1 % loss from Mercury recycling) Landfill of hazardous waste from oil industry: 100-200 kg/year Waste from dental applications: 100kg/year Incinerators: 116,79 kg/year Industrial sites: 179 kg/year (air) Industrial sites: 3 kg/year Wastewater: 132,6 kg/year 225321–226221 kg/year 838,15–1109,15 kg/year Recycling: 11163,24–11559,24 kg/year Net addition to stock and/or losses: 373,35–844,35 kg/year (Source: KVVM, 2006 and own calculations) 1482,5–1682,5 kg/year These are strictly preliminary, non-official data, however we consider the data quality is close to the maximum which could be possibly achieved. It is obvious that most of the stocks are accumulated at one single industrial site. Nevertheless, phasing-out from additional stocks will have to be managed also very carefully as indicated by Table 3. 6 Conclusions While European level SFA studies could provide useful information, substantial barriers should be overcome regarding this broader applicability of SFA. These include nonstandardised methodology, high data and resource demands, and the broad variety of substances and high variability in substance properties, as the most important barriers. Nevertheless, there are options as possible first steps towards a broader applicability of SFA: (a) inventory of the flows of a substance for Europe and/or (b) looking at a number of indicator countries where the selected countries could represent a number of countries. Both of these options are considered to be feasible. In addition, addressing specific, high priority substances (such as Mercury) by the SFA can help decision makers to plan the phase out of these substances and clean the socio-economic metabolism from these hazardous flows. 311 7 References 1. Bodo, P., Herczeg, M., Nemeskeri, R. Finding the Right Chemistry. Green Horizon, Vol 1. No2. September 2004. 2. Cefic website, January 2005 update. www.cefic.org. (European Chemical Industry Council) 3. Elshkaki A. and van der Voet E. in collaboration with Van Holderbeke M., Timmermans, V., Claeys P. and Geerken T. (2004). Development of a dynamic model for Substance Flow Analysis. The Netherlands, December 2004. 4. Femia, A and Moll, S. (2005). Use of MFA-tools in environmental policy-making. Overview of possibilities, limitations and existing examples of application in practice. European Topic Centre on Waste and Material Flows, revised final draft, 21 March 2005. 5. Helias A. de Haes, U. van der Voet, E. and Kleijn, R. (1997). Substance Flow Analysis (SFA), an analytical tool for integrated chain Management. Regional and National Material Flow Accounting: From Paradigm to Practice of Sustainability Proceedings of the workshop 21 -23 January, 1997 Leiden, The Netherlands. 6. Herczeg, M., Carlsen, R., Nemeskéri, R. (EEA 1/2007). Feasibility assessment of using the Substance Flow Analysis Methodology for chemicals information at macro-level. Technical report No 1/2007 European Environment Agency, 2007. 7. Herczeg M., Baranyi, R. Tracing Sunstances in the Technosphere and Products Periodica Polytechnica Ser. Soc. an. Sci. Vol. 13. No 2. 2005. 8. KVVM (Hungarian Ministry of Environment and Waters). Report on the Mercury Inventories. Non official Working Document, 2006. 9. OECD Working Group on the State of the Environment (2000). Special Session on Material Flow Accounting. Links between the micro and macro flows: substance flow analysis. Paris, 2000. 10. OECD Working Group on Environmental Information and Outlooks (2005). Material Flows and Related Indicators. Inventory of Country Activities. OECD, 2005. 11. van der Voet, E. (1996). Substances from cradle to grave. Development of a methodology for the analysis of substance flows through the economy and the environment of a region, with case studies on cadmium and nitrogen compounds. Leiden University,1996. 12. van der Voet, E. (2002). Substance Flow Analysis of Heavy Metals' Recycling - How to deal with Decreasing Markets. International Symposium on Sustainable Material Cycles, Tsukuba, 5 November 2002. 312 Local Agenda 21 in Çorlu, Turkey and its Role in Waste Management Füsun Uysala, Remzi Ermanb a Çorlu Engineering Faculty, Environmental Engineering Department, Namık Kemal University, Çorlu -Tekirdağ, Turkey [email protected] b Local Agenda 21, Çorlu-Tekirdağ, Turkey 1 Introduction 1.1 Agenda 21 Much has been initiated since the United Nations Conference on Environment and Development (the Earth Summit) was held in Rio de Janeiro, Brazil in 1992. The heads of state and government of 181 countries adopted an action plan for the 21st century: Agenda 21. The aim was to remove imminent environmental threats, reduce excessive resource consumption and to work jointly to move development towards sustainability (1). Many global problems are based on people’s habits and lifestyles. Solving modern environmental problems requires integrating environment into our everyday lives. The public authorities have an important role in creating sustainable development, but they need help from the general public. Sustainable development can only result from a democratic process with public participation. Each individual person must therefore take responsibility for global problems by starting to solve them where he or she lives and works. People should not be motivated by laws but should feel personal and moral responsibility for carrying out the principles of Agenda 21(2).The principles are transparency, dialogue and cooperation (2). Safeguarding the environment is a key feature of Agenda 21, including issues like pollution, waste management and the protection of the oceans and freshwater resources. 1.2 Local Agenda 21 An essential element of any Local Agenda 21 process is the consultation and involvement of the wider community and general public. Any Local Agenda 21 Strategy should be a joint effort between the different sectors in society and local residents. The involvement of the public is of key importance in this process as it creates a sense of responsibility amongst the citizens for improving their local environment and it helps the local authority to advocate the implementation of actions for achieving the goals of sustainability (2). The 1992 Earth Summit in Rio de Janeiro called on local governments to prepare their own sustainable development action plans in consultation and partnership with their respective communities (3). Efforts to achieve sustainable development differ depending on local resources and needs. New ideas and different way of doing things require a transparent decision-making process. What are the problems and what solutions can we devise? What is your role and what is mine? What should be done how and when? Dialogue and the willingness to cooperate across traditional disciplines and sectors are required to develop and implement ideas. 313 Transparency, dialogue and cooperation across disciplines and sectors comprise one of the key cornerstones of Agenda 21(2). We do need development as it provides jobs, homes and generally a better standard of living, but we can enjoy a better quality of life and still protect our environment by making relatively small changes to our lifestyles. The most important thing to do is to stop making our environment worse and get the balance right. Small changes in our habits today can make the difference for the future and for our children. For example, we need to cut down on waste, save energy and materials, use the car less, reduce pollution and look after the local environment. By making an effort at a local level we can make a real impact on protecting the global environment (4). 2 Çorlu’s economic growth and environmental degradation Located on Thrace Region of Turkey, Çorlu is inhabited by 350.000 people. Besides the rapid growth of its population, in the last two decades, Çorlu has also experienced economic growth. As a result of immigration of many people to Çorlu, the town’s character has changed from a city focused on agriculture to a city focused on industry, with environmental problems and cultural conflicts.. However, this often has been at the expense of the existing ecosystems and community. Nature is domesticated for direct human use, mainly in the form urbanization. Çorlu’s Local Agenda 21 Process is motivated by the intention to escape environmental deterioration, which is associated with rapid urbanization. On the other side, a markable environmental deterioration can be observed in the insufficient provision of urban services. Improvements of the quality of life all Çorlu’s citizens will be a key measure progress on Local Agenda 21 of Çorlu. Environmental working group of Local Agenda 21 of Çorlu works on recycling programs, tree planting programs. The group’s aim is to develop recyclable waste collection system and to increase the recyclable collected quantities of waste by sharing their ideas with local municipality and other local authorities. As environmental working group we provide information and improve communication for the public in environment and health matters. Our schemes help to raise awareness and also help to stimulate interest and action in public. We use leaflets and manuals, mass media such as local newspapers and radios as major source of information for public awareness. The lead projects of Local Agenda 21 in Çorlu are at quality of life of the citizens of this town, with respect to waste water, solid waste, control of water and air pollution, waste management, creation of green areas and parks, raising awareness of public. 2.1 The project of e-wastes The group decided to start a project for the collection and recycling of e-wastes in Çorlu. The reason is that the electronics industry is a large, rapid growing industry all over the world. Our growing dependence on electronics products both at home and in the workplace has given rise to a new environmental challenge: electronic waste. Unep estimates that up to 50 million tones of waste from discarded electronic goods is generated annually (5). E-wastes are estimated 1 million tons per year in Turkey. Improper disposal of e-waste can release hazardous chemicals and heavy metals into the environment (5).Electronic circuit boards, batteries and color cathode ray tubes can contain hazardous materials such as lead, mercury and hexavalent chromium. If improperly handled 314 or disposed, these toxins can be released into the environment through landfill leachate or incinerator ash (6). The decreasing cost of replacing computers , mobile phones and electronic gadgets and the speed with which technology goes out of date, mean there is more and more disposed of (5). With rapid innovations in technology, most computers are disposed of within two years. E-waste is thought to be the fastest growing part of municipal waste in the developed world. A study by the U.S. EPA shows that electronics already make up 1 percent of the municipal solid waste stream (6). The European “Directive on Waste Electrical and Electronic Equipment (WEEE)”provides that WEEE should be collected in a range of 50 % by weight up to 80 % by weight according to the category they belong to. Furthermore, WEEE treatment shall include the removal of all fluids and selective components as a minimum requirement (7). According to the “Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment” (ROHS), the new electric and electronic devices must do not contain heavy metals like mercury, cadmium, lead and other hazardous substances (7). The working group contacted with the electronic recycling company in Turkey. There is only one electrical and electronic waste recycling company that was founded in 2003 in Kocaeli. The Company aims to collect the used or out of use electrical and electronic goods, recycle them in order to get raw materials and provide raw materials to the market. The company supplies a waste management system for electrical and electronic waste collecting to transportation, storing, processing, safety and final disposing. Due to their homogenous construction large electrical and electronic devices are easy to dismantle and to recover. The company required the working group to contact with municipality. Until now the erecycling company had only signed contracts with municipalities. The group persuaded the municipality for starting the collection of e-wastes. Çorlu is now within a few towns signing the contract with the company and starting the collection of e-wastes. The group expects that the return of the project will be in high level and will be a successful implementation. Information providing posters and hand-outs, for the collection of e-wastes were distributed to business and industrial groups, including chamber of commerce and selected trade and industrial associations, professional groups and organizations, educational institutions, including university, hospitals, high schools and vocational schools, service clubs and civic organizations, labor unions, state and local governmental agencies, factories, media, including the staff of newspapers and radios. Because of the number of people reached by media, it holds considerable potential as a tool for both providing information to the public and soliciting participation. It is expected that some people will have greater interest in action than others and some may have an interest in assuring it does not occur. 2.2 The Project of Collection of Batteries People are using more and more household batteries. The battery consumption per person is around three to four pieces annually. The rate of consumption is around 10 in Europe (8). All batteries are now classified as “hazardous waste”. Batteries have been determined to be unsuitable for disposal as municipal solid waste because they contain toxic heavy metals and have corrosive properties. Batteries are not to be placed in waste basket or dumpsters where they will end u as municipal trash (9). In landfills, heavy metals have the potential to leach slowly into soil, groundwater or surface water. Dry cell batteries contribute about 88 percent of the total mercury and 50 315 percent of the cadmium in municipal solid waste stream. In the past, batteries accounted for nearly half of the mercury used in the United States and over half of the mercury and cadmium in municipal solid waste stream. When burned, some heavy metals such as mercury may vaporize and escape into the air, and cadmium and lead may end up in ash (10). We thought of having a collection system for batteries to prevent the release of hazardous materials into the environment. We proposed to set up a collection scheme and worked together with Çorlu Municipality. We communicated with TAP (Removable Battery Producers and Importers Association). The association has forty-five members. We supplied plastic barrels from TAP for the collection of batteries. Information providing posters, hand-outs and plastic barrels for the collection of batteries were distributed to business and industrial groups, including chamber of commerce and selected trade and industrial associations, professional groups and organizations, educational institutions, including university, hospitals, high schools and vocational schools, service clubs and civic organizations, labor unions, state and local governmental agencies, factories, media, including the staff of newspapers and radios. 3 Conclusion As experiences of the last two years have shown, Environmental Working Group of Local Agenda 21 in Çorlu has been quite successful in producing projects. Through the intensive participation of different sections of society, many imaginative and creative project ideas have been fed into process. Improvements of the quality of life all Çorlu’s citizens will be a key measure progress on Local Agenda 21 of Çorlu. We believe that Çorlu is ready to establish a new relationship with the environment to take Çorlu’s citizens into the next century and ambitious to achieve this vision. 4 1. 2. 3. 4. 5. 6. 7. 8. 9. References Introduction to Local Agenda 21 in Denmark, skov-orgNaturstyrelsen.htm. Active Public Involvement in Relation to LA21, INTEGAIRE case study submission form.htm. Rahardjo,T., The Semerang Environmental Agenda: A stimulus to Targeted Capacity Building Among Stakeholders, Habitat International, Volume 24, Issue 4, 443-453,2000. Welcome to North Tyneside Council’s Service Directory: Your First Step for Service, Help and Advice, Local Agenda 21.htm. UN Warning on E-Waste ‘Mountain‘, http://news.bbc.co.uk/2/hi/technology/6187358.stm. Electronics Waste How to avoid it, E-Waste & the Environment, http://www.eath911.org/master.asp?s=lib&a=electronics/elec_ewaste.asp. Janz,A. and Rotter,S., The Challenge of Recycling Small Waste Electrical and Electronic Appliances and Equipments, ‘Waste Site Stories’ ISWA/DAKOFA Annual Congress,Executive Summaries, 2006. Disposal of Batteries, http:// blink.ucsd.edu/go/battery. Battery Recycling and Disposal Guide for Households, Environmental Health and Safety Online, http://www.ehso.com/contents.php. 316 Accounting for Direct and Up-Stream Energy Requirements and Carbon Emissions Related to the Production System in the Czech Republic Jan Kovandaa*, Miroslav Havraneka, Helga Weiszb, Gloria Gerillab a Charles University Environment Center Chzrles University, Prague, Czech Republic [email protected]; [email protected] b Institute of Social Ecology, Faculty for Interdisciplinary Studies, University of Klagenfurt, Vienna, Austria [email protected]; [email protected] *corresponding author 1 Introduction Economic system demands energy and materials from the surrounding environment and other countries and transforms them into products (goods and services) needed for meeting human needs. However, at some time all these products are released back to the environment in form of emissions and wastes. This predominantly one-way flow of materials and energy is often called industrial or social/societal metabolism (Moldan, 1983; Baccini, 1991; FischerKowalski et Haberl, 1993; Ayres et Simonis, 1994). Materials and energy needed for functioning of the economy are consumed by economy sectors to produce sectoral outputs, which consist of both goods and services. Some of these material and energy carrier inputs are direct; it means they are directly consumed for production of commodities used for final demand. Apart from this, there are up-stream energy and material flows, which are sometimes identified with indirect or embodied energy and material flows. These are needed to produce infrastructure and/or semi-manufactured products, which are then used to produce commodities for final demand. This production can take place abroad or domestically in other sectors. Total energy and material flows (i.e. sum of their direct and up-stream parts) indicate requirements for total material/energy inputs mobilized during the whole production process of a commodity. The same applies for emission and waste flows; they are also both direct and up-stream ones. Anthropogenic material and energy flows are one of the key causes of environmental problems and can serve as an indirect indicator of pressure exerted on the environment by humans (e.g. Schmidt-Bleek, 1993; Ayres and Simonis, 1994; Weizsäcker et al., 1997; Bringezu 2002). To identify the most environmentally-damaging commodities, it is useful to take into account total material/energy requirements and emissions related to commodities production, as environmental pressures are associated with both direct and up-stream material/energy/emission flows. It can happen that the rank of commodities and their groups based on the total flows would differ significantly from the rank which would be based just on the direct ones. This fact would re-route the energy and carbon policies and measures on commodities, which deserve particular attention as the most environmentally-damaging. 317 Total material/energy/emission flows can be attributed to the total final demand of particular commodities, but can also be split into domestic final demand and exports. This allows for distinguishing between environmental pressures driven by domestic consumption and by consumption abroad. Moreover, up-stream flows can be attributed to commodities imports, which helps to assess shifts of environmental pressure across countries related to foreign trade activities. In general, balance of the total flows related to imports and exports should be close to zero. In that case country does not exert bigger environmental pressures on the environment abroad than other countries exert on its environment. This state is in line with the requirements for equity in sharing space and resources (UN, 1992, 2002). From this point of view, the shift of environmental pressures between developed and developing countries seems extra important, as developed countries have achieved improvements in the quality of their environment to some extent by these shifts (Machado et al., 2001, Schütz et al., 2004). Study described in this paper treats the issue of direct and up-stream energy requirements and carbon emissions related to the production system in the Czech Republic. These flows are linked to domestic final demand of commodities, as well as to their exports and imports. The paper is organized in a few logically linked sections. Data and Methodology Section describes used data sources and the methodology applied to quantification of total energy requirements and carbon emission flows. Result and Discussion Section shows results of the quantification and discusses main findings. Conclusion Chapter summarizes results and puts forward some implications, which these results might have. 2 Data and Methodology 2.1 Data The quantification of total energy requirements and carbon emission flows was carried out for years 1999 and 2003. Selection of these years was mainly driven by data availability. There were two main sources of data used: 1) Monetary supply and use tables, 2) Use of energy carriers by sectors, for final demand and their imports (all in Joules). Ad1) Supply tables say how products groups are supplied (produced) by sectors in economy, while use tables show consumption of these product groups by sectors (intermediate consumption) and their use for final demand (consumption of households, a government and for exports). These data were provided by the Czech Statistical Office and were organized according to 52 NACE sectors (NACE — Statistical Classification of Economic Activities within the EC) and 52 CPA product groups (CPA — Classification of Product by Activities). Ad2) These data were provided by the Czech Statistical Office for 24 energy carriers (fossil fuels, electricity and heat) and summed up to be on the same level of aggregation as monetary supply and use tables. We ended up with 6 groups of energy carriers: 1. Coal, lignite and peat (CPA 10), 2. Crude oil and crude natural gas (CPA 11), 3. Coke and oil refinery products (CPA 23), 4. Refined nature gas and other gases (CPA 40.2), 5. Electricity (CPA 40.1), 6. Heat (CPA 40.3). As sectoral data on consumption of renewable energy carriers were not available, our calculations only focused on calculation of direct and up-stream energy requirements and carbon emissions related to use of fossil fuels. Only electricity and heat were covered in their entirety, i.e. also electricity and heat produced from renewables were taken into account. 318 For calculation of direct and up-stream carbon emissions, we took those parts of above energy figures, which were used for combustion93, and multiplied them by carbon content specified for particular energy carriers (IPCC, 1996). As electricity and heat are not carbon carriers, we ended up with carbon emissions from 4 groups of fossil fuels (CPA 10, CPA 11, CPA 23 and CPA 40.2). 2.2 Methodology Calculation of total energy requirements and carbon emissions related to the production system in the Czech Republic was carried out using input-output technique, described e.g. in Hannon et al. (1983), Miller et al. (1985) and Machado et al. (2001). The basic analytical tool employed for the calculation was a symmetric input-output table. A scheme of such a simplified table (only for three product economy) is shown in Table 1. Table 1: A simplified product-by-product input-output table Product 1 Product 2 Product 3 Product 1 M M M Product 2 M M M Product 3 M M M Final demand Y Y Y Total output X X X A product-by-product input-output table shows, which quantity of each product is used for production of other products and which quantity goes for final demand. This table can be described by a following equation: Y=X–M (1) where Y stands for a vector of final demand, X is a vector of total output and M is a matrix of intermediate consumption. This equation allows for derivation of a matrix of coefficients of direct inputs/emissions (A), which can be calculated as follows: A = M * X-1 (2) This matrix describes quantities of products used for production of other products and for final demand per unit of total product output. The equation can be written also as follows: X = A-1 * M (3) M=A*X (4) Based on (4), the equation (1) can be further modified as follows: Y=X–A*X (5) Y = (I – A) * X (6) X = (I – A)-1 * Y (7) 93 Use of primary fossil fuels (such as coal and crude oil) for conversion into secondary fossil fuels (such as coke and petrol) was not included, as carbon emissions are related to combustion of their secondary counterparts. 319 The (I – A)-1 matrix is called Leontief inverse and is identified with a matrix of coefficients of total inputs/emissions. This is because in equation (3), total product output is related to its intermediate consumption through matrix A-1, while in equation (7) it is related to final demand through matrix (I – A)-1. And whereas intermediate consumption gives evidence on direct consumption/emissions, final demand has to encompass whole production chain of a given product. Input-output modeling is usually carried out in monetary units, it means that the extension of A and (I – A)-1 matrices is CZK per CZK. In order to calculate total energy requirements and carbon emissions intensities, we had to develop a hybrid input-output model. In this model, we started with supply and use tables. While the whole supply tables remained in monetary units, we replaced monetary consumption of energy carriers in the use tables by their consumption in Joules (for calculation of total energy requirements) and monetary consumption of carbon carriers by related carbon emissions in tons (for calculation of total carbon emissions). Then, we calculated A matrices for the product-by-product inputoutput tables based on these supply and use tables and applying the industry technology assumption94. These A matrices were calculated according to the following equations: A=B*D (8) B = Mu * Xs-1 (9) D = Ps * X-1 (10) where Mu and X stood for a matrix of intermediate consumption of products and total product output, respectively, as shown in the use table, while Xs and Ps were a vector of a total sectoral output and a matrix of product production by sectors, respectively, as shown in the supply table. After calculating A matrices, we could calculate (I – A)-1 matrices. The extension of these matrices was now Joule per Joule for energy requirements and tons per tons for carbon emissions for points where energy/carbon product rows met with energy/carbon product columns, Joule per CZK and tons per CZK where energy/carbon product rows met with nonenergy/carbon product columns and CZK per CZK in the rest of matrices. By multiplying of energy/carbon product rows of (I – A)-1 matrices by vector of final demand in hybrid units, we could calculate total (direct plus up-stream) energy requirements and carbon emissions related to final demand of particular product groups. This was done for both domestic final demand and exports which are parts of total final demand. It was done also for imports under simplifying assumption that the input-output structure of economies, whichwe imported from, was the same as in the Czech Republic. If this assumption were not held, a new vector of total energy/carbon intensities would have to be estimated based on the input-output tables of the exporter countries. The calculated total energy requirements were broken down by 6 energy carrier groups, which included both primary energy carriers (most of CPA 10 and CPA 11) and secondary energy carriers (most of CPA 23, CPA 40.2, CPA 40.1 and CPA 40.3). In order to calculate total energy requirements for all energy carriers together it was not possible to sum simply these figures. This would lead to double-counting as some primary energy carriers were used for production of secondary energy carriers. To cope with this problem we had to excerpt primary parts of energy requirements for each energy carrier group. This was done by means 94 Industry technology assumption says that each industry has its own specific way of production, irrespective of its product mix. Product technology assumption implies that each product is produced in its specific way, irrespective of the industry where it is produced. 320 of coefficients which expressed shares of primary energy carriers in total supply (domestic production plus imports) of particular energy carrier group. By multiplying of A and (I – A)-1 matrices by these coefficients we came to energy intensities just for primary energy. This procedure had not to be done for carbon emissions, as while a unit of energy in a primary energy carrier can be used more than once (for instance for production of a secondary energy carrier and then, in form of this secondary energy carrier, for production of some non-energy commodity), carbon emissions took place only once during the whole unit of energy life cycle. 3 Results and Discussion Figure 1 shows attribution of direct and up-stream primary energy requirements to domestic final demand and to exports. While total energy requirements of domestic final demand remained stable between 1999 and 2003, there was an increase in energy requirements of exports by ca 9 percent. An increase in energy requirements of total final demand (sum of domestic final demand and exports), which amounted to 4 percent between 1999 and 2003, was therefore driven by consumption abroad rather than by consumption in the Czech Republic. Figure 1 further shows the share of direct/up-stream energy requirements in total energy requirements. The share of up-stream energy requirements was higher in the case of exports, although there was a decrease between 1999 and 2003. The higher share of up-stream flows suggested that the level of processing was higher for the exported commodities than for the commodities consumed domestically (more processed products usually have longer production chains behind, which stem in larger accumulation of up-stream energy requirements). The fact that the Czech Republic tended to export highly processed commodities was related to higher value added and thus revenues from their export. Figure 1: Direct and up-stream primary energy requirements related to domestic final demand and exports, Czech Republic, 1999, 2003 1,200 1,000 1000 TJ 800 600 59% up-stream 59% direct 77% 400 72% 200 41% 41% 23% 28% Exports 1999 Exports 2003 0 Domestic final demand 1999 Domestic final demand 2003 Total carbon emissions related to domestic final demand went up by 12 percent (Figure 2). As there was only very slight increase in total energy requirements of domestic final demand, this increase indicated that more carbon intensive energy carriers were burnt for producing commodities for domestic final demand in 2003 compared with 1999. Contrary seems to be true for exports, as in spite of increase in energy requirements, total carbon emissions went down by 7 percent. When taking the sum of domestic final demand and exports (see below, Table 2), the carbon emissions went up slower than energy requirements. 321 It means that there had to be a shift to consumption of less carbon-intensive energy carriers for production of commodities for total final demand. The share of indirect carbon emissions was again higher in the case of exports, which could be substantiated analogously to energy requirements. Figure 2: Direct and up-stream carbon emissions related to domestic final demand and exports, Czech Republic, 1999, 2003 30 1 000 000 tonnes 25 20 15 72% up-stream 70% direct 83% 10 78% 5 28% 30% 17% 22% Exports 1999 Exports 2003 0 Domestic final demand 1999 Domestic final demand 2003 Figure 3 shows direct and up-stream primary energy requirements of imports and trade balance. Total energy requirements of imports went up by 6 percent. This suggested an increase in pressure exerted abroad by the consumption in the Czech Republic between 1999 and 2003. As also total energy requirements of exports went up (Figure 1), there was simultaneous increase in pressure exerted on the environment in the Czech Republic by the consumption of other economies. When balancing these two variables by subtracting total energy requirements of exports from total energy requirements of imports, the results remained positive and more or less on the same level for both years. It means that, with respect to its foreign trade and energy requirements, the Czech Republic rather exerted pressure on the environment abroad than other economies exerted pressure on its environment. This balance was positive mostly due to up-stream energy flows (it was even negative for the direct flows in 2003). This fact would not be visible without quantification of up-stream energy requirements. The share of up-stream energy requirements in total energy requirements of imports was similar to exports, which indicated the similar level of processing of imports and exports (see above). As total energy requirements of imports went up (Figure 3) and total carbon emissions of imports went down at the same time (Figure 4), it seemed that also other countries tended to produce commodities for export with the use of less carbon intensive energy carriers. This fact led to the result that, with respect to carbon emissions, the balance of imports and exports went down by 35 percent. Considering requirements for equity in sharing space and resources, the trend therefore followed a sustainable trajectory. Table 2 shows total primary energy requirements and total carbon emissions related to total final demand of particular commodity groups in 1999 and 2003. The highest energy requirements and carbon emissions were recorded for some energy and carbon carriers (they are completely burnt/consumed when used for final demand), with the exception of crude petroleum and crude natural gas, as these carriers are, in general, used for production of secondary energy carriers (refined petroleum products and refined natural gas /the latter 322 treated under CPA 40.2/) than used for final demand. With the exception of both energy requirements and carbon emissions of coal and lignite (CPA 10) and carbon emissions of crude petroleum and nature gas (CPA 11), all energy and carbon carriers recorded increase in total energy requirements and carbon emissions between 1999 and 2003. Figure 3: Direct and up-stream primary energy requirements related to imports and trade balance, Czech Republic, 1999, 2003 1,400 1,200 1,000 1000 TJ 800 82% 83% up-stream 600 direct 400 200 18% 17% Imports 1999 Imports 2003 0 Balance 1999 Balance 2003 -200 Figure 4: Direct and up-stream carbon emissions related to imports and trade balance, Czech Republic, 1999, 2003 35 30 1 000 000 tonnes 25 20 69% up-stream direct 15 81% 10 5 31% 19% 0 Imports 1999 Imports 2003 Balance 1999 Balance 2003 From non-energy commodities, the highest energy requirements and carbon emissions were recorded for construction work (CPA 45), basic metals (CPA 27), chemical products (CPA 24), food products and beverages (CPA 15), machinery and equipment (CPA 29), motor vehicles (CPA 34) and real estate and other services (CPA 70-74). Among non-energy commodities with meaningful energy requirements (higher than 5 thousand TJ), highest increase in energy requirements was recorded for pulp, paper and paper products (CPA 21), education (CPA 80) and radio and TV apparatuses (CPA 32). On the other hand, the highest decrease in energy requirements was recorded for wearing apparel and furs (CPA 18), textiles (CPA 17) and agriculture (CPA 1). Among non-carbon commodities with meaningful carbon emissions (higher than 0.1 million tons), highest increase in carbon emissions was recorded for education (CPA 80), pulp, paper and paper products (CPA 21) and public administration and defense services (CPA 75). The highest decrease in carbon emissions was recorded for 323 wearing apparel and furs (CPA 18), textiles (CPA 17) and hotel and restaurant services (CPA 55). Table 2: Total primary energy requirements and total carbon emissions related to total final demand of particular commodity groups, Czech Republic, 1999, 2003 and percentage change CPA Commodity category 1999 2003 Change in % code 1999/2003 Total Total Total Total Energy Carbon energy carbon energy carbon in mil. in thou. in mil. in thou. tons tons TJ TJ 10 Coal and lignite; peat 306.7 7.5 250.9 6.6 -18.2 -12.8 40.1 Electricity 276.2 4 337.9 5.2 22.3 30.4 23 Coke, refined petroleum products 226.1 4.5 252.1 5.9 11.5 32 Gas 110.8 2 139.2 2.4 25.6 21.7 40.2 45 Construction work 85.3 1.9 73 1.4 -14.4 -24.6 27 Basic metals 77.3 1 96.1 1.2 24.4 21.5 24 Chemicals, chemical products 70.5 1.1 62.2 1 -11.8 -12.4 15 Food products and beverages 68.5 1.5 57.8 0.9 -15.6 -36.6 29 Machinery and equipment n.e.c. 60.3 1.1 68.5 1.1 13.6 -2.1 34 Motor vehicles, trailers 55.4 1 64 1 15.4 -3.5 70-74 Real estate services, renting services, 40.7 1.1 34.7 0.9 -14.8 -21.8 computer and related services, research and development, other business services 28 Fabricated metal products 38.4 0.7 36.8 0.6 -4.1 -16.2 26 Non-metallic mineral products 32.8 0.7 29.2 0.6 -10.9 -15.9 50-52 Trade and repair services of motor vehicles, 32.3 0.9 33.7 0.7 4.2 -18.7 wholesale, retail trade, repair services 75 Public administration, defense services 32.1 0.7 24.2 0.9 -24.5 23.9 40.3 Heat 29.2 2.3 53.3 3.8 82.4 64.9 60 Land transport 28.6 0.6 35.9 0.5 25.5 -12.6 85 Health and social work 28.1 0.7 25.8 0.6 -8 -17.3 31 Electrical machinery and apparatus n.e.c. 24.4 0.5 24.4 0.4 -0.1 -13.3 17 Textiles 21.5 0.4 15.9 0.2 -26 -40.2 55 Hotels, restaurant services 16.9 0.6 14.6 0.4 -13.6 -40.1 36 Furniture, other goods n.e.c. 14.9 0.3 16.8 0.3 13.2 -7.2 25 Rubber, plastic products 14.7 0.3 15.8 0.3 8 9 1 Agriculture 14.6 0.3 10.9 0.2 -25.6 -32.8 21 Pulp, paper and paper products 14.4 0.2 21.7 0.3 50.4 55.4 80 Education 11.8 0.3 16.8 0.7 42.4 120.9 63 Travel agency services 11.3 0.3 14.8 0.3 31.1 19.5 35 Other transport equipment 8.7 0.2 8.6 0.1 -1 -16.8 18 Wearing apparel; furs 7.7 0.2 2.6 0 -65.8 -72 92 Recreation, cultural and sporting services 7.3 0.2 7.6 0.2 3.7 -13.6 41 Distribution services of water 6.3 0.2 5.1 0.1 -19 -29.5 65-67 Financial intermediation services, insurance 6 0.2 4.5 0.1 -25.1 -32.1 and pension fund services, services auxiliary to financial intermediation 22 Printed matter, recorded media 5.9 0.1 6.3 0.1 6.6 7.7 20 Wood and products of wood 5.9 0.1 4.8 0.1 -18.2 -28.6 32 Radio, TV apparatus 5.1 0.1 6.7 0.1 32.4 -3.1 90 Sewage, refuse disposal services 5.1 0.2 5.9 0.2 15.6 3.2 11 Crude petroleum and natural gas 4.6 0.2 7.3 0.2 58.1 -7.5 62 Air transport 4.3 0.1 6 0.1 40.9 48.1 16 Tobacco products 4 0.1 2.4 0 -39.8 -44.6 324 19 64 33 30 93 12 91 2 14 61 5 37 13 Leather 3.4 0.1 0.9 Post, telecommunication services 3.1 0.1 2.8 Medical, precision and optical instruments 2.5 0.1 3.5 Office machinery, computers 2.5 0.1 6.5 Other services 2.1 0.1 1.9 Uranium 1.9 095 1.8 3 Membership organization services 1.5 0 1 1.1 Forestry 1.4 03 Other mining products 0.7 03 0.9 03 Water transport 0.4 03 Fishing 0.2 03 0.3 3 -0.1 Recovered secondary raw mat. 0.1 0 Metal ores 03 03 03 Total 1,833.9 38.7 1,915.0 Note: energy commodities are in italics, carbon commodities are in gray cells 0 0.1 0.1 0.1 0.1 03 03 03 03 03 03 03 03 40.2 -73.9 -9.4 43.4 157.1 -6.9 -5.7 -31 -24.5 28.1 -92.6 12.2 -206.1 -126.6 4.4 -77.5 -21.4 -6.8 86.4 -41.2 19.6 -21.6 -30.3 5.7 -91.3 -4.2 -194.7 -100 3.8 In general, total primary energy requirements and total carbon emissions related to total final demand of the Czech Republic went up by 4.4 and 3.8 percent, respectively. As argued above, there had to be a shift to consumption of less carbon intensive energy carriers between 1999 and 2003. This shift differed across particular commodities groups. The highest one was recorded for office machinery and computers (CPA 30), crude petroleum and natural gas (CPA 11) and medical, precision and optical instruments (CPA 33). On the other hand, a shift to more carbon-intensive energy carriers was above all recorded for education (CPA 80), public administration and defense services (CPA 75) and metal ores (CPA 11) 4 Conclusions Total primary energy requirements related to commodities consumption for final demand were growing in the Czech Republic between 1999 and 2003. This growth was rather driven by consumption for final demand abroad than domestic consumption for final demand. There was also a growth in total emissions of carbon. Compared with energy requirements, this growth was however lower. It implies a certain shift to consumption of less carbon-intensive energy carriers for production of commodities for total final demand. This shift was above all determined by production for exports, as production for domestic final demand even recorded increase in carbon intensity. When balancing total primary energy requirements and carbon emissions of exports and imports, we are coming to positive results for both years. They are more or less on the same level for energy requirements and decreasing for carbon emissions. It means that, with respect to its foreign trade, energy requirements and carbon emissions, the Czech Republic rather exerts pressure on the environment abroad than other economies exert pressure on its environment. In the case of energy, this balance is positive mostly due to up-stream energy flows, which would not be visible without their quantification. In the case of carbon emissions, the decreasing trend seems to follow a sustainable trajectory from the viewpoint of equity in sharing space and resources. The most environmentally-damaging commodity groups from the viewpoint of energy consumption and carbon emissions — i.e. commodity groups, which final demand is associated with highest total primary energy requirements and carbon emissions — were as follows in 1999 and 2003: some energy carriers (coal /CPA 10/, electricity /CPA 40.1/, coke /CPA 23/ and gas /40.3/), construction work (CPA 45), basic metals (CPA 27), chemicals and 95 Number smaller than 0.05 325 chemical products (CPA 24), food products and beverages (CPA 15), machinery (CPA 29) and motor vehicles (CPA 34). It implies that energy and carbon policies should aim at final demand of these commodities, as through its reduction we can get highest gains in decreasing the energy consumption and carbon emissions in the Czech Republic. 5 Acknowledgements The research on the subject presented in this paper was done as part of the MATISSE project 004059 (GOCE) “Methods and Tools for Integrated Sustainability Assessment”. This project is being undertaken for the European Commission and funded through the Sixth Framework Programme. This support is gratefully acknowledged. 6 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. References Ayres, R. And Simonis, L., 1994. Industrial Metabolism: Restructuring For Sustainable Development. UNU Press, Tokyo. Baccini, P., Brunner, P., H., 1991. Metabolism Of The Anthroposphere. Springer Verlag, Berlin, New York, Tokyo. Bringezu, S., 2002. Towards Sustainable Resource Management In The European Union. Wuppertal Papers 121, Wuppertal. Eurostat, 2001. Economy-Wide Material Flow Accounts And Derived Indicators. A Methodological Guide. Luxembourg. Fischer-Kowalski, M., Haberl, H., 1993. Metabolism And Colonization. Modes Of Production And The Physical Exchange Between Societies And Nature. Innovation: The European Journal Of Social Sciences 6 (4), pp. 415-442. Hannon, B., Blazeck, T., Kennedy, D., Illyes, R., 1983. A Comparison Of Energy Intensities: 1963, 1967 And 1972. Resources And Energy 5, pp. 83-102. IPCC, 1995. Guidelines for National Greenhouse Gas Inventories, Vol. 1-3, IPCC / OECD / IEA Machado, G., Schaeffer, R., Worrell, E., 2001. Energy And Carbon Embodied In The International Trade Of Brazil: An Input-Output Approach. Ecological Economics 39 (2001), pp. 409-424. Miller, R.,E., Blair, P.,D., 1985. Input-Output Analysis: Foundations And Extensions. Prentice Hall Inc., New Jersey. Moldan, B., 1983. Material Flows In Nature. Academia, Prague (In Czech). Schmidt-Bleek, F., 1993. Wieviel Umwelt Braucht Der Mensch? MIPS — Das Maß Für Ökologisches Wirtschaften. Birkhäuser Verlag, Berlin, Boston, Basel. Schütz, H., Moll, S., Bringezu, S., 2004. Globalisation And The Shifting Environmental Burden. Material Trade Flows Of The European Union. Wuppertal Papers 134, Wuppertal. Weizsäcker, E. U. And Lovins, A., 1997. Factor Four: Doubling Wealth — Halving Resource Use. Earthscan, London. 326 Energy Balance and Balance of Reserves Fuels Miroslav Farskýa*, Martin Nerudaa, Roman Nerudab, Jiří Išac a Faculty of Environment, Jan Evangelista Purkyně University in Ústí nad Labem, Czech Republic * Corresponding author [email protected] b Institute of Computer Science, Academy of Sciences of the Czech Republic c Faculty of Mathematics and Physics Charles University Prague, Czech Republic 1 Introduction The Consumption Balance and Balance of Energy Sources Reserves come among important parts of the System of Material Flow Accounts (MFA), with three basic methods: 1. Interpretation of material and energy balances. They have been used in the Substance Flow Analysis (SFA) and in Energy Flow Analysis (EFA). 2. Interpretation of structural balance ("input-output" balance). 3. Records of the chosen files of primary and secondary Material Input and the chosen files of Material Output (Waste Output). 2 Specifics of energy balance Energy balance has 3 basic parts: 1. Balance of Input primary energy sources 2. Energy process 3. Final energy consumption 2.1 Balance of Input primary energy sources Each year, the balance is made in the Czech Republic (CR) and published in tables (Table 1). Table 1: Balance of Input primary energy sources Balancing item (PJ) 1995 Natural resources 1 409,8 Solid fuel 1 253,6 Liquid fuel 6,1 Gaseous fuel 8,6 Primary heat and electricity 141,5 Imports 726,1 Solid fuel 63,3 Liquid fuel 350,7 Gaseous fuel 270,0 Exports 397,3 Solid fuel 341,0 Liquid fuel 33,6 Gaseous fuel 0,0 Withdrawals from inventories (+), 5,1 entries into inventories (–) 2000 1 246,7 1 078,4 7,4 7,1 153,8 728,3 45,0 333,5 318,3 338,5 229,7 39,9 1,5 3,8 327 2004 1 317,1 1 005,7 12,8 6,8 291,8 802,6 64,0 397,1 306,3 339,6 206,8 34,6 6,3 32,2 Other resources (+) decreases (–) Primary resources, total Solid fuel Liquid fuel Gaseous fuel Primary heat and electricity 5,7 1 749,7 1 005,8 321,6 279,3 143,0 16,4 1 656,7 906,4 314,7 317,8 117,8 4,3 1 816,6 873,7 377,5 330,4 235,1 Source: ČSÚ – http://www.czso.cz/csu/ 2.2 Energy process The energy process In the CR is presented in tables (Table 2) each year. Table 2: energy process Primary resources, total Total losses Fuel mining and preparation Fuel upgrading Heat production Electricity production Energy distribution and fuel transport Balancing differences Final consumption, total Non-energy materials Source: ČSÚ - http://www.czso.cz/csu/ 2.3 1995 1 749,7 594,5 22,1 2000 1 656,7 623,4 13,4 2004 1 816,6 712,5 12,3 68,4 78,8 388,2 37,0 0,0 1 091,3 63,9 40,9 62,4 469,3 37,4 0,0 1 002,6 30,7 55,3 50,6 548,6 45,7 0,0 1 087,2 16,9 Final energy consumption Each year the Czech Statistical Office publishes data about final consumption of chosen fuels and electricity in all 59 branches and 229 groups. 3 Models The Balance Leontiev model can transform monetary and material influences of economy system and influnces of this model to outside relationship [4]. In the model it is possible to include environmental activities and waste flows and emission flows [5–7]. Due to the National energy balance it is important to predict energy consumption and energy production. Netto energy consumption (NNSE) is counted via climate conditions in CR [2]. It is made with regression. Two variables represent climate conditions (average daily temperature (MPT) and daily sun period (MDSO). Three variables represent trends and periodical character of electricity consumption. We counted relation between NNSE and MPT, MDSO. Data MPT, MDSO were obtained from the Czech Hydrometeorological Institute (data period January 1998-December 2005) [1]. For better results we believe we need to have 30 years data period. NNSE data were obtained from Czech Energy Agency [2]. By experience we found a function: (1) NNSE(t) = f (MPT (t), MDSO(t)) and regressive equation: 328 (2) NNSE (t) = a . MPT (t) + b . MDSO (t) + c with: a = – 73,3746; b = - 0,2916; c = 5161 Determination Coefficient R2 = 0,87 and autocorrelation Durbin–Watson statistic D = 1,37. In the Figure 1 the red line means a „real NNSE“ and the green line means regressive prediction. It can be well seen that there are differencies in the beginning and end of data set. 4 Conclusion Characteristics of present situation of balances of consumption and reserves of energy sources in CR are presented in this article. These balances make important part of Material Flow Accounts, MFA. It is possible to use artificial neural networks for such an experiment. We have good results from previous calculations in the similar experiments from economy and rainfall-runoff application as well [11]. Figure 1: „Real NNSE“ and regressive prediction 5 1. 2. 3. 4. 5. 6. 7. References Statistická ročenka ČR za rok 2005. Kapitola 16.B – Energetika. Prah, ČSÚ 2006. Diagram energetických toků v České republice. Praha, CONTE & Česká energetická agentura 2006. Gardel A. Energy Economy and Prospective. Oxford, Pergamon Press 1981. OLŠOVSKÝ J., SEĎA P., HRUBEŠ J.: Možnosti využití stochastického simulačního input-output modelu k analýze regionálních meziodvětvových vztahů. .Aplimat 2004. Bratislava, STU 2004, s. 753 – 758. RITSCHELOVÁ I. a kol.: Environmentální a ekonomické účetnictví. Edice Ekonomické nástroje sv. 24. Praha, Karolinum 2000. FARSKÝ M.: Leontijevská strukturní input-output bilance a environmentální účetnictví. E+M Ekonomie a management, r. V. (2002), č. 4, s. 16 – 20. FARSKÝ M., NERUDA M.: Bilance produkovaných odpadů jako omezující. 329 8. faktor v úvahách o rozšíření výroby průmyslového podniku. E+M Ekonomie a management, r. VI. (2003), č.2, s. 42 – 47. 9. VLČKOVÁ J. a kol.: Modely produkčních a odbytových bilancí pro vybrané toky odpadů v komparaci s navržením nástrojového mixu k podpoře využití odpadů. Praha, Institut pro strukturální politiku, o. p. s. 2006. 10. Vybrané účty životního prostředí v České republice na makroekonomické úrovni (NAMEA pro emise do ovzduší v letech 1998, 1999, 2003 a MFA v letech 1993-2004) . Kód publikace : 2006-05, č. j. 1579 / 2005-2430. Praha, ČSÚ 2006. 11. KOVANDA J.: Vývoj indikátorů celoekonomických materiálových toků v České republice v letech 19902003 se zaměřením na environmentální média a sektorové rozdělení výstupních toků.In: Environmentální účetnictví — indikátory udržitelného rozvoje. Sborník z konference 25. – 27. září 2005, Praha, s. 162 – 168. 12. NERUDA M., NERUDA R., KUDOVÁ P.: Aplikace umělých neuronových sítí na zvolený úsek povodí Sázavy. Vodní hospodářství, (2007), č. 4, Praha, s. 127-128. 330 Energy and Exergy Analysis of a Sulfation Unit of a Powder Detergent Plant G. Bektaş, F. Balkan Chemical Engineering Department, Ege University, Izmir, Turkey [email protected], [email protected] 1 Introduction Energy management on the basis of the first thermodynamic law (energy conservation or heat balance) allows minimization of wastes and improvement of energy efficiency by up to 15 %. Further, higher level energy savings can be achieved on the basis of the second thermodynamic law, which includes analysis of exergy. Exergy can be briefly described as maximum useful work that could be obtained from a system at a given state in a specified environment. So far, it is mainly used as a complement to the energy concept, to describe, analyze and improve energy systems and processes. Many engineers and scientists suggest that the thermodynamic performance of a process is best evaluated by performing an exergy analysis in addition to or in place of conventional energy analysis because exergy analysis appears to provide more insights and to be more useful in efficiency improvement efforts than energy analysis. During the past decade, many studies have been undertaken by the researchers to investigate thermodynamic aspects of thermal systems and processes. I. Dinçer and A. Şahin [1] develop a new thermodynamic model for exergy analysis of the drying process of moist solids and define exergy efficiency as a function of heat and mass transfer parameters. Gemci T. And Öztürk A. [2] conducted energy and exergy analyses of the sulphide-pulp preparation process used at the SEKA-Izmit Pulp and Paper Mill in Turkey. The First Law and Exergy analysis of pyrite reactor, waste heat recovery boiler, washing tower and gas cooler are performed. Utlu and et al. [9] perform energy and exergy analysis of a raw mill (RM) and raw materials preparation unit in a cement plant in Turkey using the actual operational data. Both energy and exergy efficiencies of the RM are investigated for the plant performance analysis and improvement, and are determined to be 84.3 % and 25.2 %, respectively. Muangnoi and et al. [6] used an exergy analysis to indicate exergy and exergy destruction of water and air flowing through the cooling tower. One important observation from this study is that the choice of the ambient conditions (dry and wet bulb temperatures) affects the results of exergy analysis quite strongly. Ozgener L. and O. [7] confirm energy and exergy modeling of industrial final macaroni (pasta) drying process for its system analysis, performance evaluation and optimization. The energy efficiencies of pasta drying process and overall system are found to be as 7.55 – 77.09 % and 68.63 %. The exergy efficiency of pasta drying process is obtained as 73 %. Mei G.[4] performed exergy analysis of a pulp and paper mill. Overall energy and exergy efficiencies are found as 78 % and 61 %, respectively. In the literature, although there are a number of energy and exergy analyses in various areas of industry, this study will be likely the first one for powder detergent production. With the light of this motivation, a case study for the sulfation unit of the powder detergent plant was performed and the effect of system parameters such as excess air percent, inlet air temperature and steam temperature on the energy and exergy efficiencies are studied. 331 2 Theoretical Analysis For a general steady-state flow process, there are three balance equations, namely mass, energy and exergy balance equations, which are used to find the work and heat interactions, exergy destructions and energy and exergy efficiencies. In this work, using these equations the energy and exergy efficiencies were calculated in each equipment of the sulfation unit. 2.1 Mass, energy and exergy balance equations The mass balance equation can be expressed as: ∑ m& in = ∑ m& out (1) & is the mass flow rate and the subscripts ‘in’ stands for inlet and ‘out’ for outlet. where m The general energy balance equation based on First Law of Thermodynamics is as follows; E& in − E& out − W& + Q& = 0 (2) E& = m& h (3) where E& is the rate of energy transfer with streams, Q& and W& are heat and work interactions between system and surroundings, h is the specific enthalpy. The exergy balance equation can be written as: ∑ E& x − ∑ E& x in out − E& xW + E& xQ = E& x dest (4) where E& x is the rate of exergy transfer with streams, E& xQ is the rate of exergy due to Q& across a system boundary at a constant temperature T, E& xW is the rate of work transfer and E& xdest is the exergy rate destructed in the system. ⎡ T ⎤ E& xQ = ⎢1 − 0 ⎥Q& ⎣ T⎦ (5) E& xW = W& (6) Total exergy of a system consists of physical, chemical, kinetic and potential exergy rates: E& x = E& x PHI + E& xCHE + E& x KN + E& x PT E& x PHI = [m& (h − h0 ) + To ( s − s0 )] = m& (∑ xi Cpie (T − T0 )) v E& x KN = m& 2 (7) (8) i 2 (9) 332 E& x PT = m& gz (10) ⎡ ⎤ E& x = m& ⎢∑ xi ei0 + RT0 ∑ xi ln( xi )⎥ i ⎣ i ⎦ (11) where s is the specific entropy, e0 is formation exergy, Cp e is the specific exergy capacity, v is the velocity, g is the gravitational force, z is the distance from the reference level, x is the mass fraction, R is the gas constant. The subscript zero indicates the properties at the dead state. 2.2 Energy and exergy efficiencies Based on the First Law of Thermodynamics the energy efficiency of a system ( η en ) can be described as η en = Eout Ein + W (12) In the literature, there are various exergy efficiency descriptions. In the present study, two of them were used. The conventional exergy efficiency (η ex ) can be expressed as η ex = Exoutput Exin + W (13) The product based exergy efficiency ( η ex ,P ), however, can be written as η ex , P = 3 Ex product Exin + W (14) Case Study The washing industry has roots over 2000 years in the past. In many countries, it has been generally accepted that the per capita of powder detergent is a reliable guide to the standard of living for any country. In the detergent production plant many chemical processes have been taken place. Basically, a powder detergent production is presented in four steps; sulfation, sulfonation, treatment, powder detergent. In the present study application of energy and exergy analyses in the sulfation unit of a powder detergent production plant is achieved. As seen in Figure 1 the sulfation part consists of melting tank, sulphur burner (furnace), waste heat boiler and the convertor. Sulphur is fed in the environmental state to the melting tank where it is melted by high temperature steam. Molten sulphur and atmospheric air are introduced into the sulphur burner where SO2 is produced. The products of combustion are used in waste heat boiler to generate process steam. The gasses are then passed through catalytic convertor which converts SO2 to SO3 by a conversion of 95 %. The special characteristics of this plant are two different exothermic reactions releasing large quantities of energy. 333 Figure 1: Sulfation unit Steam (4.5 bar, 450 °C) Solid Sulphur (20 °C) Steam (4.5 bar, 400 °C) Air (20 °C) Melting tank Water (4.5 bar, 200°C) Molten sulphur (140 °C) Air (20 °C) Sulphur Burner Com. gases (680 °C) Combustion Gases (350 °C) Waste Heat Boiler C O N V E R T O R Product (400 °C) Steam ( 4.5 bar, 275 °C) Some of the data used in calculations were obtained from the factory and the measurements were taken for the missing ones. The physical properties were read from the Ref.’s [5, 8]. All of these are tabulated in Table 1. Table 1: Data for calculations & steam (kg/h) m 1,000 Cp h ( kJ/kmol) & water (kg/h) m 172 O2 (350ºC) 30.92 & sulphur (kg/h) m 162.5 N2 (350ºC) 30 Cpsolid,sulphur (kJ/kmol) 21.8 SO2 (350ºC) 44.67 Cpliquid,sulphur (kJ/kmol) 31.5 SO3 (350ºC) 61.67 Tmelt,sulphur (ºC) 119 Cp e ( kJ/kmol) 14,200 O2 (350ºC) 10.29 N2 (350ºC) 9.78 λ sulphur (kJ/kmol) Cp h ( J/kmol) O2 (680ºC) 31.6 SO2 (350ºC) 14.95 N2 (680ºC) 30.9 SO3 (350ºC) 21.07 SO2 (680ºC) 48.4 e 0 ( kJ/kmol) Cp e ( J/kmol) O2 3,970 O2 (680ºC) 17.02 N2 690 N2 (680ºC) 15.92 SO2 303,500 SO2(680ºC) 25.72 SO3 225,070 334 4 Result and Discussion The mass balance of sulfation unit is performed taking two chemical reactions into account. Application of the energy and exergy analyses was carried out for the sulfation unit using actual operational data. The energy and exergy efficiencies were calculated for each equipment and the effect of system parameter were investigated. 4.1 Energy and exergy analyses The following assumptions were made in the energy and exergy analyses. - The pressure losses are negligible, - Changes in kinetic and potential energy are negligible, - All gaseous streams behave ideally, - The ambient temperature is constant. The energy and exergy values for each stream were calculated by using equations [2-11]. The ambient temperature (T0) was assumed as 20 ºC. Heat losses and exergy destructions were determined for each part of the system and tabulated in Table 2. The energy and exergy efficiencies were also calculated and shown in Table 3. Energy and exergy efficiencies were then compared in Fig. 2. Melting Tank Table 2: Energy and exergy rates for sulfation. Equip- Stream T (ºC) P E& (kJ/h) ment (bar) Steam in Steam out Sulphur in Sulphur out 450 400 20 140 4.5 4.5 1 1 E& x PHI (kJ/h) E& xCHE (kJ/h) E& xT (kJ/h) 3,378,150 3,232,000 0 86,428 1,042,940 934,880 0 927,045 0 0 3041,035 2,011,051 Sulphur Burner Q& loss = 59,721 Sulphur in 140 Air in 20 Combustion gases out 680 1 1 1 86,428 0 1,313,888 E& xloss = 200,848 927,045 0 683,359 2,011,051 0 1,507,978 Waste Heat Boiler Q& loss = 281,812 Steam in 400 Combustion gases in 800 Water in 200 Combustion gases out 350 Steam out 275 4.5 1 4.5 1 4.5 3,232,000 1,313,888 491,404 634,607 3,562,880 Convertor 2,938,096 0 2,191,337 E& xloss = 596,429 1,042,940 683,359 133,088 25,817 1,018,316 0 1,507,978 0 1,507,978 0 Q& loss = 839,805 Combustion gases in 350 Combustion products 400 out Air in 20 1,042,940 934,880 3,041,035 2,938,096 1,042,940 2,191,337 133,088 1,533,585 1,018,316 E& xloss = 410,785 1 1 634,607 748,862 25,817 34,937 1,507,978 900,408 1,533,585 935,345 1 0 0 0 0 Q& loss = 435,256 E& xloss = 430,583 Table 3: Energy and Exergy Efficiencies. Equipment Energy efficiency Exergy efficiency (η ex ) Exergy efficiency η ex , P ) Melting Tank Burner Waste Heat Boiler Convertor 0.95 0.75 0.78 0.61 0.72 0.75 0.31 0.61 0.98 0.82 0.83 0.63 335 Figure 2: Comparison of energy and exergy efficiencies 1 0,9 0,8 0,7 0,6 0,5 Energy efficiency 0,4 Exergy efficiency(ηex) 0,3 Exergy efficiency(ηex,P) 0,2 0,1 0 Melting Tank Burner Waste Heat Boiler Convertor As seen from the Table 2, the greatest heat loss is in the waste heat boiler. This was probably due to the two reasons: very high temperature of combustion gases and relatively larger surface area in comparison to other part of the system. The insulation material may be thickened to decrease this heat loss. In melting tank solid sulphur is melted with high efficiency. In the literature the efficiency of the waste heat boiler is about 0.45-0.85. The actual value of 0.83 falls in this range. The exergy lost in the convertor is greatly related to the heat loss and the intrinsic irreversibility of the process. The exergy loss in the waste heat boiler is due to the heat transfer over a finite temperature difference between hot gases and water. The exergy loss in the burner represents a substantial loss of the original exergy from sulphur to SO2. The comparison of exergy and energy efficiencies for each part of the system is shown in Figure 2. As seen, exergy efficiencies are always lower than energy efficiencies. Since the exergy efficiency measures the irreversibilities of the process under the consideration it must be used to reflect the real scheme of a process instead of energy efficiency. 4.2 The Overall Efficiency Calculations The overall energy and exergy balances were presented and the energy ad exergy losses were determined and shown in Table 4. The overall energy and exergy efficiencies were calculated for the sulfation unit considering the streams in and out of the unit. The exergy band diagram for the overall energy and exergy balances are shown in Figure 3 and 4, respectively. Table 4: Overall energy and exergy balances for the sulfation unit Inlet Outlet Streams E (kJ/h) Ex (kJ/h) Streams Steam 3,378,150 1,042,940 Steam Sulphur 0 3,041,035 Combustion Products Air 0 0 Water 491,404 133,088 0 ΔH rxn in sulphur burner = –1,509,272 kJ/h 0 ΔH rxn in convertor = –549,512 kJ/h 336 E (kJ/h) 3,562,880 748,862 Ex (kJ/h) 1,018,316 935,345 Qloss = 1,616,596 kJ/h ηen = 0.73 ηex = 0.56 Exloss= 1,852,054 kJ/h ηex,P = 0.22 Figure 3: Energy band diagram for sulfation unit Heat Loss 27% Steam in 57% Steam out 60% Water 8% Com. Pr. 13% Figure 4: Exergy band diagram for sulfation unit Steam in 34% Exergy Loss (45%) Sulphur in 65% Heat Loss (9%) Water 1% 5 Steam out (24%) Com. Pr. (22%) Conclusion In this work, the energy and exergy analyses of a sulfation unit in a powder detergent production plant was performed and the overall energy and exergy balances were investigated. Some concluding remarks from this study are as follows: - The greatest heat loss occurs in the waste heat boiler. This causes low energy efficiency. This is mainly due to the two reasons: very high temperature of combustion gases and relatively larger surface area in comparison to other equipments. - The exergy destruction in the burner is higher than those in the other units. This can be explained by the fact that the chemical reaction in burner is highly irreversible. - The overall energy and exergy efficiencies were calculated. The overall exergy efficiency is low and this can be attributed to the heat loss and the intrinsic irreversibility of the process. Also the substantial loss of the original exergy from sulphur to SO2 can be another reason for this value. - Although there are a number of energy and exergy analyses in various areas of industry, this study will be likely the first exergy analysis application for powder detergent production. 6 Acknowledgement We thank the staff of Henkel Turyağ powder detergent plant for the guidance provided in collecting data and taking measurements. 7 1. References Dincer I., Şahin A.Z., A new model for thermodynamic analysis of a drying process, Int. J. Heat Mass Transfer 47 (14) (2004) 645– 652. 337 2. 3. 4. 5. 6. 7. 8. 9. Dinçer I., On energetic, exergetic and environmental aspects of drying systems, International Journal of Energy Research, 26 (2002), 717-727. Gemci T., Öztürk A., Exergy Analysis of a sulphide-pulp preparation process in the pulp and paper industry, Energy Conversion, 1998. Gong M., Exergy analysis of pulp and paper mill, Int. J. Of Energy Research, 29(2005), 79-93. Incropera F., Dewitt D., Fundamentals of Heat and Mass Transfer, John Wiley and Sons, New York, 1996. Muangnoi T., Asvapoositkul W., Wongwises S., An exergy analysis on the performance of wet cooling tower, Applied Thermal Engineering, 2006. Ozgener L., Ozgener O., Exergy analysis of industrial pasta drying, Journal of Energy Research, 30 (2006), 1323-1335. Szargut J., Morris D.R., Steward F.R, Exergy Analysis of Thermal, Chemical, and Metallurgical Processes, Hemisphere Publishing Corporation, New York, 1988. Utlu Z., Sogut Z., Hepbaslı A., Oktay Z., Energy and exergy analysis of a raw mill in a cement production, Applied Thermal Engineering, 26 (2006), 2479-2489. 338 Waste Minimization as an Option to Preserve the Environment Martha Elena Velasco Becerra Universitat Politècnica de Catalunya, Spain [email protected] 1 Panorama The natural treasures which years ago seem to be eternal today are threatened by the unstoppable speed at which they are being consumed. It can be settled that this situation has its origin — at micro level — because of our actual consumption habits that come from a marketing attack which pretends take us to a comfort era; and by the other hand, — at macro level —, the nations willing of being the best, and in which the winner is the one which produces most and by consequence, gets a better economical development. It’s illogical to think that the natural resources are not going to be used anymore, but maybe there are some actions that can help to rectify the damage that we are causing with this exploitation. Being aware that as human beings we will continue using nature for our own purposes, the option is that we try to get the most of each one of these resources lengthen their life cycle at maximum. How can we achieve this? An option is the reduction of the waste we generate. As it is known, waste is formed by those substances or objects which (to those who use them) lose their utility value. So, this substances or objects are rejected and disposed generally at landfill. Even though there are many actual techniques to manage waste, its quantity is still increasing and by consequence, all the damages that causes. The main problem originated is air, soil and water pollution which provide an unhealthy environment to those communities nearby the landfills, leaving many diseases problems and also there is a problem because of the need to use a specific land extension for disposal. Modern waste management techniques are controversial because by one hand, they cannot dispose of all the quantity of waste that is generated, and by the other hand, they also cause negative effects to the environment. There are new techniques that pretend to be friendly with nature but they cannot be widely applied because of the cost that their implementation represents to the countries. Besides, the solution is by making an 180ª turn to the common thinking of tackling the waste generation problem. By now, the techniques look for the remedy of the problem once it has been created. The proposal is to look at the origins and not at the consequences. Best solution, viable and economical will come from the implementation of the technique of waste reduction or minimization. Also known as source reduction, clean production, clean industry… waste minimization aims to look for the way to getting the most advantage of the resources we use, giving them the most possible utility before they become waste. Doing so, the numerous problems caused by its generation will decrease. At industry level, I believe that the goal is easily reachable because the implementation of waste minimization represents economical and financial savings to the manager at reducing all kind of waste at production process. The biggest challenge will be the consciousness necessary at individuals to change the consumption habits of “use & throw” implanted for so many years by marketing campaigns. 339 Right now the commerce has become the main enemy on the fight to create an ecological thinking on people. Government must promote reduction activities and create the strategy to get people participation and involvement. The role that governmental actions play on this technique is a fundamental piece to achieve the goal of its practice. 2 Definition To start talking about waste, the first thing is to understand at what we are referring when we pronounce this word. It can be settled that Waste is a “Substance or object which lose their utility value (to that who use it)”. The reason to underline the phrase “to that who use it” it’s because in here remains the most important and critical part of the definition. According the criteria or costumes of each person, the most or less quantity of waste he/she is going to generate. When a product remains useful it won’t be disposed away and so on it won’t become into waste until the value of this product has been disappeared. 3 Problematic The problem about the waste remains on what its generation causes. Next, the main causes are mentioned. Waste causes: - Air, water and land contamination. - Proliferation of rats, cockroaches, bugs, insects… - Problems on health. - Ethical problems, because in some countries the products that are being rejected, could be useful for the living of many families on poor countries. - Resources that will delay to be renewed. 4 Waste management There are some waste management’s techniques that pretend to give a better disposal to the waste reducing the impact that it may cause. Next, some important methods of waste management are explained. a) Landfill Is the most traditional method of waste disposal and it remains a common practice in most countries. Design characteristics of a modern landfill include methods to contain leachate, such as clay or plastic lining material. Disposed waste is normally compacted to increase its density and stabilize the new landform, and covered to prevent attracting vermin (such as mice or rats) and reduce the amount of wind-blown litter. Many landfills also have a landfill gas extraction system installed after closure to extract the landfill gas generated by the decomposing waste materials. Gas is pumped out of the landfill using perforated pipes and flared off or burnt in a gas engine to generate electricity. Even flaring the gas is a better environmental outcome than allowing it to escape to the atmosphere, as this consumes the methane, which is a far more potent greenhouse gas than carbon dioxide. b) Incineration Incineration is a waste disposal method that involves the combustion of waste at high temperatures. Incineration and other high temperature waste treatment systems are described 340 as "thermal treatment". In effect, incineration of waste materials converts the waste into heat, gaseous emissions, and residual solid ash. c) Composting and anaerobic digestion Waste materials that are organic in nature, such as plant material, food scraps, and paper products, are increasingly being recycled. These materials are put through a composting and/or digestion system to control the biological process to decompose the organic matter and kill pathogens. The resulting stabilized organic material is then recycled as mulch or compost for agricultural or landscaping purposes or by generating a biogas which can be used to generate electricity. d) Mechanical biological treatment Mechanical biological treatment (MBT) is a technology category for combinations of mechanical sorting and biological treatment of the organic fraction of municipal waste. The "mechanical" element is usually a bulk handling mechanical sorting stage. This either removes recyclable elements from a mixed waste stream (such as metals, plastics and glass). The "biological" element refers to either anaerobic digestion or composting. Anaerobic digestion breaks down the biodegradable component of the waste to produce biogas and soil conditioner. The biogas can be used to generate renewable energy. Biological can also refer to a composting stage. Here the organic component is treated with aerobic microorganisms. They break down the waste into carbon dioxide and compost. There is no green energy produced by systems simply employing composting. e) Pyrolysis & gasification Pyrolysis and gasification are two related forms of thermal treatment where waste materials are heated to high temperatures with limited oxygen availability. The process typically occurs in a sealed vessel under high pressure. Converting material to energy this way is more efficient than direct incineration, with more energy able to be recovered and used. 5 Waste hierarchy The aim of the waste hierarchy is to extract the maximum practical benefits from products and to generate the minimum amount of waste. The following image shows graphically the most/less favorable option to manage waste. As seen on it, the best option refers to reduce the amount of waste produced, and the worst option refers to the disposal of waste to landfill. 341 6 Waste minimization The waste minimization, as seen at the past figure, is the best option to treat the wastes. This practice is also known as: - Waste reduction, - Waste prevention, - Source reduction, - Clean industry, - Cleaner production, - Green industry, - Green technology… 7 Considerations Next, are mentioned the considerations to promote de waste minimization at the industry, at home and at government level. 7.1 - 1. 2. 3. 4. 5. At the industry Means: Prevention &/or reduction of generated wastes, Wise use of materials and packaging, Wise use of fuel, electricity and water, Improvement on waste’s quality to facilitate its recycling and/or to reduce its danger, Promotion reuse, recycle and recovery practices. Methodology (according Van Berkel) The steps to achieve the waste minimization technique at the industry are mentioned: Source identification, an inventory is made of the material flows, entering and leaving the company with the associated costs. This results in a process flow diagram, allowing for the identification of all sources of waste and emission generation. Next is the cause diagnosis: an investigation into the factors that influence the volume and composition of the waste and emissions generated. A checklist of possible waste generation causes is used to assess all possible factors influencing the volume and/or composition of the waste stream or emission. A materials and energy balance is needed for the evaluation of the relative importance of each of the possible waste generation causes. The purpose of the next logical step (option generation) is to create a vision on how to eliminate or control each of the causes of waste and emission generation. Feasibility Studies: these now have to prove whether or not each of the options is technically and economically feasible and whether each indeed contributes to net environmental improvement. The level of detail in these feasibility studies needs to be tailored to the nature of the option, since options might be as diverse as simple operational improvements, use of alternative materials or installation of advanced equipment. A preliminary evaluation is therefore useful to determine which detailed evaluations have to take place for each of the options. Implementation & Continuation: the feasible prevention measures are implemented and provisions taken to assure the ongoing application of Cleaner Production. The development of such an ongoing program requires monitoring and evaluation of the results achieved by the implementation of the first batches of prevention measures. The 342 expected result of the 'Implementation & Continuation' phase is therefore threefold, respectively: a) implementation of the feasible prevention measures; b) monitoring and evaluation of the progress achieved by the implementation of the feasible options; and c) initiation of ongoing Cleaner Production activities. - - - - - 7.2 Strategies Resource optimization. Minimizing the amount of waste produced by organizations or individuals goes hand-in-hand with optimizing their use of raw materials. For example, a dressmaker may arrange pattern pieces on a length of fabric in a particular way to enable the garment to be cut out from the smallest area of fabric. Reuse of scrap material. The introduction of techniques or processes that enable production scrap to immediately be re-incorporated at the beginning of the manufacturing line so that it never reaches the stage of being considered a waste product. Many industries already routinely do this; for example, paper mills return any damaged rolls to the beginning of the production line and in the manufacture of plastic items, off-cuts and scrap are re-incorporated into new products. Improved quality control and process monitoring. Taking steps to ensure that the number of reject batches is kept to a minimum. This is achieved by increasing the frequency of inspection and the number of points of inspection. For example, installing automated continuous monitoring equipment can help to identify production problems at an early stage. Waste exchanges. Where the waste product of one process becomes the raw material for a second process. Waste exchanges represent another way of reducing waste disposal volumes for waste that cannot be eliminated. Ship to point of use. Making deliveries of incoming raw materials or components direct to the point where they are assembled or used in the manufacturing process can minimize handling and the use of protective wrappings or enclosures. At home At home, the consideration that must be taken into account according to achieve the waste minimization are listed below: - Less products with dangerous materials, - Purchase by great amounts, - Reconsidering superficial purchases, - Products of materials/packaging already recycled, - More durable products, - Reparable products, - Hiring products (by individuals or groups), - Composting and raising worms to produce humus, - Refill packaging or services, - Avoiding disposable products, - Using electronic source’s of information, - Changing, giving or selling the unwanted products, - Making a correct and safe disposal of dangerous wastes. 343 7.3 Government Government should make efforts according to change the heart and the mind of each person. The way this is going to carry out is through: - Educational & training programs, - Economical and taxing incentives, - Promoting with the example, - Giving the necessary infrastructure tools, - Standardizing definitions, labels, messages… 8 Normative A brief explanation of the programs, rules or normative that are concerned with promoting actions to preserve the environment, and that refer waste as an important matter, are mentioned next. Agenda 21 The Agenda 21 was approved by the Earth Summit at Rio de Janeiro, 1992. It is composed by 40 chapters. According to what these chapters refer, those which make important statements about waste minimization are: - Chapter 4.Changing consumption and production patterns, - Chapter 21.Management of solid wastes. World Summit on Sustainable Development The World Summit on Sustainable Development celebrated at Johannesburg in 2002, establishes that “the actions to implement agenda 21 have been insufficients” Four principles were redacted, but the first one is which speaks about the sustainable development, talking about economical, social, cultural and environmental matters. Aalborg Charter The Aalborg Charter was redacted in 1994. The following is part of the text of this charter. European cities & towns towards sustainability: “We understand that our present urban lifestyle, in particular our patterns of division of labor and functions, land-use, transport, industrial production, agriculture, consumption, and leisure activities, and hence our standard of living, make us essentially responsible for many environmental problems humankind is facing.” Aalborg +10 On the chapter 4 of the Charter redacted in 2004 to review the Aalborg Charter signed in 1994, the theme is focused on Consumption and lifestyles responsibles, by: - Avoiding and reducing wastes and increasing recycling and reusing. - Managing and treating wastes according to good housekeeping practices. - Eliminating the unnecessary consumption of energy and improving the efficiency on its final destination. - Assuming sustainable purchases. - Promoting actively the sustainable consumption and production, especially organic products, with ecological label and from ethical and fair trade. 344 Kyoto Protocol The Kyoto Protocol was ratified on february 16, 2005. The main purpose was to look for action to do something against the earth’s warming. The compromise is to reduce jointly the emissions of greenhouse gases in 5 % among the years 2008 and 2012. This will be achieved by: - Reinforcing or settling down national policies, - Cooperating with the other contracting parties. - - 9 Other programs Pay As You Throw (PAYT) Residents are charged for the collection of municipal solid waste—ordinary household trash—based on the amount they throw away. This creates a direct economic incentive to recycle more and to generate less waste. Extended Producer Responsibility (EPR) This means that firms, which manufacture, import and/or sell products and packaging, are required to be financially or physically responsible for such products after their useful life. World’s situation Source: European Environment Agency, 2001: Environmental signals 2001. Environmental assessment report No 8. 345 Source: Baseline projection of selected waste streams. EEA Technical report No 28, 1999. Source: http://www.gruener-punkt.de and ETC/WMF 346 10 References 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Coggins, C., (2001). “WASTE PREVENTION — AN ISSUE OF SHARED RESPONSIBILITY FOR UK PRODUCERS AND CONSUMERS: POLICY OPTIONS AND MEASUREMENT”. Journal of Resources Conservation and Recycling. ISSN 0921-3449. Vol. 32, No. 3, pp. 181– 190. Cohen, Y., Allen, D., (1992). “AN INTEGRATED APPROACH TO PROCESS WASTE MINIMIZATION RESEARCH”. Journal of Hazardous Materials. ISSN 0304-3894. Vol. 29, No. 2, pp. 237-253. Freeman, H. (1995). “INDUSTRIAL POLLUTION PREVENTION HANDBOOK”. McGrawHill. Estados Unidos. King, A., Lenox, M., (2002). “EXPLORING THE LOCUS OF PROFITABLE POLLUTION REDUCTION” Journal of Management Science. ISSN electronic 1526-5501. Volume 48, No. 2, February 2002. pp.289-299. McHarry, J. (1994). “REDUCIR REUTILIZAR RECICLAR”. Angel Muñoz Editor. España. Seoánez Calvo, M. (1999). “RESIDUOS. PROBLEMÁTICA, DESCRIPCIÓN, MANEJO, APROVECHAMIENTO Y DESTRUCCIÓN.” Ediciones Mundi-Prensa. España. Van Berkel, R., (1999). “BUILDING A CLEANER WORLD: CLEANER PRODUCTION, ITS ROLE IN AUSTRALIA, LESSONS FROM OVERSEAS, AND ITS FUTURE APPLICATIONS”. John Curtin International Institute. Think Tank Meeting 2 march 1999. Best Practice Guidance. “Waste Minimisation. Driving principles, policy & legislation. The True Cost of Waste”. Egeneration Bulding Learning Centre. Reino Unido http://www.egeneration.co.uk/centre/modules/waste_min/intro/driving_principles/true_cost/true _cost.asp Centro de Actividad Regional para la Producción Limpia http://www.gencat.net/mediamb/cprac/cast/01_presentacio.htm Departament de Medi Ambient i Habitatge http://mediambient.gencat.net El Portal de la Unión Europea. “Protocolo de Kyoto sobre el Cambio Climático” http://europa.eu/scadplus/leg/es/lvb/l28060.htm Environmental Protection Agency http://www.epa.gov Ministerio del Medio Ambiente http://www.mma.es United Nations Environment Programme. Mediterranean Action Plan. http://www.unepmap.org/html/homeeng.asp Wikipedia The Free Encyclopedia http://en.wikipedia.org 347 Final Report of Material Flow Accounts (MFA) in Slovenia Vida Butinaa, Maja Zupanb a Statistical Office of the Republic of Slovenia, Ljubljana, Republic of Slovenia [email protected] b Struktura d.o.o., Republic of Slovenia 1 Introduction Natural resources use and efficiency is one of the key policy issues in the Sixth Environmental Action Programme 2001–2010. Furthermore, natural resources use and/or material consumption parameters should be included in a system of sustainable development indicators. An integrated environmental and economic accounting system seems to be the finest tool to achieve this indicators framework. The integrated environmental and economic accounting system objective is to provide a detailed description of environment and economy relationship. It is essential to describe this relationship, the availability of environmental and economic data based in similar accounting standards and concepts. The correct interpretation and analysis of the results requires data expressed in physical units as they are more suitable than monetary units. Therefore, to measure material flows from the environment to the economy and this to the environment, data should be expressed in tonnes as material flows change their shape and composition across production and consumption processes. The pilot project on Material Flow Accounts of Slovenia has been processed in the framework of the environmental accounting project »Grant Agreement No 71401.2005.0012005.300 — Environment Statistics and Accounts — Material flow accounts«, financially supported by Eurostat. The aim of the project was to develop the input side of material flow accounts for Slovenia to the widest possible extent for the years 2000–2005. We calculated two indicators deriving from these accounts: Direct Material Input (DMI) and Domestic Material Consumption (DMC). For compiling the tables we adopted the recommendations of Eurostat's methodological guide (Economy-wide material flow accounts and derived indicators), Total material requirement of the EU, Technical Part, Technical Report Number 56 (Stefan Brigenzu, Helmut Schuetz, Wuppertal Institute) in order to establish a harmonised system of the MFA for Slovenia. One of the aims of the project was to find the appropriate data sources and to map all the available data for the compilation of domestic extraction, import and export tables of Slovenia for the above-mentioned project. Slovenia has no tradition in regular data compilation on material flow accounts at all. Therefore, the work had to be started from zero, with studying of methodology and maping all the available sources. This report serves as a summary of the work done in January 2006– December 2006 and also gives a good starting point for our future more extensive work in this field. The long-term objective of our work is calculation of other MFA derived indicators. 348 2 Data sources One of the basic aims of the project was to compile all available data sources relevant for the material flow accounting. First we assessed the statistical data sources of the Statistical Office of the Republic of Slovenia and FAO. Other administrative data sources were also used in the project, especially in the field of minerals, where no detailed data structure is available from statistical data compilations and data collections. 2.1 Used domestic extraction For the compilation of used domestic extraction tables we used production data instead of consumption data. Our assumption was as follows: Production of (fossil fuels + minerals + biomass) = used domestic extraction 2.1.1 Fossil fuels The main data sources used in our project are the data of energy statistics collected with statistical surveys following different statistical questionnaires. The energy sector includes fuel and energy that is consumed by the energy industry to support the extraction and production of fuels and transformation activities. It excludes own use of plants. In the Standard Classification of Activities the energy sector covers section Electricity, gas and water supply and subsections Mining and quarrying of energy producing materials (CA) and Manufacture of coke, refined petroleum products and nuclear fuel (DF). Data are available in tonnes of oil equivalent (TOE) and are categorised per years into the following subcategories: - solid fuels (hard coal, lignite), - crude oil, - petroleum products, - natural gas. Fossil fuels are counted in this group if they are used as energy sources and are divided into groups of solid, liquid and gaseous fuels. Hard coal and lignite are solid fossil fuels. The domestic production is higher than import but import of natural gas is higher than indigenous production. 2.1.2 Minerals The only comprehensive and administrative data source is the report on Mineral Raw Materials 2004, done by the Slovenian Geological Survey. The data are compiled from different institutions annually and are reported in tonnes. Data in tables are classified to subcategories: - raw material for manufacturing, - raw materials for mining and quarrying, - raw materials for construction. 2.1.3 Biomass The data of biomass are derived from agricultural statistics based on detailed agricultural data compilations and surveys such as the Farm Structure Survey and agricultural balances. Data are annually published in detailed reports on the farm structure in accordance with the requirements of Eurostat and the database with aggregated data is available on SORS’s website. 349 The methodology of statistical surveys was being gradually harmonised with international standards according to recommendations of the Statistical Office of the European Communities. For domestic production in forestry (input) we used data for removals by tree species. Data have been supplied by the Slovenian Forestry Service. Data of hunting are not available in tonnes only as a number of animals. We decided not to include them in the accounts at the time being and we shall research this domain more deeply with the expert of the Slovenian Forestry Service. 2.1.4 Import and export Information on import and export is taken from external trade statistics. The source of data for external trade statistics are customs declarations. Until 1996 the Single Administrative Document (SAD), used in the EU and other countries, was introduced. Data from customs declarations are reported to the Statistical Office by the Customs Administration of the Republic of Slovenia monthly on electronic media. Data refer to the last cumulative period and contain both new declarations for the last reporting month and all declarations for previous months, including changes since the last reporting. The Statistical Office receives only selected data from the Single Administrative Document in the predefined record format. After the accession to the EU the data on external trade statistics of Slovenia are acquired from two different systems: Intrastat or statistics relating to the trading of goods between Member States (monthly statistical survey) and Extrastat or statistics relating to the trading of goods with non-member countries (data from the Single Administrative Document SAD). The observation unit in external trade statistics is export and import shipment of goods which is covered according to methodological recommendations. At this process the recommendations of the Statistical Office of the United Nations are taken into consideration, from the aspect of data coverage as well as other methodological elements which determine the manner of presentation of external trade statistics with the aim of achieving maximum international comparability. External trade statistics covers only trade in goods with foreign countries. Very important for defining the coverage is the system of trade, according to which external trade transactions are monitored. We distinguish between two systems: general trade system and special trade system. According to the general trade system the statistical territory of the country coincides with its economic territory. According to the special trade system the statistical territory comprises only a particular part of the economic territory. In the framework of the special trade system we distinguish between strict and relaxed definition. In Slovenia we monitor external trade statistics according to the special trade system (relaxed definition), which means that beside regular import and export transactions also inward and outward processing as well as processing carried out in customs free trade zones are included. External trade statistics does not cover temporary imports and exports of goods which will return after a certain period in an unchanged condition, services, repairs, money as means of payment, monetary gold, fuel supply of foreign vehicles in Slovenia and Slovenian vehicles abroad, imports of goods for foreign embassies and other diplomatic missions in Slovenia, personal baggage of travellers, commercial samples and postal packages of minor value. 3 Table structure for the direct material inputs of Slovenia The table structure used for calculating DMI and DMC indicators of Slovenia are as follows (we followed the Eurostat methodology where it was applicable for Slovenia): 350 3.1 Domestic extraction (used): 3.1.1 Fossil fuels Domestic lignite Domestic brown coal Crude oil Natural gas 3.1.2 Minerals Industrial minerals: Bentonit Calcite Flint stone Kaolin/cornish stone Chalk Tuff-pozzuolana Chert Ceramic clay Construction minerals: Brick clay Limestone Tonalit Other natural stones Natural stones – total Marl, limestone for cement Limestone Dolomite Silicates Technical minerals – total Sand and gravel 3.1.3 Biomass Biomass from agriculture Biomass from agriculture reported by harvest statistics: Cereals Roots and tubers Pulses Oilcrops Vegetables+melons Fruit excl. Melons Treenuts Fibre crops Other crops Biomass from forestry Roundwood: Conifers roundwood Non-conifers roundwood Other Fodder and Harvest Inputs: - Hay from lasting grassland (meadows and pastures) Grass and grass mixtures Grass/clover mixture Sugar beet leaves Fodder beet leaves Straw input 3.1.4 Biomass from fishing Marine fishing Aquaculture Angling 3.1.5 Biomass from hunting By 2000 the data on hunting had been supplied by hunting societies and organisations involved in the management of hunting. Since 2000 the data on hunting have been supplied by the Slovenian Forestry Service. The data are available only as the number of animals and not in tonnes, so we could not include them into the calculation of indicators. 351 4 Results For the purpose of this project we compiled data for the 2000–2005 period and calculated two indicators DMC and DMI for the same period. 4.1 Fossil fuels and minerals The data on minerals come from the report of the Slovenian Geological Survey containing data on the actual changes in reserves. The data on fuels come from the Statistical Office of the Republic of Slovenia. At the turn of the millennium, quarrying (surface mining of industrial minerals and rocks for construction materials, mainly aggregates) and two underground coal mines represent the full extent of the Slovenian mining. There is negligible production of oil and gas and no metal production. Metal mines (mercury, lead and zinc), other coal mines (brown coal) and a uranium mine are in the process of closing. Quarrying was the prevailing form of resource extraction in Slovenia. Identified resources of aggregates are virtually infinite, although not all geological resources are extractable. Mining is allowed only in designated exploitation areas. Quarry permitting is predominantly under mining and spatial planning legislation. Domestic extraction of minerals in Slovenia is over 40 % higher than the extraction of fossil fuels and biomass (Figure 1, Figure 2). In 2005 the domestic extraction of minerals was 63 %, of biomass 19 % and of fossil fuels 18 % (Figure 3). In Slovenia the highest domestic extraction of minerals was the DE of construction minerals in the years 2000–2005 (Figure 4, Figure 5). 4.1.1 Fossil fuels The source of fossil fuels data are data of energy statistics. The following subcategories were included: - solid fuels (brown coal, lignite), - crude oil, - petroleum products, - natural gas, - renewables. Peat is only used for non-energy purposes in Slovenia; therefore, this subcategory is not included in fossil fuels. Composition of domestically extracted fossil fuels (solid fuels, crude oil, natural gas) mainly consist of solid fuels (lignite, brown coal), but imported fossil fuels consist of more than 70 % natural gas (Figure 6, Figure 7). For the comparison of domestic extraction of fossil fuels per capita in Slovenia and that of EU-15 countries we used the following table: Table 1: Domestic extraction of fossil fuels per capita, Slovenia and EU-15 countries, 2000 DE of fossil fuels per capita tonnes/capita EU 15 7,0 Austria 0,5 Belgium, Luxembourg 0,0 Denmark 4,7 Finland 0,9 352 France 0,1 Germany 2,7 Greece 6,0 Ireland 1,7 Italy 0,3 Netherlands 3,9 Portugal 0,0 Slovenia 3,0 Spain 0,6 Sweden 0,2 United Kingdom 4,5 Source: New Cronos, Eurostat: Material use in the EU, 1980-2000 Table 2: The source of minerals is the Report on Minerals edited by the Slovenian Geological Survey. We compiled data on a) raw material for secondary b) raw material for industry of c) raw material for industry: building material: construction: bentonit brick clay limestone calcite limestone dolomite kaolin/cornish stone tonalit silicates chalk other natural stones sand and gravel flint stonet marl, limestone for cement tuff-pozzuolana chert ceramic clay In Figure 8 domestic extraction of minerals of Slovenia is presented, the highest value was in 2003 (18 478 251 tonnes). The composition of domestically extracted construction minerals includes limestone, dolomite, silicates, sand and gravel. In 2003 the highest values of limestone and dolomite extraction were measured (Figure 9). The domestic extraction of minerals increased during the years 2000–2005 from 19 760 147 tonnes to 23 070 203 tonnes (dolomite, sand and gravel). For the comparison of domestic extraction of construction minerals per capita in Slovenia and the data of EU-15 countries we used the following table: Table 3: Domestic extraction of constructional minerals per capita, Slovenia and EU-15 countries, 2000 DE of construction minerals per capita tonnes/capita EU 15 7,0 Austria 9,4 Belgium, Luxembourg 7,5 Denmark 12,2 Finland 17,8 France 6,8 Germany 8,8 Greece 7,1 Ireland 6,6 Italy 5,1 Netherlands 3,4 Portugal 7,9 Slovenia 1,5 Spain 7,9 Sweden 10,3 United Kingdom 4,5 Source: New Cronos, Eurostat: Material use in the EU, 1980-2000 353 For the comparison of domestic extraction of industrial minerals and ores per capita in Slovenia and the data of EU-15 countries we used the following table: Table 4: Domestic extraction of industrial minerals and ores per capita, Slovenia and EU-15 countries, 2000 DE of industrial minerals and ores per capita tonnes/capita EU 15 0,4 Austria 0,6 Belgium, Luxembourg 0,0 Denmark 0,1 Finland 2,3 France 0,2 Germany 0,3 Greece 0,7 Ireland 0,9 Italy 0,2 Netherlands 0,3 Portugal 0,2 Slovenia 1,5 Spain 0,5 Sweden 2,7 United Kingdom 0,4 Source: New Cronos, Eurostat: Material use in the EU, 1980-2000 4.2 Biomass Data on biomass production in Slovenia are shown in the following table: Table 5: Domestic extraction of biomass, Slovenia, 2000–2005 (in tonnes) 2000 2001 2002 2003 Biomass from 4.284.991 3.763.798 4.720.953 3.413.964 agriculture Biomass from 1.521.875 1.519.243 1.534.482 1.732.527 forestry 3.059 3.089 2.974 2.660 Biomass from fishery Total 5.809.925 5.286.130 6.258.409 5.149.151 2004 4.850.683 2005 5.247.066 1.690.987 1.842.913 2.599 3.018 6.544.269 7.092.997 The changes of the main components of biomass are illustrated in the graphs (Figure 10, Figure 11). Extracted biomass from agriculture is on average 80 % of total and biomass from the forestry is mainly 20 %. Slovenia has a very short coast and a small sea area. This is the reason why the share of biomass from the fishery is so low. We have to emphasise that we did not take into account the biomass from the hunting as we already mentioned. 4.3 Import and export The classification of the import and export according to MFA categories enables us to analyse not only the structure of external trade of materials but also the rate of imported materials and domestically extracted materials in the same category. In Table 6 the data of import and export in Slovenia show the trend of increasing of imported and exported materials in the 2000–2005 period. 354 Table 6: Import and export, Slovenia, 2000–2005 (tonnes) 2000 2001 2002 Import 11.787.892 13.305.913 13.549.755 Export 7.608.755 7.628.927 7.943.125 2003 14.916.858 8.509.792 2004 15.999.981 8.783.326 2005 15.263.970 9.387.325 For the comparison of Slovenian import and export data and the data of EU-15 countries we used the following table: Table 7: Import and export per capita, Slovenia and EU-15 countries, 2000 Import/capita Export/capita EU 15 3,8 1,1 Austria 8,1 4,7 Belgium, Luxembourg 23,7 18,1 Denmark 8,4 8,1 Finland 10,4 6,8 France 5,8 3,4 Germany 6,2 3,3 Greece 5,0 2,2 Ireland 8,2 3,0 Italy 5,7 2,1 Netherlands 17,8 13,4 Portugal 5,0 1,5 Slovenia 5,9 0,6 Spain 5,6 2,4 Sweden 6,8 6,9 United Kingdom 3,5 3,3 Source: New Cronos, Eurostat: Material use in the EU, 1980-2000 According to these data, Slovenia has 5.9 tonnes of imported materials per capita, between France and Germany. Countries dependent of import like Benelux have 4 times higher rates than Slovenia. The total export per capita rate for Slovenia (0.6 tonnes per capita) has the lowest total exported materials. 4.4 Indicators derived from the data sets (DMI, DMC) Table 8: Two main indicators per capita, Slovenia and EU-15 countries, 2000 (tonnes/capita) DMI/capita DMC/capita EU 15 16,8 15,6 Austria 22,8 18,1 Belgium, Luxembourg 34,8 16,6 Denmark 30,8 22,7 Finland 42,3 35,6 France 18,7 15,3 Germany 21,1 17,8 Greece 18,1 15,9 Ireland 26,7 23,6 Italy 14,6 12,6 Netherlands 26,4 13,0 Portugal 15,8 14,2 Slovenia 22 18 Spain 19,1 16,7 Sweden 28,3 21,3 United Kingdom 14,9 11,6 Source: New Cronos, Eurostat: Material use in the EU, 1980-2000 355 Slovenia has two indicators DMI and DMC per capita very close to the Austrian value but 1.3 tonnes below the EU-15 average (Figure 12). DMC shows the similarities, Slovenian DMC/per capita is practically equal to the average of EU-15. 5 Conclusions This project contains calculation of two main MFA indicators on the input side of the MFA — DMI and DMC for the 2000–2005 period. We used different data sources (Statistical Office, Hunting Association, Slovenian Geological Survey, FAO, Eurostat). Data availability was not 100 % sufficient. In case of lack of data, mathematical approximation was made. It was really a pity that no meeting or study visit was possible during 2006. Our future short-term plan is to compile the extended time series for the most important material input indicators for the years 1992–2005 and to calculate the TMR (total material requirements with hidden and indirect flows) indicator. The development of indicators which measure material efficiency or productivity (GDP unit per material indicator unit) or material intensity (material indicator unit per GDP unit) has huge significance to compare the use of natural resources with economic growth. The extension of indicators would make the international comparison easier and would contribute to analysis of the background process behind the use of materials. For further development of comparability of MFA indicators at international level and for assisting the new Member States to develop their own sistem of MFA, regional conferences, workshops, meetings, study visits and bilateral cooperation seem to be the most effective ways of working. The experts of the Slovenian Statistical Office would be grateful if it is possible to participate in a working group in the field of MFA and to be included in the future projects concerning material flow accounts financially supported by Eurostat. 6 Annex Figure 3: Domestic extraction DE by main material category (biomass, construction minerals, industrial minerals, fossil fuels in tonnes) Figure 1: Domestic extraction DE of biomass, fossil fuels and minerals (tonnes) Domestic extraction by main material categories, Slovenia, 2005 Domestic extraction, Slovenia, 2000 - 2005 25000000 tonnes 20000000 18% 19% biomass 15000000 fossil fuels 10000000 fossil fuels minerals minerals 5000000 biomass 0 2000 2001 2002 2003 2004 2005 63% years Figure 4: Domestic extraction DE of industrial and construction minerals (tonnes) Figure 2: Composition of DE (biomass, fossil fuels, minerals) Domestic extraction DE of minerals, Slovenia, 2000 - 2005 Composition of DE, Slovenia, 2000 - 2005 70% 25000000 60% 50% 20000000 40% tonnes biomass fossil fuels 30% minerals 20% 15000000 Construction minerals 10000000 Industrial minerals 5000000 10% 0 0% 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004 2005 2005 years years 356 Figure 5: Composition of DE of minerals, Slovenia, 2000–2005 Figure 9: Composition of domestically extracted construction minerals (limestone, dolomite, silicates, sand and gravel) Composition of domestically extracted construction minerals, Slovenia, 2000 - 2006 Composition of DE of minerals, Slovenia, 2000 2005 100% 90% 120% 80% 100% 70% 80% silicates 50% Industrial minerals 40% sand and gravel 60% Construction minerals 60% dolomite 40% limestone 30% 20% 20% 0% 10% 2000 2001 2002 2003 2004 2005 0% 2000 years 2001 2003 2004 2005 years Figure 10: Biomass from agriculture in tonnes Figure 6: Domestic extraction of solid fuels and fuel oil, Slovenia, 2000 - 2006 Biomass from agriculture, Slovenia, 2000 - 2005 Domestic extraction of solid fuels and fuel oil 3.500.000 4500 4000 3.000.000 3500 2.500.000 3000 Lignite 2500 tonnes 1000 tonnes 2002 Brown coal 2000 Fuel oil 1500 2.000.000 1.500.000 1.000.000 1000 500 500.000 0 2000 2001 2002 2003 2004 0 2005 2000 2.001 2.002 years 2.003 2.004 2.005 years Figure 11: Biomass from forestry in tonnes Figure 7: Composition of imported fossil fuels (coal, crude oil, natural gas) Biomass from forestry, Slovenia, 2000 - 2005 Composition of imported fossil fuels, Slovenia, 2000 - 2005 700.000 120% 600.000 100% 500.000 80% 60% tonnes Natural gas Crude oil Solid fuels 40% 400.000 300.000 200.000 20% 100.000 0% 2000 2001 2002 2003 2004 0 2005 2000 years 2.002 2.003 2.004 2.005 years Figure 12: Import and export per capita, Slovenia and EU 15 countries, 2000 Figure 8: Domestic extraction of minerals (industrial minerals, construction minerals) in tonnes Domestic extraction of minerals, Slovenia, 2000 - 2005 Import and export per capita, Slovenia and EU 15 countries, 2000 25000000 20000000 tonnes/capita 25 15000000 construction minerals Industrial minerals 10000000 5000000 20 15 10 5 EU Au 15 ux st em ria b D our en g m a Fi rk nl an Fr d a G nc er e m a G ny re ec Ire e la nd N et Ita he ly rla Po nds rt Sl uga ov l en ia Sp U ni Sw ain te d ed Ki en ng do m 0 0 2002 2003 2004 2005 years ,L 2001 lg iu m 2000 Be tonnes 2.001 357 Figure 13: Development of DE and DMC, Slovenia, 2000 - 2005 Figure 16: Different resources productivities, 2000 – 2005 Development of DE and DMC, Slovenia, 2000 2005 Different resources productivities, Slovenia, 2000 2005 tonnes 80000000 60000000 DMC 40000000 DE 20000000 0 2000 2001 2002 2003 2004 110% EUR/tonnes (index 2000=100%) 100000000 105% GDP/DMI 100% GDP/DMC 95% 90% 2005 2000 years 2001 2002 2003 2004 2005 years Figure 14: Composition of DMI, Slovenia, 2000 – 2005 Figure 17: Rate of DMI and DMC per capita, Slovenia and EU 15 countries, 2000 (tonnes/capita) Rate of DMI and DMC per capita, 2000 Compisition of DMI, Slovenia, 2000 - 2005 100% tonnes 80% biomasa 60% minerals 40% fossil fuels DMI/capita DMC/capita EU A 15 ux ust em ria b D ou en r g m a Fi rk nl a F r nd an G er c e m a G ny re ec Ir e e la nd N et Ita he ly rla P o nd rt s S l u ga ov l en i Sp a U ni Sw ain te d ed Ki en ng do m 20% 45 40 35 30 25 20 15 10 5 0 0% 2002 2003 2004 2005 ,L 2001 um 2000 Be lg i years Figure 15: Composition of DMC, Slovenia, 2000 – 2005 Composition of DMC, Slovenia, 2000 - 2005 100% 80% biomasa 60% minerals 40% fossil fuels 20% 0% 2000 2001 2002 2003 2004 2005 years 7 References 1. Eurostat, Economy – Wide Material Flow Accounts and Derived Indicators, A methodological guide, 2002. 2. Eurostat, Working Papers – Material Flow Accounts, DMI and DMC for Sweden 1987-1997. 3. Eurostat, Material Flow Accounts, TMR, DMI and Material Balances, Finland 1980-1997. 4. EEA, Sustainable Use and Management of Natural Resources, Final draft for review by EEA management board. 5. EEA, Total Material Requirement of the European Union, Technical report No 55, Stefan Bringezu, Helmut Schütz, 2001. 6. ETC WMF, Resource Use in European Countries, Zero Study, Stephan Moll, Stefan Bringezu, Helmut Schütz, 2003. 7. OECD Working Group WGEIO, Special Session on Material Flow Accounting, Papers and presentations, 2000. 8. ISTAT, 1980-1998 Material-Input-Based Indicators Time Series and 1997 Materila Balance of the Italian Economy, Giulia Barbiero, Stefano Camponeschi, Aldo Femia, Gianna Greca, Antonio Macri, Angelica Tudini, Miriam Vanozzi, 2003. 9. Eurostat — Working Papers, Material balance and indicators, Austria 1960-1997, 2000. 10. Eurostat — Working Papers, A Material Flow Account for Italy, 1988, Aldo Femia, 2000. 358 Economy-Wide Material Flow Accounts Compilation in the Czech Statistical Office Eva Krumpová Environmental Statistics Department, Czech Statistical Office, Czech Republic [email protected] Most of environmental problems are directly or indirectly related to the passage of materials through the economy. The aim of the compilation of accounts of material flows on the macroeconomic level is the quantification of total demands of the economic system on materials. These demands can be expressed as input of materials into the economic system, their consumption or total waste flowing from the economic system back to the environment. On the basis of these input and output of material flows, it is possible to set up a total material balance. Material flows accounts provide a foundation for making and evaluating environmental policy decisions at both strategic and operational levels. MFA data offer government leaders a sound basis for setting strategic targets and tracking the effectiveness of environmental policies. The data can also help policymakers understand and deal with the origins of specific environmental problems. MFAs provide the data to support environmental performance indicators in much the same way that the national economic accounts support such economic indicators as expenditures per capita, debt/equity ratios, and the gross domestic product (GDP). The CZSO focused on the compilation of indicators Direct Material Input (DMI), Domestic material Consumption (DMC) and Physical Trade Balance (PTB). These indicators are from the methodological point of view well developed. For the calculation of these indicators, two basic material flow accounts had to be developed: - Domestic used extraction account — contains material inputs of domestic origin, which obtained a status of a product; - Foreign trade account— covers imports and exports including packing. Direct (used) material inputs includes all solid, liquid and gaseous substances that enter the economy for further use in the manufacturing process or consumption. Water and atmosphere are excluded except those parts contained in materials. The term “direct material input” means that the material physically enters the national economy as an input. Indicators of material inputs are derived from the material balance, it is possible, though, to derive them from individual material flow accounts (MFA) without having to set up a total material balance and introduce adjusting items. Domestic used extraction is divided into three groups: - Biomass (contains biomass from agriculture, forestry, fishing and hunting); - Fossil fuels (included are both energetic and non-energetic uses); - Mineral recourses (metallic ores, industrial materials, construction materials). Imports and exports are classified according to the level of processing into raw materials, raw products, final products and other products (rough classifications are raw materials and products). Other products are products without further description, usually products from the food industry. Further, exports and imports are classified according to main 359 components of individual commodities, which are (similarly as in domestic extraction) fossil fuels, mineral resources, products and biomass. It is not possible to classify imports and exports into individual material categories and therefore the input indicators of the Czech Republic were divided into following categories: - Biomass (raw materials and raw products from biomass); - Fossil fuels (raw materials and raw products from fossil fuels); - Metal ores (raw materials and raw products from metal ores); - Non-ferrous metal ores (raw materials and raw products from non-ferrous metal ores); - Others (final products, other products, packing materials). Direct Material Input (DMI) — measures the input of used materials in the economy, i.e. all materials that have an economic value and are used for production and consumption. DMI is domestic used extraction (extracted raw materials, grown biomass) plus import. Table 1: Direct Material Input in the Czech Republic: Indicator Unit 2000 2001 Year t 228 362 276 229 864 603 DMI t/person 22.23 22.48 DMI Kg / ZK1000 104.31 102.48 DMI/GDP CZK / kg 9.59 9.76 GDP/DMI 2002 2003 2004 2005 220 307 363 21.60 96.39 10.37 228 208 631 22.37 96.38 10.38 249 209 003 24.42 100.99 9.90 245 127 838 23.95 93.65 10.68 Domestic Material Consumption (DMC) — measures the total amount of materials directly used in the economy, without hidden flows. DMC is calculated as DMI minus export. Table 2: Direct Material Consumption in the Czech Republic: Indicator Unit 2000 2001 2002 Year t 185 493 548 187 451 528 175 867 468 DMC t/person 18.06 18.33 17.24 DMC Kg / ZK1000 84.73 83.57 76.95 DMC/GDP CZK / kg 11.80 11.97 13.00 GDP/DMC 2003 2004 2005 180 922 409 17.73 76.41 13.09 192 149 088 18.83 77.87 12.84 188 067 923 18.38 71.85 13.92 Further, indicators of economic performance can be related to the input and output indicators of material flows. For example GDP per unit DMI or DMC indicates direct material productivity of the economy. On the other hand, if we relate the input indicator to GDP, we get material demands of the economy. One of the conditions of a maintainable development is the achievement of decreasing material demands and increasing material productivity. Indicators of material productivity describe (physical) material productivity of the economy. This is expressed as the size of economic output — indicated as the gross domestic product produced from unit material. . Indicators of material demands describe the (physical) material demands of the economy, expressed by the amount of materials needed for the production of a specific unit of economic output. In the graph below is expressed as an index where the base year is given the value 100 and other years are depicted as a percentage change recorded against this value. 360 Material intensity and productivity in the Czech Republic; 2000-2005 150 140 Index (2000=100) 130 120 110 100 90 80 70 60 2000 2001 2002 2003 2004 2005 Year DMI/GDP GDP/DMI DMC/GDP GDP/DMC Physical Trade Balance (PTB) — measures the surplus or deficit of the physical foreign trade of the economy. It is calculated as imports minus exports. Table 3: Physical Trade Balance in the Czech Republic: Indicator Unit 2000 2001 Year t 6 087 889 9 070 755 PTB 2002 2003 2004 2005 4 914 249 5 607 321 7 241 844 5 346 683 Imports and exports in the Czech republic; 2000-2005 80 000 kT 60 000 40 000 20 000 0 2000 2001 2002 2003 2004 2005 Year Imports Exports References 1. 2. 3. 4. Selected environmental Accounts on macroeconomic level in the Czech Republic, 2006. Czech Statistical Office, Prague. Wernick, I. K.; Irwin, F. H., 2002. Material flows accounts - A Tool for Making Environmental Policy; World Resources Institute, Washington, DC. Eurostat, 2001. Economy-wide material flow accounts and derived indicators — A methodological guide. Eurostat, 2002. Material use in the European Union 1980-2000: Indicators and analysis. 361 362 Session E Measurement of Decoupling, National Accounts’ Adjustment, Damage Valuation “The Session E was divided into three parts ... The first part was devoted to external costs assessment of various economic activities, second was devoted to environmental macro-modeling, and the final one was focused on the environmental valuation of forestry services, landscape and biodiversity.” (Jan Melichar, Charles University Environment Center) 363 364 Critical Factors in the Assessment of External Costs from Transport: How Reliable are the Estimations for Decision Makers? Vojtěch Máca, Jan Melichar Charles University Environment Center, Charles University in Prague, Czech Republic [email protected], [email protected] 1 Introduction The quantification of external costs from transport is gaining particular attention in Europe and worldwide. Uncompromised transport growth especially in road freight transport highlights the need to address negative side effects that are very often of external nature. The scope of assessment of transport external costs is subject to various limitations due to high complexity of subsystem components. In this paper we take close look at external costs quantification from road vehicle operation. In addition, critical factors in external cost calculation related to emission data inputs and monetary values are discussed in detail. 2 Methodological approach The assessment builds on ExternE methodology [Friedrich et Bickel, 2001] that uses so-called Impact-Pathway Approach (IPA). IPA is particularly right approach for assessing transport externalities as it follows bottom-up approach that is able to capture various specific local, temporal and technological features (local and regional meteorological conditions, population density, fuel specification, vehicle size and speed). IPA traces single pollutant pathway from its origin (emission source) to the receptors being them humans, crops, natural ecosystems, buildings etc. In the next step the relation between increase in pollutant concentration and physical impact on receptors is determined. For this purpose various concentration-response functions are used (e.g. increase in asthma attack as a consequence of higher ambient air concentration of NOx). Physical impacts are then transformed into monetary values using either market prices (if available) or as change in welfare due to damage to human health or environment expressed as willingness to pay (WTP) or willingness to accept (WTA) for such change. For the purpose of assessment of critical factors, different road vehicles were chosen to reflect different emission levels and different propellants. In total, 16 scenarios were designed encompassing passenger cars, light and heavy duty vehicles and buses, with petrol, diesel, compressed natural gas (CNG), and liquefied petrol gas (LPG) as propellants, and various EURO emission categories in every vehicle group. Two modelling site were chosen — Prague main arterial road to represent metropolitan conditions and a main road in Vysočina region to represent rural conditions. Following figure shows modelled site in Prague. 365 Figure 1: Population density in Prague (grid 5x5 km) Modelled site 140000 120000 100000 80000 N-E 60000 40000 20000 3 47.5 37.5 27.5 17.5 7.5 -2.5 -12.5 -22.5 -32.5 -47.5 -42.5 -32.5 -17.5 -2.5 12.5 27.5 0 42.5 S-W Data requirement For calculation we used RiskPoll 1.51 software modelling tool [Spadaro, 2004]. This software necessitates detailed data on meteorological conditions, emission flows, and population density. Hourly meteorological data (temperature, wind speed and direction) were obtained from Czech Hydrometeorological Institute’s automated imission monitoring. For emission characteristics of vehicles we used national database of emission factors MEFA 02 [Šebor et al. 2002] with the following assumption — vehicle speed in urban location 50 km/h and in rural location 90 km/h. For comparison we used emission factors from TREMOVE assessment model for transport and environment policies in versions 2.32 and 2.44 [T&M Leuven, 2005, 2007]96 with attributing non-urban road in off-peak to rural location and metropolitan city off-peak as urban location. Following table illustrates the range of emission factors used in external costs calculation for buses and passenger cars. Table 1: Emission factors for buses (urban location, in g/km) Buses Database MEFA TREMOVE 2.32 TREMOVE 2.44 MEFA TREMOVE 2.32 TREMOVE 2.44 MEFA TREMOVE 2.32 TREMOVE 2.44 96 pollutant NOX NOX NOX SO2 SO2 SO2 PM10 PM10 PM10 Diesel preEURO 25,445 8.764 10.874 0,019 0.018 0.019 3,852 0.470 0.423 Diesel EURO3 4,624 3.068 3.732 0,019 0.017 0.015 0,187 0.131 0.103 CNG EURO3 2,775 2.646 3.734 0,000 0.000 0.000 0,004 0.013 0.013 Emission factors mainly originate from MEET project [Hickman et al., 1999] but are continually updated. 366 Passenger cars database pollutant Diesel EURO1 Petrol EURO1 0,786 MEFA NOX 1,105 5.777 TREMOVE 2.32 NOX 1.188 1.391 TREMOVE 2.44 NOX 0.667 0,004 0,005 MEFA SO2 0.011 0.016 TREMOVE 2.32 SO2 0.005 0.007 TREMOVE 2.44 SO2 0,001 MEFA PM10 0,143 0.005 TREMOVE 2.32 PM10 0.271 0.003 TREMOVE 2.44 PM10 0.110 Note: significant variations of parameters are highlighted in bold. 4 LPG EURO1 0,347 6.000 1.000 0,000 0.000 0.000 0,001 0.000 0.000 Results The scope of assessment were restricted only to “classical” pollutants — sulphur dioxide (SO2), nitrogen oxides (NOx) and particulate matters (PM10) and impact in terms of damage to health and climate change. The following table provides external costs estimates for 14 modelling scenarios with different vehicle category and spatial, fuel and emission level properties. For impacts on human health upper and lower range in addition to a central estimate is included. Table 2: External costs of vehicle use (in CZK/km, year 2000) Health impacts Min Central 0.22 0.46 0.02 0.05 0.48 0.98 0.07 0.14 0.52 1.07 0.04 0.08 1.6 3.3 0.08 0.16 Min Central 4.63 9.51 0.38 0.78 Min Central 31.1 63.88 2.72 3.72 Min Central 22.85 46.93 1.67 3.43 GHG Max 0.94 0.09 0.09 0.07 2.02 0.11 0.28 0.08 2.14 0.11 0.17 0.08 6.59 0.13 0.32 0.09 Max 19.02 0.17 1.56 0.11 Max 127.75 0.39 7.39 0.55 Max 93.87 0.38 6.81 0.52 Notes: LDV — light duty vehicle, HDV — heavy duty vehicle, GHG — greenhouse gases passenger car URBAN — petrol EURO 3 RURAL — petrol EURO 3 URBAN — diesel EURO 3 RURAL — diesel EURO 3 URBAN — petrol EURO 2 RURAL — petrol EURO 2 URBAN — diesel EURO 2 RURAL — diesel EURO 2 LDV URBAN — diesel EURO 2 RURAL — diesel EURO 2 HDV URBAN — diesel EURO 2 RURAL — diesel EURO 2 BUS URBAN — diesel EURO 2 RURAL — diesel EURO 2 Total 0.55 0.11 1.09 0.22 1.18 0.16 3.42 0.25 9.68 0.89 64.27 4.27 47.31 3.95 In following graph the results for passenger cars are showed with central estimates used for heath impacts broken into mortality and morbidity impact categories. 367 Figure 2: External costs of passenger car use (in CZK/km, year 2000) 4.00 Mortality Morbidity 3.42 GHG 3.50 CZK/km 3.00 2.50 2.00 1.50 1.00 1.18 1.09 0.55 0.50 0.25 0.22 0.11 0.16 0.00 Rural Urban Rural Urban Rural Urban Rural Urban diesel diesel perol perol diesel diesel perol perol EURO3 EURO3 EURO3 EURO3 EURO2 EURO2 EURO2 EURO2 In the following graph the same is shown for a selection of heavy vehicles (LDVs, HDVs and buses). Figure 3: External costs of heavy vehicle use (in CZK/km, year 2000) 70.00 64.27 Mortalita Morbidita GHG 60.00 47.31 CZK/km 50.00 40.00 30.00 20.00 9.68 10.00 4.27 0.89 3.95 0.00 LDV urban LDV rural HDV urban HDV rural BUS urban diesel diesel diesel diesel diesel EURO2 EURO2 EURO2 EURO2 EURO2 BUS rural diesel EURO2 It is apparent from previous graphs that substantial part of external costs is represented by human health impacts where approximately 60 % is attributed to mortality (premature deaths) while the remaining 40 % to morbidity (mainly cardiovascular and respiratory diseases). The remaining impact category assessed — greenhouse gas emissions’ contribution to climate change — contributes in the range of 1-60 % to the total damage estimated (HDV in EURO 2 emission category in urban area and passenger car with EURO 3 in rural area being the extremes). Since quantification of climate change damage is very challenging and the available estimates are substantially different (ranging from 2-200 €/ton CO2eq) we overtake the value of 19 €/ton CO2 that is a central estimate of abatement costs for attaining Kyoto targets [Fahl et al., 1999]. 368 5 Assessment of critical factors In all of IPA steps we may identify various sources of uncertainties that can represent critical factors of the assessment. Some of those uncertainties will be discussed further but it should be noted that the list is largely incomplete. Moreover, since our scope of assessment is limited to vehicle use only and health and climate change impacts, many particularities relating to upand downstream processes and other impact categories simply cannot be addressed here. When extending the assessment with emission factors for buses (diesel fuelled preEURO and EURO 3, and CNG fuelled) from TREMOVE model we obtain slightly different picture as shown in following graph. Figure 4: External costs of bus use (in CZK/km) TRE 2.32 TRE 2.44 MEFA 250 CZK/km 200 150 100 50 0 BUS diesel preEURO BUS diesel EURO3 BUS CNG EURO4 If the same comparison is made for passenger cars (in EURO 1 emission category fuelled with petrol, diesel and LPG, respectively) we obtain extremely deviated results using data from TREMOVE 2.32.97 Apparently, the choice of emission factor can influence to a great extent the resulting estimates. Thus, it can be useful to provide such a comparison of different datasets to show how big the difference can be and also to pay attention to emission factors for new or marginal fuels (e.g. LPG, biofuels etc.) that might be less reliable. In the same way one should also test the reliability of concentration response functions used but since limited availability of alternative estimates we proceed to testing robustness of monetary valuation step. In this step we compare original values used in ExternE with values obtained in surveys conducted in Czech Republic in previous years and ExternE values adjusted by purchasing parity power. The following table provides overview of all three datasets. 97 The difference within petrol and LPG fuelled passenger cars is made mostly by different NOx emission factors. We compared these factors with emission factors used for other countries and e.g. for Netherlands they were approximately half of those for Czech Republic. 369 Figure 5: External costs of passenger car use (in CZK/km) TRE 2.32 TRE 2.44 MEFA 40 35 CZK/km 30 25 20 15 10 5 0 PC diesel EURO 1 PC petrol EURO 1 PC LPG EURO 1 Table 3: Monetary values used in valuation of impacts Human health impacts Myocardial infarction Chronic bronchitis Minor restricted activity days Restricted activity days Bronchodilator use Cough Lower respiratory symptoms Asthma attack Chronic cough Ceberovascular hospital admission Respiratory hospital admission Symptom days Acute YOLL* (3 % discount rate) Chronic YOLL* (3 % discount rate) €2000 ExternE 3 260 169 330 45 110 40 45 8 75 240 16 730 4 320 45 75 000 50 000 Values for CZ €2000 CZ ** 11 54 11 360 11 41 250 27 500 €2000 PPP (GDP adjust) 1 043 54 186 14 35 13 14 3 77 1 382 14 24 000 16 000 Since the original Czech values are available for some of the morbidity endpoints only (representing 28 % of total morbidity estimates) the comparison is restricted to this share of impact. Following graph shows how the results are influenced by valuation dataset chosen for morbidity impact from passenger car use. 370 Figure 6: Comparison of morbidity estimates (28 % of total morbidity estimates; in CZK/vehicle km) 0.4 morbidity ExternE morbidity Czech values 0.35 CZK/km 0.3 morbidity PPP adjusted 0.25 0.2 0.15 0.1 0.05 0 Rural Urban Rural Urban Rural Urban Rural Urban diesel diesel petrol petrol diesel diesel petrol petrol EURO3 EURO3 EURO3 EURO3 EURO2 EURO2 EURO2 EURO2 If the same comparison is made for mortality (again from passenger car use) we obtain relatively similar picture. Figure 7: Comparison of mortality estimates (in CZK/vehicle km) 4.00 total ExternE 3.50 mortality ExternE CZK/km 3.00 mortality Czech values 2.50 mortality PPP adjusted 2.00 1.50 1.00 0.50 0.00 Urban petrol EURO3 Rural petrol EURO3 Urban diesel EURO3 Rural diesel EURO3 Urban petrol EURO2 Rural petrol EURO2 Urban diesel EURO2 Rural diesel EURO2 Summing the two graphs, we can see that original Czech estimates attain approximately to 44 % of ExternE values for morbidity impacts and to 55 % for mortality impacts. If the PPP adjustment is made the ratio is even lower — adjusted values represent only 32 % of original ExternE values. 6 Conclusions We have demonstrated that external cost estimations are substantially sensitive to values (datasets) chosen, particularly by vehicle emission factors, site specific parameters, and transferability of monetary values. To test results sensitivity we have used two emission factors data sources — Czech MEFA and EU-level TREMOVE — which seem to depart one from another mainly with respect to older technologies while for newer ones the convergence is relatively high. We have validated the assumption that site specific factors influence the range of results — this is apparent for health impacts where in urban area the level of external costs is 2-10 371 times higher then in rural area. Far less pronounced dependence on location is apparent for climate change impact of GHGs due to direct dependence on fuel consumption that does not change so much between different areas. When monetary values are being chosen for external costs assessment one should take care of values origin and transferability. We have shown that human health impacts are 30-50 % of origin ExternE values if the original Czech estimates or PPP adjusted values are used. In the same way, other factors such as dispersion modelling and transferability of concentration-response function may also affect the external costs estimates and thus can be questioned as well. In addition, the scope of assessment used and consequently the results are incomplete. We refrain from including other parts of life-cycle (fuel production, vehicle manufacturing and dismantling etc.), other impact (noise, visual intrusion etc.) and pollutants (heavy metals, organic compounds etc.). 7 Acknowledgement This paper was written thanks to support provided by Ministry of Transport in the project CG712-111-520 “Quantification of external costs of transport in the Czech Republic”. The support is gratefully acknowledged. 8 1. 2. 3. 4. 5. 6. 7. References Fahl, U., Läge, E., Remme, U., Schaumann, P. (1999): E3Net. In: Forum für Energiemodelle und Energiewirtschaftliche Systemanalysen in Deutschland (Hrsg.) (1999) Energiemodelle zum Klimaschutz in Deutschland. Physica-Verlag, Heidelberg. Friedrich, R., Bickel, P. (eds.) (2001) Environmental External Costs of Transport, Springer, Berlin and Heidelberg. Hickman A. J., D. Hassel, R. Joumard, Z. Samaras and S. Sorenson (1999), Methodology for Calculating transport emissions and energy consumption, Deliverable 22 of the MEET project, TRL Report No. PR/SE/491/98, p.362, Crowthorne, UK. Spadaro, J.V. (2004): RiskPoll manual and reference documentation (version 1.50). Impact assessment tools to estimate the health and environmental risks from exposure to routine atmospheric emissions. January 2004. Šebor, G. et al (2002): MEFA - Emission factor for motor vehicles, Ministry of Environment of the Czech Republic, Prague. T&M Leuven (2005) TREMOVE, version 2.32, Transport and Mobility Leuven, Leuven. T&M Leuven (2007) TREMOVE, version 2.44, Transport and Mobility Leuven, Leuven. 372 Modelling Recreation Demand Function: A Contingent Behavior Model Jan Melichar Charles University Environment Center Charles University in Prague, Czech Republic [email protected] 1 Introduction The paper presents the main results from a travel cost study which was carried out in the Jizerske hory Mountains (JH Mts.) in summer 2005 in order to estimate recreational values of this woodland mountain area. The JH Mts. are situated in the northern part of the Czech Republic and they are a favorite destination for summer and winter recreational activities such as hiking, mountain biking, cross-country skiing and downhill skiing. For their wealth of natural heritage sites the JH Mts. were designated a Protected Landscape Area (PLA) in 1968. Non-timber functions of forest, such as recreational and aesthetical services, are not traded on ordinary markets; therefore their monetary values are not known directly. Stated and revealed preference techniques are some of the methods that can be used when placing a monetary value on non-traded goods. When using a revealed preference technique, e.g. travel cost method (TCM), we rely on observed behavior of individuals or households. Contrary to TCM, stated preference techniques rely on stated behavior of individuals in response to hypothetical situations. There are two main approaches which combine stated and revealed preference data. The first approach is the random utility framework of trip choice modeling. This model has been used e.g. by Adamowicz et al. (1997). The second approach is the contingent behavior model, which combines observation from contingent behavior with observations of actual behavior by the same individuals, using either pooled or panel data models. Englin and Cameron (1996) were the first to use a panel data approach in a study of the economic benefits of recreational fishing in Nevada. The pooled data model was followed by Eiswerth et al. (2000), who used a Poisson model to estimate the economic benefits of protecting water levels at Walker Lake, Nevada. In this study, the single site model is applied to infer recreational values placed by visitors on the JH Mts. Observed and stated behaviors98 of recreation users are used to estimate the welfare change associated with the four hypothetical programs that improve or degrade the environmental quality99 in the area. The contingent behavior model with the Poisson specification is used to estimate the welfare changes. The rest of this paper is organized as follows. Section 1 describes the economic foundation of the single site model and its welfare implications. Section 2 outlines the 98 Observed behaviors are measured by the actual number of trips to the recreation site and stated behaviors are expressed as the number of trips realized to the recreation site under hypothetical conditions. 99 The hypothetical scenarios proposed (i) the decline of the forest quality of spruce wood in the near future because of continuing air pollution, (ii) the change of forestry composition in a favor of plant broad-leaved trees which are more resistant against air pollution than spruce wood, (iii) the designation of the bird area as a Natura 2000 network which will cover 40 % of the area. The purpose of the bird area is to protect and increase population of two endangered bird species: black grouse and little owl, and (iv) charging an entrance fee into the bird area. 373 sampling plan and the structure of the questionnaire. Section 3 presents descriptive statistics of the sample. Section 4 describes the econometrical model and presents estimates. Section 5 concludes. 2 Economic foundation According to Kolstad (2000), when we use the single site travel cost model, we suppose that the individual’s utility depends on a consumption of market goods, x, the number of trips to the recreation site, v and the environmental quality of site, q. Higher qs are better. We also assume a weak complementarity of the trips and the environmental quality of the recreation site, q. The individual’s utility is not influenced by environmental quality if the individual does not visit the site (∂U/∂q = 0 when v = 0). Furthermore, v is increasing with q (see Alberini and Longo, 2005). We also assume that the price of x is unity. The out-of-pocket expenses related to a single trip to the recreation site (fuel expenses, costs on accommodation, admission and parking charges) are denoted as p0. The individual works for L hours at a wage rate w. Then, the individual’s utility maximization problem can be recorded as follows: max U ( x, v, q ) (1a) x, v such that wL = x + p0 v (1b) Out-of-pocket expenses are not the only cost of visiting the recreation site. The individual must take time to visit the recreation site. Thus, T denotes the total time expressed in hours that is available to the individual for leisure activities and work. The travel time associated with a single round trip is tt and the on-site time associated with single trip is tv. The individual then faces a time-budget constraint that we can be recorded as follows: T = L + (t t + t v )v (1c) Equation (1c) can be substituted into equation (1b) in order to eliminate L and thus reduce the maximization problem to (2a) max U ( x, v, q ) x, v such that wT = x + [ p0 + w(t t + t v )]v ≡ x + pv v (2b) where pv = p0 + w(t t + t v ) (2c) The result of the maximization problem that is specified in equation (2) will be a demand function for trips to the recreation site: 374 v = f ( p v , q, y ) (3) where y is income (wT). We can assume that the demand function is log-linear and therefore we can write the demand equation as follows, see e.g. Alberini and Longo (2005): v = exp(β0 + β1pv + β2y + β3q) (4) Using the demand function specified in equation (3) we can measure willingness to pay for a small change in environmental quality of the site, q. In fact, this is exactly the problem determined in the context of restricted demand. Once the demand function is estimated, we can assess the consumer surplus (CS). If we follow the demand equation defined in (3) the consumer surplus is equal to (see Haab and McConnell, 2002 and Alberini, Longo, 2005): CS ( pv 0 , q0 ) = − 1 v0 β1 (5) where v0 is v estimated in equation (4) at the initial level of environmental quality (q = 0) and the price, v0 = exp(β0 + β1pv + β2y). According to Alberini and Longo (2005) the change in consumer surplus associated with the proposed change in environmental quality is defined as follows: ΔCS = CS ( pv 0 , q1 ) − CS ( pv 0 , q0 ) = − 1 (v1 − v0 ) β1 (6) We can consider the consumer surplus (5) to be an approximation of the welfare that is associated with a visit to the recreation site, and the welfare change (6) to be the change of recreational value in response to variation in the environmental quality. 3 Sampling strategy and survey design The sampling plan In order to apply the single site travel cost model, which relies on observed behavior of individuals, relevant information has to be obtained from visitors to the recreation site. Individual data are usually obtained by administering a survey. Therefore, a questionnaire that queried respondents about their current visit to the JH Mts., travel mode and attitudes was constructed. The survey on the JH Mts. was conducted from May to October 2005. The first monitoring of the recreation site was carried out during May and June. Forest ecosystems of different air pollution impacts and species composition were determined and 19 forest stands were selected for applying a scenic beauty estimation method (SBE).100 According to the SBE method, sets of photographs of the forest sites were acquired and then tested on several focus groups (n = 22 respondents). A preliminary test was carried out during June and July. Several in-depth interviews were made with visitors and the pilot version of the questionnaire was prepared. Four pilot surveys (around 50 respondents in each pilot) were carried out in August in order to improve and finalize the questionnaire and to test the sampling strategy in the field. 100 The application of SBEM is reported in Brown (1987), Brown and Daniel (1986), Brown and Daniel (1984). 375 The final survey was conducted during September and October. The questionnaire was administrated on-site to visitors at four sites located in the central part of the Jizerske hory Mts. Respondents were intercepted randomly and interviewed by trained interviewers face-toface on each of these four sites. Interviewing began early on the day, and respondents were selected randomly throughout the day. The survey resulted in a total of 312 completed questionnaires. Visitors doing summer recreational activities such as hiking and mountain biking in the central part of the JH Mts. were the target population of the survey. These individuals had immediate experience with the different quality of forest that they observed on their trips. They were able to rate the forest stands presented to them in the photographs. The questionnaire The questionnaire was designed and pre-tested for ease of responding. The questionnaire was proposed to allow interviews to be completed in 15 minutes in order to avoid the respondent’s fatigue. The questionnaire was divided into four thematic sections. The first section collected information about the respondent’s visit to the JH Mts. and his/her recreational activity. The respondent was asked about the frequency of his/her visits to the site as the number of trips over the last 12 months. The respondent had to classify the number of trips made over the last 12 month according to the season and length of trip. He/she was also asked about information relevant to the current trip. The respondent was inquired about the motivation of the present trip, the mode of transport to the site, the type of recreational activity, the number of persons in the respondent’s group and the length of the trip in kilometers on foot or by bike. If the respondent was/had been staying overnight at the recreation site, he/she was asked about the number of nights spent on the site and the type of accommodation. Information about the cost of the trip was also inquired about. The respondent was asked about the cost of transport and with how many people they shared the cost. If the respondent had arranged accommodation we inquired about the cost of the accommodation. A substitute recreation site was also inquired about. The second section of the questionnaire was focused on rating 9 color pictures showing different qualities of forest sites. First, the respondent examined if he/she had experienced the presented type of forest on the current trip. Then he/she rated the aesthetical quality of each forest stand on a scale of 1 to 5, where 1 means the best possible quality and 5 means the worst possible quality. The next question was focused on rating (also on a scale of 1 to 5) the health status of all forests in the JH Mts. according to the respondent’s experience. Next, four hypothetical programs that would improve or impair the environmental quality of the site were proposed in this section of the questionnaire. The hypothetical scenarios were suggested as follows: 1. A decline in the forest quality was proposed in the first hypothetical scenario. 70 % of the spruce wood would be seriously damaged in the near future by continuing air pollution. 2. In the second scenario a change of forestry composition was suggested. The management of the PLA would plant broad-leaved trees, which are more resistant to air pollution than spruce wood. 80 % of the area would be covered by broad-leaved trees. 3. Designation of a bird area within the Natura 2000 network which would cover 40 % of the area was the third scenario. The purpose of the bird area was to protect and increase the populations of two endangered bird species: the black grouse and the little owl. 376 4. In the fourth scenario an entrance fee into the bird area was proposed. The fee would amount to CZK 30 per person per day.101 The respondent was asked if he/she would enjoy the site more or less and how more or less often he/she would visit the site if the hypothetical scenarios were implemented. In the third section the socio-economic information about the respondent was collected. The fourth section contained debriefing questions for the respondent and also for the interviewer. 4 Sample characteristics Characteristics of trips Six per cent of the respondent sample had come to the JH Mts. for the first time. The frequency of visits on one-day and more-day trips was inquired about for each season over the past 12 months, i.e. autumn 2004, winter 2005, spring 2005, and summer 2005. For more-day trips the number of days spent in total in the JH Mts. was also inquired about. A histogram of the numbers of trips is shown in Figure 1. The average number of annual trips to the JH Mts. is 24.42 with a median value of 9. More than 13 % of the sample made only one trip over the past 12 months. More than 36 % of the sample made 1, 2, 3, or 4 trips to the JH Mts. Two persons reported exceptional rates of presence: one with 283 trips and the other with 231 trips per year. The average number of annual one-day trips is 20.52 (the median is 3), the average number of annual more-day trips is 3.89 (the median is 1 trip). People spend 10.68 days on average per year on more-day trips. The length of the trip is more than 2 days on average (the median is 1). Most trips are made in winter and summer. The average number of one-day trips and more-day trips, respectively, made in winter is 6.47 (0.96); it is 5.85 (1.08) in summer. The maximum rates of one-day trips range from 40 to 90 trips per season. Approximately 55 % of the respondents were on a one-day trip to the JH Mts. when interviewed. More-day trips composed the rest of the sample. The total average cost spent on a trip per person was CZK 967, as shown in Figure 2. The costs included transport costs, accommodation costs,102 and opportunity costs of time. The median value is CZK 550, and the maximum is CZK 6,817. Expressed per person per day, the costs amount to CZK 419, while the median value is CZK 350. Subjective costs, i.e. the costs which were stated directly by the respondents, were CZK 320 on average per trip per person, and CZK 123 per day per person. The transport costs, one component of the subjective costs, were CZK 165 on average per trip per person, and CZK 77 per day per person. 101 The exchange rate at the time of survey was CZK 22 per dollar. The costs of transport and accommodation are subjective costs that were stated directly by the respondent in the questionnaire. 102 377 Figure 1: Histogram of the number of trips realized to the JH Mts., n = 312 Objective transport costs were also measured and compared with the subjective transport costs. The MapPoint software was used to estimate road distances as well as fuel costs for each respondent. The objective costs were estimated for transport to the JH Mts. as well as for transport to substitute recreation sites. The costs of transport to the JH Mts. were CZK 196 on average per trip and person, and CZK 95 per day per person. The transport costs to the substitute sites were higher on average: CZK 229 per trip per person. Figure 2: The total costs, subjective and objective costs of a trip to the JH Mts., n = 312 1200 1000 trip/person day/person 967 800 600 419 400 320 123 200 229 196 165 77 122 95 0 Costs in total Costs subjective Transport costs subjective 378 Transport costs objective Transport cost substitute Most of the visitors came by car: 80.1 % of the more-day visitors traveled to the study site by car, 12.7 % of respondents went by train, and 7 % traveled by bus. During their stay in the JH Mts. they used the car rarely: in 21.2 % of the cases; train in 2.8 %, and bus in 2.1 %. Most used the bicycle (64.5 %) or walked (58.1). One-day trippers traveled by car in 45 %. 8.1 % traveled by bus and 7 % used trains. 56.1 % of one-day trippers went by bicycle, and 47.9 % walked. In terms of the recreation activity type on the current trip, 56 % of the respondents were mountain bikers, the rest were hikers. The average size of a group was 3.5 persons. The average number of children in a group was 0.5 children. The maximum size of a group was 50 persons. The substitute sites most frequently given by respondents were the Krkonoše Mountains (24 %), the Český ráj Hills (21 %), the Šumava Mountains (16 %), and the Lužické hory Mountains (9 %). Almost 60 % of the respondents made a trip of 16 to 50 km, which indicates the visitors’ fitness. Perception of the forest and the contingent behavior scenarios The respondents rated the quality of forest ecosystems in the JH Mts. on a scale of 1 to 5. Figure 3 illustrates that the visitors found the forests not so badly damaged. Moderate damage was expressed by 53 %, and slight damage by 36 % respondents. Only 9 % of the sample perceived the forests as heavily to completely damaged. Figure 3: Rating of the quality of forest ecosystems by respondents in the JH Mts, n = 312 2% 8% 1% healthy 36% slightly damaged moderately damaged heavily damaged completely damaged 53% Table 1 presents the structure of the responses to the hypothetical situations in relation to enjoyment and number of trips. The majority of the respondents (83 %) believed that in response to the implementation of the first program, i.e. 70 % complete destruction of the spruce woods, their enjoyment from recreation in the JH Mts. would decrease. The rest of the respondents would have the same experience. 42 % of the visitors stated that they would visit the site less often and 57 % would not change the frequency of their visits. If the second program was implemented, i.e. 80 % of the area would be covered by broad-leaved trees, 34 % of the respondents believed that their enjoyment would increase. 50 % would have the same experience and 16 % believed that their enjoyment would decrease. 11 % of the visitors expressed that they would visit the JH Mts. more often, 5 % would decrease their visitation rates. 379 In response to the designation of a bird area and an increase in the bird population, 45 % of the respondents believed that their enjoyment would increase. The rest of the respondents would have the same experience. 17 % of the visitors stated that they would visit the site more often and the rest reported that they would not change the frequency. If an entrance fee were implemented in the JH Mts., 24 % of the respondents would visit the site less often. 74 % of the visitors would not change the frequency of their trips. Table 1: The structure of responses to hypothetical questions, in %, n = 312 N (valid) increase equal Change in enjoyment Spruce 309 0.32 17.15 Broad-leaved trees 308 34.09 49.68 Natura 2000 309 44.66 55.02 82.52 16.23 0.32 Change in number of trips Spruce Broad-leaved trees Natura 2000 Entrance fee 41.69 5.02 24.19 307 299 304 310 1.30 11.04 17.11 1.29 decrease 57.00 83.95 82.89 74.52 Socio-economic characteristics of the respondents The majority of the respondents (47 %) were residents of the Liberecký Region, in which the JH Mts. are situated. Almost 30 % of the sample came from Prague, the capital of the Czech Republic. The JH Mts. can be reached very easily from the capital by approximately a one hour’s drive on a motorway. 27 % of the respondents came from Liberec (the capital of the Liberecký Region) and 10 % from Jablonec nad Nisou, the cities close to the JH Mts. More than 57 % of the interviewed were male. The average age was 40 years, which is close to the medial value of 39 years. The minimum age was 18 and the maximum age was 84; see Table 2. The average household size was 2.8 persons, the median value was 3 persons. The maximum household size was 7 persons. The number of children per household was very low: the average was 0.5 child per family. The maximum was 5 children. Table 2: Age and household size, n = 312 Household size Number of children Age N Mean Median Minimum Maximum 311 0.51 0 0 5 311 40.11 39 18 84 311 2.81 3 1 7 The sample is highly educated as almost 51 % of the respondents have secondary education, and 37.5 % have a university degree. The majority of the respondents were married (47 %), 37 % of them were single. The economic status of the respondents is as follows. The majority, 60 %, have fulltime jobs; 15 % are businesspeople, 8 % are retired, and 6 % are students. The average net individual income is 17 thousand CZK per month and the average net household income is 31 thousand CZK per month. 380 5 Econometric models and welfare estimates Econometric models As one can see in Figure 7, the number of trips to the JH Mts. made over the past 12 month is proportionate to a model using a Poisson distribution, see e.g. Alberini, Longo (2005). The number of trips is a count data variable which can be denoted as Y. If we follow Haab and McConnell (2002), then the probability function for Y could be expressed as: Pr(Y = y ) = e −λ λ y y! (7) where the parameter λ is the expected number of trips and is a function of independent variables specified in the model. The expected value and the variance of Y are equal to λ. The number of trips is the non-negative integer variable and therefore λ usually takes a log linear form: λij = exp(xij β1 + pijβ2 + qjβ3) (8) where x is a vector of socio-economic variables and other variables determining the trip to the JH Mts. pij are the travel cost spent by the respondent (i = 1, 2, …, n) on the trip. qj is a dummy variable indicating the presence of the hypothetical scenarios. β1, β2 a β3 are unknown parameters. The parameters in equation (8) are estimated using a maximum likelihood method. Using equation (7) and (8) the probability of observing the number of trips is estimated for each person in the sample. As Parsons (2003) suggests, the likelihood function becomes: L= e − λ n λ ynn ∏ y! n n =1 n (9) The on-site sample which was realized in the JH Mts. is truncated to one trip, and also the more frequent users occur in the sample. To correct the probability function we replace yn by yn-1 in the basic Poisson function (7), see also Parsons (2003) and Haab and McConnell (2002). Then the function assumes the following form: Pr( y n | y n > 0 ) = e −λ n λ y n − 1 ( y n − 1)! (10) Then equation (10), instead of (7), enters the likelihood function for each individual. When using the Poisson distribution, we assume that the expected value and the variance of Y are equal to λ. For recreational trip data, the variance is usually higher than the conditional mean, causing overdispertion in the data. The consequence of overdispersion is the fact that the standard errors in the case of the Poisson model are underestimated (Haab and McConnell, 2002). The negative binominal regression model addresses the failure of the Poisson model by adding a parameter, α, that reflects unobserved heterogeneity among observation. The negative binominal distribution assumes the following form (see e.g. Haab and McConnell, 2002): 381 Γ( y + α ) ⎛⎜ α −1 ⎞⎟ Pr( y | x) = y!Γ(α −1 ) ⎜⎝ α − 1 + λ ⎟⎠ −1 α −1 ⎛ λ ⎞ ⎜⎜ ⎟⎟ ⎝ α −1 + λ ⎠ y (11) where Γ() is the gamma function. The expected value of the negative binominal distribution is equal to λ. However, the variance of the dependent variable is V = λ (1 + α λ). The parameter is the overdispersion parameter. If α = 0, no overdispersion exists. But if α > 0, then overdispersion exists and the Poisson model is rejected in favor of the negative binominal distribution. The dependent variable and the selection of independent variables The dependent variable in the model is the number of trips to the JH Mts. made by the respondent over the past 12 months. Figure 1 illustrates the distribution of this variable denoted in the model as TRIPS. Using the contingent behavior model, each respondent contributes five observations to the sample, the actual and hypothetical number of visits. The vector x has the following variables: 1. The dummy variables SPRUCE, LEAF, NATURA, FEE which are related to the hypothetical scenarios. The value of the dummies is equal to zero when the observation on trips refers to actual trips. 2. The travel costs of the visit are expressed per trip per person. The travel costs (COSTS) include the costs of transport and accommodation stated by the respondent. The opportunity costs of time are not included. Thus, the results could be biased downwards. 3. The next variable is the respondents’ economical status, ECONOM, which is a dummy variable. If the value of the dummy is 1, the respondent has a full-time job or is a businessperson. 4. The variable AGE determines the respondent’s age. 5. The variable INCOME represents the net monthly individual income. 6. UNIVER is a dummy variable that represents the respondent’s level of education. If the value of the dummy is 1, the respondent has a university degree. 7. The length of the trip in kilometers is another variable named LENGTH. Actual visitation rates: Results In the first run the number of actual trips made by the respondent was used to fit into the equation (7), (10) and (11). The total sample size in this case is 311 observations. The results were estimated using a maximum likelihood method by means of SAS 9.1 software, and they are reported for the Poisson model (PM), the truncated Poisson (TPM) and the truncated Negative Binominal (TNB) in Table 3. The coefficient of the cost variable is significant in these models and negative according to the economic theory. Its magnitude is -0.0026 (PM), –0.0027 (TPM) and –0.0008 (TNB). There is significant evidence of overdispersion (we can reject H0: α = 0), the negative binominal regression model is preferred to the Poisson model. The numbers of trips also increase with the respondents’ age. The numbers of trips tend to be greater among visitors with full-time jobs or businesspeople (significant in PM and TMP). The length of the trip also has a positive influence on the number of trips to the JH Mts. Education status and individual income are without effect on the dependent variable. The average consumer surplus associated with an access to the JH Mts. under the current conditions is CZK 9,569 for PM, CZK 9,060 for TPM and CZK 30,249 for TNB. Expressed in US dollars the average consumer surplus per trip is about USD 18 for PM, USD 17 for TPM and 56 for TNB.103 This recreation values are comparable to other travel costs 103 The exchange rate at the time of survey was CZK 22 per US dollar. 382 studies, except truncated Negative Binominal Models that generates more than double estimates. Table 3: Maximum likelihood estimation of the actual visits, single site Poisson model, Truncated Poisson and Truncated Negative Binominal, n = 311 Poisson model Truncated Poisson Truncated Negative Binominal Parameter Estimate* S.E. Estimate* S.E. Estimate* S.E. costs –0.0026 0.0001 –0.0027 0.0001 –0.0008 0.0001 age 0.0164 0.0009 0.0164 0.0009 0.0185 0.0063 econom 0.3155 0.0307 0.3133 0.0308 0.2871 0.2191 length 0.0114 0.0006 0.0115 0.0006 0.0150 0.0055 Intercept 2.3195 0.0536 2.3297 0.0537 1.5596 0.3636 Log-likelihood –4512.89 –4478.79 –1209.98 LR chi2(4) 3816.50 3884.71 51.10 N 311 311 311 alpha 0.9823 Likelihood-ratio test of alpha = 0: chibar2(01) = 6605.821 Prob>=chibar2 = 0 *All coefficient except econom variable in truncated NB are different from zero at the 95 % level of confidence. Combining actual and hypothetical observations: Results To estimate the value of the hypothetical programs that influence the environmental quality of the JH Mts. we have to combine the actual and contingent behavior trips. Pooling these trips we arrive at 1,244 observations. The results are reported in Table 4. Table 4: Maximum likelihood estimation of the actual and contingent visits, truncated Poisson single site model, n = 1 244 Variable coefficient standard error confidence interval Intercept 2.2415 0.0291 2.1845 2.2985 COSTS –0.0028 0 –0.0029 –0.0027 AGE 0.0161 0.0005 0.0152 0.017 ECONOM 0.3933 0.0167 0.3605 0.4261 LENGTH 0.0117 0.0003 0.0111 0.0123 SPRUCE –0.9524 0.032 –1.0152 –0.8896 Log likelihood 64 386 As shown in Table 4, the coefficients of the basic variables are approximately the same as in the Poisson and truncated Poisson model. The coefficient of the cost variable is significant and negative. Its magnitude is –0.0028. The other socio-economic variables (age and economic status) and the length of trips are significant and have a positive influence on the annual number of visits. The key variables for placing a monetary value on a change in environmental quality are the dummies corresponding to the hypothetical scenarios. As shown in Table 4, the only scenario with a significant influence on the number of trips is the program affecting the quality of the spruce wood. As expected, its coefficient is negative. The other scenarios are without significant impacts on the visitation rate. The average consumer surplus per access associated with the new conditions is CZK 6,480. Its minimum value and maximum values are CZK 6,062 and CZK 6,711, respectively. The average consumer surplus expressed in US dollars is about USD 295. If the spruce wood scenario were implemented, the welfare change would decrease by about CZK 1,574 on average over the sample. The change ranges from CZK 1,072 to CZK 383 1,630. The corresponding average value of the change in US dollars is USD 71. If we express the welfare change per trip and person we come to the value of CZK 67, i.e. about USD 3. 6 Discussion and conclusions The travel cost study was conducted for the purpose of placing a recreation value on the area of the Jizerske hory Mountains. The welfare change associated with implementing the hypothetical scenarios which would influence the environmental quality of the site was also computed. The study gathered information about trips, attitudes and motivations of the visitors who came to the Jizerske hory Mountains. The questionnaire was designed and completed with the visitors who were intercepted on the site. The survey was conducted in September and October 2005, and resulted in a total of 312 completed questionnaires. The questionnaire included questions about the characteristics of the current visit, the visitation rate in the past year, and contingent behavior questions. Respondents were also queried about a number of factors related to nature protection, scenic beauty and quality of forest ecosystems. Finally, socio-economic information was inquired about. In the study, the single site travel cost model was applied, which relies on both observed behaviors (the actual number of trips to a site) and stated behaviors (the number of trips that would be taken to the site under hypothetical circumstances) to infer the value of forest recreation. The travel cost method can only measure use values, and thus cannot capture nonuse values. First, the travel cost model of the actual trips to the site was estimated using the Poisson, the truncated Poisson and the truncated Negative Binominal regression model. The average consumer surplus per trip was about USD 18 for the Poisson, USD 17 for the truncated Poisson and USD 56 for truncated Negative Binominal. There was significant evidence of overdispersion that is why the negative binominal regression model was preferred to the Poisson model in this case. The problem is that recreation values estimated by truncated Negative Binominal model are more than two times higher than estimates assessed in another TCM studies. Variables such as age, economic status and length of trips were also included in these three models. They had significant positive influences on the numbers of trips. Actual trips alone do not allow to estimate the value of the forest quality change and other public programs that would influence the visitors’ experience. Therefore, the actual trips were pooled with the hypothetical trips. This yielded estimates of the value of the change in the surplus associated with the new conditions. Only the scenario under which the quality of the spruce wood would decrease had a significant influence on the visitation rate. As expected, its coefficient was negative. The welfare change of the access value associated with this program was estimated at CZK 1,574, i.e. about USD 71. If we express the change of consumer surplus per trip we come to CZK 67 (USD 3). 7 Acknowledgement The research on this study was supported by the grant of the Czech Ministry of Agriculture: 1R56014 — Monetary valuation of recreational and aesthetical function of forest in the Czech Republic Republic within the program “Krajina a Budoucnost”. This support is gratefully acknowledged. 8 1. References Adamowicz, W., Swait, J., Boxall, P., Louviere, J. and Williams, M. (1997): Perception versus objective measures of environmental quality in combined revealed and stated preference models of environmental valuation, Journal of Environmental Economics and Management, 32 (1), 52-64. 384 2. Alberini, A. and Longo, A. (2005): The value of cultural heritage sites in Armenia and sustainable tourism: evidence from a travel cost study, conference paper. 3. Brown, T. C. (1987): Production and cost of scenic beauty: Examples for a ponderosa pine forest. Forest Science, 33(2):394-410. 4. Brown, T. C. and Daniel, T. C. (1986): Predicting scenic beauty of timber stands. Forest Science, 32(2):471-487. 5. Brown, T. C. and Daniel, T. C. (1984): Modeling forest scenic beauty: Concepts and application to ponderosa pine. Fort Collins, CO: USDA Forest Service, Rocky Mountain Forest and Range Experiment Station. 6. Eisworth, M., Englin, J., Fadali, E. and Shaw, W. D. (2000): The value of water levels in water-based recreation: a pooled revealed preference/contingent behavior model, Water Resource Research, 36 (3), 1079-1086. 7. Englin, J. and Cameron, T. (1996): Augmenting travel cost models with contingent behavior data, Environmental and Resource Economics, 7 (2), 133-147. 8. Freeman, A.M.III. (2003): The Measurement of Environmental and Resource Values: Theory and Methods, Resources for the Future, Washington, DC, ISBN: 1-89185-362-7. 9. Haab, T. and McConnell, K. E. (2002): Valuing Environmental and Natural Resources: the econometrics of non-market valuation, Cheltenham: Edward Elgar. 10. Kolstad, C. D. (2000): Environmental Economics. Oxford University Press. New York. ISBN 0-19511954-1. 11. Parsons, G. R. (2003): The Travel Cost Method. In Champ, P. A., Boyle, K. J., Brown, T. C., (eds.) A Primer on Nonmarket Valuation. London: Kluwer Academic Publishers. ISBN 0-7923-6498-8. 385 External Costs Associated with Waste Management Practices in the Czech Republic Miroslav Havránek*, Milan Ščasný Charles University Environment Center, Charles University in Prague, Czech Republic *Corresponding author: [email protected] The aim of this article is to assess alternative municipal waste treatment options for the Czech Republic. More specifically, we aim at quantifying the external costs, i.e. the impacts associated with disposing municipal waste to landfill and burning waste in an incinerator. Rather than focusing on methodology we describe of the results in this article referring the methodology section of final report of the project. To do so, we apply ExternE method and follow its core approach (Externe, 1995) — impact pathway. Our impact assessment covers the impacts on human health, crops and building due to airborne emission and impacts due to climate change. Moreover, our assessment considers the impacts related with the technology operation as well as with upstream and downstream processes. We highlight that our impact assessment is only partial; due to lack of reliable dose-response functions and monetary values, we are unable to evaluate for instance leakages from the landfills (should they happen). Added value of our assessment lies particularly in using several damage values of greenhouse gasses causing global warming effect. Except the reference value of 19 € per t of CO2-eq., we use six marginal social costs estimates of GHGs estimated by the latest version of FUND model for the period 2000-2100 including hyperbolic discounting (MethodEx., 2007). 1 External costs of disposing waste to landfill For impact assessment of waste treatment in a landfill we have chosen two sites: the landfill in Úpohlavy is located close to bigger towns Litoměřice and Lovosice, while the landfill in Černošín is located in rural area with small towns and villages in its vicinity. Landfill gas composition indeed varies from site to site as well along the time. Except technological and site parameters, gasses are factored by an amount of degradable waste that is determined by the type of residential area and/or possibilities to burn or compost organic waste. Our choice of the sites is just subject to this fact. Following First Order Decay IPCC Tier 2 approach (IPCC, 1996; IPCC, 2000), we estimate annual emissions of methane and valuate impacts of methane emission over entire lifespan of landfill and years after its closure. Assuming 399 € per tone of methane, i.e. 19 € * 21 GWP, as the reference value for the impacts due to global warming, the external costs are 18.4 € per tone of disposed waste at the landfill in Úpohlavy, or 19.2 € in Černošín landfill. This is in line what we found in our previous landfill impact assessment in the SusTools104 project; i.e. 16 € per ton of disposed waste after applying TYG Tier 1 IPCC approach. Damage due to global warming varies according to the assumptions on discounting, weighting 104 Full project report can be found on www.externe.info 386 the effects and statistical metric used; the external costs range between 6 € to 26 € per ton of disposed waste to landfill for the marginal social cost (MSC) options used. The external costs due to VOCs and mercury are estimated as high as 1.7 € per ton of waste. Damage due to emission of mercury are however negligible having three orders lower magnitude than damage due to VOCs. The external costs due to VOCs would be about 3 € to 9 € per ton of waste if reference values of CAFÉ (Clean Air For Europe programme) CBA were applied. External costs due to airborne pollution and global warming associated with the landfill construction and capping are 0.34 € per ton of disposed waste. Alternative estimates of MSC of carbon result in 0.30 € to 0.42 € of external costs. As found in our previous assessment, the external costs associated with municipal waste collection and transportation to the treatment site are about 0.40 € per ton of waste, while higher in urban areas and lower in rural due to varying population density and number of receptors so. Total external costs of municipal waste disposed to the landfill amount 23 € per ton of waste for the reference value of global warming impacts. For our six alternatives of MSC of carbon, we get a range of external costs between 10 € to 66 € per ton of waste disposed to the landfill. 2 External costs of incinerating waste We focus on assessment of the most recent technology operated in the Czech Republic TERMIZO Liberec. In order to make our calculation comparable with our previous results as well as with other two operated municipal incinerators, we calculate the external costs for all of three Czech municipal incinerators. The external costs due to global warming are about 15.6 € per ton of incinerated waste for 19 € reference value, ranging — according to MSC of climate change used — between 2.3 € to 41.1 € having 6.1 € for Weitzman hyperbolic discounting. The impacts due to classical and trace pollutants are 3.33 € per ton of waste incinerated in TERMIZO Liberec. BeTa tables give slightly lower value of the external costs due to classical pollutants; the external costs are 2.8 € per ton for the incinerator MALEŠICE in Prague, 3.0 € for TERMIZO in Liberec and 3.9 € for SAKO in Brno. For comparability, one should add 0.11 € to the externality value due to lack of reported emission data on NH3 for the incinerator MALEŠICE Prague and SAKO Brno. The external costs associated with the incinerator construction and dismantling are comparable with the effects of up/down stream processes of the landfill, although having different composition. These part of external costs is about 0.30 € per ton of incinerated waste for the reference value of global warming impact. The external costs for all of assessed impacts are 19.2 € per ton of waste for our reference scenario. 3 Waste treatment technologies comparison We compare the external costs for actual operation of a Czech landfill and an incinerator. Firstly, we do not assume any LFG recovery for landfill. Hereinafter, we report this scenario as ‘present state’. We do also sensitivity analysis of the external costs value on different values of damage due to global warming. Table 1 shows assumed values of the impact of GHG. 387 Table 1: MSC of tone of CO2 in 2005 discounted back to the year 2005 GHG Scenario VS1 VS2 VS3 VS4 ExternE MethodE MethodE MethodE Project 2005 x x x n.a. 1 % PRTR 1 % PRTR 1 % PRTR Discounting Equity n.a. Regional Regional Equity weighted values values weighting n.a. Median 1 % trim 5 % trim Statistical mean mean metric 19.0 2.3 11.7 29.8 2005 19.0 3.2 11.7 26.4 2015 19.0 3.4 12.6 28.6 2025 19.0 3.6 13.0 40.5 2035 19.0 2.9 11.8 38.3 2045 19.0 3.1 14.3 57.5 2055 19.0 2065 19.0 2075 19.0 2085 19.0 2095 VS5 MethodE x 1 % PRTR Equity weighted 1 % trim mean 57.5 46.5 63.6 99.5 165.5 192.8 VS6 NEEDS VS7 NEEDS 1 % PRTR Regional values Median Weitzman Regional values Median 4.9 4.8 4.4 3.9 3.6 3.1 2.7 2.4 2.0 1.8 7.0 6.9 6.6 6.2 5.9 5.5 5.0 4.7 4.2 3.8 We conclude that the external costs associated with disposing waste to landfill are higher than the externalities of waste burnt in incineration except a variant of global warming impact valued by using declining discount rate over time. Figure 1: Comparison of WIP (waste incineration plant) and SWDS (solid waste disposal site) based on GHG scenarios € / ton of disposed or incinerated waste 70 Construction and dismantling Air pollution Greenhouse gasses 60 50 40 30 20 10 S6 W IP -V S5 -V -V S4 W IP -V -V S3 W IP W IP -V W IP W IP SD W S -V SW S1 DS -V SW S2 DS -V SW S3 DS -V SW S4 DS -V SW S5 DS -V SW S6 DS -V S7 S1 S2 0 GHG scenarios Methane generated from landfill can be however either combusted in flares or used for some energy device, i.e. producing heat and/or electricity. For our next scenarios, we assume that such system exists on the landfill. Moreover, we follow here a concept of “avoided externalities” meaning that energy generated in waste treatment facilities hypothetically substitutes energy that would have to be otherwise produced in classical power plant(-s). We chose three different options for avoiding 388 externalities in our impact assessment: to date fuel-mix used in energy generation in the Czech Republic, energy generation in nuclear power plant and in power plant burning lignite. As previously, we did sensitivity analysis with overall six alternative values of impacts due to global warming. We apply this sensitivity analysis not only for quantification of external costs associated with municipal waste treatment, but also for quantification of avoided external costs. This approach is indeed needed particularly for energy recovery from the landfill that might generate energy and thus avoid externalities over long time period. We calculate the external cost for overall nine scenarios on energy recovery, assume three types of avoided externality and consider seven variants of MSC of global warming having we ended with 189 treatment options/scenarios. For the reference value of climate change impact and avoided externalities for the typical fossil fuel-mix, the highest externalities are associated with the waste treatment without any energy recovery, i.e. 22.5 € for the landfill, or 19.2 € per t of incinerated waste respectively. The external costs will decline if energy is recovered; they are about 10 € for flaring, 6.4 € if heat generated or 6.0 if electricity produced from landfill gas. Energy generation from burnt municipal waste results in even lower external costs; they are 1.9 € per t of waste if only electricity is generated, or even negative, i.e. yielding positive externalities, if heat is produced. Cogeneration of heat and electricity would give negative external costs at –3.6 € per ton of waste burnt. The external costs associated with recent operation in the municipal incinerator TERMIZO including avoided externalities are about –1.1 € per t of waste supporting that the municipal waste treatment results in overall positive externality. Figure 2: Scenarios performance when avoiding externalities from the Czech typical fossil fuel mix. SWDS - present state WIP - no recovery SWDS - flaring SWDS – LFG for heat SWDS – LFG for electricity WIP – electricity WIP - heat WIP - present state (h+ele) WIP – heat & electricity -10 -5 0 5 10 € per t of waste 15 20 25 The reference ranking of waste treatment technology options would be changed if much higher values of global warming damage were used in the impact assessment. Higher values of MSC make a treatment on landfilling with energy recovery better-off burning waste in the incinerator with energy recovery. Therefore the waste incinerator option might be less attractive for global social planner that will likely require impacts weighted for equity, i.e. giving higher values of MSC. If lignite power plant was concerned for the avoided externality, the impacts of global warming would have to be valued much higher to make the landfilling more attractive than burning waste in incinerator. On the other hand, if energy-generating technology associated with relatively low external costs was concerned for assessment of avoided externality, i.e. energy generation in nuclear power plant, waste treatment technologies based on disposing 389 waste into landfill become more attractive for the social planner. Disposing waste in the landfill without energy recovery remains however the least preferred option among all assessed. 4 Acknowledgement Work on this topic was supported by EC project Methodex (Contract No. GOCE-CT-2003505368 — METHODEX). Support is kindly acknowledged. Full report of this project can be found on www.externe.info. 5 1. 2. 3. 4. References IPCC, 1995: Guidelines for National Greenhouse Gas Inventories, Vol. 1-3, IPCC / OECD / IEA, Paris. IPCC, 2000: Good Practice Guidance and Uncertainty Management in National Greenhouse Gas Inventories, IPCC. Externe, 1995: EXTERNALITIES OF ENERGY, Volume 2: METHODOLOGY, ETSU, Oxfordshire, (www.externe.info). MethodEx 2007: MethodEx final report, AEA Technology, www.externe.info. 390 Multidimensional Analysis of Macro Sustainability of Austria: A Dynamic Approach Stanislav E. Shmeleva*, Beatriz Rodríguez-Labajosb a Energy and Environment Research Unit, The Open University, UK * Corresponding author: [email protected] b Institute of Environmental Science and Technology, Universitat Autònoma de Barcelona, Barcelona, Spain 1 Introduction The assessment of sustainability at the macro level is now a major concern of national governments, international organisations and NGOs as well as, increasingly business circles (European Commission, 2001; European Commission, 2005; Eurostat, 2004; UN, 2001, New Economic Foundation, 2006). The issue has been the focus of considerable analytical attention for the past 20 years (Daly and Cobb, 1989; van den Bergh, 1991; Pearce and Atkinson, 1993; Lawn, 2003, Munda, 2004) and is becoming an increasingly important instrument for the policy dialogue and governance given the need to tackle climate change, reduce the loss of biodiversity and decrease material and energy consumption. According to Martinez-Alier et al. (1998) the incommensurability of conflicting values and interests is considered to be the cornerstone of ecological economics and determines the distinction between weak and strong sustainability. The essentially multidimensional nature of sustainable development, comprising economic, environmental, social and institutional aspects requires simultaneous consideration of measures representing various aspects of sustainable development over time. An integrative framework is required to analyse the tradeoffs among various development objectives such as the reduction of material use and emissions, income differentiation and unemployment, increase in life expectancy, educational attainment and life satisfaction. This paper employs the United Nations Commission for Sustainable Development Indicator Framework and is devoted to the analysis of sustainability at the macro level with the help of the multi-criteria method NAIADE. Austria was chosen as a case study to test a multi-criteria approach, due to the wide availability of data, especially on indicators of strong sustainability. In the past several attempts have been made to assess the sustainability of development at the macro level. A first direction of research was determined by the critique of the concept of GDP as the key policy goal. This approach has been focused on weighted indices that could capture sustainability in one single number, reflecting the depreciation of natural capital and environmental pollution not captured by GDP. The Index of Sustainable Economic Welfare (ISEW) proposed by Daly and Cobb (Cobb, 1989) attempts to adjust GDP for the unpaid household labour, income differentiation, 391 pollution, long-term environmental damage, costs of urbanisation, etc. For a discussion of the benefits of ISEW and its shortcomings, see Lawn (2003) and Neumayer (2000). ISEW was calculated for Austria for the period 1955-1992 by Stockhammer et al., 1997. We can see that the growth in ISEW follows the pattern of GDP until late 1970s, and afterwards shows a slow decline, reflecting the growing burden of resource depletion, pollution, the cost of urbanisation and so on. Figure 1: GDP and ISEW per capita, Austria 1955-1992 120000 ISEW p.c. 100000 GDP p.c. 80000 60000 40000 20000 0 1955 1960 1965 1970 1975 1980 1985 1990 Source: Stockhammer et al. (1997) The Human Development Index (1990), calculated by the United Nations is another integrated indicator of development. It comprises the following three dimensions: long life (measured by life expectancy at birth, education (adult literacy) and the quality of life (measured by the real GDP per capita at PPP) (ul Haq, 2003). It correlates strongly with GDP per capita and has no environmental dimension. Figure 2 depicts the dynamics of HDI for Austria for the period from 1975 to 2002. Figure 2: Human Development Index, Austria 1975 -2002 Human Development Index, Austria, 1975-2002 0,96 0,94 0,92 0,9 0,88 0,86 0,84 0,82 0,8 20 02 19 99 19 96 19 93 19 90 19 87 19 84 19 81 19 78 19 75 0,78 Adjusted Net Savings (Pearce and Atkinson, 1993) is an indicator reflecting to what extent the nation satisfies the Hartwick-Solow rule, often called the “weak sustainability” indicator.Weak sustainability assumes that any type of capital is perfectly substitutable for natural capital as an input to production. From the adjusted net savings standpoint, for 392 example, a nation which reinvested all of its profits from the exploitation of non-renewable natural resources in the formation of human capital through its educational system would have imposed no net opportunity cost on the country’s future citizens (World Bank, 2002). For the critique of the Adjusted Net Savings measure see (Hamilton et al., 1997). Figure 3: Adjusted Net Savings, Austria 1970 -2003 Adjusted Net Saving, excluding PM10 damage 20 18 16 14 12 10 8 6 4 2 0 1970 1975 1980 1985 1990 1995 2000 The indicators presented here present conflicting evidence with a declining pattern in ISEW and Adjusted Net Savings and an upward trend in HDI. All these measures are based on the idea of strong comparability of their subcomponents; compensation between the included indicators is a part of the methodological procedure, and is accounted for in the form of weights. Acknowledging the critique of GDP, previous attempts at macro sustainability assessment appear to be single-dimensional views of the sustainability phenomenon. Taking the ecological economic approach and placing the incommensurability of values at the top of our priorities, we decided to undertake a multidimensional analysis of sustainability at the macro-level. This prompted the authors to conduct an assessment simultaneously analyzing the relevant criteria and avoiding employment of a single monetary estimate or any other single measure. It should be pointed out that multi-criteria evaluation (MCE) methods have been already used to analyze sustainability problems. Methodological work in this field has been done by Roy (1985), Janssen (1993), Hovanov (1996), Munda (1995, 1996, 2005a, 2005b), and Shmelev (2003). Applications of MCE exist for regional problems, e.g. industrial development (Nijkamp and Delft, 1977), waste management (Shmelev and Powel, 2006) or renewable energy (Madlenera and Stagl, 2004, Gamboa and Munda, 2006). Recent application of a non-compensatory multi-criteria approach is the Environmental Sustainability Index (Yale Center for Environmental Law and Policy, 2005), where, however, dynamic aspects were not addressed. There are also theoretical contributions for studying the multidimensional dynamic patterns of development with the help of multi-criteria methods (Omann, 2000). However, empirical attempts are rare (Shmelev, 1998, Shmelev 2005, Shmelev 2006, Falconí, 2002) and no empirical work, especially employing strong sustainability indicators, is known for any EU country. In the light of the above this paper will contribute to the discussion of sustainability assessment at the macro level by applying the multi-criteria approach to the specific case of Austria. The study will address the dynamic aspects of the sustainable development as well as analyse the value of multicriteria analysis in this setting. 393 2 Methods The study was designed so that several multi-criteria evaluation (MCE) methods could be applied to the analysis of sustainability at the macro level. The methodological procedure included the usual steps of MCE analysis, namely: 1. Definition and structuring of the problem. 2. Development of the impact matrix by: a. Generating options, in this case, time periods. b. Defining the evaluation criteria. 3. Selection of the multi-criteria method. 4. Implementation and sensitivity analysis. Definition and structuring of the problem, decisions on the time span and desirable characteristics of the multi-criterion method were taken during a brainstorming session by an international team of junior sustainability experts during the THEMES Summer School of 2006 at ICTA, Universitat Autonoma de Barcelona. The analysts involved in the project identified a range of indicators, representing the economic, social, environmental and institutional dimensions of sustainability and collected data from official statistical sources (OECD, World Bank, UN, Eurostat) and surveys (EuroBarometer). For the implementation of the assessment, three different exercises were carried out. They represent alternative structures of the problem according to different time frames and sets of criteria. a. Long term analysis (1960-2003), involving three criteria representing each one of the traditional dimensions of sustainability: Economic (GDP per capita), Social (Life expectancy) and Environmental (CO2 emissions). b. Middle term strong sustainability assessment (1970-1995), with a set of ‘strong sustainability’ criteria, such as material flows or human appropriation of net primary production. c. Comprehensive short term analysis of sustainability (1995-2003) including a large set of indicators. They were selected according to the UN Sustainable Development framework. Several tests were performed to assess the response of the process to the inclusion of additional criteria. Indicators selected are presented in Annex 1. 2.1 Selection of criteria and time framing When talking about sustainability, the selection of criteria becomes a delicate process of translation from socio-environmental agreements to specific observed properties of a complex system. Thus choice of criteria is the consequence of the social and political framework existing in a given historical period (Munda, 2004). In this paper, the matter to be assessed is whether or not a country – Austria - is progressing in a sustainable manner. Having this in mind, discussion on criteria involves the problematical issue of defining what a sustainable path is. In turn this leads to a discussion around the following questions: - Which dimensions of sustainability should be taken into account? - Which criteria represent better each dimension at the macro level? - How many criteria should represent each dimension? What happens when a single indicator represents more than one criterion or dimension? - What should be the desirable direction of change (the societal objective) for each criterion? 394 2.2 The sustainable development agendas Procedures to elicit assessment criteria are diverse. Involving the affected parties is highly advisable because reflexive complexities entail social incommensurability (see Munda, 2004). When this is not feasible, the irreducible diversity of perspectives should be at least taken into account by the analyst. An alternative approach is taking normative statements as a guideline. In this work, the latter approach was explored by reviewing existing indicator sets linked to sustainable development agendas. The indicator sets included those proposed by United Nations, Eurostat, OECD and the Austrian Government (see Annex 2). The analyzed approaches are top-down since the indicator set was in all cases promoted by a high level organization. However, they differ in the degree of inclusion of stakeholder views during the process. Feedback from national users is obtained in both the UN and EU’s framework while the Austrian process was highly participatory. The frameworks are usually based on the idea of a balanced performance of different dimensions. The OECD Indicators are the exception since only environmental indicators were included, in order to complement a larger available set of economic and social indicators. Austria figures among those EU countries that have avoided the three pillar (environment – economy – society) model of Sustainable Development (SD). Rather the country has approached the issue with an integrated and holistic scheme. It includes nationally relevant themes defined after a comprehensive consultation exercise. For the Austrian Sustainability Strategy, sustainable development is a searching, learning, and shaping process within society (Austrian Federal Government, 2002). The strategy recognizes the need of simplifying the complexity by selecting key objectives. Thus, indicators play a role in monitoring, evaluating, taking informed political decisions and supporting communication. 2.3 Selection of indicators After Barbier (1987), three equally relevant dimensions - economic, social, and environmental - of sustainable systems are widely recognized. This theoretical distinction was employed as a starting point for selecting sustainability criteria given the classification of sustainability indicators described in the previous section. Specifically, the themes appearing in the UN framework were taken as main reference. Thus, a short list of indicators was composed from a large catalogue of available indicators. Even within the selection, many indicators reflect several processes at the same time. Thus, their classification within a specific dimension is not obvious. Employing an organizing scheme proposed by Eurostat (2001), the list of sustainability criteria for the assessment at the macro scale is presented in Figure 4. The choice of indicators entails a reflection on the pros and cons of employing given criteria or corresponding metrics. During this step, interesting debates arose around the meaning of the indicators. Even accepting the universality of certain criteria, it is clear that different societies place different interpretations upon topics such as education, population growth or poverty. Additionally, the social interpretation of the criteria may vary over time. For instance, the UN reports parties’ concerns during the development of the Sustainable Development Indicators Framework. Some doubts were raised regarding the potential use of the indicators set, as to whether it was adjusted for national use or for international comparisons. It was agreed that the primary goal was to assist national decisionmaking (UN, 2001). 395 Figure 4: Criteria for the assessment, a multi-dimensional representation Economic dimension 1 2 4 16 Social dimension 11 3 5 7 8 12 13 17 6 15 10 14 9 Environmental dimension 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Gini Index of income inequality Unemployment rate Life expectancy at birth Education Number of recorded crimes Population change Life satisfaction CO2 emissions Forests Water quality Income Material consumption Energy consumption Renewable sources of energy supply Wastes Expenditure in R&D Appropriation of NPP Source: Own elaboration. Organizing scheme taken from Eurostat The availability of data was also a criterion for selection. This is why some consistent indicators involving gender issues or the state of biodiversity had to be excluded from the dataset. A list of the indicators employed in the assessment, and charts representing the evolution of the indicators over time are included in the Annexes 3 and 4. 2.4 Time framing 2.5 Selection of the multi-criteria method The choice of time span was restricted by the availability of data.105 We have done several exercises with long time series (since the 1960’s or 1970’s to 2003). Both conventional indicators and available data on material flow and appropriation of net primary productivity were used. An evaluation of a short time series (1995-2003) was also undertaken. In this way, the potential of MCE within several time frames was explored. An extensive survey of various MCE methods with sustainability implementations is contained in De Montis et al. (2004). For the purposes of our study we have considered the following methods. Table 1: Comparison of selected multi-criteria decision methods. Source Software Method Brief description (Munda, 1996) Naiade Naiade It is a discrete outranking method that may employ qualitative, crisp, stochastic and fuzzy information about the criteria. Two types of evaluation (a multi-criteria analysis and a conflict analysis) may be carried out. By employing the concept of semantic distance in the pairwise comparison, the MCA generates ranking of alternatives. (Gustafsson et PRIME PRIME Method based in multiattribute value theory, with an additive al., 2001) (MAUT) structure of preferences. Preference elicitation is both scores and weights elicitation. Statements on interval-valued ratios of value differences serve to obtain score information for each 105 Since some crucial datasets are not complete, missing data were assumed sporadically. Exploiting the potential of the employed software (NAIADE) fuzzy numbers were used to set assumptions on the missing values. 396 (Janssen et al., 2001) Definite (CBA) (Graphic Evaluation) Weighted summation Electre 2 Regime Evamix (Hovanov et al., 2006) Aspid Aspid attribute. These statements are translated into linear constraints. Thus the dominance structures can be determined from a series of linear programming problems. Definite is a toolbox that guides the analyst in the selection and implementation of several evaluation methods. Through a optimization approach all information provided is integrated to a set of value functions. MCE methods employed are: Weighted summation: it generates a ranking of alternatives based on the specification of quantitative criteria scores and relative importance (weight) of the effects. Electre 2 method: it generates a ranking of alternatives based on pairwise comparisons. First the extent to which the alternative is preferred above others is looked at based on the weights, then the question to what extent it is dominated by another based on quantitative scores is addressed. Regime method: dominance analysis approach where qualitative scores and weights are processed as ordinal scores. Identification of extreme points allows finding the relative size of the subsets defined by every alternative. The probability that the different alternatives achieve the highest rank is inferred, thus pointing out to one candidate for the final selection. Evamix: A separate treatment is given to qualitative and quantitative scores. Dominance indices are calculated for both types of scores. After standardization the indices are combined into one dominance index that defines a ranking. Weights must be specified. Method is based on the Bayesian model of uncertainty randomization. Relational information on prioritisation of different criteria determines the choice of weights, and as a result, a randomized estimation of probabilities of domination of certain alternatives over others is obtained. The desirable qualities of the multi-criteria method for the purpose of assessment are listed next: - Since we want to evaluate the progress of a country over time, a method able to generate ranking between periods of time is to be preferred over one obtaining ‘the best’ possible option. - Given the nature of the issue, avoiding compensatory method was a key aspect of the methodological choice. This was also related to a preference for keeping away from a discussion on the weighting of criteria. - The possibility of including different kinds of information, either qualitative or quantitative was considered important. - Although a participatory assessment was not carried out at this phase, it appeared to be desirable. So, a method that allowed conflict analysis was to be preferred. Having this in mind, we decided that the best candidate for this stage of the work was NAIADE (Novel Approach to Imprecise Assessment and Decision Environments). Testing other methods remained a possibility for future research. During the implementation of NAIADE, an operator for the aggregation must be chosen. In all exercises the chosen operator was the minimum operator which allows no compensation. Thus the idea of assessing strong sustainability was supported. 397 3 Application Several types of analysis were conducted within this study. The development of the Austrian economy has been analysed from the point of view of application of different sets of criteria in the long-term, medium-term and short-term setting. 3.1 Long term assessment exercise In this exercise three criteria representing the traditional dimensions of sustainability were considered: GDP per capita (economic), Life expectancy (social) and CO2 emissions (environmental). Initially the assessment was carried out using the three headline sustainability indicators – GDP per capita, Life expectancy, and CO2 emissions for all the years covering the period 1960-2003. As a result, a high number of incomparabilities arose, hindering the interpretation of the ranking. Table 2 shows the years appearing at the top and at the bottom of the ranking, for different values of the parameter α. The parameter α indicates the degree of credibility for accepting a given preference relation as true. When α increases, only those values with high intensity of preference are taken into account. Thus it is easier generating clearer rankings and the number of incomparable periods decreases. The order in which the years are listed in the table doesn’t necessary represent the order in the domination relationships. Table 2. Long term sustainability assessment, Austria, 1960 -2003 (yearly, GDP per cap., Life expectancy, CO2 emissions) Ranking 0,1 0.2 0.4 0.6, 0.8 0.9 Top 2000 2000 2000 2000 2003 1994 1999 2001 2001 2002 1999 2001 1999 2002 2001 Bottom 1973 1963 1962 1960 1971 1973 1963 1962 1960 1963 1962 1960 1960 1962 1963 1963 1961 1960 A second approach for this long term assessment was carried out which involved reducing the number of periods. One year every five was included since 1960. The results are presented in Figure 5. On the whole, the results point out to certain progress in sustainability, since recent years are closer to the top of the ranking. This happens for both the yearly and the five-yearly exercise. However, the presence of incomparable periods increases with a lower value of α. The parameter α indicates the degree of credibility for accepting a given preference relation as true. When α increases, only those values with high intensity of preference are taken into account. Thus it is easier to generate clear rankings and the number of incomparabilities decreases. This can be easily observed in the aggregation process, when the phenomenon of rank reversal may appear (see the different rank of H (1995) and G (1990) in the different charts of Fig. 5). 398 Figure 5: Long term sustainability assessment, Austria, 1960-2003 (five-yearly, GDP per cap, Life expectancy, CO2 emissions) α = 0,1 3.2 α = 0,4 α = 0,9 Middle term assessment exercise The middle term assessment exercise was designed to test the NAIADE multicriteria method when applied to the macro sustainability problem with an increased number of criteria, which was allowed by the time series data available for an extensive list of indicators from 1970. Eleven criteria included in this assessment, are listed in Table 3. Table 3: Economic, social and environmental criteria, included in the medium-term assessment Economic Social Environmental 1) CO2 emissions; 1) Life expectancy; 1) GDP per capita; 2) HANNP; 2) GINI; 2) TPES per capita; 3) Water Quality. 3) Unemployment 3) REN; 4) Population growth 4) DMC Figure 6: Middle term assessment, Austria, 1970-1995, (ten/five-yearly, 11 criteria) α = 0.1, 0.2 α = 0.4 α = 0.6 α = 0.8, 0.9 Employing these indicators, a progress towards sustainability can be observed. However, when the parameter α is very low, and values with less intensity of preferences are taken into account the possibility of incomparable periods appear. In this sense, the results of the evaluation are similar to those of the long term assessment. The decrease in the number of periods and criteria contribute to signal an unambiguous trend. The precision of this trend can be explained by coincident partial φ+ and φ- rankings. By modifying the parameter α, the 399 phenomenon of rank reversal may appear (see the different rank of B (1980) and C (1990) in the different charts of Fig. 6). In this exercise, the method’s response to the increase in the number of criteria (with α=0.60) was tested. In this assessment HANNP was excluded and the generation of municipal solid wastes, adult educational achievement level, number of recorded crimes, life satisfaction level, forest trees damaged by defoliation, and expenditure on R&D were added to the set of criteria analysed. 3.3 Short term assessment exercise Figure 7: Positions in the phi+ and phi- ranking, Austria, 1970-1995, a=0.8, 0.9 Phi+ Phi4,50 4,00 3,50 3,00 2,50 2,00 1,50 1,00 0,50 0,00 1970,00 Phi+ Phi- 1980,00 1990,00 1995,00 Table 4. Economic, social and environmental criteria, included in the medium- and the short-term assessment Economic Social Environmental Institutional Criteria 1) GDP per capita; 1) Life expectancy; 1) CO2 emissions; used in the 2) TPES per capita; 2) GINI; 2) Water quality; medium 3) REN; 3) Unemployment; term 4) DMC 4) Population growth. assessment Additional 5) Generation of 5) Educational 3) Forest trees 1) Expenditure on criteria MSW. Attainment; damaged by R&D. used in the 6) Number of Rec. defoliation. short–term Crimes; assessment 7) Life satisfaction index. An alternative representation of the rankings presented so far is shown by plotting the positions of the different periods in the φ+ or φ- rankings. The ranking φ+ is based in the ‘better’ and ‘much better’ preference relations and indicates how a given period performs ‘better’ than the others. The ranking φ- is based in the ‘worse’ and ‘much worse’ preference relations and indicates to what extent the period is ‘worse’ than the others. Intersection of both allows the generation of a final ranking (See Fig.8). If these two lines followed a similar increasing evolution over time, we could talk about a ‘trend’ towards sustainability. Diverging lines or up-and-down evolution indicate likely incomparability between periods and irregular performance in terms of a sustainable progress of the country. As we observe, results are sensitive to the number of criteria included. Also, it must be clarified that fuzzy numbers were employed in some indicators for the assuming missing values for 2002 and 2003. Divergence in the rankings for these final years may have its origins in the increase of ‘fuzziness’ in relation to a dataset that is mostly quantitative. 400 Figure 8: Short term sustainability assessment, Austria, 1995-2003 φ+ Short term , yearly, 3 criteria φPosition in the ranking 10 8 6 4 2 0 1995 1996 1997 1998 1999 2000 2001 2002 φ+ Short term , yearly, 11 criteria φ- 10 Position in the ranking 2003 8 6 4 2 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 φ+ Short term , yearly, 16 criteria φPosition in the ranking 10 8 6 4 2 0 1995 4 1996 1997 1998 1999 2000 2001 2002 2003 Conclusions A progress towards sustainability seems to be taking place in Austria. When the assessment is done in the long term, recent years are closer to the top of the ranking than remote periods. However, we cannot talk about a regular evolution along a sustainable path. Moreover, it has been shown that the results crucially depend on methodological choices, such as the selection of the degree of credibility for accepting a given preference relation as valid. Our conclusion is mostly based on the long term assessment. On the whole during the last 40 years there is an apparent trend of improvement in sustainability, since there is a dominance of the present periods over the past years. This situation is visible if only some specific periods separated from each other by time are taken as reference points. If we look at the complex processes that take place closer together in time, the favourable trend is combined with certain areas of decline. An expanding set of criteria is in line with the principles of sustainability, since it reflects the multiple aspects that should be taken into account. However, the inclusion of additional criteria affects the feasibility of comparing the periods. As a counterbalance, knowledge about the dynamics of the system may increase. 401 A relevant aspect to take into account is that this judgement considers the opinions from the present. This may go against the performance in the past of the chosen criteria (when other aspects were privileged in the set of social objectives). As it has been mentioned in the paper, every multi-criteria assessment should be considered as a unique exercise, dependent on cultural and institutional aspects. For this reason, recalculation of the rankings in a regular basis seems to be an advisable exercise for supporting social learning. This is applicable at the macro level, as it is for other previous implementations of the method to sustainability issues. Several conclusions can be drawn from the application of multi-criteria methods to the problem of sustainability at the macro scale. First, an increased understanding of the problem is generated by addressing the assessment in a multi-dimensional way. The need to identify relevant criteria pushes us to reflect on the origins of the changes. Second, respects the original nature of the data, without the need to transform data into any single unit. Since the data are not arbitrarily managed, transparency of the assessment is enhanced. However, we should admit that some aspects of the implementation procedure are complex. This could operate against the original intention of making the process transparent. Additionally, criteria should be socially discussed. Previous institutional analysis and the inclusion of social actors during the evaluation process are needed. Otherwise it becomes difficult to define whether a given criteria should be minimised or maximised (energy, population). The inclusion of social actors also helps to set societal priorities. For this reason sustainability indicator sets and the definitions of criteria differ among countries. Finally, increasing the number of criteria, increases the likelihood of getting incomparabilities (in NAIADE). The indicators set should focus on those criteria that are unequivocally relevant. An increased number of criteria and periods may generates the phenomenon of rank reversal. Every assessment, socially supported, helps to evaluate history, but should also be understood as a product of unique historical conditions. Thus, the proposed approach offers a comprehensive framework for the assessment of sustainability at the macro level and could provide necessary support for policy makers in establishing priorities for development as well as evaluation of progress in a multidimensional setting. The multi-criteria macro-assessment module could become the standard element of environmentally extended input-output models and enable the assessment of complex scenarios of future development. The flexibility embodied in the parameters of multi-criteria assessment such as α allows for the consideration of greater or lesser degree of compensability among criteria therefore illustrating stronger and weaker sustainability perspectives. 5 Acknowledgement This paper is a product of the Emerging Theories and Methods in Sustainability Research (THEMES) Marie Curie Summer School “Analysing Complexity”, held at ICTA, The Autonomous University of Barcelona, Spain, 7-17 June, 2006. The authors are very grateful to Professor Juan Martinez-Alier and Professor Jeroen van den Bergh for valuable comments and suggestions. This paper has been accepted for publication in the Ecological Economics journal. 6 1. 2. 3. References Austrian Federal Government, 2002. The Austrian Strategy for Sustainable Development. In. Vienna: Federal Ministry of Agriculture, Forestry, Environment and Water Management; 70. Barbier EB, 1987. The concept of sustianable economic development. 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Selection of indicators (based on the UN CSD Theme Indicator Framework) Theme SOCIAL Equity Education Security Population Sub-theme Indicator Poverty Unemployment Mortality Education level Crime Gini Index of Income Inequality Unemployment Life Expectancy at Birth Adult Education Achievement Level (Tertiary) Number of Recorded Crimes per 100,000 Population Population Growth Rate Satisfaction Index (not included in the UN CSD Theme Indicator Framework) Population Change Life satisfaction ENVIRONMENTAL Atmosphere Land Fresh Water Biodiversity Climate Change Forests Water Quality Emissions Greenhouse Gases Forest Trees Damaged by Defoliation BOD in Water Bodies Human appropriation of net primary production (not included in the UN CSD Theme Indicator Framework) ECONOMIC Economic Structure Economic Structure Consumption and Production Patterns Economic Performance Material Consumption Energy Use GDP per Capita Direct Material Consumption Annual Energy Consumption per Capita Energy Use Share of Consumption of Renewable Energy Resources Generation of Industrial and Municipal Solid Waste Waste Generation and Management INSTITUTIONAL Institutional Capacity Science and Technology Expenditure on Research and Development as a Percent of GDP Annex 2. Indicator sets of sustainable development Source Aim Process for selection Definition of indicators Indicators of sustainable development United Nations Commission on Sustainable Development (UNCSD) {UN, 2001 #28;UN, 1996 #27} To become a reference to the principles and policy guidance of the Agenda 21 program. UN expert assessment, afterwards voluntarily tested by selected countries (employing participatory multi-stakeholders strategies). Analysis of chapters of Agenda 1. Equity 21 under the dimensions of 2. Health sustainable development 3. Education (social, economic, 4. Housing environmental, and 5. Security Institutional). 6. Population Within these categories, 7. Atmosph-9 indicators were classified 8. Land-10 according to the driving force – state – response model. 134 indicators To monitor, assess and National experts’ assessment (Sustainable review the EU's Development Indicators Sustainable Development Strategy Task force) including: To inform the general statisticians, researchers, public about progress in members of national attaining the commonly governments, and agreed objectives of representatives from sustainable European Commission development. services. OECD Environment To track environmental Prepared by the OECD progress and to support Secretariat with support of indicators {OECD, 2004 #22} policy evaluation the OECD Working Group (reporting, planning, on Environmental clarifying policy Information and Outlooks. objectives and priorities, budgeting, and assessing performance). To inform the public. Sustainable Development Indicators {Eurostat, 2001 #21} Main themes and number of indicators 9. Ocean & Coast -17 10. Fresh Water-18 11. Biodiversity-15 12. Econ. Structure-2 13. Consumption and prod. patterns-4 14. Instit. Framework 38 15. Institut. Capacity-37 Driving forces and state 1. Economic development - 29 indicators, organized according 2. Poverty and social exclusion - 14 to the political priorities of the 3. Ageing society - 11 Strategy: economic 4. Public Health - 16 development, social cohesion 5. Climate change and energy - 14 and protection of the 6. Produc. and consum. patterns - 18 environment 7. Management of natural resources - 7 8. Transport - 12 9. Good governance - 8 10. Global partnership - 14 Selected from the core 1. Climate change indicators included in the 2. Ozone layer OECD 3. Air quality 4. Waste generation 5. Freshwater quality 6. Freshwater resources 7. Forest resources 8. Fish resources 9. Energy resources 10. Biodiversity 405 Criteria for selection National scale and scope Relevance Understanding Conceptual soundness Within national governments capabilities Limited in number and adaptable to future Broad in coverage of Agenda 21 goals International consensus Data availability Desirability and availability Policy relevance Analytical soundness Measurability To monitor key Sustainable objectives of the Development indicators in Austria Austrian Strategy for Sustainable {Government, 2002 Development. #34;Austria, 2006 To identify mutual and #23} secondary effects of the implemented measures. Stakeholder consultation including federal ministries, representatives from the state (Länder) and district levels, social partners, different interest groups and NGOs. Connection of key topics with 1. Quality of life - 14 needs and activities of the 2. Dynamic Economic location for business society, resulting loads - 11 (pressures) as well as condition 3. Habitat, place to live – 19 (state) and effects (impact) on 4. Responsibility - 4 the environment. Manageable number Clear, systematic structure Handling of cross topics Orientation towards naturals assets to be protected. Annex 3. NAIADE Thresholds of the Sustainability Criteria Criteria SOCIAL Income inequality Indicator: Gini index, Disposable income (Household) Unemployment rate Indicator: Unemployment (% of total labour force) Life expectancy at birth Indicator: Years of life expectancy at birth Education Indicator: Tertiary attainment for age group 25-65 (% population) Number of recorded crimes Indicator: Number of recorded crimes per 100 000 population Population change Indicator: Population growth rate Life satisfaction Indicator: Percentage of people answering ‘very satisfied’ with their life. ENVIRONMENTAL CO2 emissions Indicator: CO2 emissions (Mt of CO2) Forests Indicator: Forest trees damaged by defoliation (%) Water quality Indicator: Organic water pollutants emissions (BOD) (kg per day) HANPP Indicator: HANPP ECONOMIC Income Indicator: GDP per capita (Constant 2000 US$) Material consumption Indicator: Domestic material consumption (DMC) (Million Tonnes) Energy consumption Indicator: Total primary energy supply per capita (Tonnes of oil equivalent (toe) per capita) Renewable sources of energy supply Indicator: Contribution of renewables to energy supply (% TPES) Wastes Indicator: Municipal waste generated (kg per capita) Expenditure in R&D Indicator: Gross domestic expenditure on R&D (As a percentage of GDP) Source Objective NAIADE Thresholds = ~= >< >> << 0,1 0,2 0,4 1 0,25 0,5 1 2 0,1 0,2 0,5 1 0,5 1 3 5 180 350 850 1400 0.01 0.02 0.1 0.2 1 2 6 8 2,5 5 15 30 0,4 0,8 2 3 550 1150 2750 4500 0,2 0,4 0,9 1,5 10 50 500 1000 1 2 4 7 0,05 0,075 0,1 0,3 0,05 0,1 0,2 1 15 30 75 125 0,025 0,05 0,1 0,25 Min WIID, 2003 Min World Bank, 2005 Max World Bank, 2005 Max OECD, 2006 Min Min OCDE, 2006 Max Eurobarometer Min IEA, 2005 Min Eurostat, 2006 Min World Bank, 2005 Min Haberl, 1999 Max World Bank, 2005 Min Eurostat, 2002 Min OECD, 2006 Max OECD, 2006 Min Eurostat, 2006 Max OECD, 2006 Annex 4. Historical evolution of the evaluating kriteria Gini Index of Income Inequality (%) Unemployment Rate (% of labour force) 28 5 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 27 26 25 24 23 22 1960 1965 1970 1975 1980 1985 1990 1995 2000 1960 406 1965 1970 1975 1980 1985 1990 1995 2000 Life Expectancy at Birth (years) Education - tertiary attainment (% population 2565) 80 16 14 12 10 8 6 4 2 0 78 76 74 72 70 68 66 64 62 1960 1965 1970 1975 1980 1985 1990 1995 2000 1960 1965 Number of Recorded Crimes per 100,000 Population 1970 1975 1980 1985 1990 1995 2000 Population Growth Rate (%) 1,5 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 1 0,5 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 -0,5 1960 1965 1970 1975 1980 1985 1990 1995 -1 2000 Eur o B ar o met er Li f e Sat isf act io n Sur vey CO2 emissions(Mt) 70 80 60 70 50 60 40 50 30 40 20 30 10 20 0 jun-95 jan-96 apr-97 may-98 nov-99 Very satisf ied Not very satisf ied DK jun-00 nov-01 10 Fairly satisf ied Not at all sat isfied 0 1960 1964 Forest trees damaged by defoliation ( %) 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 BOD in water bodies (kg per day) 14 120000 12 100000 10 80000 8 60000 6 40000 4 20000 2 0 0 1960 1965 1970 1975 1980 1985 1990 1995 1960 1965 1970 1975 1980 1985 1990 1995 2000 2000 GDP per Capita (Constant 2000 US dollars) 30000 160 Domestic Material Consumption (DMC), Tonnes 155 25000 150 20000 145 140 15000 135 130 10000 125 5000 120 115 0 1960 1965 1970 1975 1980 1985 1990 1995 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2000 407 Share of Consum ption of Renew able Energy Resources Annual Energy Consumption per Capita 30 5 4 25 4 3 20 3 15 2 2 10 1 5 1 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 Expenditure on Research and Developm ent (percent of GDP) Generation of Industrial and Municipal Solid Waste 700 2,5 600 2 500 1,5 400 300 1 200 0,5 100 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 900 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 0,700 800 0,600 700 0,400 400 0,300 300 0,200 200 0,100 100 HANPP (PJ/yr) (primary axis) 1995 1990 1980 1970 1960 1950 1940 1930 1920 1910 1900 1890 1880 1870 1860 1850 0,000 1840 0 1830 PJ/yr 500 % of NPP 0 0,500 600 HANPP as percentage NPP 0 (secondary axis) 408 Is France Sustainable? Some Empirical Evidence from Eight Sustainable Development Indicators Myriam Nourry Faculté des Sciences Economiques et de Gestion, Université de Nantes, France [email protected] 1 Introduction: Context and Purpose of the paper In 1992, the International Conference on Sustainable Development in Rio underlined the limits of gross domestic product (GDP) as a measure of sustainable development for a country. Indeed, "common indicators such as gross domestic product and measures of different resources or pollution flows do not assess the sustainability of economic systems" (paragraph 40.4 of Agenda 21). This article also points out that "sustainable development indicators must be constructed in order to form a useful basis for decision making". Therefore, since the beginning of 1990, measures aiming at completing the GDP and limiting its supremacy have been built. This paper lies within the framework of development of indicators of sustainable development. In fact, whereas alternative and competitive measures have been created to assess national sustainability, none of them is perfect: each index is based on a specific definition of sustainable development and so takes into account only some aspects of sustainability. Two main approaches of sustainable development can be described: weak sustainability and strong sustainability. The first defines sustainable development as a nondeclining level of well-being for future people. In economic models, this can be achieved by two ways: either a non-declining consumption or utility per capita, or a non-declining stock of total capital. The central point of weak sustainability is the possibility of substitution between human, man-made and environmental capital. In this approach, natural capital is not different from other resources. The aim is to keep the stock of total capital constant or increasing, whatever the combinations of the three types of capital are. On the contrary, strong sustainability gives an essential position to natural capital. According to this approach, sustainable development is defined by the maintenance of environmental functions and critical natural capital needed for the life of ecosystems. In this context, natural capital is a different capital without which human life cannot exist. This approach also takes into account specific evolutions of some natural and biophysical variables by introducing irreversibility and threshold effects. Therefore, models of strong sustainability impose constraints on the possibility of substitution between man-made, human and environmental capital. Contrary to weak sustainability that focuses on human well-being, strong sustainability deals with environmental functions and possible ecological limits to growth. In this context, it is interesting to compare the theoretical basis and empirical results of the different measures to give a better valuation of the sustainability of a country. This paper presents results from time-series analysis of eight measures of sustainability for France. It adopts the same methodology as the one used by Hanley et al. [1999].106 These authors work 106 Note that only five indicators are identical between Hanley's paper and mine (green GDP, genuine savings, ISEW, GPI and ecological footprint). The three other measures studied are two green HDI and the French Dashboard on sustainable development. 409 out seven alternative indicators for Scotland. Whereas the measures are supposed to assess the same phenomena, their results lead to different views of the national sustainability. The main aim of my paper is to compare the evolution of eight measures of sustainable development and to check if the indexes show a similar trend. In other words, do the empirical results of sustainable development indicators support the same conclusion concerning the sustainability of France? If the response is negative, the study of a single measure is not sufficient to assess the sustainability of a country and policies based on the conclusion of only one indicator should not be implemented because empirical results could be misleading. The remainder of this paper is divided into four sections. Section 2 deals with economic measures, section 3 with social and political indexes and section 4 with non-monetary indicators. Sections 2 to 4 have the same structure. Firstly, they give a description of each kind of indicator by focusing on the theoretical basis and practical problems. They also present the advantages and limits of each measure. Then, empirical results for France are presented. Finally, section 5 concludes by confronting opposite trends and presenting missing indicators and research prospects. 2 Economic measures 2.1 Green National Net Product 2.1.1 Theoretical description Gross national product (GNP) is the traditional measure of economic performance and is implicitly used to assess national development and welfare. GNP measures the value of goods and services in the economy. This indicator takes into account human capital imperfectly but does not integrate natural capital. The first step to compute green national net product (gNNP) is to work out national net product (NNP) by subtracting depreciation of physical capital from GNP. Then, many adjustments are necessary to obtain gNNP. These adjustments are derived from a neoclassical model of growth with a constant rate of discount and are linked to specific environmental variables (exhaustible resources, renewable natural resources, pollution flows, discoveries) (see Hamilton [1994] and Hanley [2000] for a review of the different optimal computations). Note that there is not a consensus among economists concerning the reasons for those modifications and on the techniques used to compute them. Another point of disagreement is the interpretation of gNNP. According to some authors (e.g. Solow [1993], Hartwick [1990]), gNNP is a measure of the Hicksian income, i.e it represents the maximum amount of possible consumption during a period that does not reduce the possibilities of future consumption. In this context, information on the sustainability of a country comes from the comparison of gNNP at the period t with consumption at the same moment. If gNNP is superior or equal to current consumption, the studied country will be sustainable. Note that an increase of gNNP means that the maximum level of sustainable consumption is also improving (Hanley [2000]). On the other hand, other authors doubt the ability of gNNP to be an indicator of sustainable development (e.g. Asheim [1994], Pezzey and Toman [2002b], [2005]). According to them, an instantaneous measure of gNNP does not indicate if a country is on a path of sustainable growth: the entire time path of gNNP must be assessed. This result is linked to the method of computation of the Hotelling rents for natural capital (that is, the difference between price and marginal cost). Even if the prices used were the optimal prices resulting from the theoretical model, this would not mean that gNNP is a measure of the Hicksian income because sustainability is not an efficiency problem but rather an equity one (Hanley [2000]). Therefore, gNNP would be the "true" measure only if sustainable prices were used. However, only current prices are available for empirical work 410 and these prices are neither optimal nor sustainable (Pezzey and Toman [2002a] [2005]). To compute an exhaustible gNNP, other data are missing. For example, since most marginal costs are not available, average costs are used instead and few pollution flows are included in the estimated gNNP because of the lack of data on abatement costs. To apply this indicator to France, we used the framework of Hartwick [1990] which suggests subtracting depreciation of all kinds of natural capital, valued with their Hotelling rents, and pollutant emissions valued at marginal abatement costs (cf. appendix 1 for the expression of gNNP). 2.1.2 Empirical Result for France Data used to estimate a green national net product (gNNP) for France come from various sources (cf. appendix 2 for a detailed presentation of the sources and methodology). Briefly, over the period 1990-2002, hotelling rents from energy (oil, gas and coal), minerals (copper, lead, zinc, silver and gold), forests107 and the costs of air pollution have been deducted from national net product (NNP). Given the facts that data on marginal production costs were not available for many resources and that partial data have been used (e.g. for the average cost of air pollutants), we refer our estimation to approximate environmentally-adjusted national product (AENP) as in Hanley et al. [1999]. Note also that four different AENP have been estimated. AENP 1-3 and AENP 2-4 are different because of the valuation of marginal damages from CO2 emissions: AENP 1 and 3 are based on the global marginal social cost of a ton of carbon emitted as estimated by Fankhauser [1994] (20 $ in 1995) ; whereas AENP 2 and 4 are built with an average value of 100 € per ton of carbon in 2000, taken from the Boiteux Report [2001]. AENP 3 and AENP 4 take into account the cost of three other air pollutants (NOx, SO2 and PM10) estimated by the average cost of a kilogramme of pollutant in 1998. These costs stem from the work of Rabl and Spadaro [2001]. Figure 1 shows NNP, AENP 1, AENP 2 and current consumption (C) and Figure 2 NNP, AENP 3, AENP 4 and C in real billion euros (of 2000). I would like to develop three comments on those graphs. First of all, for the whole period, the four AENP are always less than NNP. This indicates that environmental depreciation in any year has a negative impact on NNP. This influence varies according to the method of valuation and number of pollutants examined. In fact, the gap between AENP 1 and AENP2 (and between AENP 3 and AENP 4) is due to the difference of value of the marginal cost of a ton of CO2. Similarly, the difference between AENP 1 and AENP 3 (and between AENP 2 and AENP 4) is the consequence of the integration of a monetary valuation of damages from NOx, SO2 and PM10 emissions. Secondly, the comparison with current consumption shows that the four AENP are always higher than current consumption. This can be interpreted as a sign of national weak sustainability (cf. section 2.1.1.) because gNNP represents the maximum amount of possible consumption for a period that does not reduce the possibilities of future consumption. Nevertheless, note that pollution recorded in the AENPs is far from exhaustive: for example, overfishing, water pollution and loss of biodiversity are not included because of lack of data. This implies that the "true" gNNP would be lower than the AENPs shown in Figure 1 and 2. Therefore, any conclusions about the sustainability of France should be used with caution. The last but not the least remark is the fact that the four AENP have been rising for the whole period (except in the last year), indicating that the maximum level of sustainable consumption is also improving. 107 Note that hotelling rents from forest resources are added to NNP for France because natural regeneration is higher than wood extraction. 411 Figure 1: AENP 1 and 2 for France (1990-2002) Figure 2: AENP 3 and 4 for France (1990-2002) In conclusion, results for AENP support the idea that France was weakly sustainable for the period 1990-2002. However, given the fact that no AENP estimates the "true" measure of gNNP, this outcome is not very sound and should be used carefully. 2.2 Genuine Savings 2.2.1 Theoretical description Genuine Savings (GS) is an economic measure of sustainable development. It stems from a theoretical model of maximization of a social welfare function, discounted at a constant rate, under hypothesis of constant population and perfect substitution between all kinds of capital (Hamilton and Clemens [1999], Neumayer [2004]). Within this framework, it can be shown that the economy is unsustainable if its GS is inferior to zero (Pezzey and Toman [2002b]). GS is an extension of the Hartwick rule:108 an economy is sustainable if savings are superior to the aggregated depreciation of human, man-made and natural capital (Pearce and Atkinson 108 The Hartwick rule requires that rents from natural resource extraction must be re-invested in physical capital to maintain the amount of total capital at the same level (or a higher one). See Hartwick [1977]. 412 [1993]). These two authors attempt to estimate GS for 18 countries. Based on the following operational specification, the World Bank nowadays computes GS for all countries: GS = Gross national savings – fixed capital consumption + education expenditures – value of natural resources depletion – value of damages caused by pollutants (carbon dioxide and particulate matter). Empirical results show that OECD countries as well as East and South Asia never had negative GS during the period 1980-2000; whereas many African nations and the Middle East had negative value for this indicator during this same period (World Bank [2005]). Therefore, according to GS, most developing countries, dependent on natural resources exploitation, are unsustainable whereas results for developed nations do not indicate un-sustainability. Note that this indicator is a measure of weak sustainability. Indeed, the condition for sustainability in the theoretical model is non-declining consumption and total stock of capital on the optimal development path. Therefore, this requirement does not integrate an environmental constraint. On the contrary, there are no limits on the substitution between human and man-made capital and environmental capital. In this context, this indicator does not take into account irreversibility or threshold effects. Moreover, problems appear during the switch from the theoretical definition to the operational one. Firstly, the theoretical model supposes that the economy follows an efficient growth path. Therefore, prices used in the GS computation must be the optimal and sustainable prices (as for gNNP computations). However, only current prices are available for empirical work and these prices are neither optimal nor sustainable (Pezzey and Toman [2005]). Since empirical values of GS are estimated with incorrect data, conclusions on national sustainability based on this indicator must be used carefully. Secondly, methods used to compute natural resource depletion and damages from pollution are criticized. Neumayer [2000] uses an alternative method to assess resource depletion (El Serafy method109) and this change has an impact on the value of GS: for countries with substantial reserves, GS changes from a negative to a positive value, transforming conclusions on the sustainability of those countries. Thirdly, GS is overestimated because only damage from carbon dioxide and particulate matter are subtracted. Other environmental fields like biodiversity, water and soil are not included because of a lack of data, although these fields are important to assess national sustainability. To conclude, GS seems to be a partial and flimsy indicator of weak sustainability. 2.2.2 Empirical Result for France Data on GS are taken from the World Bank. To compute this indicator, the World Bank uses data from different sources (Bolt et al. [2002]): the World Bank (for gross national savings and dioxide carbon emissions), the United Nations (for fixed capital consumption), UNESCO (for education expenditures), British Petroleum, the International Energy Agency and the International Petroleum Encyclopedia (for natural gas, coal and oil), FAO (for forestry) and USGS Mineral Yearbooks (for minerals). Figure 3 shows GS with and without damages from particulate matter over the respective periods 1990-2004 and 1970-2004. I develop two comments on this graph. Firstly, note that the value of the French GS is always higher than zero within the period (with or without particulate matter). Therefore, France seems not to be unsustainable during the period, in that sufficient funds were re-invested in the economy to compensate for the depreciation of man-made and natural capital. This graph supports the idea that France is weakly sustainable. However, given the problems and limits of this indicator (cf. section 109 The El Serafy method valuates the "user cost" of resource extraction. It indicates the share of the resource receipts that should be considered as capital depreciation (see Neumayer [2004] for a detailed presentation). 413 2.2.1.), this conclusion must be used carefully. Secondly, GS decreased over the period: it reduced from 23.9 % to 11.3 % of gross national income. The study of the absolute values of GS shows an upward trend. Therefore, this means that genuine savings is increasing at a lower rate than gross national income. This is mainly explained by the important decrease in the weight of national net savings in national income over the period, a reduction a little limited by the increase of the percentage of education expenditures in national income. Concerning the environmental themes, the share in gross national income has decreased for energy rents since 1983 and has been constant for CO2 and particulate matter damages since 1987. In this context, if the trends described above continue in the future, the weight of the French GS in gross national income will not stop its fall because of the decrease of the share of national net savings and the constancy of those of CO2 and particulate matter damages. Figure 3: French Genuine Savings 1970-2004 24,00 22,00 % of GNI 20,00 18,00 16,00 14,00 12,00 10,00 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 GS without PM damages GS with PM damages To conclude, the positive value of GS cannot be interpreted firmly as a sign of weak sustainability (Pezzey and Toman [2005]) because GS is a "one-sided indicator of sustainability" (Atkinson et al. [1997]). Nevertheless, empirical results corroborate the idea that France is not unsustainable. 3 Social-political measures 3.1 Aggregated indicators 3.1.1 Theoretical description The first kind of sustainable development indicators focuses on the incorporation of environmental capital in traditional economic measures. Such indexes do not take into account social and political aspects. In this context, some authors attempt to correct GDP by integrating not only ecological but also social and political variables. Examples of this group of measures are: the indicator of sustainable economic welfare (ISEW) (Daly and Cobb [1989]) and the genuine progress indicator (GPI) (Cobb et al. [1995]). From personal consumption expenditures adjusted for income inequality, the general idea is to add contributions to welfare and/or sustainability (e.g. household labour and voluntary work) and to subtract losses (e.g. cost of environmental damages). To construct an ISEW for Sweden, Jackson and Stymne [1996] add non-defensive public expenditures on health and education, growth in capital and net change in international position and estimates of non-monetary contributions to welfare (domestic labour, durables consumption). They also subtract private 414 defensive expenditures in education and health, costs of environmental degradation and depreciation of natural capital. The approach to construct the GPI is similar (Anieslki and Rowe [1999]). Two main differences can be noted. The first is that private defensive expenditures and public non-defensive expenditures on health and education are excluded and the second is that cost estimates of welfare losses (e.g. loss of leisure time, underemployment) are included. The interpretation of these measures is the same: a rise of the ISEW or GPI means that national welfare and sustainability are improving. Therefore, the policy recommendation is to ensure that those indexes are not decreasing. Estimates of ISEW and GPI show a decrease of these indicators during the last twenty to thirty years, unlike the still rising GDP. These opposite trends support the "threshold hypothesis" (Max-Neef [1995]): there is a point beyond which economic growth does not improve the quality of life but deteriorates it. Consequently, empirical results indicate that development and sustainability are worsening in the studied countries. The application of these measures to France is another test of the threshold hypothesis. Two main problems appear during the construction of these indicators. Firstly, no theoretical basis supports them.110 Indeed, environmental and social adjustments do not come from a theoretical model but depend on ad-hoc justifications. Secondly, ecological and social costs and benefits must be monetized and yet this step is tricky since monetization techniques are criticized. Therefore, empirical results of ISEW and GPI depend on the choice of the valuation method. Concerning the interpretation of these indicators, I underline that they are indicators of weak sustainability. Indeed, substitutions between economic, social and environmental variables are possible and irreversibility and threshold effects in the ecological sphere are not taken into account. To conclude, note that a sustainable development indicator should enable one to assess if a country is on a sustainable growth path. Indicators such as the ISEW and GPI do not give this indication since no benchmark value for a sustainable state exists. The ecological and social adjustments only reduce the level of the indicator, which means that a part of the development occurs at the expense of environmental quality and social conditions. 3.1.2 Empirical results for France Data used to estimate the ISEW and GPI for France come from various sources (cf. appendix 3 for a detailed presentation of the sources and methodology). Figure 4 shows ISEW, GPI and GDP per capita over the period 1990-2002. Two main comments can be developed concerning this graph. Firstly, it is striking that ISEW and GPI per capita always had a lower value than GDP per capita. Note also that, over the whole period, GPI per capita was inferior to ISEW per capita. This suggests that the incorporation of social, political and environmental variables in a traditional measure of development contributes to lower the value of this indicator. Therefore, it seems that a part of the development of France between 1990 and 2002 occured at the expense of environmental quality and social conditions. Secondly, two trends appear: a first one from 1990 to 1997 and a second one from 1997 to 2002. During the first period, ISEW and GPI per capita rose, as did GDP per capita. This indicates that the development of France improved during the period 1990-1997. During the second period, the trends were no longer similar. While GDP per capita continued to increase, ISEW and GPI per capita showed an unstable evolution. Indeed, in 1998 and 1999, the rise of the number of car accidents and of water pollution, a small net capital growth and negative changes in net investment position contributed to a falling ISEW and GPI indicator. Nevertheless, in 2000 and 2001, ISEW and GPI per capita increased positively mainly 110 Except Lawn [2003] who constructs a theoretical framework based on the concept of Fisherian income. 415 because of the increase of net capital growth and positive changes in net investment position. But, in 2002, ISEW and GPI per capita decreased because of a reduction of net capital growth and negative change in net investment position. This unstable trend suggests that the development of France was not regular over the period 1998-2002 and environmental, social and economic variables influenced it. Figure 4: ISEW/GPI per capita in France (1990-2002) To conclude on these indicators, remember that this application was another test of the threshold hypothesis. It seems that the trends of ISEW and GPI per capita do not support the threshold hypothesis for France between 1990 and 2002, contrary to other studies on European countries (Jackson and Stymne [1996] for Sweden, Hanley et al. [1999] for Scotland). However, these papers computed ISEW or GPI per capita over a longer period. Therefore, an extension of the computations for France in previous years could supply a stricter verification of the threshold hypothesis. 3.2 Non-aggregated indexes 3.2.1 Theoretical description The group of social and political measures is also composed of non-aggregated indicators, i.e dashboards on sustainable development. This kind of measure is interesting because it has the advantage of avoiding the difficult step of aggregation and monetization of environmental and social items. To construct the dashboard, France used United Nations' works. Indeed, in 1995, the commission on Sustainable Development defined a list of 134 indicators divided into four groups (economic, social, environmental and institutional) and published in 2001 a methodological report in order to guide countries in constructing dashboards. The construction of the dashboard was based on the Pressure-State-Response (PSR) model that suggests dividing the indicators into three groups: indicators of pressures on the environment, those describing the change in the state of the environment and finally those translating institutional responses. France has changed the framework proposed by the United Nations: it separates 10 modules (grouped in 5 themes) relevant to assess the sustainable development of a country and insists on the links between them. In this context, France adopted a list of 45 sustainable development indicators in 2004 (Ayong Le Kama et al. [2004]) and chose 15 key indicators (cf. appendix 4). These main measures aim at "broadening the description of growth by integrating a human dimension and environmental pressures, establishing the state 416 of resources to transmit to future generations and giving some information on inter/intragenerational equity" (IFEN [2003]). This set of measures is interesting because it can give a more exhaustive view of a country in terms of sustainability and it avoids the problematic step of aggregation and monetization. Nevertheless, it can be difficult to have a global and clear picture of the sustainability of national growth with a dashboard because of the number of data and information, sometimes at odds, to examine. Moreover, contrary to the ISEW and GPI, this kind of indicator is not a substitute for GDP but rather a complement. In this context, it cannot be integrated into an economic model to evaluate the consequence of a given policy in terms of sustainability. The dashboard can still be useful to give some relevant information on specific aspects of sustainable development. 3.2.2 Empirical Results for France The French dashboard on sustainable development contains 45 indicators. In this section, I will not present all the results and I will focus on the significant trends of the 15 key indexes111 (cf. appendix 4) to assess the sustainability of France. These measures are presented with the three-pillar framework of sustainable development, so they are grouped in economic, social and environmental sets. Three main results can be underlined. First, in the economic domain, three indicators give information on the state of resources for future generations (genuine savings, employment rate and R&D expenditures). Over the past ten years, the trends for those indexes show positive GS, a relatively stable employment rate and rising R&D expenditures (Ayong Le Kama et al. [2004], IFEN [2003]), suggesting that some factors needed for sustainable development are present in France for current and future generations. Nevertheless, in the environmental field, empirical results for five indicators indicate that French production and consumption modes put considerable pressures on the environment. However, the trend of CO2 emissions compared with that of GDP does not support this conclusion. It shows a decoupling between GDP and CO2 emissions over the 1990-2000 period, suggesting that economic growth can be continued without imposing an increasing burden on air quality. Therefore, ecological key indicators give an ambiguous picture of environmental effects of economic growth. This result also appears with social indicators. Some variables of human development are improving (life expectancy and mortality rates) whereas others indexes of national and international equity are worsening (expenditures for development assistance, public debt) or relatively stable (long-term unemployment rate and proportion of households below the poverty line) (Ayong Le Kama et al. [2004], IFEN, [2003]). This brief description of the important results based on the dashboard on sustainable development illustrates the advantages and limits of this kind of indicator. Whereas it gives useful information on specific element of sustainable development, it is difficult to synthesize and obtain a clear conclusion on the sustainability of France. According to the 15 key indicators, it seems that France is not sustainable because environmental quality is worsening for some aspects (e.g water, soil) and some threats exist on inter/national intra/intergenerational equity. 4 Non-monetary measures During the presentation of economic measures (section 2.) and social-political indexes (section 3.), I insist on the difficulty of monetizing environmental and social losses and 111 Note that I do not present the 15 graphs for the sake of brevity. These figures can easily be found in Ayong Le Kama et al. [2004] and IFEN [2003]. 417 benefits. Consequently, it is relevant to avoid this step and build non-monetary indicators of sustainable development. Two measures have already been created: one is a physical indicator and the other a "green" extension of the human development index (HDI). 4.1 A physical indicator: Ecological Footprint 4.1.1 Theoretical description The ecological footprint was first proposed and developed by Rees and Wackernagel [1994] and Wackernagel and Rees [1996]. It is a physical indicator of sustainability expressed in land units. Its objective is "to translate all the ecological impacts of human activity into the area required to produce the resources consumed and to assimilate the wastes generated under the predominant management and production practices in any given year" (Neumayer [2004]). Energy, food and timber consumption per capita are transformed in terms of land area needed to produce these amounts. The sum is then compared with the amount of available productive land area per capita. If the ecological footprint is higher, the carrying capacity112 of the land is exceeded. In other terms, economic activity, responsible for the ecological footprint, is unsustainable. Note that a positive footprint (or ecological deficit) can come from either the depletion of national natural capital or importations of natural resources. In this context, not all countries can have a positive footprint. Whereas this indicator is appealing and widespread, it is not perfect. I present below three main limits. Firstly, the ecological footprint construction is problematic because heterogeneous data are transformed into land units. Conversion methods are criticized. For example, not all the aspects of economic activity can be integrated into the index because of the lack of means of conversion into physical units (Neumayer [2004]). Secondly, the ecological footprint can be seen as an indicator of weak sustainability whereas proponents present it as a measure of strong sustainability. Although this indicator focuses on the environmental constraint on development, it does not include irreversibility or threshold effects. In fact, even if the ecological footprint is lower than the carrying capacity of the ecosystem, it is possible that some critical ecological thresholds have been exceeded. There are no constraints on the substitution between different kinds of natural capital. In this context, it should not be regarded as an indicator of strong sustainability. The last but not the least limit, is the lack of policy recommendation based on ecological footprint analysis. If the goal is to reduce the ecological footprint to fit within the carrying capacity of the land, advocates of this indicator do not propose detailed policy advice. 4.1.2 Empirical result for France Only partial data were available for this indicator: for the years 1961, 1971, 1981, 1991, 1999 and 2001, data of the ecological footprint and biocapacity have been taken from WWF "Living Planet Reports" ; for the years 2002 and 2003, data come from the National Footprint Accounts 2005 and 2006 published by the Global Footprint Network. Data on total national population have been taken from the World Resource Institute to compute ecological footprint and biocapacity per capita. Values of these two indicators have been estimated for the missing years by a linear approximation (using an average annual growth rate). The graph below shows the trends of the ecological footprint (superior line) and biocapacity per capita (inferior line) between 1961 and 2003. Note that bold points on the graphs n°5 and 6 represent real values whereas dotted lines represent estimated values of the indicators. 112 The carrying capacity defines the extent of disruptions that can be absorbed by a system based on a locally stable equilibrium before shifting to another one. 418 First of all, during the studied period, the ecological footprint per capita was always higher than the individual biocapacity: in 1961, the individual ecological footprint was 4.51 ha and biocapacity 2.98 ha, in 1981 4.71 ha versus 2.55 ha and in 2003 5.6 ha versus 3 ha. This means that the carrying capacity of land in France has been exceeded. Therefore, the French economic activity is unsustainable. This result also appears on the graph of the ecological deficit that is the difference between biocapacity and ecological footprint (Figure 6). During the period, the ecological balance was always negative. Moreover, the French environmental deficit is widening: from –1.53 ha in 1961, it rose to –2.6 ha in 2003, i.e an increase of 70 % in forty years. This is mainly due to the growth of the ecological footprint which is explained especially by the rise of the energy footprint (i.e the land needed to absorb national CO2 emissions) (WWF [2002]). The downward trend of the ecological deficit suggests that France is not on a sustainable growth path. On the contrary, according to the ecological footprint, France is unsustainable and continues to develop at the expense of the environment. This country could be sustainable in the future only if a considerable reversal of the economic activity occurs in order to reduce the ecological footprint to fit within the biocapacity. Figure 5: Ecological Footprint in France (1961-2003) 6,00 5,50 Hectare per capita 5,00 4,50 4,00 3,50 3,00 2,50 2,00 1960 1965 1970 1975 1980 1985 Ecological footprint per capita 1990 1995 2000 Biocapacity per capita Figure 6: Ecological deficit in France (1961-2004) 0,2 Hectare per capita 1960 -0,3 1965 1970 1975 1980 -0,8 -1,3 -1,8 -2,3 -2,8 419 1985 1990 1995 2000 4.2 A "green" extension of the HDI 4.2.1 Theoretical description The "green" extensions of the HDI constitute the second kind of non-monetary indicators. The HDI, created by the United Nations Development Program in 1990, is a well-known global measure of human development.113 It is composed of three variables (equally weighted): GDP per capita, life expectancy at birth and education level (measured by adult literacy and enrollment rates in education). In this context, it seems that economic and social fields are included in the HDI. To be interpreted as a sustainable development indicator, an environmental variable is missing. Therefore, some authors seek to incorporate such an ecological measure into the HDI (Desai [1994], Lasso de la Vega and Urrutia [2001], Costantini and Monni [2004]). Different methods are used. As I compute the "green" extensions of Lasso and Urrutia and Costantini and Monni for France, I present briefly their methodology. Lasso and Urrutia include an environmental variable by penalising the income component of the HDI. They compute an environmental behaviour indicator (EBI) based on CO2 emissions per capita and combine it with GDP per capita using the approach of Atkinson's inequality index (cf. appendix 5 for the exact expression of the indicator). Whereas Lasso and Urrutia keep the same economic and social variables, Costantini and Monni change the composition of the HDI to better assess human development in OECD countries. They use green national net product per capita, unemployment rate and gross tertiary enrolment ratio instead of respectively GDP per capita, life expectancy and measures of education level. They include a forth equally weighted variable in their "sustainable HDI" (SHDI) composed of three measures of environmental quality (for air, water and soil) (cf. appendix 6 for the exact specification). Even if these "green HDI" seem interesting to assess sustainable development, some limits on their computation and interpretation can be underlined.114 Concerning the construction of these measures, the choice of the environmental variable and its exhaustiveness is important. In fact, a sustainable development indicator cannot be based on a specific measure of pollution. On the contrary, it must represent all environmental threats. Consequently, it is more relevant to use an aggregated and weighted ecological index (as in Costantini and Monni's paper). Nevertheless, the weighting of the environmental variable in the HDI is another issue (Boulanger [2004]). The choice is between equal weights for each component or different ones. Note that the choice of weights is not without effect because it has an impact on empirical results. However, this step is not based on theoretical arguments and is totally arbitrary. Concerning the interpretation of the "green HDI", I would like to develop two comments. The first is that a sustainable HDI is an indicator of weak sustainability because substitutions between economic, social and environmental variable are possible. So, this measure does not take into account irreversibility and threshold effects. Moreover, the interpretation of "green HDI" is very tricky because there is no benchmark value: it is not possible to check if the current state is sustainable or if the trend leads to sustainability. 4.2.2 Empirical results for France Two extensions of the HDI are applied to France. As these developments are described above, I am going to present briefly the data used and then describe more precisely empirical results. 113 Note that the validity of the HDI as an indicator of human development and welfare is still criticized (e.g. Mac Gillivray [1991], Sen [1997], Hicks [1997], Noorbakhsh [1998]). 114 I present only general drawbacks of those "green" HDI. Nevertheless, specific and individual comments on their computation can be developed (e.g the choice of the maxima and minima). 420 To compute the French "pollution-sensitive human development indicator" (HDPI) (based on Lasso and Urrutia's methodology), I used data from: the World Bank (GDP per capita in purchasing power parity), the French statistical institute INSEE (life expectancy), Human Development Reports of the United Nations and the French ministry of Education (adult literacy and school enrolment rate) and also the World Resource Institute (CO2 emissions per capita). I worked out this indicator for the period 1990-2000 (cf. appendix 5 for the exact specification). Figure 7 shows HDI and HDPI over the period 1990-2000. At first sight, both indicators increased during the decade. The French HDI rose from 0.9039 in 1990 to 0.9306 in 2000 and the HDPI from 0.9021 to 0.9259. Note also that the value of the HDPI is less than that of the HDI. Therefore, the incorporation of an environmental variable into the HDI reduces its value. Figure 7: HDI and HDPI in France (1990-2000) 0,9350 0,9300 0,9250 0,9200 0,9150 0,9100 0,9050 0,9000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 HDPI HDI The study of the gap between these two measures provides some interesting results (see Figure 8). Figure 8: Gap between HDI and HDPI in France (1990-2000) 0,0050 0,0045 0,0040 0,0035 0,0030 0,0025 0,0020 0,0015 0,0010 0,0005 0,0000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 421 Indeed, the difference decreased between 1991 and 1994 whereas it increased after 1994. This phenomenon can be explained by the trends of the different components and especially by the income and environmental variable. In fact, the time-series analysis of these two elements shows that environmental quality improved over the 1991-1994 period and worsened after 1994, whereas income per capita grew during the decade. In summary, as the "green" HDI increased over the period, it seems that human development in France is improving. Nevertheless, to draw a conclusion on the sustainability of this development would not be accurate since no benchmark value for sustainable development exists. What just can be said is that the level of human development is lower when the state of the environment is taken into account. To calculate the "sustainable HDI" (based on Costantini and Monni's approach), data come from: the French statistical Institute INSEE and the French ministry of Education (tertiary gross enrollment ratio), the United Nations economic commission for Europe UNECE (unemployment rate), the World Bank and INSEE (green national net product per capita), the European Environmental Agency and the World Resource Institute (air, water and soil pollution). This "green HDI" is also computed for the period 1990-2000 (see appendix 6 for the precise formula). Figure 9 shows the French HDI and SHDI over the decade. There is an upward trend for both measures. The HDI rose from 0.9039 in 1990 to 0.9306 in 2000 and the SHDI from 0.7636 to 0.8182. One can observe that the value of the SHDI is lower than that of the HDI. In comparison with the HDPI, the gap between the indexes is larger. Therefore, the incorporation of an environmental measure and the change of other variables have a negative impact on the level of the indicator. In short, as the SHDI has increased, but at a lower level, it seems that human development has improved in France between 1990 and 2000. However, no relevant conclusion on sustainability can be deducted from this indicator. Figure 9: HDI and SHDI in France (1990-2000) 0,9500 0,9300 0,9100 0,8900 0,8700 0,8500 0,8300 0,8100 0,7900 0,7700 0,7500 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 SHDI HDI Figure 10 indicates that the gap between the two HDI decreased over the period because of the improvement in environmental quality. Nevertheless, the difference is still significant (0.1123 in 2000), which supports the idea that the insertion of environmental issues decreases the level of human development. 422 Figure 10: Gap between HDI and SHDI for France (1990-2000) 0,1450 0,1400 0,1350 0,1300 0,1250 0,1200 0,1150 0,1100 0,1050 0,1000 1990 5 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Conclusions and prospects This paper has presented data concerning the evolution of eight indicators of sustainable development for France. A theoretical description of each index has highlighted their advantages and drawbacks, underlining the fact that no indicator is perfect and no one can give an exhaustive view of national sustainability. Results show that trends of the various measures do not support the same conclusion about the sustainability of France. Indeed, while the computations of AENP and GS uphold the idea that French development was weakly sustainable, the analysis of the EF path and the French dashboard on sustainable development support the opposite idea. Results for ISEW, GPI and the two "green" HDI back up the theory of unsustainability of French development because those measures indicate that a part of development occurred at the expense of environmental quality and social conditions. Given this different empirical evidence, it seems that French development is unsustainable. Therefore, the example of France shows that the study of a single measure is not sufficient to assess the sustainability of a country because empirical results can be misleading. The analysis of various indicators is necessary to evaluate national sustainability with accuracy. In this context, note that some indicators of sustainable development are missing. Ecological measures such as the net primary productivity, environmental space and material flows are not computed. Another missing indicator is the sustainable national income (SNI) (Hueting and De Boer [2001]) that combines physical values and a monetary valuation. Indeed, the SNI can be defined as the "maximum attainable level of production and consumption, using the technology of the year under review, whereby the vital functions, that is possible uses, of the physical surroundings remain available forever". The SNI was estimated for the Netherlands with an general equilibrium model by Gerlagh et al. [2002] and Hofkes et al. [2004]. Therefore, it is possible to collect new empirical evidence about the sustainability of France by computing the ecological measures aforementioned and estimating a French SNI. 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Etude en collaboration, Paris. 425 Appendix Appendix 1: Expression of the Green National Net Product estimated for France ( & - ∑ (p − Cm )(R − g ) − ∑ b E - d gNNP = C + K i i i i j j j with n m i =1 j =1 ) (1) gNNP is green national net product, & is net investment (so C + K & is national net product), C is total consumption and K Ri is production or extraction of resource i, gi is growth of the resource i (gi = 0 for non-living resources), pi is the market price of the resource i, Cmi the marginal cost of production or extraction, bj is the marginal cost of abatement of the pollutant j, Ej is emission of pollutant j, dj is the natural dissipation of pollutant j (dj=0 for pure cumulative pollutants). Source : adapted from Hamilton and Clemens [1999] Appendix 2: Sources and methodology for EANP Net national product is estimated by the subtraction of depreciation of fixed capital (INSEE data) from gross national product (United Nations data). Real values of gross national product have been obtained using the French GDP deflator (INSEE data). Hotelling rents from energy have been estimated with data of various sources. Annual productions of oil, natural gas and coal (in kTep) come from the French Research Institute on Energy. Data for oil ($ per barrel) and gas prices ($ per billion BTU) have been taken from the British Petroleum Statistical Review of World Energy of 2006 and prices for coal from the World Bank. Marginal production costs have not been found. I used average costs taken from the World Bank for gas ($ per TJ) and coal ($ per ton). For oil, I found partial data on average production costs ($ per barrel) for the years 1990, 1994, 1998 and 2000 (French Oil Institute via CNRS). Missing data have been estimated with an annual average growth rate. Prices and production costs have been converted into $ per ton using conversion factors from the British Petroleum Review of World Energy. French wood production (in cubic meters) has been taken from the Food and Agriculture Organization (FAO) of the United Nations. Natural regeneration (in cubic meters) and prices ($ per cubic meter) come from the World Bank. A rental rate of 40 % is assumed, as used by the World Bank for genuine savings computations. This provides unit rents and costs ($ per cubic meter). I used this methodology because I did not find detailed data on prices or average/marginal costs. French mineral productions (copper, lead, zinc, gold and silver) have been taken from various U.S Geological Survey Mineral Yearbooks. Average annual prices for copper, zinc, gold and silver have been derived from INSEE monthly data and prices for lead is a world average (World Bank data). Since marginal/average extraction costs have not been found, I used average costs published by the World Bank. Finally, damages from air pollution have been calculated with four different methods. For AENP 1 and 3, I estimated the cost of total CO2 emissions using the value of 20 $ per ton of carbon in 1995 (Fankhauser [1994]). This has been deflated for missing years using the French GDP deflator. For AENP 2 and 4, I changed the value of a ton of carbon and used the figure of the Boiteux Report [2001], 100 € per ton of carbon in 2000. This also has been deflated for other years using the French GDP deflator. For AENP 3 and AENP 4, in addition to the cost of CO2 emissions, I took into account the damage cost of three other air pollutants (NOx, SO2 and PM10). Total NOx and SO2 emissions come from the European Environmental Agency (EEA) and total PM10 emissions from the Interprofessional Technical Centre (CITEPA). Although marginal damage costs have not been found, average costs have been studied by Rabl and Spadaro [2001]. Those estimated costs value external damage costs on health, buildings and harvests. Note that the effects on health are the most important. Rabl and Spadaro [2001] estimate the cost of a kilogramme of NOx, SO2 and PM10 at respectively 16 €, 10.5 € and 15.4€ in 1998. Those costs have been deflated for missing years using the French GDP deflator. All data in $ have been converted into € using an exchange rate from Eurostat. 426 Appendix 3: Sources and methodology for ISEW and GPI The French ISEW by variable: Variables (Sources) Computations Personal Consumption (INSEE) Distribution inequality (World Inequality Income Database of the United Nations) Weighted Personal consumption + Services from domestic labour (INSEE) + Services from consumer durables (INSEE & Williams [1998]) + Services from roads + Public expenditures on health and education (OECD & Education Ministry) - Consumer durables (INSEE) - Defensive private expenditure on health and education (INSEE) – Cost of commuting (INSEE) – Cost of personal pollution control (IFEN) – Cost of automobile accidents (National institute of road safety) – Cost of water pollution (Water Agency) – Cost of air pollution (European Environmental Agency (EEA) and Interprofessional Technical Centre (CITEPA)) – Cost of noise pollution (INSEE et Boiteux [1994]) – Loss of wetlands I use Gini's coefficient. Note that Atkinson's inequality index can also be used. = Personal consumption / (1 + Gini coefficient) I use data from two national time-use studies [1986, 1999] to estimate the time-use for domestic labour (childcare, housework). I monetize this time by multiplying it by a time-varying wage rate (the SMIC, minimum guaranteed income). The flow of services from durable goods is calculated using the average lifetime of the goods (taken from Williams [1998]) and the value of expenditures on them in each period. The flow of services from each good is assumed to be equal in each period of its life. Not integrated because of lack of data As some of the expenditures on health and education must be regarded as defensive, "the ISEW does not include all government expenditures on health and education, but takes only half of the expenditures on health and education as a non-defensive contribution to welfare" (Jackson and Stymne [1996]) This includes consumption of cars, television sets, washing machines, refrigerators and freezers, furniture, carpets and textile. As for public expenditures, the ISEW assumes that only one half of private expenditures on health and education contribute to welfare. I use data from two national time-use studies [1986, 1999] to estimate the time-use for travelling to and from work. I monetize this time by multiplying it by a time-varying wage (the SMIC, minimum guaranteed income). This includes mainly expenditures for purifying and insulation of houses and purchase of waste containers. I use data on the annual number of accidents (divided into three classes: fatal accident, slight injury and serious injury). I apply a unit cost for each kind of accident (1,000,000 € per fatal accident, 150,000 € per serious injury and 22,000 € per slight injury). These costs are taken from the National Institute of Road Safety [2006]. I have decided to use the same methodology employed in the Swedish study, namely to scale the estimated costs of water pollution in the USA in 1972 according to the relative difference in GDP. Then, the cost estimate is spread over the period using an indicator for the quality of water (i.e proportion of sites with an average to bad concentration of nitrates). Valuation of the annual emissions of SO2, NOx, CO, PM10 and VOC is based on their marginal social costs. I compute average marginal social costs with the estimates of Rabl & Spadaro [2001], Tellus [1991] and Pace [1990]. The marginal social costs of SO2, NOx, CO, PM10 and VOC are respectively : 5245.4 €/T, 8093.4 €/T, 969.5 €/T, 7264.57 €/T and 5762.3 €/T (1995 €). I use the number of people bothered by noise (about 40 % of the whole population). I monetize these numbers by applying an individual cost of 137.2 € per person (in 1992) (taken from the Boiteux Report [1994]) increasing at the same rate as personal consumption. Not integrated because wetlands represent only 3 % of the French territory. 427 – Loss of farmlands (IFEN) – Depletion of non-renewable resources (Energy Ministry) – Costs of long-term environmental damage (Energy Ministry) – Costs of ozone depletion (UNEP) + Net capital growth (INSEE) + Net changes in international position (IMF via EconStats) The IFEN assumes that 81,000 hectares of farmlands have been destroyed each year for the period 1992-2003. So, I use this data to evaluate the cumulated physical losses. Then, I use the foregone benefits estimated by Daly and Cobb (1989) : 100 $ per acre per year (in 1972), i.e 397.19 € per acre per year (in 2000 €). I use the methodology employed by Jackson and Stymne [1996]. Data on annual consumption of coal, electricity, oil and gas are monetizing with a replacement costs of 75 $ per barrel of oil equivalent in 1988. Note also that this replacement cost increases by 3 % each year. Long-term environmental damage is taken into account by imposing an annual tax of 0.50 $ (1972) (1,98 € (2000)) on each barrel of oil equivalent consumed from non-renewable energy sources. This tax is supposed to operate cumulatively. That is to say, the total cost in any year is taken to be equal to the cumulative energy consumption (from 1981 onwards) multiplied by the tax imposed. Data on production is used (because no information on consumption has been found). The unit cost of 5 $ (1972 $), 19.86 € (2000 €), per kilogramme is applied to cumulated production. This variable accounts for capital formation net of both depreciation and the capital requirement (the capital growth necessary to maintain a constant level of capital per worker) flowing from an increase in the workforce. = Ct − Dt with Dt = Bt−1 × At where A is the change in number of people employed, B is the net capital stock (private capital only), C is the change in the net capital stock B and D is the ‘capital requirement’, while t denotes the year. = assets – liabilities Differences with the GPI : Variables not included in the GPI The variables "public expenditures" and "defensive private expenditures" are not taken into account to compute the French GPI. The GPI never includes these elements (Anieslki and Rowe [1999]). Alternative computation Costs of long-term environmental damage Additional variables Variables (Sources) + Services of volunteer work (INSEE et Archambault and Boumendil [1999]) – Cost of crimes (Research centre on law and penal institutions) – Cost of divorces (INSEE) – Cost of underemployment (INSEE) Long-term environmental damage is taken into account by imposing an annual tax of 1.45 $ (1,58 € (2000)) on each barrel of oil equivalent consumed from nonrenewable energy sources. This tax is supposed to operate cumulatively. That is to say, the total cost in any year is taken to be equal to the cumulative energy consumption (from 1981 onwards) multiplied by the tax imposed. Computations I found data on the number of volunteer workers for the years 1991, 1993, 1996 and 2002. For missing years, I apply the proportion of volunteers in the population to the French total population. I assume that each participant gives 2.5 hours per week to voluntary work, as Prouteau and Wolff [2004]. I monetize the annual number of volunteer work using the SMIC, minimum guaranteed income. Over the period 1990-1996, I use estimated costs of stealing, tax evasion, customs frauds, economic offences, pimping and consumption drugs from Godefroy and Laffargue [1995] and Palle and Godefroy [1998]. For the period 1997 to 2002, I compute the costs by applying the annual growth rate of crimes and offences to the previous estimated cost. I multiply the annual number of divorces by a unit cost (4,204 € en 2000) representing expenditures for legal fees and counselling. This cost is an average between estimated costs of the three kind of divorce. I use the estimated number of people being in a situation of underemployment from the INSEE. Employment surveys indicate these people, for the most part, work for 20 hours and want to have a full-time job. Therefore, I multiply their number by the number of additional hours they desire to work (15 hours) and then 428 by a time-varying wage rate (the SMIC). + Gain of leisure time (INSEE) From two time-use studoes, leisure time increases by 2 hours per week (96 h per year) between 1986 and 1998. I assume this growth was equally distributed during the 12 years and is continuing at the same rate: a gain of 8 hours of leisure time per year. I monetize this value using the SMIC (minimum guaranteed income). Appendix 4: The French Dashboard of Sustainable Development The structure of the Dashboard Theme 1: Sustainable Growth Module 1: "Eco-efficient" growth Module 2: Integrating the environment into the production structure Theme 2: Critical Heritage and Resources Module 3: Sustainable use of Resources Module 4: Maintaining and transferring our heritage Theme 3: The spatial dimension and the global perspective Module 5: Inequality and spatial distribution Module 6: Relationships between France and the rest of the world Theme 4: Satisfying the needs of the present-day generations Module 7: Inequality and Exclusion Module 8: Behaviour reflecting dissatisfaction Theme 5: The long-term and future generations Module 9: Principles of responsibility and precaution Module 10: Vulnerability and adaptability to unforeseen circumstances Source: Institut Français de l'Environnement-IFEN [2003] The 15 key indicators 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Life expectancy without disability (theme 2, Module 4) Avoidable untimely mortality rate (theme 2, Module 4) Artificial lands (theme 2, Module 3) Contamination of inland waters by pesticides (theme 2, Module 4) Overfishing (theme 2, Module 3) Biodiversity: changes in the population of common bird species (theme 2, Module 4) Genuine Savings (theme 5, Module 10) Employment rate (theme 5, Module 10) Research and Development expenditures (theme 5, Module 9) Waste production and population (theme 1, Module 1) CO2 emissions and GDP (theme 1, Module 1) Public debt (Theme 5, Module 9) Proportion of households living below the poverty line (Theme 4, Module 7) Long-term unemployment rate (Theme 4, Module 7) Public expenditures for development assistance (theme 3, Module 6) Source : IFEN [2003] and Ayong Le Kama et al. [2004] Appendix 5: Expression of the "Pollution-sensitive HDI" HDPI = 1 3 (H1 + H 2 + H 3P ) (2) with : 429 LE - 25 where LE is life expectancy H1 = 85 - 25 2 AL 1 ER where AL is adult literacy and ER school enrollment rates H2 = + 3 100 3 100 1 ⎡1 1−ε 1−ε ⎤ 1−ε H 3 P(ε ) = ⎢ (H 3 ) + (EBI ) ⎥ 2 ⎣2 ⎦ 1 ln(GDP) − ln(100) where H 3 = with GDP = gross domestic product per capita ln(40.000) − ln(100) EBI = 1 - with CO 2 = CO 2 emissions per capita 60 ε is the degree of aversion to inequality and is fixed at 2 for computations CO 2 Source : Lasso de la Vega and Urrutia [2001] Appendix 6: Expression of the "Sustainable HDI" SHDI = 1 ⎡⎛ x1 − 0 ⎞ ⎛ (100 − x 2 ) − 0 ⎞ ⎛ log(x 3 ) − log(100) ⎞ ⎛ x 4 + x 5 + x 6 ⎟⎟ + ⎜⎜ ⎟+⎜ ⎟⎟ + ⎜⎜ ⎢⎜ 100 4 ⎣⎜⎝ 100 − 0 ⎟⎠ ⎜⎝ 100 − 0 ⎠ ⎝ log(40.000) − log(100) ⎠ ⎝ ⎞⎤ ⎟⎟⎥ ⎠⎦ (3) with: x1 : tertiary gross enrollment ratio x2 : unemployment rate x3 : Green NNP per capita ⎛ y −0 ⎞ ⎟ where y1 is the air pollution index : y1 = tonnes per day per worker of NO x , x 4 = 1 − ⎜⎜ 1 0,03 − 0 ⎟ ⎝ ⎠ SO 2 , NH 3 , NMVOC and CO. ⎛ y2 − 0 ⎞ ⎟⎟ where y 2 is the water pollution index : y 2 = kg of BOD emissions per day 0,55 0 − ⎝ ⎠ x 5 = 1 − ⎜⎜ per worker. ⎛ y3 − 0 ⎞ ⎟⎟ where y 3 is the soil pollution index : y = fertilizers, herbicides and insecticides 3 ⎝ 6.000 − 0 ⎠ x 6 = 1 − ⎜⎜ used on arable land, kg per hectare Source: Costantini and Monni [2004] 430 Environmentally Adjusted GDP for the Czech Republic: To What Extent is Assessment Possible? Iva Ritschelova, Egor Sidorov Jan Evangelista Purkyně University in Ústí nad Labem, Czech Republic [email protected], [email protected] 1 Conventional GDP and its alternatives 1.1 GDP as a measure of economic activity GDP is one of the main indicators that can be derived directly from the national accounts data. GDP is a general measure of the performance of the economy in terms of economic activity. GDP has number of important functions, which, of course, are closely connected with the functions of the whole system of national accounting. It is a tool which indicates the need for new policy initiatives on the one hand. On the other, it enables the analysis of the efficiency of the initiatives which have been already carried out. GDP is exclusively focused on economic activity. The growth of economic activity, no matter by what manner it has been stimulated (e.g., by employment growth, technological progress, or in consequence of natural disaster) positively affects the GDP. Its properties are closely connected with the concept in the basis of the conventional national accounting. GDP measures the “additional value of goods and services that are newly created in the economy and are available for domestic final uses or for exports” [1]. In other words GDP is equal to the value of all goods and services produced within the economy (i.e., output) less the value of all goods and services used in the production processes (i.e., intermediate consumption). The part of the product that is sold to the end users is called final goods (or services). All the elements are valued at market or equivalent market prices [1]. The economic activity is possible only due to the presence of assets, which belong to the nation. “An asset is any material or process that has the potential to generate a continuing flow of income.” [2] The quantity of the particular asset available at the certain time is defined as a stock of the asset. The general property of the stock is the ability to generate the flow of services during the chosen accounting period. This is the general differences between stock and flow measures within the national accounting system. The capital stock generates the flow of both factor and final services [2]. The general peculiarity of the conventional national accounting system is that it recognizes only the factor services of the reproducible capital and marketed renewable and non-renewable natural resources. Significant part of natural capital, remain out of SNA bounds due to the fact that their services are non-marketed even through the fact that they contribute to the quality of life. See the following Table 1. 1.2 How to measure well-being? In the Oxford dictionary “well-being” is defined as “the state of being comfortable, healthy, or happy.” [3] Since every single member of the human society tends to define what is “happy and healthy” for him in his own personal way, it is impossible to give a universal definition of what “well-being” is. The term “well-being” can be also related to supra-individual level of group, or the society in the whole [4]. In this case to define what well-being is seems to be 431 even harder task, because “tastes differ”: some people can regard something to be good, the other one can stay neutral or even take it to be negative. Table 1: Extended framework of assets and their service flows Type of asset Category of service flow Marketed factor Non-marketed factor services services Reproducible capital Services of business-owned Major service flows are not Tangible, privately plant and equipment identifiable owned Non-marketed final services Owner-occupied housing Services of business-owned capital Services of infrastructure to households Tangible, publicly owned Services paid for through user fees Factor services of infrastructure to industry and commerce Human Services of labor paid by wages and salaries Volunteer services Other non-pecuniary services of education Marketable permits for use of sink services of the environment Sink services of air, land, and water Effects on health, aesthetics Renewable natural resources Food, lumber, water, and recreation paid for by user fees Major service flows are not identifiable Other recreation services, biodiversity, non-use benefits Non-renewable natural resources Energy, minerals, water, and recreation paid for by user fees Major service flows are not identifiable Recreation services paid for by user fees Natural capital Environmental Source: [2] The meaning of the term “welfare”, more usually used by the economists, is very close to the meaning of “well-being”, (e.g., [5]). The definition of both these terms is to a greater extent a more philosophical, than practical task. Nevertheless, everyone understands what both these terms mean. The aim to achieve the certain state of well-being or welfare can be an explicit or an implicit part of most human activities. Throughout the fact, that it is really hard to find a universal definition, well-being of a population is an important concern in economics, political science, and number of other disciplines as geography, sociology, psychology, philosophy, etc. Since there are many different components defining the well-being, in order to bring some distinctness one can divide between the objective and subjective sides of the problem. Subjective well-being can be explained as a degree to which an individual is well, as he believes it to be. This part of well-being is really hard-to-formalize (if not possible at all) and, therefore, to analyze and use for decision making. Objective well-being can be measured by objective indicators. It is intuitively assumed, that there are “standard needs” [6], which are common for every representative of the society. The level of these needs’ satisfaction can be monitored by the indicators, which do not depend on individual’s self-assessment. Objective well-being can be described in terms of five domains [6], i.e. physical well-being, material well-being, social well-being, development and activity, and emotional well-being. For instance, physical well-being can be described in terms of life expectancy, and material wellbeing definitely strongly correlates with the disposable income per capita. The general goal that economists were trying to reach for a long time was to “make more easy practical measures to promote welfare” [5], in other words to provide to a certain extent formal tool of evaluation, which decision makers could use while carrying out different types of projects. In order to be able to manage something one should find a framework for its 432 measurement. From this perspective the objective indicators can be useful. The necessary data may be collected from the routine administrative sources on a regular basis. Therefore, these indicators can be used for analysis of the situation, formulation of decisions, and assessment of the results. Evidently it is impossible to measure all the sides of such phenomenon, like well-being, which is so comprehensive and contradictious that can’t be even universally defined. For instance, in “The Economics of Welfare” [5] Pigou expressed the pragmatic approach that “the one obvious instrument of measurement available in social life is money”. He calls the part of welfare (well-being) which can be measured in terms of money, directly or indirectly, can be called the “economic welfare”. Though the boundary between the economic and noneconomic welfare is very implicit, this decomposition is necessary for enabling the analysis of the subject-matter. That is how Pigou introduces the framework for welfare partial measurement. He recognizes that total social welfare is a much more comprehensive term, than economic welfare, but as long as one wants to measure it such assumptions are necessary. There still may be a situation when effects produced on the part of economic welfare can be compensated by negative effects other aspects of social well-being. For instance, in order to increase his income, one can work overtime sacrificing the leisure time for the sake of personal consumption increase. Thus, change in the economic well-being doesn’t necessarily mean the respective change in the social well-being. One logical question arouses in this connection: why has the society used economic criteria to evaluate the state of well-being for so long time? There are several reasons for that. First, is the fact that market is highly integrated in humans’ life and “participates” in satisfying the significant parts of our needs. We should also state, that the level of this integration has significantly grown since the time of the approach introduction. Second, probably it was economists who managed to offer more or less sensible approach to the measurement. As it was already mentioned the economic theory recognizes the variety of factors, which influence the social well-being. For instance Pigou discussed the “duality” of possible viewpoints on people. On the one hand, human beings are “ends in themselves” [5], as each man is “an important element in ethical value of the world”. On the other — he is an element of what the economic theory used to call “production factor”. This duality is the main barrier on the way to finding the consensus. So why money measure? The theory and practice of national accounting was developed at the time when the researchers were facing significant constraints, e.g. lack of statistic information. The possibility to measure the part of welfare at least in monetary terms seemed to be more than an ambitious program. “Economic causes act upon the economic welfare of any country, not directly, but through the making and using of that objective counterpart of economic welfare which economists call the national dividend or national income.” [5] Under these conditions the currently well-known SNA system based on the money measurement was developed. Nevertheless, the limitations of the money based information system were realized before its implementation. The economists were aware of the fact that chosen monetary magnitude makes impossible to consider non-marketed goods and services. Economic welfare is only a “limited group of satisfaction and dissatisfactions” [5] measured by money. It has nothing in common with other types of satisfactions and dissatisfactions connected with cognitions, emotions, desires, etc. Such parts of well-being “are not reckoned as parts of national dividend, but are left to be accounted for separately. … Unfortunately, however, the conditions are such that nothing better appears to be available.” (italics added) [5] Today the economic part of well-being is comprehensively measured within the SNA; its methods and procedures are accepted almost universally; its information capacity is used in the significant number of human activities. 433 1.2 Criticizing GDP As we have already showed the GDP aggregates the information only of those spheres of humane activities which are being descripted within it’s the boundaries of SNA. The main problem is that the decision makers use SNA data and particularly GDP not in accordance with its information capacity. The SNA-1993 clearly states, that the GDP is far from being the welfare indicator. But the analysis of the history of SNA development shows that the success of this system in the past and its “universal” character support the tendencies to overestimate its potential. The problem of managing the national welfare awakes a lot of criticism of how SNA treats the rest of the non-marketed world and how GDP reflects the specifics of economicsocial-environmental relationships. A number of criticisms state, that the way the current macroeconomic management approaches to the environment and the way the policy success is measured seriously threaten the future of the society. Too many factors are out of the decision-makers’ eyesight. The other argument is the fact that the developing countries, using the same conventional SNA based measurement can repeat the mistakes of the worlddeveloped countries, get into the same environmental and social problems. For instance, some developing countries of Africa are actively exploiting their natural resources in order to achieve the necessary tempos of economic growth. The tradeoff between economic growth and natural resource stock depletion accompanied by connected environmental problems reminds the model of the European development just few decades ago. GDP criticism comes out of the fact that this aggregate indicator is often used as measure of well-being due to the absence of the other widely accepted alternative. Under these circumstances we should state that GDP as an indicator of the economic activity fulfills its duties according to the aims it was developed for. In general GDP reflects only those humane activities which can be descripted as market transactions. “It doesn’t distinguish between the costs and benefits, between productive and destructive activities. […] It treats everything that happens in the economy as a gain for nation, while ignoring everything that happens outside the realm of monetized exchange, regardless of importance to well-being.” [7] Based on the analysis of the available recourses we can define the following weaknesses and bottle necks connected with GDP being treated as a measure of wealth [8]: - the need to reclassify what is intermediate and what is final output; - conceptual differentiation between “goods” and “bads”; - extending assets’ depreciation account with the natural assets’ depreciation; - taking non-marketed goods and services into account, and - incorporation of social issues on a wider basis. The need to revise what should be considered as intermediate or final output has been discussed since the day the national accounting activities began. Kuznets noted that not all commodities currently produced, exchanged or consumed are the source of final satisfaction to its users. [8] These goods in many cases can be called intermediate in their origin: they have a function of intermediate inputs necessary for production of other goods. For instance, Nordhaus and Tobin [9] classify the commuting expenses made by the employees as intermediate in nature. These are only “instrumental” expenditures which aren’t evidently source of utility by themselves. Another phenomenon which is more close to the topic of our paper is the question of defensive expenditures. Defensive expenditures are “expenditures that have actually occurred and are classified as not welfare bearing due to a systematic bias in the economic social system. The typical example of defensive costs is filter installation, which would not be necessary if production did not cause pollution. [10]. 434 Natural assets belong to the category of non-produced assets. Through the fact that such assets as e.g. land, water, mineral resources are used as capital on both micro and macroeconomic levels, SNA doesn’t recognize them to be the part of gross capital formation. The system of SNA is developed in a way, that inclusion or exclusion of non-produced assets doesn’t affect the value of capital investment because the whole process of non-produced asset connected transactions looks like a spillover of resources. The sale of such asset by one economic entity is compensated by a purchase of it by another entity. Non-marketed goods and services are those which according to the concept of SNA can not be measured by the GDP, but which affect the life and level of well-being of individuals on a large scale. Underground economy is not fully descripted by the GDP. Activities connected either with illegal products or services, or illegal character of transactions is usually aggregated under this term. Non-marketed factor services such as nature’s ability to partially eliminate the consequences of humane activities (e.g. waste absorption) are not reflected by GDP. These services are not recorded within the System of National Accounts due to the fact, that they do not have market price. But they affect the level of productivity and therefore affect the value of GDP. Such factor services include the services of the reproducible capital owned by public. Non-marketed environmental services “appear free for individual producers and consumers, but [are] costly in aggregate to society.” [9] According to Nordhaus and Tobin [9] treating non-free things as free in reality gives the wrong signals to the economic system, which is aimed at constant growth regardless the consequences it involves. The GDP omits such social issues as the distribution of income among the population representatives. The two countries may have the same level of GDP but the totally different pattern of income distribution. It is obvious, that the egalitarian pattern of income distribution corresponds to the higher welfare level of the nation in comparison with the one where significant social inequality (ceteris paribus). This idea can be supported with the utilitarian concept, where every further unit (a money unit or the amount of goods the money unit can by in our case) has a lower utility than a previous one. Furthermore the destructive social processes are treated by the GDP as “goods”. A good example is mentioned by Cobb et al. [7] who states that obviously a direct relation between the number of divorces and activity growth on the market of real estate building should exist. The GDP doesn’t take into account neither household and nor voluntary work. 1.4 Alternatives to GDP As we have already stated the social welfare is a function of the number of variables. Since 1970s the criticism directed against the GDP has been growing. Along with these critics the number of alternative approaches and models of welfare measurement was developed. In the meantime none of them is generally accepted, but we should admit, that every existing approach introduces us the new important perspectives on measurement problem. Net Economic Welfare (NEW) [9] measure was developed by William Nordhaus and James Tobin in 1972. They extended the measure of National Income with the value of leisure time and included the elements of the underground economy such as under-the-table services (e.g. babysitting services paid in cash). Illegal activities were excluded. Environmental damages, health and education expenses, as well as expenses on national defense, transport infrastructure maintenance, sanitation services, personal security and police services were classified as “defensive costs” and therefore deducted from the National Income. Total Incomes System of Accounts (TISA) [8] was introduced by Robert Eisner in 1989. The newly introduced system was an effort to revise the existing approaches in the national income accounting. In general Eisner introduced the 3 conceptual amendments. 435 First, he has made an attempt to reclassify the intermediate and final consumption, by arguing with the practice of treating household and governmental expenditures as final and most of business purchases as intermediate. The job connected expenses of households (e.g. commuting expenses) are intermediate by nature. Furthermore, the number of governmental expenditures (e.g. transport infrastructure building, defense, police services) is also intermediate in fact and therefore should be deducted from the GDP. We should mention that in the contemporary SNA business inventory investment (accumulation) is regarded as final consumption [1]. Second, Eisner discussed the possibility to introduce the non-market outputs which contribute to the quality of life, but do not participate in the market transactions and therefore are not included into the final consumption framework. Household work and household durables’ services value belong to this category of amendments. We should mention that the owner-occupied housing and paid domestic stuff services value is included in SNA [1]. Third, the distinction between the current consumption and capital accumulation is discussed. The author argued with the fact that the capital formation consist only of business expenses and purchases of assets by government and households aren’t included (with the exception of new home purchases). The Index of Sustainable Economic Welfare (ISEW) [10] was originally developed by Daly and Cobb in 1989 and revised later (e.g. [10]). The indicator is based on the concept, which states, that the following aspects should be taken into account: non-market production, defensive costs, environmental damage (not eligible for amendment), reduction of future welfare in connection with today’s consumption, income distribution and duration and intensity of work needed for welfare obtaining. The process of ISEW calculation can be divided into three steps. First, the consumption base is calculated extending and revising the components of SNA (i.e. including market and non-market consumption). Consumer durables are introduced in household consumption as assets which provide services (not the expenditures on buying them but the actual use as in case of capital stock depreciation is reflected), government consumption is not changed, and the capital formation is revised to a further extent (increase in capital stock is converted into consumption by multiplying the net change times the capital productivity). Furthermore the value of unpaid household labour and public infrastructure services are included. Second, the number of items is substracted. This includes the defensive costs (as economic activities required to maintain the current quality of life but not contributing to it), and future reductions that arise due to the contemporary production and consumption pattern. These include social defensive costs (i.e. costs of commuting, costs of traffic accidents) and environmental defensive costs (i.e. loss of wetlands and farmland, costs of air, water, and noise pollution), defensive health expenditures, non-renewable resources’ depletion, and longterm environmental damages. We should mention that defensive health costs are being calculated separately due the significant accounting issues connected. Also the estimation can not be regarded as complete, because environmental issues are too complicated multidimensional [10] phenomenon involving lots of consequences and dependencies we can not monetize at least at present. These estimations should be taken as monetary equivalent of the society’s reactions to the environmental issues. Third, the “raw ISEW” [10] which has been got in the previous stages is weighted by an index of income and labour inequality. Human Development Index (HDI) [11] concept was developed in 1990 by the United Nations Development Agency inspired by Amartya Sen. The HDI consists of the economic element (purchasing power parity adjusted GDP per capita), health element (life expectancy or longevity) and educational element (level of population literacy). 436 Genuine (extended) Savings (GS) indicator was introduced by Pearce and Atkinson [12] in 1993. The general idea of this GS is incorporation of net saving criterion for a more consistent approach to natural assets’ loss treatment. The Genuine Savings indicator is calculated on the basis Gross Domestic Saving measure. The Gross Domestic Saving element of GNP is modified as follows: the man-made capital depreciation, the value of depreciation on natural resources and value of pollution damage are subtracted. In other words the GS is based on a wider definition of assets, which along with the man-made capital include natural resources to a wider extent and environmental assets. The authors also note [12] that “it is now a commonplace to include a measure of human capital appreciation in net savings.” World Bank for instance uses the value of educational expenditures for its assessment. One can state that this is not the best measure for human capital assessment due to the fact, that it doesn’t take into account any quality characteristics of education. Environmentally Adjusted Net Domestic Product (eaGDP) was introduced in SEEA 1993 and developed in SEEA 2003. EaDP is derived by subtracting depletion, degradation, and defensive expenditures values from Net Domestic Product. We should mention that EDP doesn’t take into consideration the “social philosophy” [10] and is restricted only to the extent of environmental issues. Besides this is one of the indicators, whose theoretical basis can be regarded as the most carefully and comprehensively worked out. The closer analysis of the indicator is provided in the respective section of this work. Genuine Progress Index (GPI) [11] was proposed in 1995 by Cobb, Halstead and Rowe as a revision of ISEW. This approach gave life to the number of the later variations and of course a wide criticism from the scientific community. Of course the critics should be taken not as tries to discredit the authors’ approach, but as contributions to the further development. The GPI makes amendments to the traditional GDP in almost 20 spheres. Social breakdown is registered in GDP as addition to well-being. The good example is growing number of divorces stimulating the number of houses bought. The same nature has the growth of legal fees, medical expenses, and property damages regarded by GDP as quality of life improvement. The authors also include the unpaid household and volunteer work, income distribution, leisure time changes as important social phenomena omitted by GDP. Consumer durables and public infrastructure are calculated as costs when they are bought and benefits while they provide services in the further years. The authors also introduced dependence on foreign assets’ measurement. When the nation borrows money from abroad — it lives beyond its means. Therefore the funds attracted from abroad are treated subtracted. Environmental issues are also incorporated. Resource depletion is regarded to be borrowing from future generations and therefore doesn’t create well being. In case of GDP resource depletion is taken as current income. GPI also assesses pollution and long-term environmental damage. Defensive expenditures, such as commuting costs, pollution control expenditures of households etc., are regarded to be the measure of preventing the quality of life erosion. Greened Economy Gross Domestic Product (greened-economy GDP), which is also introduced in SEEA 2003, is based on the theory totally opposite to the concept of e.g. eaGDP. It rejects the approach of adjusting the standard macro-economic aggregates due to fact, that it is not enough to “provoke policy change and avoid the damage” [13]. According to it “not accounting conventions” [13], but the pattern of economic behavior should be changed. If the environmental functions really had a price apart from the hypothetical value used in eaGDP, they would have already been evaluated by the market and the pattern of the economic activity would have been much more “greener” or environmentally friendly. The 437 greened-economy GDP is assessed on the basis of the hypothetical model of economy which is “more responsible in environmental terms” [13]. This model can be used for the analysis of the consequences of environmental standards’ achievement by replacing the traditional economic activities with more environmentally friendly. Index of Consumption Corrected for Environmental Damage (ICCED) is a result of GREENSENSE project by Hunt, Mason, Dale and Markandya in 200-2003. The authors tried to accumulate critics of the previous indicators (i.e. Genuine Savings, Index of Sustainable Welfare) and to produce one containing the strengths of previous approaches. Finally they “conclude that the measurement problems encountered in producing a reliable single indicator both of the effect of economic activity on current wellbeing, and of the economy’s sustainability, may not allow such a measure to be feasibly constructed, and that a more fruitful approach may be to analyze the two issues separately.” [14] 2 Environmentally adjusted GDP 2.1 Extending SNA boundaries SNA has two precisely determined sets of boundaries which define its information capacity, i.e. asset and production boundaries. Asset boundary includes the elements of capital producing the flow of services. The production boundary covers the goods and services which are treated either as intermediate, or as final products. In order to avoid the double counting, only final products are being aggregated into the GDP indicator. It has been acknowledged that nature is closely related to the economic reality. If this linkage is not considered the decisions based on information form SNA can be misleading. What the decision makers really need is an information system for development of the policies which are more consistent with the sustainable development concept. Incorporation of the environmental capital and its services within the SNA framework can be a step towards the sustainability measurement. In this connection the conventional system framework, i.e. SNA boundaries, should be extended in order to enable incorporation of the new data. Generally in the literature (i.e. [2, 15, 13]) three types of revisions are being addressed. They are a) expanding the asset boundary, b) expanding production boundary, c) revising the production boundary. First, accounts and therefore the newly calculated GDP indicator should reflect the natural resource depletion and environmental degradation. The more comprehensive information about the investment and depreciation connected with a wider definition of disposable national capital (i.e. natural capital in addition to reproducible one) should give the decision makers a clearer picture of how the productive assets being maintained. The accounts with the extended asset boundaries in this manner will give a more comprehensive economic interpretation of changes in national assets. Expanding the asset boundary is “a logical way of accounting for the environmental impacts of economic activity” [15], since it is a step towards obtaining measures of economic performance which are conceptually closer to the sustainable development. Second, environmental services (i.e. recreation capacities, biodiversity), which definitely affect the quality of life of the society, should also be incorporated into national accounts’ framework [2]. Including these services in national income will increase the current GDP, and, hence, accent the contribution of natural resources and environment to the GDP. The absence of such practice ignores the contribution of natural environment to quality of life. The production boundary which is discussed here is very important, since it “determines also the consumption boundary for household activities” [15]. However, introducing the changes into this specific boundary of national accounting can possibly break the fundamental 438 principles on which the whole system is based on: market transactions. “Reference is made to the use of labour and capital inputs in transforming goods and services into outputs [designed for market transactions] … Excluded from this definition are domestic services for own consumption by households, and natural processes which are not under the managerial control of institutional units.” [15] Third, the so-called environmental expenditures, which are already being incorporated within SNA, should be explicitly differentiated from the other forms investment or consumption. Some researchers even assume (e.g., [2]), that these expenditures should be subtracted from the GDP measure. Instead of subtracting the components of environmental expenditures could be just reorganized within the accounts in order to identify how much is spent for reduction of risks, e.g. caused by pollution. Figure 1: Extended asset and production boundaries Assets OPENING STOCKS Industries SUPPLY OF PRODUCTS USE OF PRODUCTS Economic assets Households/Government Environmental assets + Rest of the World Domestic production Imports of products thereof: for environmental protection thereof: for environmental protection Economic cost (intermediate consumption, consumption Final consumption of fixed capital) Gross capital formation, consumption of fixed capital Exports thereof: for environmental protection thereof: for environmental protection USE OF NATURAL ASSETS Environmental costs of industries (imputed) Environmental costs of households (imputed) Natural capital consumption OTHER CHANGES OF ASSETS + Other changes of economic assets = Other changes of environmental assets CLOSING STOCKS Economic assets Environmental assets Source: [15] The “pragmatic approach” to national accounting boundaries’ extension introduced in SEEA 1993 can be expressed as follows [15]: a) the assets transferred between the environment and economy are being accounted as “other changes” in the Asset accounts, so the production and income accounts are not affected in any way; b) the values of depletion and degradation are introduced within the production and income accounts as “Natural capital consumption”; c) finally stocks of environmental assets can be accounted for in both physical and monetary measures, while monetary measures are used for valuation of “losses of environmental functions of waste absorption and other environmental services” [15]. The Figure 1 gives an idea of how the conventional boundaries of national accounting can be extended as proposed by SEEA. The shaded areas of asset accounts correspond to incorporated environmental assets and their changes. The shaded row “Use of natural assets” corresponds to depletion and degradation of environmental assets. “Environmental costs reflect the consumption of natural capital and are therefore recorded in both the asset and flow accounts.” [15] Expenditures for environmental protection are being decomposed from the conventional use accounts, since they are part of consumption and are normally implicitly registered within the SNA. 439 2.2 Concept of environmentally adjusted GDP The growing concern about the environmental problems in general is connected with the fact, that human (before all economic) activities’ extent has lately become a real threat to the environment. “In the period when world’s population and the scale of economic activities were relatively small, environmental inputs were often regarded as “free” goods and the environment was treated as a “sink” for disposal of waste.” [18] The concept proposed in SEEA deals with extending SNA’s framework by introducing the satellite accounts, which can depict the environmental concerns, without changing the SNA system itself. One of the basic features of SEEA is to provide a framework for elaboration and measurement of environmentally adjusted product and income that will account for costs of environmental depletion and changes in environmental quality. The current level of overall knowledge, methodology development, and statistics available enables to make the environmental adjustments to conventional GDP (NDP) only partially. SEEA doesn’t provide “any judgements on the issue” [13], providing different approaches how one can proceed. The “pragmatic approach” to environmental adjustments of conventional national accounting system provided in SEEA assumes the following three possible directions: a) making allowance for depletion of environmental assets, which were “used up” due to economic activities; b) redefining approach to defensive expenditures made in order to correct harm resulting from economic activity; c) treating environmental degradation which occurs despite the defensive actions of the society as decline of wealth. The depletion of cultivated livestock, which has always been incorporated in the SNA’s accounting boundaries, has always been accounted for within the national accounting systems. The idea to treat all the environmental resources in the same manner that depreciation of stocks of created capital is deducted to obtain NDP becomes possible after environmental extension of the accounting system boundaries. The general idea is to deduct the depletion of the stocks of natural capital over the accounting period from the measure of GDP (or GNP) in order to show how the “economic production affects measure of wealth which include environmental assets and measures of income which are concerned about maintaining the levels of these assets as well as of produced assets” [13]. The additions and deductions to the stocks of both nonrenewable and renewable environmental resources are under consideration. One of the issues standing before the accountants is to find appropriate tools to measure the value of depletion, which theoretically can be calculated by multiplying the change in the stock of an environmental asset by an appropriate price. The conventional accounts deal only with those assets, which “participate” within market transactions, and therefore have a determined market price. Since the environmental assets included in extended asset account are not valued in markets, “artificial” valuation methods should be developed. The term defensive expenditures can be interpreted in a very wide sense. Intuitively the defensive expenditures can be the defined as expenditures people are observed to make in order to protect themselves against a potential or an actual decline in the environmental quality [17]. In practice there is not consensus about what types of expenditures should be treated as defensive. For instance, SEEA treats environmental protection expenditures as an “obvious candidate for inclusion” [13]. Nevertheless, health expenditures related to environmental pollution can also be chosen among some others. The environmental protection expenditures can be both current and capital. Those expenditures aimed to “combat the environmental degradation in current and future periods” [13] can be classified as capital. Both current and capital environmental protection expenditures affect the level of GDP. Number of commentators proposes to subtract the volume of these expenditures from GDP, since they do not contribute to welfare, and are only aimed at bringing back the original status quo. SEEA expresses the national accountants’ point of view arguing, that it is impossible to deduct this part of GDP in such manner, since 440 omitting the part of economic activities that have taken place in the accounting period will disturb the consistency of the whole system of national accounting. SNA is before all aimed at measuring the economic activities, to changes in national output and expenditure with no regards to their moral or necessity aspects. An additional problem connected with environmental protection expenditures is how they are reflected within the system of national accounting. One of the issues is to find a) the dividing line between intermediate; and final goods and services and b) the dividing line between investment and maintenance expenditures [2]. The respective expenditures made by business can be classified as intermediate consumption, or gross capital formation. Environmental protection expenditure on the side of government can be classified as final consumption or gross capital formation. All the expenditures made by households are treated as final consumption. The issue standing before the accountants is to find methods, that will enable the symmetric treatment of environmental protection expenditures by government, industry and households. In particular SEEA proposes to reclassify these expenditures using a “gross gross” method, when environmental protection expenditures will be treated as gross capital formation on the one hand, and as consumption of fixed capital on the other. Due to the fact that the part of intermediate and final consumption will now be treated as gross capital formation, the measures of GDP and NDP will experience the slight changes (see [13]). Incorporation of environmental degradation into the system of national accounts is “more difficult, less certain and more controversial” [13] than the two previous adjustments. As we have already noted, the natural capital is regarded to have three general functions: resource functions, sink functions and service functions. Environmental degradation causes reductions in sink and service functions of environmental capital. The conceptual reasoning for deducting environmental degradation from the national aggregate product measure is based on the following assumptions. The society disposes of an asset which is capable of providing it the same services over the very long term; this property enables to take the value of the services to be income [13]. Assets’ degradation can be registered as either the decrease of value of its services, or decrease of its length of life, as well as their combination. In any case, the connected decline of the value of the asset should be treated as a deduction from income, since it jeopardizes the possibility of getting the same income in the future. As we have already mentioned, the conventional economic theory treated the environmental assets as “free gifts” of nature; the present environmental economics proposes to treat environmental assets in the same manner as produced economic assets, and therefore to incorporate degradation into the aggregate indicators of SNA. SEEA points out that incorporation of environmental degradation will be the most difficult issue of all above mentioned, due to several reasons. The general weakness is the fact, that environmental functions aren’t still described and specified exactly in quantified terms at the current level of knowledge. Since the physical description of some functions is not available, the somehow comprehensive monetary evaluation is impossible either. The two general approaches to degradation valuation are discussed in SEEA. Those are damage-based and cost-based methods, one describing what has happened to the stock of environmental asset, while the other is based on the measure of income. 2.3 Uses and possible weaknesses of environmentally adjusted GDP The use of the indicator can be derived from the use of conventional national accounting indicators. National accounting information system is regarded to be a multi-purpose statistical system, which provides information for a great variety of decision-makers on both micro- and macro-levels. Therefore the informational value of environmentally adjusted GDP 441 is that it facilitates the diagnosis of the past performance of the system defined within its boundaries, contributing to further policy analysis and formulation. - The eaGDP can be one of indicators for sustainable development measurement. It can be used for comparison with conventional measures of national income and as intergenerational equity indicator. The indicator itself and the components it consists of can contribute to evaluation of long-term growth potential of the economy. Besides that, it enables the evaluation of relative significance of different produced and non-produced assets. - EaGDP can be an indicator for policy priority setting, and for assessment of mutual success or failure of the policies combining the economic and environmental concerns. It permits to make the analysis of the economy performance “before” and “after” adjustments. The breakdown by industries (information on costs allocation) can be a base for incentive actions planning. - The approach can be used for internalization of environmental costs among those who cause pollution and degradation (e.g. by the means of “green” taxes, or marketable pollution permits). Additionally, the decomposed indicator can be used for the assessment of distributional impacts of environmental and natural resource policies: the benefits and costs of environmental and resource policies can have a more substantial impact on certain industry sectors or income groups than on others. - Since GDP is a popular discussion topic in mass media, eaGDP could also attract the public attention. In other words, eaGDP can easily be a communication tool for attracting public attention to the environmental problems, which the nation is facing. - If taken per-capita and calculated in constant prices eaGDP can be used as a tool for the cross-boarder and intertemporal comparison of countries’ performance. EaGDP can be used for the purposes of modeling the future development. It improves to the certain extent the conventional GDP as an indicator of standard of living. EaGDP has a certain number of weaknesses connected with its calculation; these are widely discussed in the literature. The basic problems can be divided into several groups. First, is the fact, that not all the aspects of the environment can be monetized, or even measured in physical terms. Thus, any correction of income can be only partial. Second are the valuation issues connected with non-market effects. A significant number of proposed valuation techniques already exist and there is a real risk of mixing the measures which are different in their nature within one indicator. (It is evident, that the system should contain the measures in the terms of the common metrics.) Providing the market data together with the e.g. shadow price evaluations will possibly break the system’s integrity. The pro argument can be the fact that presently the certain items in SNA are also being evaluated on non-market principle, i.e. owner-occupied housing. Third, a serious discussion is going on about including or deducting defensive expenditures and pollution damages from income indicators. Fourth, the transboundary pollution issue. The practical issue is who should account for this pollution due to the fact that it can have even a world-wide effect. Fifth, there is a discussion about the nature of eaGDP. The environmentalists tend to regard this indictor as an attempt at environmental sustainability measurement and management. Economists (e.g. El Serafy [18]) argue, that the indicator based on SNA framework, regardless of the extensions provided, still remains economic in nature, and it is impossible to “administrate” the environment by its’ means. Sixths, there is no consensus if the valuation techniques should be “universal”, or if different countries should use techniques tailored to their realities. Additionally, an other issue is “identifying the most appropriate way of gauging physical changes in the environment and natural resource reserves” [2], since there is no agreement in this respect either. 442 EaGDP is a closer measure to the sustainable income indicator. But it is not totally the same, since not all forms of capital are introduced within the environmentally expanded national accounts. But neither human, nor social capitals have not any significantly developed theoretical base. Under these conditions the eaGDP is a good alternative for conventionally used macroeconomic indicators. In addition, as we have already mentioned, eaGDP is based on the weak sustainability concept, which allows trade-offs between different types of capital. In other words, it doesn’t give the policy-makers any idea about the structural changes within the assets, and therefore the physical capacity to provide the utility. The future uncertainty factor (which is also closely connected to technological change treatment) is a serious issue influencing the valuation techniques. It is obvious that certain technical and technological innovations can reduce the value of both capital units the society uses and flows of services and goods it produces. Hence, the future uncertainty factor should be taken into consideration e.g. when calculating the net present value. EaGDP as well as conventional GDP has no predictive power: it reflects the development pattern in the past, but tells nothing about if this pattern will remain in the future. Each project connected with environmental adjustment of national accounting figures should have the neat concept, boundaries, clear focus and well defined aims. Only under these conditions the outcoming indicator can be regarded as appropriate for the certain decisions’ development. 2.3 Worldwide experience of adjusting economic macroaggregates The work connected with adjustment of conventional macroaggregates is being done in number of national and international organizations. One can find projects connected with both depletion and degradation evaluation, as well as with defensive expenditures estimation. The overall progress is being aggregated within SEEA publications, which were already published twice: first in 1993, and the latest version in 2003. Since there is still a substantial amount of blanks both of the theoretical and practical character, SEEA is regarded to be not a model to action, but a tool to support the further development of the concept. This “inconsistency” enables only partial adjustments to the conventional accounts and therefore to the conventional GDP. Until present the several works were represented by the countries of the world community. The Table 2 provides an overview of what have been done in the field of partial environmental adjustment of macroaggregates. Table 2: Selected projects in the field of macroaggregates’ partial environmental adjustment Country Institution, year of Source Project description, main fields of environmental results publishing adjustment Australia Australian Bureau [19,20] Experimental estimates of GDP adjusted for the value of of Statistics, depletions and discoveries of subsoil assets and the regularly degradation of agricultural land. China Costa Rica State Environmental Protection Administration of China, and the National Bureau of Statistics (China), 2004 World Resources Institute (USA), 1991. [21] [22] Estimates of GDP adjusted by the environmental pollution costs (i.e., health, agricultural and materials losses caused by air pollution; health, industrial and agricultural production losses, and water shortage caused by water pollution; economic loss caused by land occupation of solid wastes and etc.); pollution discharge amounts and treatment, pollution abatement and control investment. The Environmentally Adjusted GDP was estimated after forest resource depreciation was deducted from gross forestry product, soil depreciation was deducted from 443 agricultural value added, and fishery depreciation from gross fishery product. A PhD dissertation (1996) adjusted GDP indicator by natural capital depreciation/appreciation (petroleum) estimations. Ecuador John Hopkins University (USA), 1996 [23, 24] India United Nations, Madras School of Economics (India), 1997; 2001 [25, 26] Adjustments were made for the depletion of forest assets, costs of water pollution, air pollution, and soil degradation. Indonesia World Resources Institute (USA), 1989 [27, 28] Adjustment of GDP by estimates of net national resource depreciation for petroleum, timber and soils. Japan Department of National Accounts, Economic Research Institute, Economic Planning Agency (Japan), 1998 National Institute of Statistics, Geography, and Informatics (Mexico), UNSO, and the World Bank, 1991 Statistics New Zealand, regularly [29] Experimental estimates of GDP adjusted for the discharge of residuals in case of air pollution, use of land, timber, environmental costs of carbon dioxide emissions, environmental protection expenditures. [28, 30] Adjustment of GDP by oil depletion, degradation concerns (water and air pollution, soil erosion, ground water use and the deposition of solid wastes), land use concerns, and deforestation [31] As a strategic objective the Statistics New Zealand proclaims development of a measure of environmentally adjusted GDP. The monetary accounts of energy and emissions, environmental protection expenditure, fish, forests and forest products, land, marine, minerals, and water are being regularly prepared. The GDP adjusted by estimates of environmental protection expenditures, subsoil assets depletion, and depreciation of renewable resources (forests, fish). Mexico New Zealand Papua New Guinea World Bank, 1992 [22] Philippines National Statistical Coordination Board (Philippines), USAID, 1994 [19, 32] Republic of Korea Bank of Korea, Ministry of Environment (Korea), 2000 [33] Sweden National Institute of Economic Research (Sweden), 2001 [34] United Kingdom CSERGEECONOMICS, [35, 36] Environmentally Adjusted Net Value Added calculated on the basis of estimates of the degradation of the environment covering agriculture, fishery and forestry, manufacturing, mining, electricity generation and transport services. Adjustment of GDP by imputed environmental degradation costs incurred by agricultural activities (i.e., natural resources depletion, water pollution and air pollution costs). Adjustment of GDP by the depletion of non-renewable resources (iron ore), production losses in natural processes and economic activities, (health effects, impaired timber growth), depletion of (or additions to) renewable natural capital (e.g. fish stocks), defensive expenditures (e.g. water purification, welfare effects in the form of lost recreational values. Hartridge et al. [16] provided estimations of Adjusted Net Domestic Product for UK Agriculture and Forestry 444 University College London (UK), 1998 2.4 including environmental services (i.e., agricultural landscape, forest and woodland, environmentally sensitive areas, sites of special scientific interest), depreciation of natural capital (i.e., air resources, water resources, soil resources, landscape and biodiversity resources). Prerequisites for eaGDP calculation for the Czech Republic In this part of the paper we present an overview of the projects carried out in the Czech Republic which were connected with the environmental accounting on the macro-level. The projects presented below either have been already finished, or are still running. The main aim of this overview is to give an idea to the reader what kind of work is being carried out in the CR in the sphere of monetary evaluation of the environment. Based on this brief analysis of the available environmental accounting data and information one can determine in which particular fields the environmental adjustment of the conventional GDP indicator is possible. Table 3: Selected projects and studies connected with either methods, or applications of environmental accounting in the Czech Republic (CR) Year Institution Source Project name and its brief description 1996 Ministry of the Environment of the CR [43] 1997-1998 Charles University Environment Center, Prague [37, 38] 1998 Jan Evangelista Purkyne University in Usti nad Labem [39] 1998-2000 Ministry of the Environment of the Czech Republic [43] 1999 Gisat ltd., Prague [40] Environmental Expenditures in the CR and their Efficiency Assessment. The project was aimed at analyzing the situation in the Czech Republic, at evaluating the foreign best practices in the field and at developing the methodologies of accounting of environmental expenditures and of their efficiency assessment for the Czech Republic. Quantification of Environmental Damages Including its Rational Internalization. Based on different valuation methods, the project provided several evaluation studies in such environmental fields as soil and agriculture yield, industrial burdens, surface- and groundwater, forest ecosystems, air quality, radiation, coal mining, and quarrying for cement limestone, gravel and stone. Implementation of Environmental Accounting in the Czech Republic: Possibilities. This was the first attempt of EPEA construction for the CR. Project was focused on the experimental creation of the Environmental Protection Expenditures Account for the CR in total accordance with the existing standards. This first attempt of the EPEA implementation was based on the data of 1997 and established an initial estimate of the total national expenditure on environmental protection in the country. Quantification of External Costs of Electric Power Production in the Czech Republic. The aim of the project was to assess and quantify the total costs and benefits of the contemporary energy systems in the Czech Republic. Additionally the external costs of transport and waste treatment were determined and quantified. Natural Resources’ and Environmental Services’ Accounting in the Czech Republic. The basic themes the project was focused at were changes in land and landscape use including biodiversity, transport and changes in energy use, and agriculture, industry and inhabitation impacts on water sources. The respective statistical data sets, several evaluation techniques and 445 accounting approaches came as a result of the project. 1999 Jan Evangelista Purkyne University in Usti nad Labem [40, 41] 1999-2000 Charles University Environment Center, Prague [42] 2000-2001 Charles University Environment Center, Prague [43] 2001-2003 Czech Environmental Institute, Prague [48] 2002-2003 Charles University Environment Center, Prague [37] 2002-2005 Charles University Environment Center, Prague [47] 2003-2004 Charles University Environment Center, Prague [45] National Environmental Protection Expenditures — Handbook. This was the second EPEA-focused project. The main objective was to develop the methodological handbook for regular evaluation of total national environmental expenditures and creation of the EPEA for the CR. The proposed approaches were compared with the methodology developed by Eurostat. In the certain cases, the methodology was modified with the respect to the national conditions differences and information sources insufficiency. ISEW: Alternative Indicators for Gross Domestic Product: Assessment of Use of Index of Sustainable Economic Welfare for the Czech Republic. The project provided an analysis of weaknesses of the conventional GDP indicator, presented the Index of Sustainable Economic Welfare (ISEW) and experiences of its calculation in several countries of the world. The assessment of its use in the Czech Republic was a result. Methodology of State Assessment and Prediction of the Environment by material (as well energy) flows and balances (including hidden flows). The overview and analysis of the methods of environmental condition and further development assessment in number of developed countries were presented. The chosen methods were adapted for use under the Czech Republic’s conditions. HESEN: Analysis of Evaluation Methods for the Chosen Parts of NATURA. The project was aimed at analysis of the Hesen method of evaluation of ecosystems as landscape biotopes. AKTIVA-2: Evaluation of Environmental Assets with a Focus on the Subsoil Assets. The project presented an analysis of the approaches to accounting of the environmental assets (with the special focus on subsoil assets) described in such standardized accounting systems as SNA-1993, ESA-1995, and in SEEA-2003. Rents were calculated based on several evaluation techniques. Additionally an analysis of the condition of the subsoil assets and their stocks was introduced. MOSUS: Modeling Opportunities And Limits for Restructuring Europe Towards Sustainability. The project presented the analysis of material flow trends of the global economy for the period of 1980-2002. The material flow was divided into several groups, i.e. fossil fuels, industrial and construction minerals and biomass. The analysis enabled to illustrate the physical growth of the global economy and to define the distribution of the environmental pressures. Macroeconomic Analysis of Material Flows with Application to Micro-level and Use for Sustainable Development Indicator Development. The aim of the project was to analyze the material flow in the Czech Republic based on the information of the previously performed studies in order to describe the possibilities of using the material flow methods for sustainability oriented decision making on the macro-level. The connections with the micro-level accounting were also analyzed. 446 2003 Charles University Environment Center, Prague Charles University Environment Center, Prague [37] 2003-2004 Charles University Environment Center, Prague [37] 2004-2006 Charles University Environment Center, Prague [37] 2004-2007 Charles University Environment Center, Prague [37] 2004-2005 Charles University Environment Center, Prague [37] 2004-2006 Charles University Environment Center, Prague [37] 2004- 2005 Jan Evangelista Purkyne University in Usti nad Labem [39] 2003-2005 [46] FOOTPRINT: Ecological Footprint Method Development. The project was connected with the issues of ecological footprint methodology INFOSDEV: Information on Sustainable Development Education, Economic Instruments and Indicators. One of the project aims was to develop methodologies for indicators of sustainable development. The particular focus was on the development of highly aggregated indicators that have not been adequately treated in grant programs and research agenda of the Czech Republic in order to support the decision-making process. EKC: Environmental Kuznets Curve — Theory, Development and Results for the Czech Republic. The project was aimed at testing the theory of the Environmental Kuznets Curve under conditions of the Czech Republic. Among the further objectives was to discuss the effects of prices changes and income growth. MEFA: Assessment of the environment based on material and energy flow analysis. The project was focused on analysis of the net growth of the material stock in the CR for 2000-2003 (i.e., NAS indicator) and pilot calculation of the energy flow indicator for 19902002. NAS indicator was calculated using the direct method, which enabled its further decomposition. The method used for energy flows analysis enabled the comparison of the results with the further pilot studies abroad. NEEDS: New Energy Externalities Developments for Sustainability. The project is focused on development of external costs quantification methods and their wider application, and incorporation of those methods into political decision making. Particularly Charles University takes part in improvement of the method of health influence assessment, coordinates the application of ExternE method in 9 countries, etc. Material Flows and Sustainable Use of Resources. The project is aimed at expanding the material flow indicators’ data set up to the year 2003 based on Eurostat methodology. The data is used for analysis of the connection between the environment and economical performance. In addition the project presents the recalculation of the material flow indicators for 1990-2003 based on the newly available data of the Czech Statistical Office. MethodEx: Methods and Data on Environmental and Health Externalities: Harmonizing and Sharing of Operational Estimates. This project was aimed at the development of externalities’ calculation methods and their application for calculation of external costs in industry and waste sectors; at applying the monetized result for health impact, forest recreation function and water eutrophication assessment, etc. Application of Environmental Accounting. The complete time series of environmental protection expenditures for the CR for the years 1995 up to 2003 were calculated. As a result of the project such data became available as: the calculation of environmental capital stock, the estimation of current expenditure associated with environmental investments based on the capital stock method, and the estimation of total national 447 2005-2007 Charles University Environment Center, Prague [46] 2007-2009 Economic Institute Academy of Science, Jan Evangelista Purkyne University in Usti nad Labem [43] 3 environmental expenditures. For the first time the environmental investments in current prices were recalculated in the constant prices, thereby the inflation factor influence was eliminated. The aim of the project is to evaluate before all recreational and aesthetic non-productive functions of the forest ecosystems in the Czech Republic. The travel cost method, the conjoint analysis method, and the contingent valuation method are applied. Macro-Economic Implications of Environmental Protection in the Course of Transformation of the Czech Republic. This project aims at carrying out research of the relations between environmental protection and selected macro-economic aggregates: a) the rate of economic growth expressed by the growth of gross domestic product, b) employment rate, c) price stability, inflation rate resp. Apart from the selection of these classical macro-aggregates the research will be extended by the analysis of the relation between the national economy structure and the quality of environment. Acknowledgement This paper was prepared under the project of the Czech Republic’s Grant Agency of the Academy of Science 2007-2009: “Macro-economic Implications of Environmental Protection in the Course of Transformation of the Czech Republic” and the project of the Ministry of the Environment 2007-2011: “Indicators for Evaluation and Modeling of Interactions between Environment, Economy and Social Relations.” The support is gratefully acknowledged. 4 References 1. 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Retrieved May 1, 2007 from www: http://lesprace.silvarium.cz/ 450 Importance of Socio-economic Valuation of Forest Services to Sustainable Accounting Miroslav Hájeka, Karel Pulkrabb a Ministry of the Environment of the Czech Republic [email protected] b Czech Agriculture University, Prague, Czech Republic [email protected] 1 Introduction Environmental management accounting is neccesary in order to distinguish between diferent decision situations based on economic and environmental acpects. It is fundamental for sustainable accounting. Sustainable accounting is the logical further development of environmental management accounting. Proposal of sustainable accounting in forestry is based on chosen methodology of valuation. This methodology makes possible to deepen decision in companies. In the case of forestry there is important comprehension of sustainability. Forestry is specific sector where the standing tree is the factory and the final product. There is also a lot of monetary and nonmonetary outputs. Method of valuation of socio-economic importance of forest services was used in addition to economic and environmental accounts. This extension of accounts supports the objectivity of pricing method and the real value of forest company asset. Proposed metodology of sustainable accounting in forestry has importance on the level of company but also for society. 2 Sustainable development as a part of policy The definition of sustainable development was given by the Brutland Commission twenty years ago as development which meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainability is not just an environmental issue, it is also social issue. The UNDP Human Development Report 1999 makes it very clear that economic growth is still being achieved at the expense of ecological balance and social progress (UN 2000). At first many enterprises see sustainable development and commercial activity as mutually exclusive. However there were a lot of business activities starting with the World Business Council for Sustainable Development, established in 1991. While a number of enterprises may wish to operate in a more environmentally friendly manner, financial pressure, competitive markets and the traditional accounting model based upon historical costs are some of the factors which inhibit substantial changes in enterprises behaviour (UN 2000). In the first time period the lack of understanding and formal guidance contributes significantly to an enterprises inability to operationalize the concept of sustainable development. In the framework of OECD countries, still, many pressing challenges remain include establishing appropriate policies to combat the threat of climate change, to better manage water resources, and to provide greater protection of ecosystem and biodiversity. Such policies would result in a more marked decoupling of environmental pressures from economic growth by changing unsustainable consumption and production patterns (OECD 2002). 451 Despite the necessary policies have been identified what we need now is their implementation by using appropriate policy instruments. A lot of cost effective solutions in the framework of sustainable policy exist. Progress requires to find proper instruments. Implementation of sustainable policy requires - support of decision-making process, preferably on the enterprise level to allow a more integrated approach to sustainable development, - use of marked based instruments combined with regulations in suitable instrument mix to take full costs of environmental and social pressures into account, - focus on greater use of technology to help decouple environmental pressures from economic growth and to contribute to sustainability. 3 Sustainability as a goal of enterprises It was difficult to make clear interpretation of sustainability especially for the business community. Nevertheless differences exist between the concept of sustainable development and goals of private enterprises. Some activities are under control of the enterprise but some out of control. That is why achievement of the sustainability is very important on the level of enterprises and there exist a lot of instruments and methods which support this goal. Of course, if we want to know what is goal of enterprises, we must know, who is owner or more precisely why the enterprise was established, i.e. if it is organization profit making or nonprofit making. It is possible to suppose, that the organizations nonprofit making perform requirements in larger sense. Ownership is very important in the case of voluntary approaches. That is why by using sustainable management accounting, change of behaviour depends on ownership. There are three main groups of ownership: - state enterprise or municipality, - organization nonprofit making, - organization profit making. Maximum interest on sustainable development is on the level of state (central government) or municipality. There is probability to decide in favour of sustainable development according to the sustainable strategy. In the case of organization non-profit making, the goals are focused on some sphere of public interest, it means there are conditions for decision making in the interest of sustainable development. Goal of organization profit making is preferable increasing of the assets. That is why there is difficult to change behaviour to sustainable development without the state regulation. Introduction of the sustainable accounting is as an essential step to proper decision making towards sustainable development. All mentioned ownerships need enough economic, environmental and social information and that is why development of the methodology of sustainable development is desired. One of the very important steps was development from environmental accounting to sustainable accounting in the last five years. Firstly understanding that sustainability is not only environment issue, secondly take into account social issue and choose proper information sources. Relevant social aspects can be identified analogously to the environmental aspects. Nevertheless, it is difficult to determine classification of social aspects because of their great variety (Figge, Hahn, Schaltegger, Wagner 2003). That is why range of data collation is very important. A lot of studies are aiming on the definition of the social costs and revenues. Important is to explain what social means and how it is measured. From this point of view, example of forest enterprising is interesting, because in forestry there are a lot of outputs which are 452 important for society. In this case it is possible to define demand of society or more precisely social services of forest. 4 Goals of forest enterprises Forests have parallel outputs, many of which aren´t easily sold in the market. Along with revenue from wood, other plant products, hunting, also produce nonmonetary outputs (scenic beauty, flood control, recreation and other) (Klemperer 1996). Society calls for more nonmonetary goods and fewer negative side effects. In forestry is expressive clash between public rights and private property rights (clear cutting, endangered species). Special character of forestry is that the standing tree is both - the factory and the final product. Then forest involves long production periods and uncertainty (pulpwood, sawtimber, veneer). While none of the above are unique to forestry alone, together they form a special challenge in the profession (role of market, prices, nonmonetary outputs). Forest services are differentiated by their diverse socio-economic essence and impact on the society, purpose of their employment in the society and input data availability. There were identified all basic forest services generally differentiated by their socio-economic content (Šišák, Švihla, Šach, 2004): - market forest services: ƒ timber production service, ƒ hunting and game management service, ƒ other market services; - non-market environmental forest services: ƒ with mediated market impact (with measurable market, i.e. economic, impacts): • non-wood forest production services, • soil-protective services (site soil erosion protection, protection against eroded soil deposits in water streams and reservoirs), • hydrological (water management) forest services (protection against maximum runoffs and minimum runoffs in water streams, water quality in water streams, reservoirs and resources), • air protective forest services (protection of air quality, climate, CO2, NOx sequestration); ƒ without measurable market impact: • health-hygienic forest services (recreational and health influencing), • cultural-educational (nature protective, educational, scientific and institutional) services. Goals of forest enterprises are dependent on ownership and on goal of national forestry policy and policy instruments. It depends on the interest, which social services are important for society. From this point of view forest management is established. Nevertheless performance of the goals of forest policy depends on method of analysis and valuation. 5 Forest services valuation Complete valuation of enterprises activities is important for proper decision making. If we look on forestry, of course there is not problem to use methodology for environmental management accounting. There is importance to use not only environmental costs, but for correct evaluation of the economic effects of the attitude of the enterprise towards the environment, it is also necessary to concentrate on environmental revenues. Environmental 453 revenues include, e.g. revenues from recycling of materials, sale of wastes, subsidies and awards (Hyršlová, Hájek 2006). They also include other elements of revenues, related to the elements of the environmental costs. However state subsidies are very important. Subsidies support outputs which are crucial for society. On the other side we have to know if subsidies are efficient. That is why valuation of all outputs is the best way. One possibility how to value outputs of forestry if following. Valuation of market services is based on the mean year income from respective markets (timber sale, hunting and game production). Valuation of hydric forest services was done by costs of prevention, soil protecting services by costs of compensation, CO2 sequestration by shadow prices of trade with CO2. Valuation of healthhygienic and cultural-scientific forest services of a non-market essence was performed by expert approach using comparative method, i.e. comparing their socio-economic importance to the socio-economic importance of market services (timber production) (Šišák 2006). 6 Example of Forest Plant Zidlochovice The Forest Plant Zidlochovice administers 22.5 thousand ha of forests in an area important for different forest services, especially timber production forest service, hunting and game management, nature protection forest service, recreational forests, nature protection forest service (several important protected natural reserves from national and international point of view), and other services. Therefore the forest management can be considered as typical multipurpose forest management in the CR. It is possible to use results of valuation and calculations of socio-economic effectiveness of multipurpose forest management as a essential part of sustainable accounting. The managerial staff of the Forest Plant Zidlochovice and by managerial staff of the state enterprise Forests of the Czech Republic can use results for decision making in forest management. It is example of public (state) owner of forest, who wants to suport all forest services. The socio-economic values of individual forest services vary to a great extent by respective forest site and forest stand, by environmental, social, cultural and economic factors in individual localities. Compared to average values and their fluctuation in conditions of the CR, majority of services’ values in the Forest Plant Židlochovice area is higher and the scope is more limited than in the area of CR. Table 1: Total socio-economic values of forest services in the whole area of Forest Plant Zidlochovice (in EUR) Forest services Year value Capitalised value (EUR) (EUR) Timber production 6,256 312,816 Hunting and game management 1,279 63,938 Non-timber production 301 15,057 Hydric — maximum runoffs 54 2,718 Hydric — minimum runoffs 247 12,294 Hydric — water quality in streams and reservoirs 513 25,659 Soil protection — introskeleton site erosion 11 530 Soil protection — soil deposits in streams, reservoirs 0 6 802 40,120 Air protection — CO2 sequestration Health-hygienic 3,069 153,421 Cultural-educational 4,900 244,999 Total 17,432 871,558 Source: Šišák 2006 454 As for the whole forest area of the Forest Plant Zidlochovice, the most important is a timber production service sharing, followed by cultural-educational services (nature protection forest service) and by health-hygienic services (recreational service). 7 Conclusion Sustainable accounting on the enterprise level is important instrument of the strategy of sustainable development. There is possibility to use general methodology of the sustainable management accounting. However valuation of the social issues is very important. There are a lot of social outputs in the case forestry. That is why valuation of all outputs is important for decision making on the forest enterprise level. 8 Acknowledgments This work was supported by the Grant Agency of the Czech Republic under project No. 402/06/1100. 9 References 1. Figge, F., Hahn, T., Schaltegger, S., Wagner, M., 2003. The Sustainability Balanced Scorecard as a Framework to Link Environmental Management Accounting with Strategic Management. In: Bennett, M., Rikhardsson, P., M., Schaltegger, S. (Editors), Environmental Management Accounting — Purpose and Progress. Kluwer Academic Publishers, Dordrecht, pp. 17-40. 2. Goddart, T., 2006. Do Social Objectives Integrate with Core Corporate Objectives? In: Schaltegger, S., Wagner, M., (Editors), Managing the Business Case for Sustainability. Greenleaf, Sheffield, pp. 64-81. 3. Hyršlová J., Hájek M., 2006. Environmental Management Accounting in Czech Companies that Have Implemented Environmental Management Systems. In: Schaltegger S., Bennett M., Burritt R. (Editors), Sustainability Accounting and Reporting. Springer, Dordrecht, pp. 433-456. 4. Klemperer, W.D., 1996. Forest Resource Economics and Finance. McGraw-Hill, Inc., New York. 5. Integrating Environmental and Financial Performance at the Enterprise Level. United Nations Conference on Trade and Development. United Nations, New York and Geneva, 2000. 6. Policies to Enhance Sustainable Development. OECD 2001. 7. Šišák, L., Švihla, V., Šach, F., 2002. Oceňování společenské sociálně-ekonomické významnosti základních funkcí lesa (Pricing of socio-economic importance of basic forest services for the society) (in Czech). Ministry of Agriculture. Prague, pp. 71. 8. Šišák, L., 2004. Socio-economic valuation of forest services — case of the Czech Republic. Proceedings. International Conference. Economics of sustainable forest management. University of Toronto, Toronto, p.17. 9. Šišák, L., 2006. Forest services valuation system applied to forest plant Židlochovice of the forests of the Czech Republic state enterprise. In: International symposium on Managerial economics and accounting in an evolving paradigm of forest management. University of applied forest sciences, Rottenburg, pp. 206-214. 10. Working Together Towards Sustainable Development. The OECD Experience. OECD 2002. 455 The Effect of Different Scale and Mapping Pattern Size on Landscape Evaluation Marcela Prokopováa, Renata Burešováa, Josef Sejákb, Pavel Cudlína a Institute of System Biology and Ecology v.v.i., Academy of Science of the Czech Republic, České Budějovice, Czech Republic [email protected], [email protected], [email protected] b Faculty of the Environment, Jan Evangelista Purkyně University in Ústí nad Labem, Czech Republic [email protected] 1 Introduction The most common methods for evaluation of the environmental assets and services follow two basic approaches (Turner et al., 1994). One of them is the so called preferential methods investigating matter of people´s willingness to pay for preservation or improving of the environment quality, or even willingness to accept compensation for its worsening. They are represented by methods of hedonic and contingent valuation. (Braden and Kolstad, 1991; Cummings et al., 1986). Non-preferential methods are represented by cost methods - finding costs on natural assets restoration or damage mitigation (OECD, 1994) and expertized valuation of the ecosystem. Under the approach of expert valuation falls also the Biotope valuation method, which was developed in the Czech Environmental Institute in years 20012003 and comes out of the principals of the nature valuation method used in Hessian federal land. The problem of scale and pattern is one of the main problems in ecology. There is no single natural scale at which ecological phenomena should be studied; system generally shows characteristic variability on a range of spatial, temporal, and organizational scales (Levin, 1992). We can also observe that environmental changes or disturbances illustrate a relationship between space and time. Most short-duration changes affect a small area, and most long-term changes affect a large area. This generalized space-time principle is also observed for many biological responds and other ecological attributes (Forman, 1997). Scaling is the process that describes objects and phenomena on the basis of changing scale of geographical data. The sense of the different spatial utilization could be shown on buffalo wallow, which is important in the local scale (1:5000), but it is practically imperceptible in the regional scale (1:50 000; Forman, 1993). Conroy and Noon (1996) describe problem of scaling in the biodiversity mapping. They suggest that animal species should be grouped by history attributes and spatial scaling relationships. Knowledge of species´ position in the hierarchy, and thus the appropriate map scale, are essential for effective conservation planning. Engquist and Niklas (2000) had also shown that scaling relationship varies little with plant species diversity, total standing biomass, latitude and geographic sampling area. Ritchie and Olff (1999) use spatial scaling laws to describe how species of different size find food in patches of varying size and resource concentration. Their application indicates that many of the mechanisms controlling biodiversity may emerge from first principles of how organisms find resource in space. The remarkable function of the scale is heterogeneity (Wiens, 1989). There are two important components of scaling in heterogeneity measuring: grain and extent. Grain is unit of data resolution (minimum mapping size, pixel size and time interval). Extent is the area or time period over which the observations are made (O´Neil et al., 1986). It is possible to vary 456 the grain and extent in the various cases. For example, we can inventory 16 m2 of the forest floor by sampling sixteen 1 x 1 m plots or on 4 x 4 m plot. In the former case, the quadrants are noncontiguous and thus cover a larger spatial extent. The same variability is also in the temporal scale. 100 hours of observation of bird population could be realized in two ways: 1 hour every day for 100 days versus 100 hours of continues observation over 4.16 days (White and Harrod, 1997). Gustafson (1998) also described the effect of grain on the spatial heterogeneity and ecological processes. Wiens (1989) point out the question of high data generalization, which leads to difficulties in data extrapolations. The choice of size grain could also have impact on the results of landscape valuation (Wu, 2004). 2 Methods 2.1 Biotope valuation method (BVM) Evaluation of the biotope types The biotope types within the CR have been chosen as resolution patches. Natural and close to nature types were taken out of Natura 2000, unnatural and antropogenetic biotopes were defined for the purpose of this method (53 types instead of 14, which Natura 2000 system distinguishes). Together, it was distinguished 192 biotope types and the relative ecological value was calculated, determined on the basis of eight characteristics, sorted into two groups and estimated by 1 to 6 points (Table 1). Table 1: Characteristics used for derivation of relative ecological value of biotope type Ecological characteristics Characteristics of rarity or endangereness 1. diversity of species 1 – 6 points 5. rarity of biotope type 1 – 6 points 2. diversity of structures 1 – 6 points 6. rarity of species in the biotope type 1 – 6 points 3. matureness 1 – 6 points 7. vulnerability 1 – 6 points 4. naturalness 1 – 6 points 8. endangereness of amount and quality 1 – 6 points The calculation is drawn as a sum of points of the first four characteristics (ecological) multiplied by the sum of the second four characteristics (rarity or vulnerability). The total is compared to maximal possible number of points (576), which would come out of this calculation in case all characteristics reach value of 6 points. [(1.+ 2.+ 3.+ 4.) * (5.+ 6.+ 7.+ 8.) / 576] * 100 = point value of the biotope type (3-100) The synoptic table with biotope types and their relative point values presents the result of this step. Because using this method, it is not possible to achieve value of biotope type lower than 3, value of completely antropogenic biotope types was changed to 0. Individual evaluation Another step — the individual valuation of the given biotope (in certain time and location) made by field survey — succeeds to biotope types estimation. It helps to reduce (rarely to increase) the basic point value in case the biotope does not correspond with the condition, which is for given type described in the catalogue of biotopes (Chytrý et al. 2001). The correction of the point value is made by means of the coefficient determined on the basis of the six criteria (see Table 2). 457 Table 2: Criteria of individual evaluation Criterion Base for valuation Ontogenetical matureness Naturalness Fullness of species Fullness of protected species Fullness of structures Integrity % of fulfilling its ecological functions Presence of invasive and expansive species % fullness of diagnostical species % fullness of protected species % of potentially present vegetation layers a) according to the biotope size (ability to sustain in the landscape) b) ability to influence positively the ecological stability c) bioregional point of view (suitability of the biotope) Coefficient extent 0,6 – 1 0,6 – 1 0,6 – 1,2 0,6 – 1,3 0,6 – 1 0,6 – 1 1 – 1,3 1 – 1,2 Money amount assignment To be able to calculate the monetary value of a certain territory, it is necessary to assign current financial amount to one point. This value of one point was figured out by means of the restoration action analysis launched in the frame of The River System Restoration Program and The Landscape Management Program, which are supportive programs of the Czech Ministry of the Environment. It expresses average costs on 1 point value increase in 1m2 within 136 verified restoration actions and reached in 2003 the value of 12,4 CZK (0,4 €). BVM utilization for price map creation in different scales Two methods, mapping the landscape patches (land cover), were used. The first one comes from Corine-LC. It is based on satellite data. Minimal polygon size for inventory was 25 ha and minimal width of the corridor was 100 meters. In frame of this mapping, three GIS layers that differ in grain size were created. For this work, the layer with the finest grain was used. It contains 44 categories, 28 of them are present in the territory of Czech Republic. The data were obtained from CENIA map server. The second mapping data comes from NATURA 2000 mapping method, for which 53 categories of natural biotopes were identified in territory of Czech Republic (CHYTRÝ et al. 2001). ). Minimal grain size was determined as 5 x 5 meters. This size is corresponding with the minimal possible size of segment that can be mapped as a point according to NATURA 2000 method and Smaragd method (GUTH 2002). Differences between BVM method and Natura method of site assessment Natura 2000 method includes its own individual valuation of biotopes embodied in site assessment criteria for a given habitat type. It estimates representativity (expressed in literal scale A, B, C, D), conservation (A, B, C) and forest biotopes age structure (P, Q, R, S). This approach follows the goals from the point of nature protection (tries to type area optimal to protect) and therefore some criteria are valuated here which are not shown in BVM. These are management, expectations and possibility of regeneration. In the contrary, the BVM of the biotope valuation is focused especially on the actual value of biotope (to which degree it matches the status described in the catalogue) and takes into the account also characteristics, which Natura 2000 does not, like maturity, contribution of the biotope to ecological stability of the surrounding landscape and its importance from the larger region point of view. Possibility of conversion The conversion of Natura 2000 individual evaluation expressed by literal codes can be transferred into numerical values of corrective coefficient by two ways. The first and more simple one is direct determination of coefficient based on the combination of representativity and conservation values. 458 To achieve a fluent point decrease from natural and close to natural biotopes to antropogenic X biotopes, the range of the coefficient was determined to be 0,6–1,2. The weight of conservation should be slightly higher for the revealing of the representativity decrease has usually certain time delay compared to conservation. The mean value according to NATURA 2000 should be relevant to combination of BB which matches the typical biotope. This combination therefore received the numerical value of the coefficient equal to 1. Numerical values of the other combinations follow the non-linear functionality and are determined in Table 3. Table 3: Conversion of NATURA 2000 individual valuation (combinations of Representativity and Conservation Status) into numerical coefficient of BVM Representativity A B C D 1,2 1,1 0,95 0,75 A Conservation 1,1 1 0,85 0,65 B 0,75 0,7 0,65 0,6 C The second and more complicated approach embodies the effort to elicit coefficients of partial criteria of the BVM individual valuation out of the available documentation of Natura 2000 method (apart from representativity and conservation it is also possible to use age structure at forest stands, information written in comments and map documentation). This way is demanding to time and as mentioned above, it is not possible to elicit some criteria out of the Natura 2000 method, because the valuations are not exactly covering each other. The data were worked up according to the described methodology to create tables with calculation of the price of individual segments. The calculation was carried out separately for both methods described above and two versions of the total price of the area were obtained (see Table 4 and 5). Table 4: The method of value calculation of the area; without use of individual evaluation and with use of individual evaluation coefficient derived from NATURA 2000 methodology (the first version) Price calculation without use of individual valuation Biotope % Area (m2) M1.7 M1.1 V1F X14 L2.2B X9B L7.2 X9A L5.4 X9A L5.4 L2.2B (5L2.2A) X10 L7.2 L2.2B L2.2B L2.2B L5.4 X9A L5.4 X9A 35 10 15 40 25 10 20 45 Price calculation with use of individual valuation (1st version) Age str. Repre- Con- Cor-rective Individua Price (€/m2) l point serva- coef. senvaluation tativity tion of biotope 1.10 29 11.82 B A 0.85 24 9.84 C B 1.10 52 21.37 B A 1.00 14 5.79 S C B S C B 134810.32 283802.93 R C 15.71 17.36 7.03 16.95 155872.96 42827.12 3850.61 41807.43 Q S B C S C B 42 17.36 25067.84 S C B 0.85 36 14.76 21307.66 42 17.36 16995.44 S C B 0.85 36 14.76 14446.12 42 38 20 17.36 15.71 8.27 28852.32 26104.48 41209.33 S S D D B B 0.65 0.65 1.00 27 25 20 11.28 10.21 8.27 18754.01 16967.91 41209.33 30 18257.0 38 70 42601.0 20 15.71 8.27 286756.61 352168.27 R D B 0.65 1.00 25 20 10.21 8.27 186391.80 352168.27 Price (€/m2) Value of the segment (€), without use of individual evaluation 2442.0 698.0 1047.0 2791.0 Point value of biotope type 26 28 47 14 10.75 11.57 19.43 5.79 26243.36 8078.19 20339.72 16150.59 16933.0 6773.0 13546.0 30479.0 42 20 41 20 17.36 8.27 16.95 8.27 293956.88 55990.13 229559.55 251959.73 20 8583.0 38 80 34331.0 20 15.71 8.27 9924.0 45 2467.0 10 548.0 45 2467.0 38 42 17 41 1444.0 979.0 20 1662.0 20 1662.0 60 4985.0 459 Value of the segment (€), with use of individual evaluation 28867.70 6866.46 22373.69 16150.59 0.85 1.00 0.85 1.00 36 20 35 20 14.76 8.27 14.40 8.27 249863.35 55990.13 195125.61 251959.73 B 0.85 1.00 32 20 13.35 8.27 114588.77 283802.93 B B 1.00 0.85 1.10 0.85 38 36 19 35 15.71 14.76 7.73 14.40 155872.96 36403.05 4235.67 35536.31 Table 5: Method of value calculation of the area with use of individual evaluation coefficient, which is counted as average of coefficients of six partial criteria (the second version) Biotope % M1.7 M1.1 V1F X14 L2.2B X9B L7.2 X9A L5.4 X9A L5.4 L2.2B X10 L7.2 L2.2B L2.2B L2.2B L5.4 X9A L5.4 X9A 35 10 15 40 25 10 20 45 20 80 45 10 45 20 20 60 30 70 Area (m2) Point Natural- Fullness Fullness Fullness integrity Integrity cor. value of ness of species of of struc- a) b) coef biotope protect. tures II. type species 2442 698 1047 2791 16933 6773 13546 30479 8583 34331 9924 2467 548 2467 1444 979 1662 1662 4985 18257 42601 26 28 47 14 42 20 41 20 38 20 38 42 17 41 42 42 42 38 20 38 20 1.00 1.00 1.00 1.00 0.80 1.00 1.00 1.00 1.00 1.00 1.00 0.80 1.00 1.00 0.70 0.80 0.80 1.00 1.00 1.00 1.00 1.0 0.8 1.0 1.0 0.8 1.0 0.8 1.0 0.8 1.0 1.0 0.8 1.0 0.8 0.8 0.8 0.6 0.6 1.0 0.6 1.0 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.0 1.0 1.0 1.0 0.6 1.0 0.6 1.0 0.8 1.0 0.9 0.6 1.0 0.6 0.7 0.7 0.6 0.7 1.0 0.8 1.0 1.0 0.85 1.00 1.00 1.00 1.00 1.00 1.00 0.95 1.0 0.95 1.00 1.00 0.60 0.95 0.95 0.95 0.95 1.00 1.00 1.00 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.2 1.0 1.2 1.3 1.0 1.3 1.3 1.0 1.3 1.3 1.0 1.1 1.0 1.00 0.94 1.00 1.00 0.87 1.00 0.90 1.00 0.96 1.00 1.01 0.92 1.00 0.88 0.91 0.88 0.88 0.93 1.00 0.92 1.00 Indivi- Value dual (€/m2) point valuation of biotope II. 26 10.75 26 10.90 47 19.43 14 5.79 36 15.05 20 8.27 37 15.25 20 8.27 36 15.05 20 8.27 38 15.84 39 15.91 17 7.03 36 14.97 38 15.77 37 15.19 37 15.19 35 14.53 20 8.27 35 14.40 20 8.27 Value of the segment (€), with use of individual evaluation II. 26243.36 7606.96 20339.72 16150.59 254762.63 55990.13 206603.59 251959.73 129193.22 283802.93 157171.90 39258.19 3850.61 36929.89 22769.95 14871.01 25245.78 24146.64 41209.33 262860.23 352168.27 When using data from Natura 2000 mapping for price map creation, it was necessary to specify the types of X - biotopes according to the BVM, because 53 unnatural X - biotope types occur in BVM and only 14 types in Natura 2000 method. It was done on the basis of the map documentation, eventually comments of the mapper. In cases it was not possible, the point value of the segment was determined as a weighted average of point values of the biotopes, which could be taken into consideration. Individual evaluation is determined separately for each type of X-biotope. Where it was possible to elicit it out of the map documentation or notes, it was filled into the table. In other case, the coefficient value 1 was assigned to segments. Table 6: Classification of X biotope types according to Hessian method into “X biotope” types according to Natura 2000 and their point values Code Biotope name Code Biotope name according to Biotope Valuation Method according to Natura (Seják and Dejmal, 2003) 2000 (Chytry et al. 2001) X1.2 Water reservoirs from concrete 6 X3.1 Ruins 16 X3.2 Used tunnels and cellars 5 X4.6 Railway stations 8 X4.7 Wasteland in industrial, depositary and technical-agricultural 6 areas X6.1 Parks and gardens, mostly with allochthonous species 18 X6.2 Graveyards, mostly with allochthonous species 15 XS2 Supportive and dry walls, stone surface (artificially made) 11 X5.2 Vegetable gardens 14 460 X2 X3 X4 X5 X6 Intensively managed fields Extensively managed fields Permanent agricultural crops Intensively managed meadows Anthropogenic areas with sporadic vegetation outside human settlements XX1.1 Sedimentation basins, sewage treatment plants XX1.2 Chemically devaluated water areas XX1.3 Streams in pipe 0 0 0 XX2 XX3.1 XX3.2 XX4.1 XX4.2 Chemically devaluated marshes Area of buildings with minimal vegetation occurrence Impermeable surface permanently without vegetation Waste dumps in intravillan Chemically devaluated areas and opened surfaces of abiotic waste dumps One-year and autumn plants on arable land Perennial plants on arable land One-year fallows Perennial plants on arable land Vegetable gardens Intensively managed vineyards and orchards Intensively managed and degraded mesic meadows 0 0 0 0 0 XS1 New stone quarries and their heaps Supportive and dry walls, artificially made stone surface Landslides, denuded soils and Technical treated springs, emptied or drained bogs without vegetation Chemically devaluated marshes Chemically devaluated areas and opened surfaces of abiotic waste dumps Wet ruderal fallow land Post-agrarian fallow lands Degraded wet wasteland Degraded grasslands and heathlands Herbaceous vegetation of railway or road embankments New mining areas and soil dumps Ruins Herbaceous vegetation on degraded lands and unrecultivated waste dumps Extensively managed or fallow vineyards and orchards Agrarian fallow land with scrub and trees Hedges Monocultures of site-inappropriate tree species Degraded forests with ruderal vegetation Monocultures of allochthonous tree species Monocultures of site-inappropriate tree species Degraded forests with ruderal vegetation Monocultures of allochthonous tree species Clearings, newly planted forests and restoration plantings 14 11 21 15 36 24 13 20 19 10 20 19 10 17 Nurseries, orchard and forest plantations Clearings, newly planted forests and restoration plantings Tree stands and scrubs in abandoned sand and stone quarries 13 17 13 Extensively managed or fallow vineyeards and orchards Tree stands and scrubs of railway or road embankments Hedgerows and alleys Solitary trees Vegetation of new water surfaces Degraded water biota Drainage channels Streams with locally modified channel New artificial water basins made from natural materials 36 17 25 25 16 14 14 23 9 X4.4 X4.3 X4.2 X4.3 X5.2 X5.3 XT3 XS1 XS2 XS4 X2 XX2 XX4.2 X7 Herbaceous ruderal vegetation outside human settlements X8 Scrub with ruderal or alien species XM1 XT1 XT2 XT4 XT5 XT6 X3.1 X4.5 XK1 XK2 X5.1 X9A Forest plantations of XL3.4 allochthonous coniferous XL4.3 trees X6.4 X9B Forest plantations of XL3.4 allochthonous deciduous XL4.3 trees X6.4 XL5 X10 Clearings with an undergrowth of the original forest X11 Clearings with X6.3 nitrophilous vegetation XL5 X12 Stands of early XK4 successional woody species X13 Woody vegetation XK1 outside forest and human XK3 settlements XL1 XL2 XV1 X14 Streams and water XV2 bodies without XV3 vegetation of XV4 conservational importance X1.1 461 10 10 15 10 14 13 13 0 0 19 17 17 19 17 13 16 10 X1.2 X1.3 X1.4 2.2 Water reservoirs from concrete Systematically canalized streams Polluted waters 6 7 6 Scaling Both map sheets were cut to ¼ (P = 4,66km2), 1/8 (P = 2,33 km2), 1/16 (P = 1,17 km2) and 1/32 (P = 0,58 km2; Figure 1). The whole sheet and each size of the section were evaluated by BVM using both, the Natura 2000 data and the Corine Land-Cover data. The individual evaluation was not applied here, because the previous results had proven its influence for the scale of price map to be negligible. The results for individua sections were tested statistically, using pair T-test since those two different financial values are both related to the same area. Figure 1: Scaling: map sheet cutting. Created in ArcMap 9 1/1 1/8 1/3 1/4 3 Results 3.1 Biotope valuation method (BVM) In case of natural and close to natural biotopes, implementation of individual evaluation caused decrease of their total value. Using the version of direct transfer, the value decreased by 10,3 % while using the version of derivation of individual criteria, the value decreased by 3,8 % (see Table 7). The reason of the decrease could be in quality degradation caused by long-term intensive agricultural use during 70ties and 80ties of 20. century (despite its current extensive use). In case of unnatural X — biotopes, their total value increased after implementation of individual evaluation by 1,4 % of the original value. This could be caused by recent extensive use of the area. In many cases, the individual evaluation could not be completed for the lack of exact information about the recent state of X-biotopes. This could be a reason why corrected value of X-biotopes differs so little from the original one. 462 Natura 2000 Corine LC Table 7: Total ecological value of the area, comparison of individual ways of counting and their results Natural and X biotopes In total close to natural biotopes 568.8695 1154.837 1723.7065 Area (ha) Value of the area (€), calculated based ------165 431 791 on Corine Land Cover data Value of the area (€), without use of individual evaluation Value of the area (€), with use of individual evaluation (1. variant) Value of the area (€), with use of individual evaluation (2. variant) 86 108 443 77 714 389 163 822 833 77 277 122 78 793 356 156 070 478 82 849 573 78 793 356 161 642 929 Figure 2: Natural area content in the map sheet ZM 1: 10 000 natural biotopes, b) unnatural biotopes; A) Map sheet 32-22-03, suburban area of České a) Budějovice (natural area content 5 %), B) Map sheet 33-13-17, highlands of Novohradské hory (natural area content 25,3 %). Created in ArcMap 9. Total value of the whole area decreased after use of individual evaluation by 7 738 226 € which makes 4,7 % from the original level when using the version of direct transfer of criteria. The version of derivation of individual criteria decreased the price by 2179903 €, which makes 1,3 % from the original level. When using data from Natura 2000 mapping, the topographical accuracy of the value map was considerably higher (370 segments) than in case of using data from CORINE Land Cover (16 segments). It is remarkable from the results, that the size of mapping grain has strong effect on the final financial value of the whole map sheet (18,64 km2 and 13,98 km2). Final map values are shown in the Figure 5 and Figure 6. The map sheet value of suburban area (Table 8), which we got on the basis of Natura 2000 mapping, is 2.6 milliards CZK but only 2.43 milliards CZK on the basis of Corine-LC. This presents 6.54 % difference in the area 18.64 km2. The difference is not so high in highlands area. The map sheet value with highlands is 3.98 milliards CZK on the basis of Natura 2000 mapping and 3.89 milliards CZK on the basis of Corine-LC. The difference in the price is only 1 % in the area of 13.98 km2. The effect of mapping grain size on the financial value of particular sections is not statistically significant (p< 0.05). Values for particular cuts are shown in the Tables 8 and 9. 463 Table 8: Number of segments and value for cuts (average values) — map sheet 32-22-03 (suburban area) Cut Natura 2000 Corine Land-Cover Area Number of Value Area Number of Value (thousands (km2) segments (thousands CZK) (km2) segments CZK) 1 18,64 444 2605866 18,64 29 2435322 1/4 4,66 125 662964 4,66 10,5 608830 1/8 2,33 71,9 331482 2,33 7 304415 1/16 1,17 38,8 165731 1,17 5 152208 1/32 0,58 22,9 82871 0,58 3,7 76104 Table 9: Number of segments and value for cuts (average values) — map sheet 33-13-17 (highlands area) Cut Area Natura 2000 Corine Land-Cover Value (thousands Area Number of Value (km2) Number of segmets CZK) (km2) segments (thousands CZK) 1 13,98 370,0 3976961 13,98 16,0 3885560 1/4 4,66 283,0 1325654 4,66 7,3 1325654 1/8 2,33 52,7 662827 2,33 5,5 647593 1/16 1,17 30,3 331413 1,17 3,9 323797 1/32 0,58 17,8 165707 0,58 3,0 161898 The range of financial values, which is evident from Figure 3 and Figure 4, is higher in the case, where Corine-LC was used. The results show that the value obtained from Natura 2000 mapping is higher than the value from Corine-LC. However, this was relevant only where the average values of particular sections were compared, but not in the case where particulate values from one section were compared. Figure 3: Comparation of cuts values (in thousands of CZK). Map sheet 32-22-03 (suburban area) Comparison of cuts values 1000000 Price CZK 800000 600000 400000 200000 0 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 2 Segment area (km ) 464 4,5 5,0 5,5 Corine Land-Cover Natura 2000 Figure 4: Comparation of cuts values (in thousands of CZK). Mapp sheet 33-13-17 Srovnání Comparison ceny jednotlivých řezůvalues of cut Comparation of cuts value 2000000 1800000 Cena Kč Price CZK 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 0,58 1,17 1,75 2,33 2,91 3,50 4,08 4,66 2 Plocha segmentu (km2 ) Segment area (km ) Segment area □ Corine Land-Cover Natura 2000 Corine ◊ Natura 2000Land-Cover Figure 5: Value map based on Natura 2000 mapping. Created in ArcMap 9 Value CZK/m2 0 1 - 100 101 - 200 201 - 300 301 - 400 401 - 500 501 - 600 nad 600 Figure 6: Value map based on CORINE Land-Cover mapping (data sourse: Cenia and Geolab). Value CZK/m2 Value CZK/m2 do 130 do 40 4 41 - 100 131 - 260 101 - 200 261 - 350 201 - 300 351 - 450 301 - 400 nad 450 Discussion It is evident that Natura 2000 mapping data can serve as a good data for creating value maps of landscape transects and can be used for more detailed evaluation. It is also possible to derive the coefficients of individual valuation from already existing data. Application of individual evaluation changed the total value mainly in case of natural and close to natural biotopes and especially using the version of direct data transfer (10,3 % from original price). In evaluation of the whole area changed the total value by approximately 2 or 5 % (according 465 to used version of calculation/data transfer). It means that for this use (value maps in scale of 15 km2), the individual evaluation could be ignored. Above mentioned results have limited validity for they were obtained based on biotope valuation of one landscape type only (submountain region, which is relatively little affected by negative impact of human activities. This significant difference in map sheets values which we obtained on the basis of Natura 2000 and Corine-LC are given by the different natural and close to nature biotopes content in each map sheet (25.3 % and 5 %). The size of mapping grain could effect the following analyses. Li and Wu (2004) had shown in the very critical way, that point values obtained without knowledge in the heterogeneity cannot lead to relevant results. Conroy and Noon (1996) concluded, that size of mapping grain could influence the biodiversity of animals’ species. It is necessary to know habit size of observed species. In this work we compared value maps, which we obtained on the basis of Corine-LC and Natura 2000 mapping. The value of particulate map sheets was different in 1 % (map sheet with highlands landscape) and 6.54 % (map sheet with suburban area), when we used different size of mapping grain. The value was higher, when using fine pattern mapping of Nature 2000, because in this case it was possible to point out small areas with valuable natural biotopes. Despite our expectation the difference was higher in map sheet with lower natural and close to nature content. It is probably caused by higher fragmentation of suburban area, where it was impossible to emphasize small valuable biotopes with rough grain of Corine-LC mapping. This was possible in the case of highlands landscape type, which has lower value of fragmentation. White and Harrod (1997) also confirm the presumption of the size effect of mapping grain. They present that usage of rough mapping grain did not point out the spatial heterogeneity. The size effect of mapping grain on the financial value of particulate areas´ segments was not statistically significant (p<0.05). In future, we would like to extend the number of landscape types for mountain landscape with very high natural and close to nature biotopes content and agricultural landscape, where natural and close to natural biotopes content will be very low. On these main cultural landscape types, we would like to test the hypothesis, that the difference between values obtained from Natura 2000 and Corine-LC data will be the highest in the map sheet with the highest content of natural and close to natural biotopes. 5 Acknowledgments This work was funded by research project of Institute of Systems Biology and Ecology, Academy of Sciences of the Czech Republic (grant no. AVOZ60870520) and project of the Ministry of Evironment of Czech Republic VaV 640/18/03. 6 1. 2. 3. 4. 5. 6. 7. References Braden, J.B.; Kolstad, C.D., 1991: Measuring the demand for environmental quality. Elsevier Publishers, North Holland. Cenia, Česká Informační agentura životního prostředí: CORINE Land Cover (CLC), /in Czech/. Conroy, M.J., Noon, B.R., 1996: Mapping of species richness for conservation of biological diversity: Conceptual and methodological issues. Ecol. Appl. 6: 763-773. Cudlín, P., Prokopová, M., Francírková, T., Burešová, R., Smrž, T., Boucníková, E., 2005: System Natura 2000 utilization for purposes of biotope valuation. Ekológia (Bratislava) 24:52-68. Cummings, R.R., Brookshire, D.S., Schulze, W.D. (eds), 1986: Valuing Environmental Goods: An Assessment of the “Contingent Valuation Method”, Rowman Allanheld, Totowa, NJ. Chytrý, M., Kučera, T., Kočí, M. (eds), 2001: Cataloque of biotopes of the Czech Republic. Agentura ochrany přírody a krajiny ČR, Praha, 307 pp., /in Czech/. Enquist, B.J., Niklas, K.J. ,2001: Invariant scaling relations across tree-dominated communities.Nature 410: 655-660. 466 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Gustafson, EJ., 1998: Quantifying landscape spatial pattern: What is the state of the art? Ecosystems 2: 143-156. Guth, J., 2002: Methods of biotope mapping NATURA 2000 a SMARAGD systems. Agentura ochrany přírody a krajiny ČR, Praha, 48 pp., /in Czech/. Forman, R.T.T., Godron, M. 1993: Landscape ecology. Academia, Praha. 583 pp., /in Czech/. Levin, S.A., 1992: The problem of pattern and scale in ecology. Ecology 73: 1943-1967. NOAA, National Oceanic and Atmospheric Administration, U.S. Department of Commerce OECD, 1994. The Annual Report of the OECD. Copyright OECD 1994. O’Neill; Gustafson, EJ.,1998: Quantifying landscape spatial pattern: What is the state of the art? Ecosystems 2: 143-156. Seják, J., Dejmal, I. (eds), 2003: Valuation of biotopes of the Czech Republic, ČEÚ, Praha, 422 pp., /in Czech/. Turner, K., Pearce, D., Bateman, I., 1994: Evironmental Economics: an Elementary Itroduction. Harvester Wheatsheaf, New York, 92 pp. White, P.S., Harrod, J.; Bissonette, J.A., 1997: Wildlife and landscape ecology, Springer, 128–159 p. Wiens, JA., 1989: Spatial scaling in ecology. Funct. Ecol. 3: 385 – 397. Wu, J., 2004: Effects of changing scale on landscape pattern analysis: scaling relations. Lands. Ecol. 19: 125-138. http://www.cenia.cz/www/webapp.nsf/webitems/GIS_CORINE. Cited 16.3.2007. http://www.noaa.gov. Cited 5.2.2007. Appendixes Appendix 1: The list of biotope types and their relative values according to BVM. Biotope type Parameter 6 4 4 4 3 5 4 73 304 53 6 6 6 6 3 3 4 3 3 2 3 3 4 6 6 4 2 1 3 1 5 4 5 5 4 3 4 3 67 63 77 65 255 224 342 234 6 6 3 4 4 2 5 3 69 266 46 6 6 4 4 4 2 5 4 73 300 52 5 6 4 5 4 3 4 4 73 300 52 5 6 5 5 4 6 4 3 79 357 62 6 6 4 5 6 6 5 5 3 3 3 3 3 2 4 4 6 6 2 6 3 2 2 3 5 6 3 4 4 3 3 5 75 71 54 73 324 289 160 306 19 M1.3 Eutrophic vegetation of muddy substrates 20 M1.4 Riverine reed beds 4 4 5 6 3 3 4 3 4 2 3 2 3 3 3 3 60 54 208 36 160 28 21 M1.5 Reed vegetation of brooks 22 M1.6 Mesotrophic vegetation of muddy substrates 4 5 6 5 3 3 3 3 4 4 2 3 3 3 3 3 58 60 192 33 208 36 23 24 25 26 27 4 5 5 5 5 5 6 5 5 5 3 3 3 2 3 3 4 3 3 3 2 6 6 6 6 2 3 2 2 3 3 5 4 5 5 3 5 3 3 3 52 77 65 65 69 150 342 240 240 272 11 12 13 14 15 16 17 18 M1.7 Tall-sedge beds M1.8 Calcareous fens with Cladium mariscus M2.1 Vegetation of exposed fishpond bottoms M2.2 Annual vegetation on wet sand M2.3 Vegetation of exposed bottoms in warm areas 467 RS 1 1 1 1 4 SB 6 6 4 4 4 TB 3 4 3 3 3 180 225 221 252 270 5 5 6 6 7 8 9 10 RB 2 4 6 6 4 ZBH PV V2.2 Periodic still waters V2.3 Waters of specific chemism V3 Macrophyte vegetation of oligotrophic lakes and pools V4 Macrophyte vegetation of water streams V4.1 Spring ditchies V4 Macrophyte vegetation of water streams V4.2 Trout belts of water streams V4 Macrophyte vegetation of water streams V4.3 Thymallidae belts of water streams V4 Macrophyte vegetation of water streams V4.4 Barbel belts of water streams V4 Macrophyte vegetation of water streams V4.5 Bream belts of water streams V5 Charophycae vegetation V6 Isoëtes vegetation M1.1 Reed beds of eutrophic still waters M1.2 Halophilous reed and sedge beds 6 DS 1 1 2 3 4 % 56 63 65 67 69 N 6 6 6 6 5 1 2 3 4 5 DL 2 2 3 3 4 Su. M V00.1 Interstitial underground waters 6 V00.2 Crack underground waters 6 V0.1 Underground carst lakes 6 V0.2 Underground carst streams 6 V1 Macrophyte vegetation of naturaly eutrophic and mesotrofic still 5 waters V2.1 Macrophyte vegetation of shallow still waters 5 31 39 36 44 47 44 39 59 41 56 50 28 53 26 59 42 42 47 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 M2.4 Vegetation of annual halophilous grasses M3 Vegetation of perennial amphibious herbs M4.1 Unvegetated river gravel banks M4.2 River gravel banks with Myricaria germanica M4.3 River gravel banks with Calamagrostis pseudophragmites M5 Petasites fringes of montane brooks M6 Muddy river banks M7 Herbaceous fringes of lowland rivers R0.1 Simple waters springs R0.2 Thermal and mineral springs R1.1 Meadow springs with tufa formation R1.2 Meadow springs without tufa formation R1.3 Forest springs with tufa formation R1.4 Forest springs without tufa formation R1.5 Subalpine springs R2.1 Calcareous fens R2.2 Acidic moss-rich fens R2.3 Transition mires R2.4 Peatsoils with Rhynchospora alba R3.1 Active raised bogs R3.2 Raised bogs with Pinus mugo R3.3 Bog hollows S1.1 Chasmophytic vegetation of calcareous cliffs and boulder screes 51 S1.2 Chasmophytic vegetation of siliceous cliffs and boulder screes 6 5 6 6 5 5 3 4 6 6 5 5 5 5 5 5 5 5 6 6 6 6 5 5 6 3 5 4 4 2 4 69 266 46 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 5 5 5 6 6 6 6 6 6 6 6 6 6 6 6 6 6 5 3 4 3 4 4 4 4 4 5 3 5 4 3 5 5 5 4 4 4 3 4 4 4 5 6 6 6 6 6 6 5 6 6 6 6 6 6 6 6 6 6 6 4 5 4 5 5 5 6 5 5 4 5 5 5 6 6 6 5 5 5 5 5 5 5 5 3 3 4 3 4 3 3 4 4 3 3 4 4 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 3 3 3 4 4 4 4 4 4 4 2 2 3 3 4 3 4 4 3 3 3 3 3 3 4 5 4 5 5 5 4 5 5 4 4 6 6 6 6 6 5 4 4 4 4 6 5 6 6 6 6 5 4 3 5 5 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 2 4 4 2 2 2 6 6 4 4 6 6 4 4 6 6 4 4 4 2 6 6 6 6 3 3 2 2 1 4 4 3 3 3 4 4 4 4 4 3 3 2 3 4 2 3 4 4 4 4 5 3 4 4 3 6 5 6 6 5 5 4 3 3 3 5 2 2 2 2 2 5 5 4 4 5 4 4 4 5 5 4 4 4 4 4 4 5 5 4 5 5 5 4 5 5 4 4 5 5 5 4 5 4 4 4 4 5 4 4 4 3 3 4 4 4 4 4 4 4 4 4 4 3 4 4 3 5 5 4 4 4 4 4 5 4 4 4 4 4 4 6 4 4 4 4 4 4 4 4 69 67 69 67 65 77 75 75 75 75 77 81 79 81 81 77 77 75 58 71 63 69 71 69 81 79 79 63 75 73 63 81 83 92 79 75 77 65 67 65 71 79 270 255 266 247 228 342 323 323 323 324 342 378 360 380 380 336 340 320 192 289 225 266 285 266 380 361 361 225 323 304 225 378 400 483 361 323 342 238 255 238 289 360 S1.3 Tall grasslands on rock ledges S1.4 Tall-forb vegetation of fine-soil-rich boulder screes S1.5 Ribes alpinum scrub on cliffs and boulder screes S2 Mobile screes S3 Caves A1.1 Wind-swept alpine grasslands A1.2 Closed alpine grasslands A2.1 Alpine heathlands A2.2 Subalpine Vaccinium vegetation A3 Snow beds A4.1 Subalpine tall-herbs vegetation A4.2 Subalpine tall-forb vegetation A4.3 Subalpine tall-fern vegetation A5 Cliff vegetation in the Sudeten cirques A6 Acidophilous vegetation of alpine cliffs and boulder screes A7 Pinus mugo scrub A8.1 Salix lapponum subalpine scrub A8.2 Subalpine deciduous tall scrub T1.1 Mesic Arrhenatherum meadows T1.2 Montane Trisetum meadows T1.3 Cynosurus pastures T1.4 Alluvial Alopecurus meadows T1.5 Wet Cirsium meadows T1.6 Wet Filipendula grasslands T1.7 Continantal inundated meadows T1.8 Continental tall-forb vegetation T1.9 Intermittently wet Molinia meadows T1.10 Vegetation of wet disturbed soils T2.1 Subalpine Nardus grasslands T2.2 Montane Nardus grasslands with alpine species T2.3 Submontane and montane Nardus grasslands T3.1 Rock-outcrop vegetation with Festuca pallens T3.2 Sesleria grasslands T3.3 Narrow-leaved dry grasslands T3.4 Broad-leaved dry grasslands T3.5 Acidofilous dry grasslands T4.1 Dry herbaceous fringes T4.2 Mesic herbaceous fringes T5.1 Annual vegetation of sand dunes T5.2 Open sand grasslands with Corynephorus canescens T5.3 Festuca sand grasslands T5.4 Pannonian sand steppe grasslands 468 5 6 6 6 6 5 6 5 6 6 5 5 6 6 6 5 5 6 6 6 6 6 6 2 3 2 3 3 4 3 3 2 2 3 3 4 4 3 3 3 4 3 4 4 3 3 2 3 2 2 2 4 4 4 2 2 4 4 2 3 4 4 4 4 4 3 3 3 5 6 4 4 6 6 4 4 4 4 4 6 6 6 6 6 4 6 4 6 6 6 6 6 2 2 1 2 2 2 2 2 1 1 4 3 3 3 3 5 3 4 3 3 3 3 5 5 4 2 4 3 3 3 3 5 4 5 5 4 4 5 5 5 5 6 6 6 6 2 6 3 4 4 4 4 3 3 3 3 6 5 4 4 4 5 4 4 5 5 5 5 4 71 63 56 69 65 65 58 58 60 58 79 75 71 73 75 75 73 75 81 81 81 79 75 285 221 176 272 240 234 192 192 208 192 357 323 289 306 324 324 306 323 380 380 380 360 323 49 38 31 47 42 41 33 33 36 33 62 56 50 53 56 56 53 56 66 66 66 63 56 47 44 46 43 40 59 56 56 56 56 59 66 63 66 66 58 59 56 33 50 39 46 49 46 66 63 63 39 56 53 39 66 69 84 63 56 59 41 44 41 50 63 94 T5.5 Submontane acidophilous grasslands 95 T6.1 Acidophilous vegetation of spring therophytes and succulents 96 T6.2 Basiphilous vegetation of spring therophytes and succulents 97 T7 Inland salt marshes 98 T8.1 Dry lowland and colline heaths 99 T8.2 Secondary submontane and montane heaths 100 T8.3 Vaccinium vegetation of cliffs and boulder screes 101 K1 Willow carrs 102 K2.1 Willow scrub of loamy and sandy river banks 103 K2.2 Willow scrub of river banks 104 K3 Tall mesic and xeric scrub 105 K4 Low xeric scrub 106 L1 Alder carrs 107 L2.1 Montane grey alder galleries 108 L2.2 Ash-alder alluvial forests 109 L2.3 Hardwood forests of lowland rivers 110 L2.4 Willow-poplar forests of lowland rivers 111 L3.1 Hercynian oak-hornbeam forests 112 L3.2 Polonian oak-hornbeam forests 113 L3.3Carpathian oak-hornbeam forests 114 L3.4 Pannonian oak-hornbeam forests 115 L4 Ravine forests 116 L5.1 Herb-rich beech forests 117 L5.2 Montane sycamore-beech forests 118 L5.3 Limestone beech forests 119 L5.4 Acidophilous beech forests 120 L6.1 Peri-Alpidic basiphilous thermophilous oak forests 121 L6.2 Pannonian thermophilous oak forests on loess 122 L6.3 Pannonian thermophilous oak forests on sand 123 L6.4 Central European basiphilous thermophilous oak forests 124 L6.5 Acidophilous thermophilous oak forests 125 L7.1 Dry acidophilous oak forests 126 L7.2 Wet acidophilous oak forests 127 L7.3 Subcontinental pine-oak forests 128 L7.4 Acidophilous oak forests on sand 129 L8.1 Boreo-continental pine forests 130 L8.2 Forest-steppe pine forests 131 L8.3 Peri-Alpidic serpentine pine forests 132 L9.1 Montane Calamagrostis spruce forests 133 L9.2 Bog spruce forests 134 L9.3 Montane Athyrium spruce forests 135 L10.1 Birch mire forests 136 L10.2 Pine mire forests with Vaccinium 137 L10.3 Pine forests of continental mires with Eriophorum 138 L10.4 Pinus rotundata bog forests 139 XV1 Vegetation of new water surfaces 140 XV2 Degraded water biota 141 XV3 Drainage channels 142 XV4 Locally treated water streams 143 XM1 Wet ruderal fallow land 144 XR Degraded raised bogs 145 XS1 New stone and sand quarries 146 XS2 Supporting and dry walls 147 XS3 Tunnels 148 XS4 Landslides 149 XT1 Post-agrar fallow lands 150 XT2 Degraded wet wasteland 151 XT3 Intensively managed and degraded mesic meadows 152 XT4 Degraded grasslands and heathlands 153 XT5 Plants of railway or road embankments 154 XT6 New mining areas and spoil heaps 155 XK1 Extensively managed or fallow vineyards and orchards 156 XK2 Fallow land with bushes amd trees 157 XK3 Trees of railway or road embankments 158 XK4 Pioneering vegatation of athropogenic areas 159 XL1 Hedgerows and alleys 160 XL2 Lone trees 161 XL3 Monocultures of inappropriate tree species Hedges 469 4 5 5 6 4 4 6 4 4 4 4 4 5 5 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5 5 4 4 4 5 5 5 5 5 5 5 5 5 6 6 6 2 1 1 4 2 6 2 2 3 3 2 2 2 3 2 2 3 3 3 2 3 3 2 4 6 6 5 5 4 6 5 5 6 5 5 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 3 3 3 3 4 4 3 2 2 4 2 2 3 3 3 2 3 4 3 3 3 3 4 3 3 3 3 4 4 4 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 6 6 6 5 6 6 6 6 6 5 5 5 5 5 6 5 5 5 5 5 5 5 5 3 3 3 3 3 3 2 2 1 2 3 3 3 3 3 2 3 4 3 4 4 4 3 4 5 5 5 5 5 4 5 5 5 5 5 5 6 6 5 6 5 5 5 6 6 4 4 5 3 5 6 5 6 5 3 3 3 3 3 5 5 3 3 3 3 3 3 3 2 3 3 3 3 3 2 2 2 2 4 3 3 3 3 2 5 3 3 3 3 3 4 4 4 6 6 6 4 6 2 2 6 2 6 4 6 2 6 6 3 5 5 5 2 3 5 5 3 6 6 6 4 4 3 4 4 6 4 6 6 3 3 4 6 6 6 6 2 2 2 2 2 4 4 3 6 4 2 2 1 2 2 4 4 4 2 2 2 2 3 2 3 4 4 4 2 2 2 2 2 3 4 3 3 3 4 3 3 3 4 4 3 3 3 4 2 4 4 4 4 3 2 2 2 3 2 3 3 2 3 3 3 2 3 3 2 1 1 2 2 2 1 1 2 3 2 2 1 2 1 1 3 2 1 1 1 1 1 3 4 4 6 3 4 3 4 4 4 2 3 4 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 2 3 2 4 3 5 1 1 2 1 2 2 3 2 2 1 3 2 2 1 4 4 3 3 4 4 6 5 4 3 3 3 3 3 4 4 3 3 5 5 4 4 4 4 3 4 4 5 4 5 5 5 4 4 4 4 4 4 3 4 4 3 4 3 4 4 4 4 3 2 3 2 2 4 3 3 3 3 3 4 2 3 3 3 5 2 3 2 4 4 2 56 71 77 85 75 65 71 63 63 73 60 75 75 77 69 81 81 71 75 77 79 69 69 73 79 63 83 85 83 79 73 63 65 67 73 65 79 77 63 67 67 75 75 77 77 40 38 38 48 44 65 38 33 44 46 42 42 38 44 40 35 60 50 42 38 50 50 46 180 285 342 418 324 238 280 209 209 300 190 323 315 330 242 378 374 273 315 336 352 242 260 300 357 216 396 414 396 345 294 216 234 247 304 228 352 336 209 247 247 323 320 340 340 90 80 80 130 108 240 81 64 104 121 99 100 77 108 88 72 210 140 96 72 143 143 117 31 49 59 73 56 41 49 36 36 52 33 56 55 57 42 66 65 47 55 58 61 42 45 52 62 38 69 72 69 60 51 38 41 43 53 40 61 58 36 43 43 56 56 59 59 16 14 14 23 19 42 14 11 18 21 17 17 13 19 15 13 36 24 17 13 25 25 20 162 XL4 Degraded forests with ruderal vegetation 163 XL5 Glades, forest plants and restoration forest planting 164 X1.1 New artificial water basins from natural materials 165 X1.2 Water reservoirs from concrete 166 X1.3 Technically treated rivers 167 X1.4 Polluted waters 168 X2 Technically treated springs, emptied or drained bogs without vegetation 169 X3.1 Ruins 170 X3.2 Used adits, tunnels and cellars 171 X4.1 Traditional village square 172 X4.2 Biotopes of one-year fallows 173 X4.3 Perennial plants on arable land 174 X4.4 One-year and autumn plants on arable land 175 X4.5 Herbaceous vegetation on degraded areas, unrecultivated waste dumps 176 X4.6 Railway stations 177 X4.7 Wasteland in industrial, deposital and technical-agricultural areas 178 X5.1 Hedges 179 X5.2 Biotopes of vegetable gardens 180 X5.3 Biotopes of intensively managed vineyards, hop-fields and orchards 181 X6.1 Parks and gardens 182 X6.2 Graveyards and cemeteries with mainly allochthonous species 183 X6.3 Nurseries, forest plantations 184 X6.4 Monocultures of allochthonous tree species (e.g. false acacia) 185 XX1.1 Sedimentation basins, sewage treatment plants 186 XX1.2 Chemically devaluated water areas 187 XX1.3 Riverbeds from concrete (channels, tubes) 188 XX2 Chemically devaluated wetlands 189 XX3.1 Completely build up area with minimum vegetation 190 XX3.2 Impermeable surfaces and surfaces permanently without vegetation 191 XX4.1 Industrial and storage objects, waste dumps in intravillan 192 XX4.2 Impermeable surface (tarmac, makadam and concrete surface of roads and parking places, technical areas, airports, bridges, dams…) 2 2 2 1 2 1 2 4 3 2 1 2 2 2 5 3 1 1 1 2 2 3 3 2 2 2 2 2 1 2 2 2 2 1 6 2 2 2 1 1 1 1 3 2 1 1 2 1 1 2 3 2 3 1 2 3 46 42 29 25 27 25 40 112 99 49 35 42 35 88 19 17 9 6 7 6 15 1 1 2 1 1 1 1 3 1 2 2 2 2 1 3 1 3 2 2 2 3 3 1 3 2 2 2 2 4 2 6 3 1 1 3 1 1 2 2 1 1 1 1 1 1 3 3 3 2 3 3 5 4 3 3 2 40 23 50 40 31 31 31 90 28 140 84 56 56 56 16 5 24 15 10 10 10 1 1 1 2 2 2 1 2 3 1 1 1 2 1 3 2 29 25 45 35 8 6 2 1 1 2 2 2 3 3 2 2 3 2 2 2 4 1 1 1 2 3 3 3 3 3 35 37 37 72 81 77 13 14 13 2 1 1 1 - 3 2 2 2 - 5 5 2 3 - 3 3 3 2 - 2 2 4 3 - 1 1 1 1 - 2 2 1 1 - 3 3 3 2 - 44 40 35 31 - 104 88 72 56 - 18 15 13 10 0 0 0 0 0 0 - - - - - - - - - - 0 0 Abbreviations: M = matureness N = naturalness DL = Diversity of layers-structures DS = Diversity of species RB = Rareness of biotope RS = Rareness of species of this biotope SB = Sensibility (vulnerability) of biotope TB = Threat of number and quality of biotope Su % = Sum of points in % from maximal possible sum (48) ZBH= (Z+P+DS+DD)*(VB+VD+CB+OB) (max. 576) PV = [(Z+P+DS+DD)*(VB+VD+CB+OB)]*100/576 (in % from max. possible value [576]) Point valuation of certain parameter is min. 1 and maximally 6 points Appendix 2: Conversion of BVM biotope types (see Appendix 1) to CORINE LC cathegories (1.1.1. -5.1.2) and their relative point value calculation. The numerical values were calculated as average from values of selected biotope types, weighted according to their spatial content within territory of Czech republic. Biotope code Biotope name 1.1.1. Countinuous urban fabic XX3.1 Completely build up area with minimum vegetation XX3.2 Impermeable surfaces and surfaces permanently without vegetation X6.1 Parks and gardens 1.1.2. Discountinuous urban fabric X4.1 Traditional village square 470 Relative point value Summarized point value 0 0 18 2,70 24 7,24 X5.2 Biotopes of vegetable gardens X6.1 Parks and gardens XX3.1 Completely build up area with minimum vegetation 1.2.1. Industrial or commercial units X4.7 Wasteland in industrial, deposital and technical-agricultural areas XX3.2 Impermeable surfaces and surfaces permanently without vegetation 1.2.2. Road and rail networks and associated land X4.6 Railway stations XX3.2 Impermeable surfaces and surfaces permanently without vegetation 1.2.3. Port areas X4.7 Wasteland in industrial, deposital and technical-agricultural areas XX3.1 Completely build up area with minimum vegetation XX3.2 Impermeable surfaces and surfaces permanently without vegetation 1.2.4. Airports XT4 Degraded grasslands and heathlands XX3.1 Completely build up area with minimum vegetation XX3.2 Impermeable surfaces and surfaces permanently without vegetation 1.3.1. Mineral extraction sites XS1 New stone and sand quarries XT6 New mining areas and spoil heaps X4.7 Wasteland in industrial, deposital and technical-agricultural areas XX3.1 Completely build up area with minimum vegetation XX4.1 Industrial and storage objects, waste dumps in intravillan 1.3.2. Dump sites XK4 Pioneering vegatation of athropogenic areas XT6 New mining areas and spoil heaps X4.5 Herbaceous vegetation on degraded areas, unrecultivted waste dumps XX1.1 Sedimentation basins, sewage treatment plants XX4.1 Industrial and storage objects, waste dumps in intravillan XX4.2 Impermeable surface 1.3.3. Construction sites XX3.1 Completely build up area with minimum vegetation X4.7 Wasteland in industrial, deposital and technical-agricultural areas 1.4.1. Green urban areas X6.1 Parks and gardens X6.2 Graveyards and cemeteries with mainly allochthonous species 1.4.2. Sport and leisure facilities XT4 Degraded grasslands and heathlands X6.1 Parks and gardens XX3.2 Impermeable surfaces and surfaces permanently without vegetation 2.1.1. Non-irrigated arable land XM1 Wet ruderal fallow land XT1 Post-agrar fallow lands XV3 Drainage channels X4.2 Biotopes of one-year fallows X4.3 Perennial plants on arable land X4.4 One-year and autumn plants on arable land 2.1.2. iPermanently rrigated land 2.2.1. Vineyards XK1 Extensively managed or fallow wineyeards and orchards X5.3 Biotopes of intensively managed wineyeards, hop-fields and orchards 2.2.2. Fruit trees and berry plantations X5.2 Biotopes of vegetable gardens X5.3 Biotopes of intensively managed wineyeards, hop-fields and orchards 2.3.1. Pastures 3.2.1. Natural grasslands A 1.1 Wind-swept alpine grasslands A 1.2 Closed alpine grasslands A 4.1 Subalpine tall-herbs vegetation A 4.2 Subalpine tall-forb vegetation A 4.3 Subalpine tall-fern vegetation R1.1 Meadow springs with tufa formation R1.2 Meadow springs without tufa formation T1.1 Mesic Arrhenatherum meadows T1.2 Montane Trisetum meadows T1.3 Cynosurus pastures T1.4 Alluvial Alopecurus meadows T1.5 Wet Cirsium meadows T1.6 Wet Filipendula grasslands T1.7 Continantal inundated meadows T1.8 Continental tall-forb vegetation T1.9 Intermittently wet Molinia meadows 471 14 18 0 6 0 1,20 8 0 3,20 6 0 0 1,80 19 0 0 14,82 14 13 6 0 0 3,25 13 13 10 0 0 0 4,75 0 6 0,60 18 15 17,10 19 18 0 16,80 19 17 14 15 10 10 10,35 39 13 14,30 14 13 13,20 59 56 59 66 63 62 56 33 50 39 46 49 46 66 63 63 30,00 T1.10 Vegetation of wet disturbed soils T2.1 Subalpine Nardus grasslands T2.2 Montane Nardus grasslands with alpine species T2.3 Submontane and montane Nardus grasslands T3.1 Rock-outcrop vegetation with Festuca pallens T3.2 Sesleria grasslands T3.3 Narrow-leaved dry grasslands T3.4 Broad-leaved dry grasslands T3.5 Acidofilous dry grasslands T4.1 Dry herbaceous fringes T4.2 Mesic herbaceous fringes T5.1 Annual vegetation of sand dunes T5.2 Open sand grasslands with Corynephorus canescens T5.3 Festuca sand grasslands T5.4 Pannonian sand steppe grasslands T5.5 Submontane acidophilous grasslands T7 Inland salt marshes XT1 Post-agrar fallow lands XT2 Degraded wet wasteland XT3 Intensively managed and degraded mesic meadows XT4 Degraded grasslands and heathlands 2.4.2. Complex cultivation patterns XT1 Post-agrar fallow lands XT2 Degraded wet wasteland XT3 Intensively managed and degraded mesic meadows XT4 Degraded grasslands and heathlands X4.2 Biotopes of one-year fallows X4.3 Perennial plants on arable land X4.4 One-year and autumn plants on arable land X5.3 Biotopes of intensively managed wineyeards, hop-fields and orchards 2.4.3. Land principally occupied by agriculture, with significant areas of natural vegetation M1.4 Riverine reed beds M1.5 Reed vegetation of brooks M4.1 Unvegetated river gravel banks M4.2 River gravel banks with Myricaria germanica M4.3 River gravel banks with Calamagrostis pseudophragmites M5 Petasites fringes of montane brooks M6 Muddy river banks M7 Herbaceous fringes of lowland rivers R1.1 Meadow springs with tufa formation R1.2 Meadow springs without tufa formation V2.1 Macrophyte vegetation of shallow still waters V2.2 Periodic still waters V2.3 Waters of specific chemism V3 Macrophyte vegetation of oligotrophic lakes and pools V4.1 Spring ditchies V4.2 Trout belts of water streams V4.3 Thymallidae belts of water streams V4.4 Barbel belts of water streams V5 Charophycae vegetation K1 Willow carrs K2.1 Willow scrub of loamy and sandy river banks K2.2 Willow scrub of river banks L2.3 Hardwood forests of lowland rivers L2.4 Willow-poplar forests of lowland rivers XK1 Extensively managed or fallow wineyeards and orchards XL1 Hedgerows and alleys XT1 Post-agrar fallow lands XT2 Degraded wet wasteland XT3 Intensively managed and degraded mesic meadows XT4 Degraded grasslands and heathlands X4.4 One-year and autumn plants on arable land X4.3 Perennial plants on arable land X4.2 Biotopes of one-year fallows 3.1.1. Broad-leaved forest L1 Alder carrs L2.1 Montane grey alder galleries L2.2 Ash-alder alluvial forests L2.3 Hardwood forests of lowland rivers L2.4 Willow-poplar forests of lowland rivers L3.1 Hercynian oak-hornbeam forests L3.2 Polonian oak-hornbeam forests 472 39 56 53 36 66 69 84 63 56 59 41 44 41 50 63 31 73 17 17 13 19 17 17 13 19 15 10 10 13 13,15 28 33 31 47 42 41 33 33 62 56 53 44 39 59 44 45 52 52 56 36 36 52 66 65 36 25 17 17 13 19 10 10 15 20,05 55 57 42 66 65 44 51 38,55 L3.3 Carpathian oak-hornbeam forests L3.4 Pannonian oak-hornbeam forests L4 Ravine forests L5.1 Herb-rich beech forests L5.2 Montane sycamore-beech forests L5.3 Limestone beech forests L5.4 Acidophilous beech forests L6.1 Peri-Alpidic basiphilous thermophilous oak forests L6.2 Pannonian thermophilous oak forests on loess L6.3 Pannonian thermophilous oak forests on sand L6.4 Central European basiphilous thermophilous oak forests L6.5 Acidophilous thermophilous oak forests L7.1 Dry acidophilous oak forests L7.2 Wet acidophilous oak forests L7.3 Subcontinental pine-oak forests L7.4 Acidophilous oak forests on sand L10.1 Birch mire forests X6.4 Monocultures of allochthonous tree species (e.g. false acacia) XL4 Degraded forests with ruderal vegetation 3.1.2. Coniferous forest L10.2 Pine mire forests with Vaccinium L10.3 Pine forests of continental mires with Eriophorum L10.4 Pinus rotundata bog forests L8.1 Boreo-continental pine forests L8.2 Forest-steppe pine forests L8.3 Peri-Alpidic serpentine pine forests L9.1 Montane Calamagrostis spruce forests L9.2 Bog spruce forests L9.3 Montane Athirium spruce forests R1.3 Forest springs with tufa formation R1.4 Forest springs without tufa formation V4.1 Spring ditchies V4.2 Trout belts of water streams V4.3 Thymallidae belts of water streams V6 Isoëtes vegetation X6.4 Monocultures of allochthonous tree species (e.g. false acacia) XL4 Degraded grasslands and heathlands XL3 Monocultures of unappropriate tree species 3.1.3. Mixed forest L5.1 Herb-rich beech forests L5.2 Montane sycamore-beech forests L5.4 Acidophilous beech forests L6.1 Peri-Alpidic basiphilous thermophilous oak forests L6.2 Pannonian thermophilous oak forests on loess L6.3 Pannonian thermophilous oak forests on sand L6.4 Central European basiphilous thermophilous oak forests L6.5 Acidophilous thermophilous oak forests L7.1 Dry acidophilous oak forests L7.2 Wet acidophilous oak forests L7.3 Subcontinental pine-oak forests L7.4 Acidophilous oak forests on sand L10.1 Birch mire forests R1.3 Forest springs with tufa formation R1.4 Forest springs without tufa formation V4.1 Spring ditchies V4.2 Trout belts of water streams V4.3 Thymallidae belts of water streams XL4 Degraded forests with ruderal vegetation 3.2.2. Moors and heathlands A 2.1 Alpine heathlands A7 Pinus mugo scrub A 8.1 Salix lapponum subalpine scrub K4 Low xeric scrub R3.2 Raised bogs with Pinus mugo T8.1 Dry lowland and colline heaths T8.2 Secondary submontane and montane heaths 3.2.4. Transitional woodland-shrub K1 Willow carrs K2.1 Willow scrub of loamy and sandy river banks K2.2 Willow scrub of river banks K3 Tall mesic and xeric scrub XK2 Fallow land with bushes amd trees 3.3.1. Beaches, dunes, and sand plains 473 55 57 38 42 49 58 34 65 68 65 56 47 34 35 38 47 56 10 19 56 59 59 36 57 55 31 40 40 50 53 44 45 52 50 10 19 20 21,63 42 49 34 65 68 65 56 47 34 35 38 47 56 50 53 44 45 52 19 30,17 56 58 59 56 66 56 41 58,42 36 36 52 33 24 31,70 M2.2 Annual vegetation on wet sand T5.1 Annual vegetation of sand dunes 3.3.2. Bare rock S 1.1 Chasmophytic vegetation of calcareous cliffs and boulder screes S 1.2 Chasmophytic vegetation of siliceous cliffs and boulder screes S 1.3 Tall grasslands on rock ledges S 1.4 Tall-forb vegetation of fine-soil-rich boulder screes 3.3.3. Sparsely vegetated areas A 2.2 Subalpine Vaccinium vegetation A3 Snow beds A5 Cliff vegetation in the Sudeten cirques A6 Acidophilous vegetation of alpine cliffs and boulder screes A 8.2 Subalpine deciduous tall scrub R1.5 Subalpine springs S1.5 Ribes alpinum scrub on cliffs and boulder screes S2 Mobile screes T6.1 Acidophilous vegetation of spring therophytes and succulents T6.2 Basiphilous vegetation of spring therophytes and succulents T8.3 Vaccinium vegetation of cliffs and boulder screes XS4 Landslides 4.1.1. Inland marshes M1.1 Reed beds of eutrophic still waters M1.7 Tall-sedge beds M1.3 Eutrophic vegetation of muddy substrates M1.6 Mesotrophic vegetation of muddy substrates M1.2 Halophilous reed and sedge beds M1.8 Calcareous fens with Cladium mariscus M2.1 Vegetation of exposed fishpond bottoms M2.2 Annual vegetation on wet sand M2.3 Vegetation of exposed bottoms in warm areas M2.4 Vegetation of annual halophilous grasses M3 Vegetation of perennial amphibious herbs XX2 Chemically devaluated wetlands 4.1.2. Peatbogs R2.1 Calcareous fens R2.2 Acidic moss-rich fens R2.3 Transition mires R2.4 Peatsoils with Rhynchospora alba R3.1 Active raised bogs R3.3 Bog hollows X2 Technically treated springs, emptied or drained bogs without vegetation XR Degraded raised bogs 5.1.1. Watercourses M1.4 Riverine reed beds M7 Herbaceous fringes of lowland rivers V4.5 Bream belts of water streams X1.3 Technically treated rivers X1.4 Polluted waters XV4 Locally treated water streams 5.1.2. Water courses V1 Macrophyte vegetation of naturaly eutrophic and mesotrofic still waters XV1 Vegetation of new water surfaces XV2 Degraded water biota X1.1 New artificial water basins from natural materials X1.2 Water reservoirs from concrete XX1.2 Chemically devaluated water areas 474 42 44 43,40 56 46 47 44 47,85 56 56 66 66 56 56 46 43 49 59 49 21 44,65 28 26 36 36 53 59 42 42 47 49 38 0 28,82 56 53 56 66 66 63 15 42 58,82 28 33 52 7 6 23 18,45 47 16 14 9 6 0 39,54 The Economic Value of the Cultural Landscape: How to Evaluate the Non-production Services of a Territory Hana Švejdarová Prague, Czech Republic [email protected] 1 Introduction The form of a landscape as we know it today, the history of its formation and the manner in which it is used deeply reflect the socio-economic development of the society. At the same time the manner of land use is one of the central points in that society’s organisation and, to a marked degree, forms economic opportunities and limits. A well formed landscape provides the inhabitants with a large spectrum of services benefiting both private and public subjects and, subsequently, the entire society. A well formed landscape forms an immense economic capital.(Cheshire, Sheppard 2002. Prato 2007). At the same time almost every landscape fulfils various important functions for human society. Nevertheless, during planning individual functions are not allocated the same significance as they ought to be in comparison with the others (MILUnet 2007). A typical example is undervaluing landscape services that cannot be expressed in market relations, i.e. those that have not got a clearly set price. However there are means to correct this imbalance. A landscape’s non-market services can be expressed through monetary means using non-market evaluation methods. This article deals with the use of these methods for evaluating an area’s services. As a basis for assessing the importance of multi-functional land use a systematic overview of the various functions of a landscape is presented here (de Groot a kol. 2002). Further there is a brief description of the non-market evaluation methods that are suitable for evaluating important non-production landscape functions (Bockstael, Freeman 2005). The core of this treatise is a search of several multidisciplinary periodicals from the areas of economics, environmental protection, spatial planning and ecology. There is a review of the professional articles that have recently been concerned with researching methods for non-market evaluation and the application of these methods in planning. There is an assessment of which landscape functions are most often evaluated and what means are used for this. The search gives a firmly based picture of the possibilities for evaluating the nonmarket services of a landscape, of the means most commonly used for this evaluation, of the intensity of the work that went into developing them and the increasing importance and prestige of these methods. The methodology presented in this article enables a structured estimate of the overall value of the benefits and services provided by a specific area (landscape) to be made thus enabling an overall analysis of the costs and benefits connected to choosing between various possibilities for developing an area (Prato 2007). This article concerns three questions: a) what services does a cultural landscape provide its inhabitants with, b) what means exist to express the natural and cultural values of the landscape using socioeconomic and monetary resources, c) how can these resources be used for analysing and comparing the suitability of the varying possibilities for using the territory. 475 Chapters 2 and 3 are concerned with the first two questions i.e. an analysis of the landscape’s functions and the possibilities for their economic evaluation. Chapter 4 gives a case study of such an assessment. 2 Landscape functions The first step is practical, to systematically describe the ecological structures and processes in a more limited number of ecosystem functions. From the wide range of ecological functions the ones that have been selected satisfy human needs directly or indirectly. De Groot grouped ecosystem functions into the following five primary categories (de Groot et al. 2002): (1) Regulation functions: This group of functions relates to the capacity of natural and semi-natural ecosystems to regulate essential ecological processes and life support systems through biogeochemical cycles and other biospheric processes. Regulation functions maintain a “healthy” ecosystem at different scale levels and thus the number of regulation functions would be almost unlimited. But for landscape planning, only those regulations functions are considered that provide services, which have direct and indirect benefits to humans (such as maintenance of clean air, water and soil, prevention of soil erosion and biological control services). (2) Habitat functions: Natural ecosystems provide refuge and reproduction-habitat to wild plants and animals and thereby contribute to the (in situ) conservation of biological and genetic diversity. Habitat functions relate to the spatial conditions needed to maintain biotic diversity and evolutionary processes. The availability of this function is based on the physical aspects of ecological niche within the biosphere. These requirements differ for different species group but can be described in terms of the carrying capacity and spatial needs of the natural ecosystem which provide them. (3) Production functions: Photosynthesis and nutrient uptake by autotrops converts energy, carbon dioxide, water and nutrients into a wide variety of carbohydrate structures, which are then used by secondary producers to create an even larger variety of living biomass. This biomass provides many resources for human use, ranging from food and raw materials (fiber, timber, etc.) to energy resources and genetic material. (4) Information functions: Because most of human evolution took place within the context of undomesticated habitat, natural ecosystems provide an essential ‘reference function’ and contribute to the maintenance of human health by providing opportunities for reflection, spiritual enrichment, cognitive development, recreation and aesthetic experience. (5) Carrier functions: Most human activities (e.g. cultivation, habitation, transportation) require space and suitable substrate (soil) or medium (water, air) to support the associated infrastructure. The use of carrier functions usually involves permanent conversion of the original ecosystem. Thus, the capacity of natural systems to provide carrier functions on sustainable basis is usually limited. 3 An economic evaluation of a landscape’s functions The above mentioned overview of the functions of ecosystems and a landscape can be used for analysing the nature and extent of their significance for human society. For evaluation the key element is the amount of material products and non-material services that the individual ecosystems or landscape areas provide from the standpoint of the given function. A large amount of a landscape’s functions are routinely evaluated economically by human society as these functions form a part of and often the direct basis of the economic system. In particular this concerns the majority of the production functions and the carrying 476 functions such as the market value of crops or the value of the land plots in the rural or urban landscape. However at the same time there exists for each landscape type a large amount of functions from the given landscape the services of which are not evaluated economically and therefore remain outside of an analysis of the costs and benefits of the varying uses and development of the territory. For a monetary evaluation of the non-market services of a landscape, which are primarily incumbent upon preserving the natural richness of the biodiversity, in providing recreational and aesthetic services and in preserving the cultural heritage the non-market evaluation method can be used. This involves a set of methodological procedures which were formed by environmental economists for the purpose of valuating the price of certain (as a rule environmental) assets the price of which is not determined by the market (Winpenny 1991, Bockstael and Freeman 2005). An overview of these is given in Table 1. Table 1: Approaches and methods for environmental economic valuation Valuation approach Valuation method Example replacement costs Constructing a swimming pool Cost-side when polluting a natural reservoir. restoration costs Afforesting a devastated forest relocation costs government payment — GP Demand-side Revealed preference methods travel cost method — TC hedonic price method — HP averting behaviour — AB Demand-side Stated preference methods contingent valuation — CV conjoint analysis — CA choice experiments — CE contingent ranking — CRk contingent rating — CRt Relocating a threatened habitat to a safe locality. Reimbursing the damages caused to farmers for protecting fauna Appraising the price of a natural park according to how far away it is and how many visitors go there. An estimate of how the proximity of a town park affects real estate prices. Purchasing bottled water when mains water is polluted. Schools in the countryside for children from areas of air pollution. Questioning people how much they would be prepared to contribute for preserving a certain natural species. A marketing method of asking for preferences for various properties of a good Choosing from a hypothetical offer including prices Ranking a hypothetical offer, including the price, according to preferences Evaluating a hypothetical offer, including the price Some of them are derived according to the costs that it would theoretically be necessary to invest to renew them, to replace them with other means or for removing them to another place. These are methods of non-market evaluation based on estimates (hypothetical) of the costs for renewing the services in the event of them being sacrificed for other development; therefore they are called cost methods. However these methods do not give any information 477 on the demand for the given services. (Here in the CR one of these methods was used by Seják and col. 2003.) Demand methods reveal the individual demand for a certain non-market service according to the same theoretical basis as explained by the price of market goods. The aim of economically evaluating non-market assets, for instance the services of an environment or a landscape, is how to measure the consumer surplus during a change in the quality or quantity of such an asset. These changes are not usually traded on the market as they do not have a market derived price though they affect the welfare of the service beneficiaries. In order for us to know what economic value the beneficiaries of a service ascribe to it, it is necessary to use one of the methods formed on the basis (on the whole also hypothetically) of the demand for the service. Here we try and reveal the willingness to pay or the consumer surplus in relation to the change in the provided amount of a certain service. These methods are based on two alternative approaches, on revealed preferences or on stated preferences. 4 Revealed preference The economic value of utility benefits can be estimated using the methods from the revealed preferences group. The methods from this group rely on researching a market that is connected to the given asset. For instance the Travel Cost Method (TC) investigates how much people are willing to pay to visit a recreational area, say a national park. The consumer surplus that park visitors receive is estimated according to the individual’s behaviour in a real market. The estimates are based on the assumption that the costs connected to the excursion reflect the price the visitor attributes to the excursion. The Hedonic Price Method (HP) very often compares how the price of real estate differs in relation to the quality of its surroundings. Here purchasers express their preferences for a particular environment by how much they are willing to pay extra for the given locality. Another method that belongs in the revealed preferences group is Averting Behaviour (AB). A typical example is remedial measures such as double glazing in noisy areas or purchasing bottled water as a reaction to poor water quality ion the mains water. 5 Stated preferences However there also exist non-market assets for which the hidden relationship between the individual’s tradable and non-tradable gains cannot be used. An example can be preserving biodiversity, a valuable landscape or cultural heritage. In these cases the individual can derive their willingness to pay just from the satisfaction that the given asset exists although they may never use it — this is called the non-utility value. The only techniques that can estimate the non-utility value are the stated preferences methods. These methods are based on creating a hypothetical market with the aid of a carefully made questionnaire, which helps to ascertain how much people would be willing to pay to improve the environment (or how much to prevent it getting worse). The Contingent Valuation Method (CV) is the most popular from the group of stated preferences, nevertheless recently methods modelling the choice of a selected attribute are being used more and more. These methods include cojoint analysis — CA, choice experiment — CE, contingent ranking — CRk or contingent rating — CRt. 478 6 Empirical estimates of the economic value of various attributes of a landscape’s quality This chapter stems from the case studies for economically evaluating various aspects of landscape quality, which were recently published in the following periodicals: Land Economics, Journal of Environmental Economics and Management, Environmental & Resource Economics. The periodicals represent the most prestigious journals from the area of environmental economics. In the given period an overview of the articles concerning the evaluation of an environmental attribute connected to landscape services was made. Purely theoretical articles or those concerned with models not relating to specific estimates of non-market values were not taken into consideration. Furthermore work involving very general landscape services that are not taken into consideration during decision making at the local level was also ignored. (For instance the effect a landscape type has on carbon fixation and climatic changes). The sources of the studies were academic magazines, which is manifested in the character of the cited work. Since they arose in the framework of scientific research they are primarily aimed at developing and testing non-market evaluation methodologies. (Practical estimates and compilations of individual evaluations should be contained in the international database EVRI — Environmental Valuation Reference Inventory. With regards to the high charges for access to the database it could not be used for our aims). Nevertheless despite the fact that forming estimates for the price of the named attributes was not the primary aim, the studies mentioned in the overview do contain such estimates. We do not give specific estimated values because their predictive ability and comparability is conditional on a good description of the circumstances and conditions of the experiment, which cannot be met during such an extensive literature review. In relation to which landscape service to evaluate the study was split up into three groups, see Table 2. Quite naturally in each group a different evaluating method predominates, which is given by the character of the asset evaluated. a. Ecosystem services (E) — biodiversity, protected landscape areas. With regards to the large proportion of unused values the contingent method evaluations predominate. b. Recreation (R) — the use of the landscape for various recreational activities. Very often it concerns sports fishing, skiing or visiting a national park. The travel costs method best captures the assessed asset’s benefits to society. c. Socioeconomic and cultural benefits (S) — the effect environmental quality has on the social structure of the locality’s population, on the residents’ behaviour and on their feeling of wellbeing. The value people attribute to the cultural components of the landscape, e.g. historical buildings and the urban structures. These values are well quantified by the hedonic method Table 2: Evaluating methods Group Journal Ecosystem E — total Land Economics J. Env. Econ. Mangm. Env. & Res.Econ. Recreation R — total Land Economics J. Env. Econ. Mangm. Env. & Res.Econ. Socecon. S — total Land Economics J. Env. Econ. Mangm. Env. & Res.Econ. CV 22 8 3 11 12 3 5 4 12 6 3 3 479 TC HP 20 4 11 5 1 7 5 2 1 26 18 6 2 Other 6 3 1 2 5 2 3 3 2 1 Total 28 11 4 13 44 14 18 12 42 11 5 An overview of the frequency of studies for the non-market evaluation of landscape services relates to the selected magazines from 2000 to the present (An enumeration of the studies, the subject and the evaluation method for each of them together with an exact citation can be found at www.ieep.cz). The studies are divided up according to which non-market service of the territory they evaluate. Apart from several exceptions each work was ranked into just one group, even though with the interrelatedness of the landscape services, it was often necessary to decide which of them the respondent was thinking about when they determined their preferences. With these simplifications we attempted to be as systematic as possible, i.e. so that the same type of work always fell into the same category. For ecosystem services the results of the contingent evaluation are always considered to be an estimate of the non-utility value, despite it often having a considerable economic benefit, for instance biodiversity preservation. Therefore the contingent value stems from the preferences of the individual and from his standpoint the economic benefits of ecosystem services are not of a type that they directly and perceptibly influence his wellbeing. His preference is thus only possible to account for by the satisfaction there is in the fact that the given ecosystem exists. In the group of recreational services hunting or fishing are often evaluated. Typically and very frequently it is discovered how the popularity of the locality changes with the increasing state of the animals, fish or birds. These studies were placed here because although they concern the ecosystem services of a territory their value is measured from the viewpoint of the recreational use. Another controversial asset evaluated were some of the attributes of the quality of living, which have both recreational aspects and socioeconomic impacts. Those studies that evaluated the view from a window or access to a beach were placed in the group of recreational service even though such a quality in the surroundings of a house increases the house prices and thus has an effect on the social status of the inhabitants. A very similar attribute, the proximity of an urban public park was, conversely, placed into the group of landscape attributes, which markedly influence the socioeconomic relations and values. The reason is that the amount and quality of greenery in a town has a demonstrable effect on the inhabitants’ behaviour, on their social contacts. For parks that had been abandoned and neglected it was even shown that there was a negative effect in that it provides a refuge for various groups on the margins of society and ordinary inhabitants are afraid to enter. The studies evaluating how people appraise their feeling of security when they refuse to have a store for hazardous waste nearby, when they are afraid of floods or when they refuse to have a public right of way across their land were also assigned into the group of the landscape’s socioeconomic services. Those evaluations of how people appraise cultural monuments, how their wellbeing is affected by the proximity of community housing for the mentally ill etc. were also placed in this group. Those studies that evaluated the landscape service in the broader spatial dimension were not included in the overview of the evaluations. In particular those on how various types of vegetation bind carbon thus alleviating climate change. Similarly the services of ocean ecosystems were not included in the overview as they do not influence decision making on land use at the local or regional level. 7 Conclusions The aim of this article was to describe those methods most often used to evaluate the nonmarket services of a landscape. 480 It gives the reasons for market failure during the allocation of public assets. During planning this failure is manifested by giving priority to easily described and evaluated economic benefits over those landscape functions that do not have an economic expression. In an attempt to correct this market failure, methods for the non-market evaluation of environmental quality have been developed and tested. They have varying characters and the suitability of their use differs depending on the natural asset being evaluated. The article gives an overview and assessment of the case studies using non-market methods for evaluation based on a literature review of the three most important magazines from the area of environmental economics. The evaluation includes articles that contain specific estimates of the value of a landscape service. The case studies are divided up into three groups depending on whether they evaluate ecosystem, recreational or socioeconomic and cultural services. From the overview it is clear which of the functions in the last few years have been most frequently evaluated and what methods have been used for this The literature review gives evidence to the intensive work done in developing nonmarket evaluation methods and their frequent use in evaluating landscape services. 8 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. References Blaschke Thomas, 2006. The role of the spatial dimension within the framework of sustainable landscapes and natural capital. Landscape and Urban Planning 75, 198–226. Bockstael Nancy E.; Freeman III Myrick A. 2005. Welfare Theory and Valuation. In:Handbook of Environmental Economics, Volume 2. Edited by K.-G. Mäler and J.R. Vincent. Elsevier B.V. 518-556. Carson Richard T., 1999. Contingent Valuation: A User's Guide. http://ideas.repec.org/p/cdl/ucsdec/9926.html. Costanza, R.; d’Arge, R.; de Groot, R.S.; Farber S.; Grasso M.; Hannon, B.; 1997. The value of the world’s ecosystem.services and natural capital. Nature 387, 253 - 260. de Groot Rudolf S.; Wilson Matthew A; Boumans Roelof M.J, 2002. A typology for the classification, description and valuation of ecosystem functions, goods and services. Ecological Economics 41, 393–408. González Matías; León Carmelo J., 2003. Consumption process and multiple valuation of landscape attributes. Ecological Economics 45, 159-169. Cheshire Paul; Sheppard Stephen, 2002. The welfare economics of land use planning. Journal of Urban Economics 52, 242–269. Jackson Jiřina 2002, Urban Sprawl. Urbanismus a územní rozvoj. Ročník V, číslo 6. Markvart Josef 2002. Suburbanizace, pěší pohyb a krajina: příklad města Brna. Urbanismus a územní rozvoj. Ročník V, číslo 6. McConnel Kenneth E.; Bockstael Nancy E. 2005.Valuing the Environment as a Factor of Production. In: Handbook of Environmental Economics, Volume 2. Edited by K.-G. Mäler and J.R. Vincent. Elsevier B.V. 622–661. Míchal Igor 1994. Ekologická stabilita. Veronica. MILUnet 2007, Practitioners Guide. Výstupy projektu: Multi Functional Land Use Network financovaného programem Interreg IIIC, http://www.milu.net/ Morancho Aurelia Bengochea, 2003.A hedonic valuation of urban green areas. Landscape and Urban Planning 66, 35–41. Myes Norman; Kent Jennifer, 2001. Perverse Subsidies: How Tax Dollars Harm the Environment and the Economy, Island Press. Polansky Stephen; Costello Christopher; Solow Andrew, 2005. The Economics of Biodiversity. In: Handbook of Environmental Economics, Volume 3. Edited by K.-G. Mäler and J.R. Vincent. Elsevier B.V., 1518-1552. Prato Tony, 2007. Evaluating land use plans under uncertainty. Land Use Policy, Vol. 24, 165–174 Seják, J., Dejmal, I. a kol, 2003. Hodnocení a oceňování biotopů ČR. Český ekologický ústav. Švejdarová Hana 1998. Krajina se oceňuje hůř než cement: Postoj veřejnosti k stavbě cementárny a k ochraně životního prostředí na Berounsku. Vesmír. Ročník 77, č. 6. Turner Matthew A. 2005. Landscape preferences and patterns of residential development. Journal of Urban Economics 57, 19–54. 481 20. Turner R. Kerry; Paavola Jouni; Cooper Philip; Farber Stephen; Jessamy Valma; Georgiou Stavros, 2003.Valuing nature: lessons learned and future research directions. Ecological Economics 46, 493-510. 21. Winpenny, James 1991. Values for the environment: a guide to economic appraisal. London: HMSO for the Overseas Development Institute. 22. Zander, P; Meyer B.;Michel B.; Karpinski I.; Rossing W.; Groot J.; Josien E.; Rambonilanza T.; Madureira L., 2005. Knowlege, Models, Techniques and tools that Help to Explain and Forecast Multifunctionality of Agriculture. Comparative Report MultiAgri/WP3, Bruxelles. 482 Session F Population Census 2010 as a Tool for Environmental Policy “… In general the Session F can be evaluated very positively since all the presentations were interesting and actual. This is also confirmed by the lively discussion conducted during the whole session. All the presentations showed that the population census in addition to other statistical information provided by the statistical offices is being used within the number of studies connected with environment and its sustainable development.” (Stanislav Drápal, Czech Statistical Office) 483 484 Private Households and Environment — a New Sectoral Reporting Module of the German Environmental-Economic Accounting Karl Schoer, Šárka Buyny, Helmut Mayer, Christine Flachmann Environmental Economic Accounting Federal Statistical Office Germany, Wiesbaden, Germany [email protected], [email protected] 1 Introduction By virtue of their various activities, private households make a major contribution towards burdens pressures on the environment. The extent of the burdens pressures is however determined not only by individual conduct, but also by economic and social influencing factors, such as developments in population size, in household structure and in the level and composition of consumption expenditure. In the new sectoral reporting module entitled “Private households and the environment” For the first time, the Federal Statistical Office Germany has put together comprehensive environmental, economic and social data on private households to form a coherent overall picture in the context of Environmental-Economic Accounting. In particular, on the basis of the corresponding results contained in the Office’s Socio-economic Accounts, information on consumption expenditure and on major environmental pressures (area, energy, carbon dioxide emissions) is provided and interlinked in a sub-division by household size classes. The depiction of the link between the use of the environment and socio-demographic factors is significant, in particular against the background of the foreseeable dramatic demographic transition (“ageing society”). Apart from this, the relationship between energy consumption and the demand for consumer goods which causes it is portrayed in detail in the new reporting module. In this paper selected results are presented. The full report is available on the web site of the Federal Statistical Office Germany under http://www.destatis.de/download/e/ugr/Private_households_and_environment.pdf 2 Overview of the use of environmental resources by private households Enterprises and private households use environmental resources such as raw materials, area and environmental services in their production and consumption activities. Environmental services include in particular the absorption of residuals. Environmental pressures occur in the use of these resources. Whilst the lion’s share of environmental resources is consumed directly in the production process, a non-negligible share of environmental resources is also used in consumption activities of private households (Figure 1). Significant approaches for reducing the pressures on the environment are hence to be found not only in production, but also in the direct use of the environment by virtue of consumption activities. 485 Figure 1 Share of private households in the direct use of environmental resources in 2004 in % 52,1 Settlement area Consumption of final energy *) 27,3 CO2 22,7 Water (not including cooling water) 19,8 NOx 15,9 NMVOC 14,3 Waste 12,7 SO2 9,6 CH4 5,4 N2O 1,8 NH3 1,7 Memorandum item: mileage 69,4 0 10 20 30 *) Energy requirement not inc. Transport and conversion looses 40 50 60 70 80 Federal Statistical Office Enviromental Economic Accounting 2006 The share of private households in settlement area was in 2004 particularly high at 52.1 %. The range of share is likely to be even higher with the traffic area. The size of the share in the use of road traffic area can be made clear by referring to mileage. The share accounted for here by private households was almost 70 %. The share of private households is also relatively high (between a good fifth and one-quarter) with energy115 (27.3 %), water (not including cooling water) (19.8 %), carbon dioxide (22.7 %), nitric oxide (15.9 %) and volatile organic compounds not including methane (NMVOC) at 14.3 %. By contrast, the share of other air emissions is much lower. The share of waste volume is 12.7 %. Somewhat more than 30 % of the direct use of final energy by private households is accounted for by the use of fuels in motorized individual transport, and almost 70 % by activity for housing. With the direct emission of carbon dioxide by private households the share of motorized individual transport is 42.5 % and 57.5 % are accounted for by consumption activity of housing. Trends in the direct use of environmental resources by private households varied in the period 1995 to 2004 (Figure 2). Marked reductions are shown in some cases in air emissions and in use of water. By contrast, an increase occurred in the factors settlement area, energy and ammonia. The settlement area of private households rose by 15.9 % between 1996 and 2004. This corresponds to an average growth of 69 ha per day. 115 Including petrol purchases abroad. This means fuel bought abroad because of the sometimes marked price difference, but consumed for driving activities in Germany. 486 Figure 2 Development of direct use of environmental resources by private household Change 2004 / 1995 in % Energy consumption total Housing Motorized individual transport Water 1,8 2,4 0,6 -3,1 Settlement area **) CO2 Housing Motorized individual transport N2O CH4 SO2 -58,9 NMVOC -51,5 NOx -64,5 NH3 Memorandum item: mileage -70 *) Including petrol purchases abroad **) 2004 / 1996 -60 15,9 -9,3 -10,5 -7,7 -21,0 -0,1 3,9 9,5 -50 -40 -30 -20 -10 0 10 20 Federal Statistical Office Enviromental Economic Accounting 2006 Total energy consumption increased by 1.8 %. The use of energy sources for housing, which will be discussed in greater detail in Section 5, increased by 2.4 % in the period under report, and fuel consumption in individual transport increased by 0.6 %. The slight increase in fuel consumption was characterised by two contradictory trends. On the one hand, mileage increased by 9.5 %, whilst on the other hand average fuel consumption per kilometre fell by 8.2 %. It was possible to reduce the emission of carbon dioxide (CO2) by a total of 9.3 %. The reduction was 7.7 % with consumption activity of motorised individual transport and 10.5 % with activity for housing. CO2 emissions arise in the combustion of fossil energy sources. The much more favourable development in CO2 emissions in comparison to energy consumption is caused above all by the greater use of energy sources with lower carbon content (in relation to their energy content). The increasing share of lower-carbon diesel fuel had an impact on transport. When it comes to activities for housing, in particular the substitution of mineral oil by gas had an impact. Over and above this, the rising share of electricity had an unburdening impact. Emissions also emanate from the generation of electricity from fossil energy sources, but these are not attributed to private households but to the power plants. 3 The socio-economic framework The development of seize and the structure of population and consumption expenditure are major driving forces for the use of environmental resources. Regarding the structural effects for instance, per capita use of environmental resources, broken down by household types can differ widely, and the environmental relevance of the individual types of consumer goods can be different as well. 487 3.1 Population As is made clear by followed graph (Figure 3), the number of residents increased between 1995 and 2004. Despite an only slight change in the population size as a whole, however, the age composition of the population has changed markedly in the last decade. Whilst the number of the elderly (60 years and older) has increased by 20 %, the number of children and juveniles (up to 20 years old) has fallen by 5 %. This trend reflects the known factors — reduced reproduction rate of the population and increasing life expectancy. The trend of change in the age structure of the population which has been observed over the last decade is also set to continue in the foreseeable future. Figure 3 Population forecast by age size classes 1995 = 100 180 60 years and older 160 140 120 Total 100 20-59 years 80 Under 20 years 20 30 20 10 20 05 20 03 20 01 19 99 19 97 19 95 60 Federal Statistical Office Environmental Economic Accounting 2006 3.2 Private households Amongst other things, as a consequence of the changed age structure, the number (+5.7 %) and the composition of private households has markedly changed in the last decade. Figure 4 presents the development of the number of private households between 1995 and 2004 by household groups. As emerges from the figure, growth in the number of private households, at 5.7 %, was much higher than that in the number of persons living in private households (annual average figures), which increased by 1.3 %. Thus, the average size of the households fell from 2.2 to 2.1 household members. 488 Figure 4 Development of the number of private households by household size classes and social status of the reference person Change 2004 / 1995 in percent Pensioners’ households Other households All households 5,7 2,1 Households total 3- and more person households 12,7 -7,1 -7,1 -7,4 12,2 2-person households 2,6 24,6 11,7 1-person households 16,5 6,3 -10 0 10 20 30 Federal Statistical Office Environmental Economic Accounting 2006 The rise in the total number of households results in particular from a 12.7 % increase in the number of pensioners’ households, whilst the number of other households increased relatively slowly (2.1 %). The sub-division by household size classes shows that the number of one- and two-person households increased in each case by roughly 12 %, whilst the number of households with three and more persons fell by roughly 7 %. The increase in the number of two-person households is the result primarily of the considerable increase in the number of pensioners’ households, by 24.6 %. This means that the marked increase in the number of households in this size class is likely to be caused largely by the trend towards an “ageing society”. The increase in the number of one-person households is also influenced by an increase in the number of pensioners’ households (6.3 %), but much stronger here was the influence of the increase in the number of other households (16.5 %). The increase in the number of other one-person households is caused by changes in behaviour, such as the earlier establishment of young adults’ own households. Because of the anticipated development in the structure of the population, the trend towards smaller households observed in recent years is likely to continue. The development of the household size structure is of particular interest in relation to the environmental pressures caused by the activities of private households because the use of environmental resources per household member is in smaller households, as is shown in the following chapters, as a rule much higher than in larger households. For instance, smaller households in particular show higher consumption expenditure, larger living space, higher energy consumption and higher carbon dioxide emissions per household member. The fall in the average household size is hence likely to have tended to burden the environment. 489 3.3 Consumption expenditure The price-adjusted household final consumption expenditure increased by roughly 11 % between 1995 and 2004, whilst expenditure continued to increase relatively rapidly until 2000. Expenditure in fact fell somewhat after that. It is revealed from Figure 5 that expenditure for most environmentally intensive purposes, like “fuels” (–4.7 %), “energy for housing” (resource: energy, absorption of greenhouse gasses) (+0.5 %), “as well as “water supply and other services relating to housing” (10.8 %) (Resources: water, absorption of waste water, waste) have risen less pronouncedly than total consumption expenditure (11.1 %). An exception is “rent payments” (+14.0 %). (Resource: settlement area). The significance of the influencing factors named here is considered in greater detail below using the example of settlement area, of direct energy consumption, as well as of carbon dioxide emissions for housing and of indirect energy consumption by private households. Figure 5 Consumption expenditure of private households by purposes (price-adjusted, chained) Change 2004 / 1995 in percent Total consumption expenditure 11,1 Water supply* Fuels** 10,8 -4,7 Energy for housing 0,5 Rent payment 14,0 Purchase of motor vehicles 11,1 Food 4,0 Transport services 2,7 Other expenditure -10 -5 * Water supply and other services relating to housing ** Not incl. petrol purchases abroad 4 13,6 0 5 10 15 20 Federal Statistical Office Environmental Economic Accounting 2006 Settlement area and living space The settlement area, directly used by private households, increased by 15.9 % between 1996 and 2004. The building and adjacent open area used for housing increased somewhat less by 14.4 %. Settlement area of private households not used for housing includes in particular recreation area, kitchen gardens and cemeteries. The actually used living space (13.1 %) has increased also much more rapidly than the number of private households (5.7 %), and the number of persons living in the private households (1.3 %). This means that the actual living space per household has increased by 7.0 % and per household member by 11.6 %. Next chart (Figure 6) shows the actually-used living space per household and per household member, in each case by household size classes for 2004. 490 This makes it clear that living space per household increases with the size of the household, but not in proportion to the number of household members. As a consequence it emerges that per capita living space in one-person households, at 62.5 m2, is much higher than in two-person households (43.4 m2). The members of households with three and more persons only use an average area of 28.5 m2. This means that the trend towards smaller households described in chapter 3 has caused additional demand for living space. Figure 6 Actually-used living space per household and household member 2004 per household 120 m2 Households with ... 3 and more persons 100 105,6 2 persons 80 86,7 per household member Households with ... Total households 83,2 1 person 1 person 60 62,5 62,5 40 Total households 2 persons 43,4 3 and more persons 39,2 28,5 20 0 Federal Statistical Office Environmental Economic Accounting 2006 The above influencing factors for the development of actually-used living space can be quantified with the aid of the mathematical tool of decomposition analysis. This analysis tool makes it possible to describe the impact of changes in individual influencing factors on an observed overall trend. It breaks down a change of a variable over time into the total of the effects of individual influencing factors. In our case, this dependent variable is the actuallyused living space. Each individual effect describes how the living space would have developed if only the factor in question had changed. Here, individual effects may have a positive or negative sign. The negative effect of a factor may be compensated for by the positive impact of the other factors. In the interpretation of the results, account should be taken of the limits which are inherent to such an analysis. Thus, for instance, the influencing factors included in the analysis are externally defined, and it is presumed that the individual factors do not influence one another. A distinction was made between three influencing factors (for decomposition see Figure 7): - Number of household members - Household size structure - Living space per household by household size classes (living space intensity). - All in all, the actually-used living space increased by 13.1 % between 1995 and 2004. All three influencing factors included had a burdening influence. The contribution of the increase in the number of household members was 1.4 percent points; the change in the 491 household size structure was reflected in an increase of 2.9 percent points. By far the greatest influence was exerted by the increase in average living space (living space intensity) in the individual household size classes, with an overall effect of 8.8 percent points. Figure 7 Decomposition of the development of actually-used living space by influencing factors Change 1995 / 2004 Actually-used living space (in %) 13,1 Growth contributions (in %-points): Living space intesity *) 8,8 Household size structure 2,9 1,4 No. of household members 0 2 4 *) Average living space per household by household size classes 5 6 8 10 12 14 Federal Statistical Office Environmental Economic Accounting 2006 Direct energy consumption of private households for the consumption activity housing Roughly 70 % of the final energy used in private households — accounting for roughly 20 % of the total energy consumed in Germany — is used for housing. Temperature-adjusted energy consumption increased by roughly 11 % between 1995 and 2000 (Figure 8). After that, it fell by roughly 7 % up to 2005. Viewed over the entire period, therefore, an increase of 3.5 % emerges (+91.9 PJ). 492 Figure 8 Direct energy consumption (temperature adjusted) of private households for housing 1995 to 2005 1995 = 100 145 Price index: energy for housing 144,9 135 125 115 Energy 105 103,5 95 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Federal Statistical Office Environmental Economic Accounting 2006 The observed trend change in energy consumption from 2000 onwards is likely to have been strongly influenced by trends in energy prices. Whilst the price index for the energy sources used by private households (not including fuels) only rose slightly up to 1999, the prices subsequently increased by roughly 42 %. Energy consumption reacted to this development with a time-lag, price elasticity being relatively low. In the context of Environmental Economic Accounting, the temperature-adjusted final energy consumption of private households for housing is also portrayed by application areas. 76 % of the energy is accounted for by the application area room heating, 11 % are used for heating water. The remainder of 13 % is used for other process heat (above all for cooking), mechanical energy (electrical appliances) and lighting. If however one includes the conversion losses incurred in electricity generation and community heating, a completely different picture is created. The share of the area room heating falls to 61 %, whilst the share of the other areas “heating water, other process heat, mechanical energy and lighting” increases to 39 %. In the last decade particularly pronounced increases were recorded by the application areas mechanical energy (+20.6 %) and other process heat (+18.4 %). By contrast, energy consumption for room heating (2.8 %) and lighting (+1.4 %) only increased moderately. The use of energy for heating water in fact fell slightly, by 1.4 %. The increased use of energy for room heating results from two components. As has already been mentioned, the actually-used living space increased by 13.1 %. At the same time, there was however much more efficient use of energy for room heating, reflected in a 9.1 % reduction in the energy requirement per m2 (energy intensity). The fall in the energy intensity of living space can result from a variety of influencing factors, such as improved heat insulation, improved heating technology and changed heating conduct on the part of households — for instance because of considerable rises in energy prices. The household size structure has, as already described, clearly swung towards smaller households. In particular, the number of households with three and more persons has fallen, whilst the number of one- and two-person households has increased markedly. 493 As Figure 9 shows, the energy consumption for housing of the individual household size classes differs depending on the household and on the household member. This means that the composition of the population by household size classes can have a major influence on the households’ energy consumption. As one might expect, energy consumption per household increases with size of the household, but not in proportion to the number of household members. The average consumption of households with three and more members is only slightly more than twice as high as the consumption of one-person households. Figure 9 Temperature-adjusted direct energy consumption for housing by household size classes 2004 (in GJ) per household 120 per household member Households with 3 and more persons 100 96,9 80 2 persons 72,8 60 40 Total households Households with 71,2 1 person 1 person 49,6 49,6 36,4 20 Total households 2 persons 3 and more persons 33,6 26,2 0 Federal Statistical Office Environmental Economic Accounting 2006 Energy consumption per household member is hence markedly higher in smaller households than in larger ones. Whilst per capita consumption in households with three and more persons is 26.2 GJ, this value in one-person households, at 49.6 GJ, is a good 90 % higher. This means that the trend that has been described towards smaller households, as with use of living space, had an upwards influence on the energy consumption of private households as well. Having said, that the change in the household size structure had a less strong influence on energy consumption than on living space. The actually-used living space per household member with one-person households is an average of more than twice as high as with households with three and more persons. The slighter difference when it comes to energy consumption is above all related to the fact that only 14 % of one-person households, but 32 % of two-person households and as many as 43 % of households with three and more persons live in detached family houses. Detached houses have much less favourable specific energy consumption values than apartment blocks. At the example of energy use for the application area of room heating the mathematical tool of decomposition analysis was applied to quantify the effect of the influencing factors increased number of the population in private households (household members), change in the household size structure, increasing average living space in the individual household size classes (living space intensity) and change in the use of energy for room heating per living 494 space in the individual household size classes (heating energy intensity of living space) — on the overall change in the heating energy consumption of private households. The results are portrayed in Figure 10. Figure 10 Decomposition of development of temperature-adjusted direct energy consumption of private households for room heating by influencing factors Change 2004 / 1995 Direct energy consumption for room heating *) (in %) 2,8 Growth contributions (in %-points): 2 Energy consumption per m -10,4 Living space per household 9,0 Household size structure 2,8 No. of household members 1,4 -15 -10 -5 0 5 10 Federal Statistical Office Environmental Economic Accounting 2006 *) Temperature-adjusted The increase in the energy consumption of private households for the generation of room heating is made up of the following factors. A burdening influence emanated from the increase in the number of household members (+1.4 percentage points), the change in the household size structure (+2.8 percentage points), and above all the increase in living space intensity (+9.0 percentage points). These burdening influences were countered by the unburdening effect of the fall in heating energy intensity of 10.4 percentage points. In total, there was thus an increase by 2.8 % in demand for heating energy. 6 Indirect energy consumption of private households In order to create a full picture of the energy consumption of private households, indirect energy consumption has to be considered in addition to the direct energy consumption analysed above (housing and motorised individual transport). Indirect energy consumption of private households is understood as the amount of energy used over the total production chain consumed for producing the goods and services consumed, including not only the domestic but also the respective energy use in the rest of the world. The calculations of the indirect energy content were carried out on the basis of monetary input-output tables and the information on the direct primary energy consumption by homogeneous branches in physical units. The indirect energy consumption — measured in original values — associated with the manufacture of consumer goods and services for private households increased by 2.4 % in the period 1995 to 2003. A decomposition analysis (see Figure 11) shows that the increase is the result of upward and downward influences. A marked unburdening effect of 5.3 percentage points was caused by the change in the basket of products towards less energy-intensive 495 consumer products. A downward effect of 2.5 percentage points also relates to the indirect energy content of the products consumed, which fell on average, above all as a result of the more efficient use of energy in manufacturing the intermediary and final products. The unburdening influences were however clearly more than compensated for by the increase in the level of consumption expenditure adjusted for price changes, leading to a burdening effect of 10.2 percentage points. Figure 11 Decomposition of indirect energy consumption of private households by influencing factors Change 2003 / 1995 Indirect energy consumption (in %) 2,4 Growth contributions (in %-points): Level of consumption expenditure 10,2 Energy efficiency of manufacturing consumer goods Consumer good structure (basket of goods) -2,5 -5,3 -6 -4 -2 0 2 4 6 8 10 12 Federal Statistical Office Environmental Economic Accounting 2006 The downward effect caused by the change in the consumption structure (basket of products) can be explained in particular from the trend away from material products (goods) towards increased demand for services, which are less energy intensive. For instance, in the period under report the demand of private households for goods (not including energy sources) (+ 7.7 %) as well as for transport services (+ 2.7 %), increased much less than the demand for other services as a whole, which was 16 % higher in 2003 than in 1995. This shift in demand towards services has therefore tended to dampen indirect energy consumption. The markedly over proportionate increase in the prices of energy goods, which amounted to 31.8 % for the period 1995 to 2003, whilst the prices of all consumer goods and services only increased by an average of 9.7 %, is likely to have favoured the change in the consumption structure which has been observed towards less energy-intensive products (trend in energy intensities — see Figure 12). 496 Figure 12 *) Trends in energy intensities of consumer goods by goods groups Change 2003 / 1995 in % Total products Goods (not incl. energy goods) -7,4 -4,5 Food and fodder products 0,3 Clothing Chemicals -11,6 -21,7 Motor vehicles/parts Transport services -16,5 -21,4 Air transport services -17,2 Other services -13,3 -6,5 Hotel and restaurant services -7,4 Health and social services Federal Statistical Office Environmental Economic Accounting 2006 *) Energy content of the productss related to their value Taking the average of all products (not including energy goods), the energy content related to the value (energy intensity) fell by 4.5 %. Intensity fell by 13 % when it comes to services as a whole (not including transport). The following was observed as examples of the fall in the energy intensity of particularly energy-intensive products: chemicals (– 22 %), air transport services (– 17 %) and motor vehicles (– 17 %). Annex: Energy consumption of private households — Overview Direct energy consumption Direct energy consumption for motorized individual transport Direct energy consumption for housing Direct energy consumption for housing (temperature-adjusted) Energy consumption for hot water Other energy consumption Energy consumption for room heating Effect of (in percentage points)… Energy consumption per m2 * Living space per household * Household size structure * No. of household members * Indirect energy consumption Effect of (in percentage points)… Level of consumption * Energy intensity * Structure of consumption * * Data of decomposition analysis 2004 in petajoule 3 937 1 292 2 644 2 749 306 365 2 078 Change 2004/1995 in percent 1,8 0,6 2,4 4,0 –1,4 17,3 2,8 2003 in petajoule 5 999 –10,4 9,0 2,8 1,4 Change 2003/1995 in percent 2,4 10,2 –2,5 *–5,3 * 497 Modeling of the Population in the Light of Census (2001) Jaroslav Kraus Czech Statistical Office, Prague, Czech Republic [email protected] There were major changes in the population development of the Czech Republic in the course of the 1990s. These changes were connected with the regime of population replacement itself as defined by the theory of second demographic transition [Van de Kaa D., 1998]. Obviously, there is significant differentiation of some aspects of demographic behaviour. In the sphere of fertility, this mainly relates to young people. These development trends are documented by sufficient data and continual attention is paid to them. On the other hand, less attention and interest has been devoted to the question of the extent with which changes in time are reflected in territorial changes such as territorial differentiation of fertility. As a result, the submitted study focuses on an analysis and generalization of the differences taking into account their impact on the spatial model of fertility. Based on the results of the 2001 population census, there is first an analysis of completed fertility from the viewpoint of size groups of localities of permanent residence and regions. The latter are further differentiated according to education. Figure 1 Average num ber of children per 1000 w om en by place of residence (generations 1930 -1959) 3500 3000 2500 2000 1500 1000 total - 1999 inhab. 2000-19999 inhab. 20000-99999 inhab. 500 100000+ inhab. 0 1910 1920 1930 1940 1950 1960 1970 year of birth Women’s final fertility can be expressed by the average number of living children. In the past decade, fertility dramatically plummeted in the Czech Republic. The total fertility rate fell from 1.89 in 1990 to the minimum of 1.13 in 1999 with a subsequent slight increase to 1.17 in 2002. With the trend, the Czech Republic’s population has joined the category of 498 lowest low fertility. As a result, the examination of changes in the fall has gained importance. Along with observation of the causes of the fall, there is the intriguing question of observation of the changes from the territorial point of view. A certain answer is provided by the results of the average number of children according to the regions and size groups of the place of residence. This has revealed [Kraus, 2004] that the average number of children is the highest in the smallest settlements and lowest in large towns, especially in Prague. From the viewpoint of individual regions of the Czech Republic, the differences are not significant, with an obvious exception of Prague, where the average number of children is significantly lower. Results have revealed that (cohort) fertility falls along with the growing education of women and the growing size group of the localities of place of residence. Higher differentiation of fertility is evident from the classification according to the size groups of towns and villages with the subsequent classification according to education. In other words, as a differentiating factor, education is more significant than the size group of locality of permanent residence. When differences in the average number of children according to regions are considered, one can say that the differences are rather insignificant, with a single, but apparent exception: Prague. While national figures of completed cohort fertility have been falling in the long run from about 2.5 children per woman to the figures under 2.0, in Prague the average number of children has been deeply under 2.0 in the long run. There is a new alternative which makes it possible to look at the spatial differentiation from a different angle — through the geographical analysis of the Geographical Information System(GIS). Subsequently, geostatistical methods are used for the creation of spatial models of fertility. Geostatistics as an instrument, widely used in natural sciences, has only had a limited application in social sciences. It delineates the territories displaying significant extent of similarity in terms of a demographic phenomenon (phenomena). This extent of similarity is given by a complex approach to this under observation. The fundament is created by the geostatistical analysis which works with well-known data (points) in the space, creating (interpolating) a coherent area in the space above them. Within a geostatistical analysis, the value in every point of area is forecast from the measurements obtained in selected points. In general, there are two basic interpolation techniques: a determinist and a stochastic (geostatistical). Both methods rely on the similarity of phenomena in the close surroundings, while the geostatistical method adds the assumption of sampling error into the model of a territory. For a spatial analysis of demographic data, the latter approach is more convenient — after some basic problems are resolved. The first can be called the ascertainment of values for a certain representative area and it is connected with uneven character of settlement. This is clearly apparent on the Figure 2 which depicts the average number of women in the towns with more than 2,000 people. In this case, the problem is to calculate the women’s fertility in the settlements with less than 2,000 people due to the size of the samples. For the purposes of this work, the values in the settlements with less than 2,000 people were replaced with the value for all settlements of a given region (see the strata NUTS3), which is a certain simplification of the entire solution. The use of geostatistics must be started with the definition of a area and territory, while geostatistical methods are applied for them. The study is based on the initial concept that territorial differences really exist in fertility and these are no random events. The basic solution to the spatial (geostatistical) model is based on the idea that the phenomena that are located close to one another are more similar than the phenomena situated at a farther distance. 499 Figure 2 Figure 3 In order to achieve the representability of the area, one has to construct the division of space into a regular network of cells (a mosaic), while the results for individual towns and villages are converted into the mosaic. In practice, two mosaics are considered: one square and one hexagonal. The former has the advantage of being compatible with the structure of the data sequences used in computer technology and with the Cartesian system of coordinates. 500 The latter (hexagonal) mosaic has the advantage that the centres of all neighbouring cells are equally distant from the centre of a given cell. Thanks to this symmetry, the hexagonal mosaic is methodologically more correct in terms of spatial analysis and this is why it was used in this work. The total fertility of women in all settlements was converted into a network of hexagons with a 10-kilometre edge. The calculation was based on individual (anonymous) files of the census, in which the average number of children of all women (the women who had or had not children) was calculated in a standard way: x = ∑ xi / N , 14 (1) i =1 where xi is number of children given order and N is number of generations of women born in 1930–1959. The calculation of average number of children in the hexagonal mosaic was calculated as a weighted mean, with the number of women of relevant generation as the weight. In this way, the values of average number of children for 428 hexagons of the mosaic, which covers the territory of the Czech Republic, were calculated — see Figure 3. In order to simplify the task, the Czech Republic was conceived as a closed entity, which implied that fertility beyond the Czech Republic border was zero. In practice, this meant enveloping the hexagonal network by another edge beyond the Czech Republic border so that spatial functions converge to zero at the Czech Republic’s border. This created space for the work with the geostatistical model. When creating a model of a territory, data analysis is the first required step. Most, though not all, data models imply that data are quite or at least approximately normal. If the condition of normalcy of data is not fulfilled, the data must be transformed. However, since spatial data about the average number of children according to the territory are drawn from a roughly normal distribution, the data transformation is not necessary. For the spatial solution, one of the Kriging methods was chosen. The Kriging methods are based on autocorrelation as a function of distance. In other words, the phenomena in a given locality are more influenced by phenomena in the neighbouring localities than in distant regions. The information about the value of a given phenomenon in a given space is calculated as distances between individual observations and the model autocorrelation as a function of distance: Z (s ) = μ (s ) + ε (s ) , (2) where Z (s ) is the observed variable (the average number of children), split into the determinist trend μ (s ) and random autocorrelated error ε (s ) . The value s denotes the distribution in space: x, y coordinates of a given village and town. Like in other stochastic models, since there is the implication of imperfect forecasts of the determinist component, the value ε (s ) should on average amount to 0. Autocorrelation between ε (s ) and ε (s + h ) does not depend on real x,y values of s, but on the shift h between them. Results (see Figure 4) of spatial prediction of average number of children as a onedimensional data characteristic of fertility reveal that the lowest values of the interval estimate refer to Prague, and internal parts of the Central Bohemian and Plzeň regions. The area of average values concerns some parts of the Karlovy Vary, Ústí nad Labem, Liberec, South Bohemian, Olomouc, Zlín and Moravian and Silesian regions. Relatively higher figures occur 501 in further parts of the above regions and in a predominant part of the Vysočina region. The model revealed that the highest figures occur in some localities in the Zlín and Olomouc regions. Figure 4 Figure 5 502 Furthermore, intensity of spatial dependence was calculated by means of the statistics called Moran’s I which is destined for the analysis of spatial and factual variability of a phenomenon under observation (see Figure 5). Above all, the calculation shows that the Central Bohemian and Plzeň regions and Prague create a homogeneous area in which the level of fertility does not significantly differ. The Hradec Králové region is adjacent to it. In other areas, this relative stability does not occur. This is exemplified by the South Moravian, Olomouc and the Moravian and Silesian regions, in which fertility seriously varies depending on the locality in question. Apparently, the decisive role is played by the size group of the place of residence. Similar oscillation appears in the Karlovy Vary, Ústí nad Labem, Liberec, South Bohemian, Pardubice and Zlín regions. Statistical significance of this phenomenon was confirmed for the Central Bohemian and Plzeň regions and for Prague and it relates to the total area of the regions, with no local dissimilarities. The figures are similar also in the wider hinterland of the towns of Brno, Olomouc and Ostrava, but not in the regions as a whole. The changes of reproductive patern, which realized in 1990s and which continue after 2000 year, can be involved into context of population development which in fact began in Europe since 1960s. It is explained by theory of second demographic transition. In according to this theory, subpopulation with the “lowest low fertility”: will be created [Kohler, H.P et al. 2002] resulting in some cases in depopulating of some societies. Population is a complex of demographic, economic, environmental and many other variables. They influence each other with the multiplicative effect. To understand complexity we would be able to decode its parts. Refernces (selected) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Armstrong, M., 1998 Basic Linear Geostatistics, Springer, s.25-70. Bongaarts, J. 2002 The end of the fertility transition in the developed world, Population and develpment review 28. Dostál P., Hampl M.Metropolitan areas in transformation of regional organization in the Czech Republic, AUC Geographica, s. 133-155. Kohler, H.P et al. 2002 The emergence of Lowest Low Fertility in Europe during the 1990s, Population and Development Review 28, s.641-680. Korčák, J. 1973 Geografie obyvatelstva ve statistické syntéze, Universita Karlova, s.27-80, in Czech. Kraus J., Rychtaříková J.(eds), 2005 Atlas sčítání 2001, PřFUK, s. (v tisku), s. 27-33, in Czech. Kraus, J. 2004 Regionální diferenciace plodnosti, Demografie 45, s. 263-268, in Czech. Longley, P.A. et al.,2005 Geographic Information Systems and Science, John Wiley&Sons, s.363-382. Longley, P.A., Batty M., 2005 Advanced Spatial Analysis, CASA, s. 233-265. Martin D.1996 Geographic Information Systems: socioeconomic applications, Routlege. Maguire, D. et al (eds), 2005 GIS, Spatial Analysis and Modeling, s. 93-112. Tuček, J. 1998 Geografické informační systémy, Computer Press, s. 53-157, in Czech. Van de Kaa D., 1998: Postmodern fertility preferences: from changing value orientation to new behaviour, Working Paper in Demography 74. 503 Willingness-to-Pay for Organic Food and its Determinants in the Czech Republic Jan Urban*, Milan Scasny Charles University Environment Center, Charles University in Prague, Czech Republic * Corresponding author: [email protected] 1 Introduction Household consumption is recognised as one of the key driving forces resulting in increasing environmental burden. Particularly, food was an important consumption item in the recent household budget surveys conducted in the Czech Republic. Indeed, expenditures on food and non-alcoholic beverages presented on average more than one fifth of the total household consumer expenditures in the Czech Republic in 2005 (CSO, 2006). On the other hand, negative impact of food consumption on the environment can be reduced by purchasing environmentally responsible food, usually so-called organic food. Market with organic food belongs to some of the most dynamic ones. This market has emerged thanks to growing public support measures introduced in order to change individual preferences of consumers. Boccaletti (2006) in his extensive review of empirical literature examines the degree, to which consumers are becoming more concerned about food quality attributes, including effects on the environment, health and safety. Following neoclassical economics, the demand for organic food can be modelled using demand models and systems like AIDS and QAIDS (see Ščasný and Brůha, 2005), using the framework of random utility theory in choice modelling, or applying contingent valuation method in order to elicit willingness to pay for buying such goods. As shown in Boccaletti’s review, the research on demand for organic food and fair trade products has been conducted extensively in Western Europe and North America, especially during the last ten years. In the Czech Republic, such studies present rather a pioneering piece of work. For instance, Janda (1994) estimates linear demand system for several types of meat, while Janda with his co-authors (1997; 2000) estimated demand for food imports. Póč (2006) conducted a marketing study to assess the potential for the development of the organic food market in the Czech Republic. Using the data from a survey conducted on 1,000 respondents representing Czech population, he focused on knowledge of the respondents about organic products and on their awareness of organic food logo, satisfaction with organic food supply, and perception of the main barriers to increase in organic food demand. Ščasný, Urban and Nevečeřalová (2005) conducted a case study on demand for food and organic food based on analysis of statistical data and a qualitative sociological research. Based on data from a survey conducted by Ščasný, Urban et Nevečeřalová in 2005, Nevečeřalová (2006) analysed household expenditures on organic food on the sample of Prague residents. More comprehensive analysis of the data from this survey, including willingness to pay for organic food and several other food items, is reported by Urban and Ščasný (2007). The results presented in this paper are also based on their survey. The aim of the current paper is particularly to analyse the demand of Czech households for organic food. More specifically, we aim at analysing current household expenditures on organic food and examine factors that influence the demand for organic food. The paper proceeds as follows. Firstly, we describe the survey and the main characteristics of the sample. Then we focus on current expenditures on organic food and we present the results of a binary logit model that used socioeconomic and demographic 504 characteristics to explain, whether respondents’ household was currently buying organic food. Then we analyse the perceived barriers to larger organic food demand. Consequently, a binary logistic model and lognormal model are run to explain positive maximal willingness to pay for organic food and the amount that the respondents reported as their maximal willingness to pay for organic quality of food of currently demanded basket of food. 2 Survey The survey targeted population of Prague aged 18 to 65. The quota sampling was used to get small (N=351), yet representative sample of Prague’s population using quotas for age, gender, education and living area within Prague. In the sample, there were 47 % of males. Around 13 % of respondents lived in the city center (Prague 1 to 3), 52 % lived in larger city center (Prague 4 to 10) and 32 % lived on the outskirts (Prague 11 to 22). There were some 14 % of respondents in the sample, who reported only elementary level of education, other 29 % attended only technical schools without state leaving exam, 39 % reported high-school degree (maturita) and some 18 % reported university degree. Other socioeconomic and demographic characteristics of the sample are displayed in the Appendix 1.116 Importantly, only those respondents, who have “significant” experience with purchase of food (i.e. were buying at least 25 % of groceries for the household) were included in the sample).117 The data were collected from May to September 2006 mostly by questioning the respondents in their households. Standardized structured interviews were used to elicit the information from respondents. The structure of the questionnaire was as follows: i) questions on current household expenditures for all food, and for specific items such as diary products, meat, fruit, vegetables, and eggs, ii) questions on factors that influence purchase of a specific brand from the same type of conventional food (such as yogurts), iii) questions on awareness of organic food label, iv) questions on actual household expenditures for organic food, v) questions on perceived barriers to, and motivating factors for consumption of organic food, vi) questions on willingness to pay extra for organic quality of currently consumed basket of food for the household under the condition that the barriers hindering current consumption of organic food were removed, vii) question on social norms related to the consumption of organic food, viii) questions on the relative importance of different motivational factors of purchase, ix) questions on attitudes (environmental attitudes and attitudes to one’s own health), x) standard socio-economic and demographic indicators, xi) debriefing section that was completed by interviewers themselves (they reported their evaluation of the interview process). The χ2 test shows that the structure of the sample is similar in terms of quota characteristics to the one of Prague’s population according to the data of the Czech Statistical Office. 117 This might have surely weakened the representativeness of the sample for the population of Prague but as far as we are aware there is no statistical data that would allow us to construct sampling frame for quota sampling of respondents who have significant experience with purchase of food for their household. For this reason we presume that that there is no relationship between “purchasing experience” and quota variables. However, in reality, especially gender might be associated with the actual purchasing of food for the household. 116 505 The average time to complete the questionnaire was around 40 minutes and interviewers reported that interviewees remained focused on the topic for the whole time of interviewing. 3 Results Buying of conventional and organic food On average, respondents reported that their household spent 4320 CZK (144 €) monthly for food alone. This is in accordance with the information that could be obtained from the household budget survey conducted regularly by the Czech Statistical Office (see the table below). Table 1: Average household expenditures, Household Budget Survey 2005 Average H o u s e h o l d s o f household employees farmers Total expenditures Consumer expenditures Expenditures on food and beverages (COICOP 1) Monthly expenditures on food (COICOP 1) Food expenditures on total consumer expenditures 275 615 213 139 43 934 3 661 20,6 % 330 378 240 709 46 371 3 864 19,3 % 305 417 224 517 47 143 3 929 21,0 % selfemployed 335 303 282 757 53 644 4 470 19,0 % retired 138 202 126 180 33 883 2 824 26,9 % Slightly higher food expenditures in our sample reflect the fact that prices of food are somewhat higher in Prague area than in the rest of the country. In our sample, some 51 % of respondents (175 respondents) reported that they have bought organic food in the last 6 months. The distribution of expenditures for organic food was right-skewed. On average, respondents spent 230 CZK (7.6 €) monthly for organic food (with median interval 0–100 CZK or 0–3.5 €). Those, who actually bought organic food, spent on average 470 CZK (or 15.6 €) with median interval 100–500 CZK (or 16.6–15.7 €). To find out who the consumers of organic food were in terms of their socio-economic and demographic characteristics, we ran a binary logistic model. This model was a standard binary logistic model as shown in formula 1, where Pni is logit probability, xnj is a vector of observed variables relating to one of the alternatives i, and β’ are estimated coefficients. e β ′x ni Pni = β ′x nj e ∑j (1) The results of the best model that we estimated are displayed in the table below. Table 2: Binary logistic model (purchase of organic food) Exp(B) Sig. socio 1,740 0,0011 attitudes 2,035 0,0001 kids 2,184 0,0004 Log likelihood = 134,247 Cox & Snell R Square = 0,203 It appears that social norms related to consumption of organic food, pro-environmental attitudes and presence of children in the household are significant predictors of whether or not 506 the household has bought organic food in the last 6 months.118 If we replaced indicators of norms and attitudes with an indicator of education level, we found out that it had also significant effect on purchasing decision (lower education level associated with lower probability of buying organic food). However, the effect of education was very likely mediated with attitudes and social norms and was a weaker predictor. Interestingly enough, it turned out in other models that were tested as an alternative to the model presented above, that personal income of respondent and household income did not have any significant effect on whether the household bought organic food or not in the last 6 months. Other factors such as gender, area of residence in Prague (downtown vs. outskirts), and age of respondent did not have any significant effect either. Perceived barriers to consumption of organic food Since 49 % of respondents reported that they did not buy any organic food in the last 6 months, the question may arise what are the most important barriers to higher consumption of organic food. The table bellow displays the main reasons stated by respondents for not buying organic food. Graf 1: Perceived barriers to consumption of organic food for buyers and non-buyers (rel. frequency) 70% 62% 62% 60% 45% 50% 38% 40% buyers 27% 30% 20% 9% 10% 25% 23% 19% 18% 12% 5% non-buyers 9% 2% 0% 2% 0% price availability choice health dangers information enviro awareness other Respondents indicated that the main barrier to consumption of organic food was the price. Other important factors were the availability of organic food and the choice of products. Low awareness about health benefits and dangers of organic food consumption and general lack of information about organic food were rather less important factors. Interestingly, buyers and non-buyers identified the same barriers to larger consumption of organic food. The only statistically significant difference was that non-buyers stated significantly more often that lack of general information about organic food was a barrier to organic food consumption for them. 118 The indicator of social norms was constructed as normalized summed score of responses to questions eliciting whether different significant others would support respondent in buying organic food and his or her willingness to comply with the perceived social pressures. In this we followed the conceptualization of social norms in the theory of planned behavior (see Ajzen 1991, see appendix 2 and 3 for precise wording of questions). Indicator of pro-environmental attitudes was constructed as a normalized regression score from the factor analysis of the battery of questions eliciting respondents’ pro-environmental attitudes. Factor analysis revealed that the one factor extracted was responsible for 52% of variation in responses to this battery. Anyway, reliability of this battery was rather modest (with Crombach’s alpha = .671). 507 Stated willingness to pay for organic food Following the section on actual expenditures on organic food, respondents were asked how much they would have been willing to pay had the above indicated barriers been removed. The question elicited specifically willingness to pay extra for the currently demanded basket of food if it was in organic quality. Average stated willingness to pay extra every month for organic food amounted to 730 CZK (or 24.2 €), with median value of 500 CZK (or 16.7 €). Not surprisingly, buyers expressed statistically significantly higher WTP (mean 880 CZK) than non-buyers (mean 637 CZK). Characteristically, the distribution of WTP’s was right-skewed with large proportions of zeros (around 21 % of all WTP’s). Using P-P graph, we tested several distributions for WTP for organic quality of food. Lognormal distribution appeared to approximate empirical distribution the best. Therefore we used linear lognormal regression model to estimate willingness to pay extra for organic quality of food. We also tested several alternative models that included socio-economic and demographic variables. Moreover, we attempted to include indicators of social norms related to consumption of organic food (see above) and pro-environmental attitudes. The model that performed best is displayed in the table bellow. This model was quite good for prediction of positive values of WTP, however, its efficiency decreases when we used it for prediction of both zero values and positive values (now with adj. R2 around 0.015 suggesting that maybe different type of model such as spike model, Tobit model, or Heckman two stage procedure would be required for modeling both positive and zero values). Table 3: Linear lognormal regression model (positive willingnes to pay for OF) Unstandardized Coefficients Standardized Coefficients B Beta (Constant) 5,547323247 age 0,006450015 0,11665841 element –0,262637786 –0,15110525 expend 0,199051404 0,503883029 hinc 0,000139 0,000953804 R square = .279 Adj. R square = .266 Sig. 0,00000 0,05352 0,01522 0,00000 0,98723 In the model, positive willingness to pay extra for organic quality of food is significantly determined by the level of education (people with only elementary education tend to state lower WTP) and overall current expenditures for food (the higher the current expenditures the higher is also WTP for organic food). The influence of age is on the edge of statistical significance (at alpha = 0.05). However, it seems that older people tend to state higher willingness to pay extra for organic quality. Interestingly enough, household income (per person in the household) did not have any statistically significant effect in the model. In alternative models we tested also the effect of personal income. In these alternative models, we also found out that that the effect of personal income and of household income on positive willingness to pay was not statistically significant. Now the question may arise as to what stochastic mechanism was responsible for stating zero willingness to pay rather than any positive value of WTP. To answer this question we tested several binary logistic models that would account for the switch between zero and positive WTP. 508 Table 4: Binary logit model for positive and zero values B Exp(B) kids –0,0054 0,9946 socio 0,8567 2,3553 hincome119 0,0012 1,0012 male 0,0491 1,0503 element 0,1746 1,1908 Log likelihood = –111,996 Cox & Snell R Square = 0,329 Sig. 0,9874 0,0000 0,0000 0,8762 0,6102 In the table above we can see the model that explained the best the switch between positive and zero values of willingness to pay extra for organic quality. We see in the model that social norms and household income are significant predictors of positive values of WTP. People who feel social pressures to buy organic food (esp. from family members) and people with higher household incomes per capita reported more often positive values of WTP. On the other hand, we see in this model that gender, presence of children in the household and level of education did not have any significant effect on whether the respondent stated positive willingness to pay extra for organic quality. 4 Conclusions The paper presented results of a pilot survey conducted on a small sample of Prague’s adult population in 2006. The survey focused primarily on consumption of conventional food, consumption of organic food and stated willingness to pay extra for the currently demanded basket of food in organic quality. Furthermore, determinants of both actual consumption of organic food and willingness to pay for organic food were analyzed using binary logistic regression and linear regression analysis with lognormal model. Respondents reported that their household spent on average 4,320 CZK (144 €) for food monthly. Some 51 % respondents from the sample stated that they have bought organic food in the last 6 months. Buyers and non-buyers spent on average 230 CZK monthly for organic food, those who actually buy organic food spent on average 470 CZK. Using binary logistic model to predict whether respondent’s household bought organic food in the last 6 month, we found that social norms related to purchase of organic food, proenvironmental attitudes and presence of children in the household had significant effect on the organic food purchase in the household. On the other hand, such socioeconomic and demographic variables as personal or household income, age of respondents, their education, area of Prague they were living in, and gender of respondents did not have any significant effect on whether the household bought organic food in the last 6 months. Further, we focused on the barriers that either prevented respondents from purchase of organic food or that hindered their current consumption of organic food. Interestingly enough, both buyers and non-buyers indicated price, availability, and limited choice of organic food as the main barrier to consumption of organic food. The only factor where buyers and nonbuyers differed was the perceived lack of general information among non-buyers. Non-buyers significantly more often expressed that the lack of general information about organic food was an important barrier for them. In the next section of the paper, stated willingness to pay extra for organic quality of currently demanded basket of food, under the condition that the barriers were removed, was elicited. Stated WTP for buyers was significantly higher (mean 880 CZK or 24.2 €) than for non-buyers (mean 637 CZK). Around 21 % of respondents stated zero WTP. 119 Household income divided by 1000 in CZK. 509 To explain willingness to pay extra for organic quality of currently demanded basket of food we tested several lognormal linear regression models. The model that best explained willingness to pay extra for organic quality used age of respondents, their level of education and their current expenditures as statistically significant predictors. Older people, people with high-school education level or higher and people with higher expenditures for food stated also significantly higher willingness to pay extra for organic quality of their currently demanded food basket. Importantly, household income as well as personal income proved to be statistically insignificant predictors on this and alternative models. Indeed, gender was not a significant predictor either. However, the described model predicted well only positive values of willingness to pay but its predictive power decreased when used for prediction of all WTP’s including zero values. To analyze the binary switch between positive and zero WTP’s, we ran several binary logistic models. In the model that best explained the switch between zero and positive values there were the following significant predictors: perceived social pressures (social norms) to buy organic food and household income. Zero stated willingness to pay was significantly more likely for people with lower incomes and for people who did not feel any social pressures to buy organic food. Because different stochastic mechanism was apparently responsible for the switch between zero and positive WTP and between different positive values of WTP, we suggest that the spike model (Kristrom, 1997) or Tobit model (Tobin 1958) should be used to estimate the parameters for both positive and zero WTP values. Such models would allow for modelling of zero “spike” in the WTP distribution. More sophisticated models like Heckman two-stage procedure combining dichotomous choice model for zero — positive value switch and the regression model with appropriate distribution for positive values could be also an alternative. However, more extensive dataset would be required to test these models than the current data sample from a pilot study. Although our pilot study provides many interesting data, one should be aware of the fact that its rather small sample size does not allow to provide aggregate indicators, not even for the population of Prague. 4 References 1. 2. 3. 4. 5. 6. 7. 8. Ajzen, I. (1991). “The theory of planned behavior.“ Organizational Behavior and Human Decisio Processes 50, 179-211. Boccaletti, S. (2006). “Household Behaviour and Environmental Policy: Review of Empirical Studies on Environmentally Responsive Food Choice.” Paper prepared for the OECD Workshop on Household Behaviour and Environmental Policy: Empirical Evidence and Policy Issues”. OECD, 1516 June 2006. CSO (2006). “Incomes, Expenditures and Consumption of the Households Budget Survey Sample Households in 2005.” Volumes I. Czech Statistical Office, Prague. Heckman, J. (1979). “Sample selection bias as specification error.” Econometrica 47 (1979), 153161. Janda, K., McCluskey, J. and Rausser, G. (2000). “Food Import Demand in the Czech Republic”. Journal of Agricultural Economics, 2000, vol. 51, no. 1, p. 22 -- 44. ISSN 0021-857X, Janda, K. and Rausser, G. (1997). “The Estimation of Hicksian and Expenditure Elasticities of Conditional Demand for Food in the Transition Economy 1993-1995.” Central European Journal of Operations Research and Economics, 1997, vol. 5, no. 2, p. 155. Janda, K. (1994). “The Estimation of Linear Demand System for Basic Types of Meat.” Working Paper no. 69, CERGE-EI, Prague, 1994. 27 s. Kriström B. (1997): “Spike Models in Contingent Valuation,” American Journal of Agricultural Economics 79 (August) 1013-1023. 510 9. 10. 11. 12. 13. 14. Nevečeřalová, I. (2006). “Poptávka po biopotravinách. Výzkum poptávky po biopotravinách na vzorku pražských obyvatel. Diploma thesis. Charles University in Prague, Prague. Póč, I. (2006). “Potenciál BIO potravin na českém trhu. Marketingová studie. Prezentation for the Czech Ministry of Agriculture. Synergy Marketing and GfK Prague, Prague. Ščasný M., Urban, Jan and I. Nevečeřalová (2005). “Úvod od analýzy spotřebitelských vzorců chování.“ (Introduction to analysis of consumption behavior patterns), Závěrečná zpráva VaV Nástroje (MŽP) (Final Report from a RaD project funded by Ministry of Environment, CUEC. Ščasný, M., Brůha, J. (2005). “Analýza distribuční efektů regulace v oblasti spotřeby energií a dopravy.” (Analysis of distributional effects due to regulation in energy and transport consumption area). Working Paper prepared for the Final Report of R&D Project 1C/4/73/04 „Environmental and Economic Effects of Economic Instruments in Environmental Protection). IREAS and Charles University Environment Center, Prague, mimeo (in Czech). Tobin, J. (1958): Estimation of Relationships for Limited Dependent Variables. Econometrica, Journal of the Econometric Society, Vol. 26, No. 1, January, 1958. Northwestern University, Evanston, Illinois, USA. Urban, J., Ščasný, M. (2007). Determinanty a bariéry spotřeby biopotravin v ČR: pilotní studie na populaci Prahy.“ CUEC Working Papers 3/2007. Praha: Centrum pro otázky životního prostředí UK. [Online: http://cozp.cuni.cz/COZP-999.html] Appendix 1: Socio-demographic characteristics of the sample Sample (Abs.) 351 (Rel.) 100 male female 166,0 185,0 47,3 52,7 47,8 52,2 15-34 35-54 55-74 138,0 106,0 85,0 41,9 32,2 25,8 36,9 34,7 28,4 element. + technical highschool university 133,0 135,0 64,0 40,0 40,6 19,3 43,5 35,7 18,8 AREA OF PRAGUE P 1-3 P 4-10 P 11-22 44,0 181,0 113,0 13,0 53,6 33,4 13,0 53,0 34,0 NET PERSONAL MONTHLY INCOME (CZK) 0 - 5.500 5.501- 7000 7.001 - 8.500 8.501-10.000 10.501-13.000 13.001-15.500 15.501-18.000 18.001-24.000 24.001-35.000 35.000 and more 66 24 25 45 36 37 29 26 20 12 20,6 7,5 7,8 14,1 11,3 11,6 9,1 8,1 6,3 3,8 WHOLE SAMPLE Prague's population (Rel.) GENDER AGE EDUCATION NET HOUSEHOLD MONTHLY INCOME 511 0 - 9.000 9.001-13.000 13.001-15.500 15.501-18.000 18.001-23.000 23.001-29.000 29.001-35.000 35.001-45.000 45.001-55.000 55.001 and more Appendix 2: 24 27 28 32 47 45 39 35 20 14 7,7 8,7 9 10,3 15,1 14,5 12,5 11,3 6,4 4,5 Indicators of social norms related to consumption of organic food Motivation to comply with social norms „Everybody can be sometimes influenced by opinion of his/her family members, friends, or collegues. How important do you think are for you opinions of the following people around you? We will list different groups of people and ask you how important their opinions are for you. Mark 1 if their opinion is unimportant to you and 5 when it is very important to you.” (Following is a list of significant others: partner, mother, father, children, other relatives, friends, collegues. For each of them respondent indicated how important their opinions are to him/her on a 5-point scale.) Normative beliefs “To what degree would these people agree with your purchase of organic food?” (Following is a list of significant others: partner, mother, father, children, other relatives, friends, colleagues. For each of them respondent indicated on a 5-point scale how much would this person (persons) agree with his/her purchase of organic food.) Appendix 3: Indicators of pro-environmental attitudes “Now I will read for you few statements related to the environment. Please indicate to what degree you agree with them. Indicate your answer on a 5-point scale, 1 for strongly agree, 5 for strongly disagree.” (Respondents than used Likert scales to rate following statements.) 1) “I think that it is important that environmental courses are taught at elementary schools.” 2) “Damage of the environment is a serious problem.” 3) “Car traffic is an important source of air pollution in the Czech Republic.” 4) “We contribute to greenhouse effect every time we burn coal, oil, or gas. 512 Appendix 4: Willingness to pay extra for organic quality “You said that your family spends on average ........... CZK for food. By how many percents would you be willing to raise these expenditures for all the food you buy if it was in organic quality? Please, take into account your current economic situation, your actual situation and you actual willingness to pay.” (Following this question, respondent could either choose among 12 intervals of percentual increase of current expenditures, or s/he could state certain sum of money.) 513 Women’s Agency: an Indicator of Fertility Decisions and Maintenance of Food Resources for Sustainable Livelihood Development in Rural Nepal Narayani Tiwaria, Anke Niehofa, Lisa Pricea, Dilliram Dahalc a Sociology and Consumers and Household Studies, Wageningen University, the Netherlands Corresponding autor: [email protected], [email protected] b CNAS, Tribhuvan University Kathmandu, Nepal 1 Introduction In rural Nepal, we have observed that it is ultimately up to women to control their fertility and decide through their own agency whether they want more children or not. They must balance questions of whether there are sufficient food resources in their household to sustain another baby, and what opportunities they have to maintain a sustainable livelihood for themselves and their children. The principal investigator in this study examined these questions during fourteen months of field study in the middle hills of western Nepal. The research evaluated whether women’s agency plays the major role in controlling fertility if the woman herself is responsible for feeding her children, and what women do to develop a sustainable livelihood to feed her children. This paper discusses the behaviors of fertility control and management of food security. It is designed to be a micro-level perspective on problems of population and food resources and their impacts on the environment of rural Nepal, with implications for other third world countries. 2 Views on agency and fertility A number of writers define agency as a power of action, which can be operationalised when a person’s action produces a particular result they desire. Agency is understood to be the power or freedom to exercise choice in one’s actions free from the constraints of social structure (Giddens, 1984; Greenhalgh, 1995; Carter, 1995; Barber, 2000). Carter (1995:65) notes that agency can be a viewed as “reflexively monitored flows of conduct in the direction of calculation in the broad utilitarian sense of balancing means and ends”. It gives the individual’s unique desires, capabilities, values, interests, and goals to accommodate intrapsychic, interpersonal and social realities for shaping an individual identity (Meyers & Tietjens, 2002). The discussion of agency in relation to fertility indicates that there is a need to pay attention to the “diverse flows of conduct of which fertility is composed” (Carter 1995:83). The demographic outcomes of interest are: fertility levels, absolute levels of child survival and female disadvantage in child survival. It is well known that, given equal care and feeding, girls experience lower mortality than boys (Bhattcharya, 2006:263); consequently, if there is greater survival of male children, there is active favouritism taking place. The study of trends in fertility needs to move beyond “utilitarian explanations of women’s behaviour” (Carter, 1995: 82) by using the concept of women’s agency. Barber (2000) has addressed the theoretical concept in which women’s agency is focused on economic decisions for the future security of the family. Barber (2000) has examined some of 514 the constraints surrounding women’s agency in the Asian context, in which women have always been directed to achieving a secure future for sons, parents and husbands. As Giddens (1984:15) notes, social constraints “are not to be equated with the dissolution of action as such.” Even in the case of South Asia (Barber 2000), women, in fact, act consciously on their own behalf, either overtly or covertly. Thus, the notion that women do not act in their own self interest is debatable (Agarwal 1994). The theoretical approach to the study of fertility decline is the reversal of intergenerational flows of wealth approach. Caldwell & Mackensen (1980) observed that high fertility has the greatest economic value in family-based production like traditional agrarian subsistence farming. On the one hand children are costly to feed and educate and need to be looked after, on the other hand children are important for family welfare and can contribute to the household economy. This relates to how people think of women’s contributions to everyday life as well as to broader shifts on thinking about women’s lives as entailing meaningful acts that alter structural condition (Leach, 2005). The questions raises; whether there is sufficient food in rural households or the women’s agency focuses to maintain the sustainable food security for livelihood or they control to give baby birth for their sustainable livelihood or play the role to manage the food resource environments in rural Nepal. This paper is derived from a PhD research project, "Women’s Agency in relation to Population and Environment in Rural Nepal". The field work was done in October 2002December 2003 at the villages of Bhoteodar and Udipur, Lamjung, Nepal. Data on food and fertility were collected from 350 households using both qualitative and quantitative methods, consisting of Participatory Rural Appraisal (PRA), Rapid Rural Appraisal (RRA), Focus Group Discussion, In-depth Case Studies, Household Sample Fertility Survey (HSS), and Food Surveys including 24-hour food intake recall techniques referred as food survey. The general field survey was done in household level which is refereed as field survey; particular questionnaire about fertility was interviewed with the reproductive age women which are referred as fertility survey. The respondents were married women between the ages of 15 and 49 years, in a homogeneous Gurung community. 3 Results The concept of “agency” includes the capacity of women to integrate their experiences into their livelihood strategies. It incorporates women finding ways to realize their ambitions, and finding solutions to their problems through the effective reorganization of their capacity and power. One Nepali example on the role of agency in fertility decisions is the Tharu community of Nepal, where much of the information women receive on family planning is through their husbands, and their social network influences their decisions to use a given birth control method (Boulay et al., 2005). In the case of the Gurung women in this study, their agency is applied to use more family planning methods to control the number of childbirths. Women want to have fewer children, so that they are able to feed their children sufficient nutritious food and provide good clothing and education to them. One important aspect in considering women’s fertility in the case of the research population is that women overwhelmingly desire to control their fertility. They want to control births and decide when and how many children they should have while using contraceptives provided or they have access to contraceptives. In this regard, women are courageously crossing the cultural boundaries that traditionally compelled them to produce the culturally demanded number of sons and daughters. The social norms enforced by their husband, in-laws and kinship networks influence women to increase the number of children. Thus, women’s agency is visible in their actions to control the number of childbirths. Fertility behaviour is changing among the Gurung women. This is due in part to national laws that have raised the legal age 515 of marriage i.e sixteen years for girls and eighteen years for boys has been creases two years for each. It is also due to conscious choices women are making to use contraception, or not to remarry once divorced (refrain from regular sexual activity), as the case studies in this research show. The positive action of women’s agency is important in their decisions to use contraception or to have an abortion when family-planning methods fail. The women can of course choose for a birth as one of their fertility decisions. 3.1 Proximate determinants of fertility and the role of women’s agency Agency in age at marriage: Gurung women’s agency is expressed through later marriage and in selecting their spouse rather than following their parents’ decisions on whom to marry. Rodi, which was the traditional institution for socialization of teenagers for marriage, has now gradually disappeared in the village. At the rodi girls could practice their agency in finding a suitable marriage partner, and thereby could also influence the timing of their marriage decision. This practice is now not found in the villages anymore. At present, the schools and colleges provide a venue for the youth where they can choose their partners, instead of parents choosing husbands for their daughters. The age at marriage shows an upward trend, which is one of the factors in the observed decline of fertility. Agency in marital life: Divorced or separated women did not show an interest in remarriage. A pregnant woman who was left by her husband preferred to have an abortion rather than remarry. Most women of reproductive age chose to stay living with their parents for some time after their marriage, instead of joining the husband and his family. They are not bound by custom to follow the husband immediately upon marriage. Some women send their husband to the army for a job so that they will be assured of economic support. This study found a relatively high proportion of married women were not living together with their husband (see Table 1). When women are cohabiting with their husband, the conjugal relationship is very unequal: the husband is very dominant in any decision-making process. Table 1: Marital status according to age group Age Group Unmarried Married & living together 10-14 238 0 15-19 161 48 20-24 46 69 25-29 19 74 30-34 1 81 35-39 5 87 40-44 2 87 45-49 1 83 50-54 1 83 55-59 0 52 60-64 1 43 65+ 2 48 Total 477 692 Source: Field Survey 2003 Married not living together 0 7 25 54 34 30 27 15 4 1 1 0 198 Total Separated Divorced Widow Absenthusband 0 1 0 1 0 3 1 3 1 0 1 1 12 0 0 2 2 1 1 1 1 1 0 0 0 9 0 0 0 1 0 1 3 4 8 3 6 26 52 0 1 2 0 2 0 2 1 1 0 0 1 10 238 218 144 151 119 127 119 108 68 47 33 78 1450 Hence, women’s empowerment should be an entry-point for the transformation of gender discriminatory attitudes and behaviour (Chapagain, 2005). Some women in the study area, whose husband has left them for a second or third wife, are facing the challenge of 516 making a living for themselves and their children. For example, Kumari Gurung (Case studies) in Bhoteodar was left with her children when her husband decided to reside with his second wife. Kumari is separated from her husband, and does not want to re-marry. She would rather depend on herself, look after her children and make their future better. She used her pewa120 money to accomplish this. In Kumari Gurung’s own words: I do not go for a second marriage. All men are out to just to take property and power from women rather than to give us anything. If I have a boyfriend or partner or marry another husband, he also wants to have my property and for me to work hard for him. At the end, he also may leave me. I therefore like to stay away from men in my life. I can do for myself whatever I need to do in my practical life. I do take care of my children. I do not need a selfish man to look after my property, the children and me. Marriage is for the improvement of lifestyle, to make a better family life rather than to make life hard with a husband and his relatives. Agency in contraception and abortion: The role of Gurung women’s agency is also visible in using contraception. The results show that a relatively high percentage (48 %) of Gurung women uses a modern family planning method (see Table 2). In this way, they have the means to control their fertility. Although the family planning methods are much used by Gurung women, they also practice traditional abortion. Women’s agency also shows in their demonstrations for legal abortion rights, for which Nepalese women have been fighting for years. So, women use their agency in seeking out modern birth control methods, help if they want an abortion and the use of traditional medicine for abortions, and pursue the issue of legal abortion. The cases illustrate the vital role women play in fertility choices. Table 2: Modern family planning methods used in the research population Family Sex Family planning planning tools used method used Permanent Male Vasectomy method Female Minilap or Tubectomy Laproscopy Sub total Temporary Male Condom Method Female Pills Injection Norplant, IUD, and Calendar Method Sub total All Total Source: Fertility survey 2003 Number Percentage 27 8 30 65 9 26 60 4 99 164 16.4 4.8 18.2 39.4 5.5 15.7 36.4 4.0 60.0 48.0 Most couples in the village know that more children are a burden to them in terms of the food and education they need. However, it is the women who typically use birth control (pill, IUD), as opposed to their partners using condoms. Family size among Gurungs is becoming smaller; Gurung women have lower fertility (3.27) as compare to national figure (3.40). Data shows that many Gurung women are using family planning methods to practice birth control. When looking at parity data and comparing the parity of different cohorts of Gurung women, fertility shows a decreasing trend. This shows that the Gurung women’s agency with regard to decision-making and actions relating to fertility is becoming stronger 120 Pewa is a personal property of women which can get from her parents as a cash, gold/silver and land. 517 Sometimes a birth control method may be problematic for a woman, and the result is an unwanted pregnancy. There is also the possibility of side effects due use of a particular contraceptive. The women have to face great problems of poverty and potential health consequences, as well as more children than desired, when contraception fails. One of the respondents explained that she had a problems using contraception: Altogether, I have six children now. I do not want more children as we do not have enough land for crop production for the year. My husband does daily wage work and we are not sure when he is paid and how much he will earn to feed our children and meet expenses for our daily livelihood. I therefore, decided not to have more children and started using contraception. The doctor gave me the tablets which did not work well for me; this is how I have my last two children. Later again the doctor gave me an IUD which affected my health badly. I had long bleeding periods, which made me very weak and unable to do much of my scheduled household and farm work. Women’s agency and fertility decision-making; The decision-making role of women is the major factor in fertility choices. Women’s attitude about sexuality, abortion and reproduction and the application of agency through their actions helps to control fertility. Some women want to have more children, while others want only a few. Caldwell’s (1981) theory of the reversal of intergenerational flows of wealth flows is applicable for understanding fertility decisions in rural households. An increasing number of children in the family influence the cost value of children on the one hand; on the other hand, their earning capability for the family in the rural context affects household economic well-being and livelihood. In focus group discussions, women expressed their view that when women have more children, there will be more competition for the use of natural resources. This will have consequences for the next generation. Importantly, the children also look after parents in their old age. Therefore, there are multiple cultural and economic considerations women take into account in their child-bearing decision-making. This explains the observation during focus group discussions that an increase in the number of children is a burden for the family to feed them, and creates increased pressure on natural resources. The Gurung present a mixed picture with regard to Caldwell’s hypothesis. Women’s desire for children in terms of having boys and girls rests on the cultural value of sons and daughters presents in Table 3. Table 3: Expressed desire for sons or daughters in relation to having sons or daughters Sons or daughters Expressed desire for more son or daughters living together Desire for more Desire for more Neither sons nor sons(1) daughters (1) daughters No sons 59 (58 %) 36 (35 %) 7 (7 %) No daughters 40 (27 %) 59 (40 %) 47 (32 %) Total 99 (40 %) 95 (38 %) 54 (22 %) (1) Total 102 (100 %) 146 (100 %) 248 (100 %) Including respondents expressing a wish for more sons and daughters. Chi-square 31.4 (P < 0.01). A number of statistically significant factors are linked to fertility, including women’s education, age at marriage, and their parity of birth at the age group, age specific fertility rates and timing of marriage. Women with a higher educational level show lower fertility. Strong statistically significant linkages are observed between education and fertility associated with the food resources environment. Women’s education also has statistically significant linkages with socio-economic and fertility variables. This may mean that educated women have more agencies in fertility choices and in earning money to feed their children. 518 Family and social obligations can influence women not to use contraceptives, and choose instead for more births. While it is in general a woman’s decision whether to choose for contraception and break the social obligations, one must consider the role of the husband. Using family planning tools, rural women of this study generally consult their husbands because husbands have more information about the types of methods and using of devices. The husband may also take his wife to the health post for family planning methods. Sometimes, as Harcourt (1997:187) says, reproductive choice is not in the hands of women because their husbands determine sexual relations, and women’s status depend on producing children, whether or not with a preference for sons or daughters. In some cases, women feel compelled to follow the desire of the husband and mother-in-law for more children, rather than their own desire. This is a difficult time for women to decide to use or not use contraceptives. In some cases, they do not have time physically to visit the health post and sometimes the health post has run out of family planning devices. In such cases, women’s agency plays a role when she decides to go to their relatives, friends and neighbours to get help from them. Thus, women’s agency is sometimes facilitated or mediated by their husbands, relatives, neighbours and friends. Nevertheless, in most cases women’s agency allows them to control their births despite the difficulties and solve the problem themselves. The educated women, however, have more agency than uneducated women. Education of women shows a highly significant relation to the number of children ever-born (Table 4 below). Table 4: Regression of CEB on selected socio-economic variables Children – ever born Variables Coefficients SE Beta value Age at first marriage in years –.033 .019 –.079 Employment within 12 months .027 .035 .036 Education –.659 .059 –.536 Current occupation –.045 .031 –.069 Annual income .028 .030 .045 Ownership of land 5.230e–05 .000 .009 Ownership of house –.098 .086 –052 Use of family planning –.169 .080 –.098 Intercept Adjusted R square 28.8 % Dependent variables: total live births *significant at 10 % level, **significant at 5 % level, *** significant at 1 % level Source: Fertility survey 2003. T-stat. –1.703* .766 –11.119*** –1.466 .911 .187 –1.134 –2.123* 000*** The results show that there are three variables that significantly affect total live births. Education has a higher effect than age at first marriage and use of family planning methods. Occupation, ownership of house, ownership of land, house, and employment has no direct effect. For most households the agricultural production from their own land is not enough for the whole year (Figure 1), which is why women said that the increase in the number of children is a burden for the family to feed them and creates increased pressure on the natural resource environment. At the same time, however, Gurung women also see children as assets of a family. If a family has many children, they can earn money or help in agricultural production. However, the enough land of family in the household is important for the livelihood resources. 519 30 20 10 Au gu st Se pt em be r O ct ob er No ve m be De r ce m be r Ju ly Ju ne ay M Ap ril ar ch M ry Fe br ua ry 0 Ja nu a Respondent % with food deficiency Figure 1: Percentages of households reporting food deficiency (N=343) Months Source: Field Survey, 2003 Agricultural and livestock production are the basic livelihood sources of Gurung women, and household food processing and food preparation are regular activities for them. Women are more involved than men in post-harvest activities, specifically their storage, processing, and food preparation (Jiggins, 1994: 211). These activities are vital, for both nutritional well-being and food security. Most women are involved in activities such as cultivating food crops, food collection and exchange, food processing, food preparation and distribution. Most Gurung women are engaged in household work and agricultural work, very few are found in the service economy. As the case studies show, women who have a small business are more empowered than those who don’t, because they can keep the money they earn and use it as they see fit. Generally, Gurung women have no access to parental property for their livelihood; they have little legal access to land. They also have less access than men to intangible resources such as education, and opportunities to gain skills, which could help them to improve their life and develop confidence. The main staple foods in the area are rice and maize. Women’s daily work starts in the early morning with grinding maize and husking rice. Normally in winter, when there are problems with the water, women have to travel up to the water source (spring) to get the system repaired, which is about one-and-a-half hours walking distance. Apart from their involvement in crop production and livestock management, women are also managers in horticulture, silviculture, pastoral activities, post-harvest operations, and social forestry in their own surroundings. Women typically favour growing a diversity of crops and vegetables. Both environmental and social constraints are major issues that impede women from getting access to enough resources to carry out all their tasks in the food system. While the traditonal form of livelihood generation in the rural villages is subsistence farming, these days people can also buy industrially packaged foods like noodles, biscuits, bread or other types of processed foods, if they have money. If women do not have enough food at home, they have to buy food to meet their consumption needs. However, because of the higher price of processed food, people cannot afford to buy these expensive foods for regular consumption. The reasons given for migration in the focus group discussions are the need for higher income, the desire for an urban way of life, and the scramble for newly opened lands. These reasons reflect the society’s economic and political relationships (Thapa and Dennis, 1983). In cases where husbands are working overseas or in distant places in the country, the men send money to their wives or come home with earned money during holidays. If they send 520 money or come home with a large sum of money, they buy agricultural land for the purpose of increasing crop production, thus improving the family livelihood situation. In a focus group discussion, women in Ratanpur, a sub-village of Udipur expressed their views that they are always in need of assistance for economic support. Sometimes they expect financial support or food from their parent’s and relatives, but in many cases they do not get this. At the end, they have to depend on their husband’s property. Women are hard-pressed in meeting their livelihood needs, not only economically but also socially due to discriminatory customs. For example, if a woman speaks loudly in pointing out some problem or talks about injustice, family members or local authority does not accept what she says and do not want to help to solve the problems. This is illustrated by the proverb: “A crowing hen is not a good sign”. Women in rural Gurung villages have the primary responsibility for looking after the children and livestock, fetching water, processing and cooking food, and other domestic chores. In general, when men leave the village, women are faced with a labour shortage. Because of male migration from villages to towns and cities for work women’s workloads both at home, and in the farm have been increasing. Thus, their responsibilities in carrying out daily household activities, increasing productivity of the land, and maintaining biodiversity on the farm for food security purposes, become heavier. In such a situation, they cannot increase food production. In the past, women in Ratanpur village provided food for the family through their hard work. There was no road nearby, neither were there transportation facilities to carry the agricultural produce or buying food. Availability of transportation has made life easier for women. Women also think that transportation facilities have made access to the health post, schools for children, and the market easier. According to informants, the productivity of agricultural land has recently declined, mainly because of the pollution due to the construction work of Madhya Marsyangdi Hydro-power project (MMHP), and land fragmentation into smaller-size plots. Orange production has been affected negatively which was the main source of income of people in Ratanpur village. 3.2 Women’s agency in agriculture In Gurung villages, most women are engaged in agricultural activities and in intra household work. Women’s agency is applied to the agricultural and food environment in different ways. The agricultural crops produced in the Gurung villages are rice, maize, potato, wheat, millet, sugarcane, mustard, sesame, beans, black gram, lentil, peanut, yams and sweet potato. Livestock products are egg, meat, milk, yoghurt, ghee, butter-cultured milk, and whey. The vegetables grown in the kitchen garden are chilli, garlic, mint, turmeric, onion, eggplant, capsicum, cucumber, pumpkin, bottle goard, squads, coriander, fenugreek, spinach, cauliflower, cabbage, spark-gourd, sponge-gourd, bitter-gourd, taro, okra, peas and cowpea. Some women and children engage in gleaning crops such as rice, maize, potato, wheat, millet, peanut, sweet potato, yam, fruits, and vegetables from agricultural land. Women are also involved in weeding, transplanting, harvesting, and post-harvest work, timber-work, and fuel and firewood collection. The production from non-irrigated land (bariland) entirely depends on the monsoon rain, where mainly maize and millet are grown. Some of the bariland is converted from forest by deforestation (agricultural expansion). Women’s relation to the earth was expressed by them as follows: “We have to fight every day with the earth, stone, soil and forest, our life relates to the earth, we need to work in stone, streams and storms, soil and forest. Without fighting with soil and stone, we cannot survive in this village. Going to schools and institutions are not our life at all. Our life relates only with the earth. We Gurung women in rural villages are surviving with the soil, water and plants in our hills and mountains.” 521 Women are engaged in the local forest consumer groups and agricultural co-operatives. As a member of those groups, women are devoting time to conserving the environment, focusing on soil, water, forest and other natural resources. This is how women’s agency is also involved in increasing land productivity for agricultural food production, and thus improving the family’s food and livelihood environment. Figure 2 shows how women are busy in the rural villages for the whole year in agricultural work. Figure. 2: A yearly seasonal calendar of agricultural work performed by Gurung women in the research villages. Dec/Jan Oct/Nov Sep/Oct Jan/Feb Mille t harvesting, refining Nov/Dec & storing, & fire wood Separating rice grain collection from the straw, refining and storing of r ice vegetable planting, mustard sowing Rice harvesting & collecting plant ma terial for thatch roof Manuring farmland with Feb/Mar cow dung, cleaning & c ultivation of farmland Tillage of land, Maize sowing Ma ize sowing, Tillage of Bariland1, & fire wood c ollec tion Weeding of maiz e crop rice seed be d preparation & seeding, collection of grasses & f irewood Weeding of millet field, vegetable planting Mar/Apr Apr/May Weeding of rice fie ld, vegetable planting Aug/Sep Preparation of ric e field for planting, & grass cutting millet seed bed Har vesting maiz e pr epar ation Field preparation from pa ddy fie ld, & sowing & planting of millet, Ric e planting maize harvesting from Bariland July/Aug May/Jun Jun/July Source: PRA 2003 The lands around the villages are covered by forest and native plants. The forests are essential to provide diverse natural resources to augment agricultural products. The women in the village regularly use forest products such as fodder, fuel and water. The forest cover on the upper hill slopes also protects agricultural lands on lower slopes and floodplains, from erosion: through their root systems and foliage, the forest plays an essential role in soil protection. The forest provides fuel and construction wood, and fodder for animals. Vegetables, fruits, honey and other wild food species, organic fertilisers, medicine and many other raw materials for other uses comes from the forest. In villages, the wood and forest products are crucial for people’s daily living. The women play major roles in resource use. The women’s activities and views expressed by women working together under their own agency are presented in Fig. 3. 522 Figure 3: Seasonal calendar of forest food and other resources collection being performed by Gurung women in research villages Dec/Jan Nov/Dec No use of forest resources Oct/Nov Sep/Oct Jan/Feb Grass & fire wood Grass & fire wood collection, collection of collection plant material for thatch roof Mushroom, & other vegetables (Tarul, Githa etc.) Grass & fire wood collection Mar/Apr Collection of vegetables (Asparagus,Niuro & Sisnu) Collection of fruits (Katush, Amala, Amaro etc.) Collection of vegetables (Githa,Bhyakur etc.) & fruits (strawberry, Kafal etc) Apr/May Grass & fire wood collection Aug/Sep Feb/Mar Grass & fire wood collection collection of herbs (timbur) & fruit (mango) Tree leaves (large) collection for the feast May/Jun July/Aug Jun/July Source: PRA, 2003 3.3 Women’s agency in a group and sustainable livelihood activities During the field study, there are six focus group discussions including thirty-six male and female members. The Participatory Rural Appraisals was conducted with the participation of elderly people. The women express their agency working in different institutional activities, relating to agricultural work, forestry, maintaining the supply of drinking and irrigation water, domestic work, marketing, their children’s schooling, family health, adult education, and other activities relating to their daily life. Every woman has to travel frequently from one place to another to participate in meetings, discuss the activities of the various groups and carry out development work. Figure 4 illustrates the different types of activities in various places and institutions of women in the village of Balithum another sub village of Udipur. Each village has its own Amasamuha (mothers group) to talk about the women’s problems or make decisions for carrying out development activities. The members of the Amasamuha in Balithum have to travel frequently to Besishahar, a district headquarter to talk about the assistance to women’s development activities and do the administrative work, which is almost three-hour walking distance from their village. Even to travel from one group to another located within the same village takes more than half an hour. The members of Amasamuha are using the collected money for the benefit of the group members or for what the group decides to invest in. Sometimes, they are lending money for a member’s treatment if someone has a serious health problem or for investing money in income-generating activities. Most recently, the Amasamuha has decided to invest their money in the 523 construction of a building, where they can have their office and conduct meetings and social gatherings, for the benefit of the whole community. Figure 4: the rural women’s activities co-related to different institutions in Balithum village. Shop (Bhote Odar) Khatri Chaur Besisahar VDC Water Supply Managment School Ragine Forest Khet VDC Road School Ghyausibas Winter Spring Spring Thamdanda WOMEN`S GROUP Nayagau Spring (Pandero) Agricultural Land Health Post Chandanda Chandanda Sarkigaun Note: The figure prepared by women’s group during Participatory Rural Appraisal (PRA) to gather information in Balithum, Bhoteodar. Because of lack of education, the women of the Amasamuha cannot solve all problems on their own. They still need the assistance or advice from experts to carry out development activities properly. They want to develop themselves but they do not always know how to go about it. The group is really trying to develop confidence to empower all women in the village, participate in the development activities, and develop and realize their own initiatives. This group is then to be profiled as a collective group of rural women working together for their own goals, to enrich their own lives. In this way identification of their desires, having a vision, transforming this vision into goals and translating this into action is a clear expression of their agency. 3.4 Women’s agency in sustainable food and nutrition security Women’s decisions regarding having children or not is conditioned, in part, by their estimation of whether they can provide sufficient food with an increased family size. The natural resources available to women are also important to consider with regard to maintaining the food supply. Therefore, women are the actors not only closely connected with the reproduction and maintenance and care of human resources but also the management of natural resources with regard to food production. The dynamics of food security at the household level primarily rely on sustainable agricultural production in the Gurung villages. Sustainable natural resources are the foundation and source of food provision. Women in 524 Gurung villages have a direct role in producing food, managing the food, processing, procuring, securing food production, storing food, managing the natural food environment, and meeting household needs. For women, these practices vary according to the local agroecological conditions. One of the respondents in our study explained how she tries to solve her problems of poverty and lack of sufficient food. The respondent had four children and her family was experiencing economic hardship. She had difficulties in managing daily life with insufficient food to feed her children. She wanted to prevent her last pregnancy but failed in using family planning (birth control) pills: My children and I have a hard-pressed situation. For many days, I do not eat myself. Whatever the food I can collect is not even sufficient for my children. Often, my children remain hungry without food. They look at me for food. My husband too does not have any job or even casual work. I myself do not have any job. There is no employment opportunity around our villages. We do not have money for living expenses neither do we have land for the agricultural production. We cannot ask for money from relatives or friends. We just cannot go to others asking money or food. I have to tolerate whatever the hard situation we have. We have no options to improve our situation. We poor have no way to go for a good life. Because for the majority of households food from their own land does not meet the need for food for the whole year, they have to supplement their food supply from other sources. Some women use the money from remittances from their husband. Women of some households look for wild foods in the forest areas to feed their families. The survey results show that in most households there is a food deficiency, in terms of nutrients and calories, in children less than five years old. Below Table 5 presents the twenty-four hours food calorie intake for children less than five years of children in Bhoteodar and Udipur. Table 5: 24-hour calorie intake of under-fives in comparison to WHO standards1 (N=42) Children below calorie standard Age in years Number of children N % <1 6 5 83.3 1 to 2 17 14 82.4 2 to 3 11 10 90.9 3 to 5 8 8 100.0 Total 42 37 88.1 1 The World Health Organization recommended the following daily calorie intake for children under 5 years: below 1 year 850, 1 to 2 years 1150, 2 to 3 years 1350, 3 to 5 years 1550 (WHO, 1985). Source: Field food survey, 2003 The result shows; a lot of children surviving with the below standard level of calorie intake. This could be the reason why women try to produce different types of food or grow different types of vegetables or fruits in the kitchen garden, to help to diversify the diet and contribute to food security. Sustainable household food availability and access to food influence adequate dietary intake and the health status of individuals. Some women also go to glean food, but not much food is collected these days. Women also participate in food exchange during the harvest season and store for food security. Gurung women are far more active than their husbands in providing food for their household, in which they follow their own strategies. 525 4 Discussion and conclusion Women’s agency in reproduction shows in a number of ways. First, in the way they try to influence the timing of their marriage and the selection of their marriage partner. Second, once married, they try to gain independence from their husband. In quite a number of cases they go for physical separation from the husband. Furthermore, divorced or widowed women with children show a reluctance to remarry. Another way of exercising their agency in reproduction is by using contraception and, in case of an unwanted pregnancy, in trying to get an abortion. At the same time, Gurung women play an important role in food production and in providing food for the household, even though the agricultural land available for food production among the majority of households is very limited and fragmented. Women are hard-pressed to ensure better food availability and security for their families. Gurung women’s responsibilities are growing for agriculture production and other farm activities, forestry and livestock production and management. Much of their work involves producing food for their households. Their heavy workload also includes food processing and preparation for consumption, or storing the produced food for the family. Any rule or practice that creates unfavourable situations for women diminishes their ability to provide food for their family and adversely affects food security. This research shows how Gurung women contribute to reproduction, care for their children to the best of their abilities, try to improve the food situation and environment, and, of course, dream of a better future and try to realize their aspirations for their children. There is a complex relationship between childbirth, household activities and agricultural food production. Food collection and food storage for food security are totally the work of women in rural areas. The living standard of the family worsens if a woman gives birth to too many children, making the household more vulnerable. Women’s agency has been identified as an important factor in fertility decline, sustainable management of household livelihood and food security. The relationship between women’s empowerment and their agency helps to balance population growth and the food environment. Most Gurung women now prefer to have fewer children than in the past. Women who are still not fully knowledgeable about birth control may follow their husband’s advice regarding the choices. In carrying out their reproductive roles and making fertility choices, women face many practical problems and constraints. They are dependent on the availability of resources and economic conditions. In spite of the value attached to children — both sons and daughters — women are aware of the fact that women who have more children are facing more economic difficulties in feeding and taking care of them. While women in the village are lacking in many aspects of social and economic power, some changes can clearly be observed. Women’s groups (Amasamuha) in the villages are raising the collective voice of women from the grass-roots level. After a long struggle, women are now getting some rights and liberty compared to the past. Government and nongovernment sectors are making some efforts for women’s empowerment. 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Paper in Regional Science 53(1) 1-16. 527 Proceedings of 3rd International Conference “Environmental Accounting — Sustainable Development Indicators” 23–25 May 2007, Prague, Czech Republic Published by Jan Evangelista Purkyně University in Ústí nad Labem, 2007 Reviewed by Iva Ritschelová and Egor Sidorov Design, layout and typesetting by Egor Sidorov First edition. Print run: 200; 528 pages ISBN 978-80-7044-883-0 528