SWEEA Swedish environmental and economic accounts

Transcription

1 Structural Change and Economic Dynamics 10 (1999) SWEEA Swedish environmental and economic accounts Eva Hellsten, Sara Ribacke, Gia Wickbom * Statistics Sweden, En ironment Statistics, Box , S Stockholm, Sweden Accepted 27 October 1998 Abstract As part of the Swedish effort at integrating economic and environmental issues, Statistics Sweden has developed a system of physical environmental accounts. The system is based on the concept of satellite accounts which supplement the traditional national accounts. Here, Statistics Sweden focuses on the chain linking natural resources to economic activities and emissions. Current projects include the use of energy and the emission of pollutants, statistics on waste generation and recycling, and accounts for phosphorus and nitrogen flows. Attention is also paid to improvements of data on expenditures on environmental protection Elsevier Science B.V. All rights reserved. JEL classification: C82; Q28; Q38 Keywords: Environmental accounts; Satellite accounts; Sustainability 1. Introduction and background 1.1. En ironmental accounts in Sweden It has become clear in recent decades that the environment imposes limits on economic development. Problems have become apparent in terms of both the depletion of natural resources and of the environmental impact of emissions from * Corresponding author. Tel.: ; fax: ; scb@scb.se X/99/$ - see front matter 1999 Elsevier Science B.V. All rights reserved. PII: S X(98)

2 40 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) the production of goods, heating and transport. Awareness of these problems has been formulated in, inter alia, the principle of sustainable development, which was expressed in the Brundtland Report in 1987 (The World Commission on Environment and Development, 1987) and received widespread international support at the UN Conference on Environment and Development in Rio de Janeiro in In Agenda 21, as adopted by the Rio conference, special emphasis is placed on the importance of all countries integrating sustainability into economic management and establishing better measurement of the crucial role of the environment as a source of natural capital and as a sink for by-products generated during the production of man-made capital and other human activities (United Nations Conference on Environment and Development, 1992). If these principles are to provide guidance in the political decision-making process, the environmental issues must be integrated in the information systems upon which decisions are based. There is a particular need of a national accounting system that provides comprehensive information on the environment and the economy. This was the fundamental idea behind the Swedish Environmental Accounts Commission, which submitted its final report in 1991 (Ministry of Finance, 1991). As a result of the Commission Report, three Government commissions were given in July 1992 to Statistics Sweden, to the National Institute of Economic Research and to the Swedish Environmental Protection Agency, respectively. 1. Statistics Sweden was to develop physical environmental accounts. 2. The National Institute of Economic Research was to investigate the feasibility to develop monetary environmental accounts. 3. The Swedish Environmental Protection Agency was to design a system of environmental indexes, with the purpose to give an overview of the state of the Swedish ecosystems. The aim of the Statistics Sweden work on environmental accounting was to create a conceptual framework for linking environmental and economic data. The goal was to supplement the traditional national accounts with satellite accounts, illustrating the environmental effects of various economic activities in the Swedish society. Initially, environmental accounts were to be developed in the following areas (Statistics Sweden, 1993): The use of energy and its effects on the environment. The use of heavy metals and certain toxic chemicals. Emissions of carbon dioxide, sulphur dioxide, nitrogen oxides and hydrocarbons. Waste and recycling. Phosphorus and nitrogen flows. The project also included the improvement of statistics on environmental protection expenditures. The work on physical environmental accounting at Statistics Sweden has been carried out by the Programme of Environment Statistics in collaboration with the Programme of National Accounts. In this paper, a summary of the results is given.

3 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) The Swedish approach to en ironmental accounts The general view of the building blocks of an accounting system is illustrated in Fig. 1. To describe the links between the economy and the environment in a complete environmental economic system, statistics must be developed for all parts in the chain of cause and effect: natural resources economic activities emissions deposition load on different ecosystems impact. The Swedish Environmental and Economic Accounts (Statistics Sweden and National Institute of Economic Research, 1994) is mainly based on the United Nation framework (SEEA, United Nations, 1993) and the NAMEA-model developed in the Netherlands (de Boo et al., 1991; de Haan et al., 1993). Statistics Sweden developed the physical environmental accounts, an area where the NAMEA and the SEEA approach to a large extent coincide. Referring to the figure above, Statistics Sweden mainly work with the first parts of the chain: natural resources economic activities emissions. The National Institute of Economic Research (NIER) developed monetary environmental accounts, aiming to estimate monetary values on environmental damages. Thus, the NIER also work with the latter parts of the chain: deposition load on different ecosystems impact. Since the NAMEA does not include monetarisation of environmental damage, this part of the Swedish environmental and economic accounts is more close to the SEEA approach. Furthermore, the National Institute of Economic Research includes economic environmental modelling, where the physical accounts serves as an input. Fig. 1. The central concepts in linking economic activities and physical flows that result in harm to the environment are emission, deposition and stock accumulation of hazardous substances. In order to include resources, the system can be expanded with flows and stocks of natural resources. The figure shows the most important flows that a complete system should include, as well as the link to the rest of the world, which affects our environment through transboundary transport of air pollution.

4 42 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) The main features of the Swedish environmental accounting system, as developed to date, can be summarised as follows: The purpose of the environmental accounts is to indicate the links between the environment and the economy they are designed as a satellite system to the national accounts. The physical environmental accounts focus initially on flows of pollutants. Accounts for natural resources including stocks and flows and also qualitative aspects of ecosystems is under development. The development of the physical accounts at Statistics Sweden has taken place in close co-operation with the development of monetary accounts at the National Institute of Economic Research. Not unexpectedly, work on environmental accounts and monetary valuation runs into difficulties, some of a theoretical nature, but also some concerned with practical measurements. The lack of environmental statistical data has been very problematic, i.e. some of the areas initially planned to be covered in the accounts are not present in the current Swedish accounts. For example, statistics on heavy metals is poor and waste statistics is only developed to cover parts of the environmental accounts so far. Since work on environmental accounts is given high priority by the concerned institutions, environmental accounting requests, e.g. classification of data according to industries, can be considered in the further development of environmental statistics. 2. The Swedish NAMEA and its content Work on establishing a system for physical accounts involves at least two important steps: The structure of the accounting system must be developed, even if it can largely be built on the basis of existing models. The accounting system must meet several requirements: it must be comprehensive and focus on describing the relevant environmental problems; it must be designed in such a way so as to be useful for economic modelling and valuation, and it must be internationally harmonised. Gaps in environmental statistics must be filled and existing statistics must be brought into line with economic statistics as much as possible. Together with the National Institute of Economic Research, Statistics Sweden have adopted the NAMEA accounting model developed in the Netherlands for Swedish use. The NAMEA will represent the core of the Swedish environmental accounting system. It will not be possible to present all of the information there, but the system will consist of a collection of separate tables and matrices and it will be possible to relate these to NAMEA. In Table 1, the Swedish NAMEA is shown in a condensed form with the air emission data included (a more detailed NAMEA is presented in Tables 10 12). To make it easier to focus on the most important information about the linkage between economy and environment, a few economic elements are left out of the matrix.

5 Table 1 An environmental accounting matrix in year 1993 (million SEK and 1999 metric tonnes) Goods and Production Production Private services activities factors consumption (industries) Allocation and Capital formation use of income Rest of world Total Emissions CO 2 SO 2 NO X NMVOCNH Goods and Trade Intermediate Private Public Gross investment Exports Use services margins input consumption consumption (purchasers values) Production Produced Output Emissions from domestic production activities goods and producers (industries) services 2 values) Production Wages and Wages, etc. from factors value added 1 rest of world Private con- Private Private Emissions from private consumption sumption consumption consumption Allocation Taxes and National income Transfers from rest and use of subsidies on of the world income products Capital Capital deprecia- Net saving formation tion Rest of the Imports 421 Wages to rest of Transfers to Current account Emissions from rest of the world world 494 the world rest of the world Total Total supply Input (producers Private (purchasers values) consumption v.) Emissions Emissions depos- Emissions to rest ited in Sweden of the world CO 2 SO No X NMVOC NH 3 3 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999)

6 44 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) The Swedish NAMEA has one difference compared to the original. We have regarded the environmental pressure as consumption of resources, i.e. as a sort of input good in production, which means that they are shown at the bottom of the input good column. The emissions are entered as expenses, like taxes and input goods. This is partly an adaptation for input output based models, which often study changes in emission taxes, and the placement is accordingly a preparation for putting monetary values on the emissions. We consequently regard pollution caused by consumer activities (e.g. private motoring) as a consumption of resources in the same way as for industry and the public sector. However, in this article, we have chosen to record the emissions in the original NAMEA way, for the sake of comparability with other countries. The incorporation of environmental statistics in the NAMEA is continuos work. Up until now, we have compiled statistics on the energy use and emissions of certain pollutants in a form that allows data to be included in the model (Statistics Sweden, 1996b). The statistics are for 1989, 1991, 1993 and (insofar as possible) divided into 16 sectors plus output in the public sector (tax-financed state and local authority activities), and private consumption. Waste statistics are produced for extraction and manufacturing industries for 1993 (Statistics Sweden, 1997). Statistics describing the flows of nitrogen and phosphorus have also been produced. Here, however, the quality of the data must be improved before the statistics can be incorporated into the accounts in their entirety. The development of flow descriptions for nitrogen and phosphorus has involved a considerable amount of work on the development of models, some of which has been conducted under the auspices of the ECE (Conference of European Statisticians, 1995) and the Nordic Council of Ministers (The Nordic Council of Ministers, 1996). Work has also been carried out on material flows and chemicals, even though this work is still in an exploratory state (Statistics Sweden 1996a). Statistics on the cost of environmental protection to the state, local authorities and industry are also compiled. So far, we have not integrated these statistics with the environmental accounts, mainly because of qualitative shortcomings. The statistical material is presented in more detail in the following sections, starting with energy statistics. Thereafter, air emissions, waste, nutrients and environmental protection expenditure are presented Energy The energy accounts represent a system in which energy data, in both monetary and physical terms, have been incorporated in the national accounting system. The input output tables of the national accounts provide the natural platform for the energy accounts in values and quantities 1. The energy accounts can be used, either directly or via computations based on economic models, to analyse energy use in 1 There are also other points of contact with the national accounts by virtue of the fact that the capital assets and energy reserves in the energy sector are included in the calculations of national wealth (currently without full coverage for energy reserves).

7 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) relation to different economic activities in society. In countries such as Denmark, Norway and The Netherlands, energy accounts have been integrated quite extensively in the traditional national accounting systems. The energy accounts are not shown explicitly in the Swedish NAMEA. Energy use is calculated in physical terms for the use of different forms of energy divided into 16 sectoral groups, output in the public sector and private consumption. The figures are mainly computed on the basis of the energy balances, which provide comprehensive data on the total energy supply for the country. The energy balances are a part of the annual energy statistics produced by Statistics Sweden. For the industrial sector, the figures have mainly been drawn from annual industrial statistics. In Table 2, the total energy use is presented for the different sectors. The energy accounts were used as a basis for computations of energy-related emissions (see below). Since the calculations of emissions of sulphur dioxide, nitrogen oxides, carbon dioxide and volatile organic compounds are at least partly based on the energy accounts, a consistent system has been obtained that describes economic activities energy use in monetary terms energy use in physical terms environmental impact through emissions Emissions of sulphur dioxide, nitrogen oxides, carbon dioxide, olatile organic compounds and ammonia Table 2 provides a detailed account of emissions of sulphur dioxide, nitrogen oxides, carbon dioxide, volatile organic compounds and ammonia, divided into 16 sectors of trade and industry, output in the public sector and private consumption. Emissions of sulphur dioxide, nitrogen oxides, carbon dioxide and volatile organic compounds originate from three main sources: combustion in the generation of energy and heat; transportation (road, air, rail, sea, off-road vehicles, motorised equipment); industrial processes (manufacture of various goods). The table also shows a breakdown of emissions according to these different sources. Emissions of sulphur dioxide mainly come from the combustion of oil products and industrial processes. Emissions from combustion depend both on sulphur content of the fuel and on any purification measures involved. For nitrogen oxides, the main source of emissions is transportation. These emissions depend not only on the amount of fuel consumed, but also on the combustion conditions, i.e. the oxygen availability, temperature and purification. This is taken into account in the emission factors and computation methods employed. Emissions of carbon dioxide largely come from combustion and are proportional to the carbon content of the fuel. Emissions of volatile organic compounds come from both the combustion and evaporation of solvent-based products. Conditions such as temperature, oxygen availability, etc. are important in conjunction with combustion. The type of fuel is less important. For ammonia, the main source of emissions is agriculture and the emissions are related to production, storage and the spread of manure. All of the energy-related emissions have been calculated on the basis of data on the consumption of different types of energy in different sectors that have been

8 Table 2 Emissions of CO 2,SO 2,NO X, NMVOC and NH 3 from different sources and energy consumption by kind of economic activity of industries, government services and private consumption in 1993, 1000 metric tonnes and PJ CO 2 SO 2 NO X NMVOC 1 NH 3 Energy total total consumption Total of which Total of which Total of which excl. biofuel Stationary Mobile Industrial Stationary Mobile Industrial Stationary Mobile Industrial combustion combustion combustion combustion combustion combustion combustion combustion combustion Agriculture Forestry Fishing Mining, quarrying Manufacturing, total Food, textile, wood, mineral Pulp, paper, printing Chemicals and plastics Petroleum products Iron and steel Machinery and equipment Electricity, gas, district heating Water and wastewater treatment Construction Transport Dwellings and premises Trade and services Total industry Governmental production Private consumption E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) Total Data refer to It is not meaningful to, in terms of quantities of energy, sum up the different sectors use of all energy commodities, since this would cause double-countings.

9 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) drawn up in the energy accounts for the Swedish NAMEA. Information on process emissions of the above substances has been provided by the Environmental Protection Agency, which uses a classification system based on the Environment Protection Act rather than the international standard classification system for sectors (SNI) that is used in the economic statistics. The environmental statistics are often linked to different environmental goals, which means that they are sometimes broken down according to principles that differ from those used for the economic statistics. We have therefore revised the process emission data according to the SNI classification in so far as possible. It should be taken into account that emissions from transportation are registered under the sector that performs the transport, i.e. mainly to the transport industry (the emission computations are based on consumption of fuel per sector and, for NO X, for the sector in which the vehicles is registered). It is therefore not possible to see the extent of emissions generated by the food sector, for instance. By using the registration of payment flows between different sectors and the transport industry in the input output system, it would in principle, be possible to obtain figures on such emissions Waste It is by now widely accepted in Sweden that waste generation is an important environmental problem. These considerations have a strong connection to the concept of a sustainable society which use resources in a highly efficient way. A general notion is that the amount of waste should be reduced and the treatment of generated waste should be aimed at, e.g. recovery, re-use and incineration of waste. Like emissions to air and water, waste is a form of pollution resulting from economic activities. The presentation in the NAMEA could thereby be partly the same for emissions and waste. How waste is re-used and recovered in society could also be traced in material flow descriptions. Waste statistics for the extraction and manufacturing industries in 1993 are included in the environmental accounts. A waste survey was conducted in 1994, and the statistics was collected directly according to economic classifications. The data can be presented in at least two different ways. Different sorts of waste can be studied, for example hazardous waste or industry specific waste groups, like in Table 3, or the total amount of waste could be grouped according to the treatment method applied (Table 4). The extraction industry dominates the total waste amounts for the studied industries. The waste from this industry is approximately three times as much as that from all manufacturing industries together. The extraction industry is not included in Tables 3 and Flows of nitrogen and phosphorus Both nitrogen and phosphorus are essential nutrients in biological production. At the same time, however, emissions of phosphorus and nitrogen are causing major problems, particularly in the form of eutrophication of inland waters and coastal

10 Table 3 Waste and waste groups in manufacturing industry, 1993 Waste (tonnes) Percentage of total waste of which Industry Percentage Household Percentage Hazardous Percentage Other Percentage specific of indus- of house- of haz- of other try specific hold ardous Food industry Textile and leather Wood Pulp, paper, printing Chemicals and plastics Petroleum products Mineral Iron and steel Machinery and equipment Other manufacturing Total E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) 39 72

11 Table 4 Waste and treatment methods in manufacturing industry, 1993 Waste (tonnes) Percentage of total waste of which Landfill Percentage Incineration Percentage Recovery Percentage Other Percentage of landfill with energy of incineration of recovery treatment of other recovery treatment Food industry Textile and leather Wood Pulp, paper, printing Chemicals and plastics Petroleum products Mineral Iron and steel Machinery and equipment Other manufacturing Total , E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999)

12 50 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) Fig. 2. Model for flows of nitrogen and phosphorus in society and in the environment. The model has been drawn up in collaboration with the ECE and the Nordic Council of Ministers. areas. Surplus nitrogen may also make groundwater unsuitable for human consumption. Nitrogen oxides and ammonia both contribute to acidification, and nitrogen in the form of nitrous oxide (laughing gas) is one of the foremost greenhouse gases, as well as one of the causes of ozone depletion. There are therefore many reasons for drawing up accounts for nitrogen and phosphorus. However, the flows of these elements cover both the national economy and the environment. In order to gain an idea of the entire problem complex, it would be necessary to follow the flows for both elements from natural resource through the economy and out into the environment as shown in the model in Fig. 2. Data are not available for large parts of the flow described in the above figure. For the purposes of the Swedish NAMEA, we have concentrated on emissions, i.e.

13 Table 5 Emissions of nitrogen in Sweden, by type of flow and economic sector in 1991, 1000 kg as N Air Water Soil and ground water a NO X N 2 O b NH 3 Total-N Total-N Total-N (manure and commercial fertilisers, sludge) Stat. Mobile Non combustion combustion combustion Agriculture e Forestry Fishing, of which Fish hatcheries and fish farms 900 Mining and quarrying Manufacturing, total c Food, textile, wood & mineral prod Pulp, paper, printing Chemicals and plastics (excl. petrol prod) Petroleum products Iron and steel Machinery and equipment Electricity, gas and district heating Water and wastewater treatment d 7800 Construction Transport Trade and services Waste treatment f Dwellings and premises g E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) Total industry

14 Table 5 (Continued) Air Water Soil and ground water a NO X N 2 O b NH 3 Total-N Total-N Total-N (manure and commercial fertilisers, sludge) Stat. Mobile Non combustion combustion combustion Governmental production Private households Total a Recalculated to N. b Data for c Emissions from industry establishments not connected to the municipal sewage system. d Emissions from municipal wastewater treatment plants, including emissions from industry establishments connected to the municipal sewage system. e Figures refer to arable land. Pasture land not included. f Figures on leakage from land fill is not available. g Emissions from Dwellings and premises of N 2 O and NH 3 are included in the sector Trade and services. 52 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) 39 72

15 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) the transition between economy and environment. The available data are presented in Tables 5 and 6. Emissions to water and soil are particularly difficult to estimate. In the Swedish NAMEA, therefore, these figures should be considered preliminary and viewed with caution. The data in Tables 5 and 6 refer to Emissions of phosphorus come mainly from agriculture and municipal sewage treatment plants. The use of chemical techniques to precipitate phosphorus in these plants has meant that emissions of phosphorus to the water have declined in recent years. Emissions of nitrogen to the air mainly take the form of nitrogen oxides and nitrous oxide from traffic and other forms of combustion, as well as ammonia from artificial and natural fertilizers in agriculture. Emissions of nitrogen to the air are subsequently deposited on the soil and the surface of the sea. Nitrogen deposited on Table 6 Emissions of phosphorus in Sweden, by type of flow and economic sector in 1991, 1000 kg as P Sector Water Total-P Soil and ground water Total-P a Agriculture 9000 Forestry Fishing, of which 135 Fish hatcheries and fish farms 135 Mining and quarrying Manufacturing, of which 500 b Food, textile, wood & mineral prod Pulp, paper, printing 410 Chemicals and plastics (excl. petrol prod) Petroleum products Iron and steel Machinery and equipment Electricity, gas and district heating Water and wastewater treatment 484 c Construction Transport Trade and services Dwellings and premises 5800 Total industry 1120 Governmental production Private households Total 820 d 1940 a Manure and commercial fertilisers sludge (Net). b Emissions from industry establishments not connected to municipal wastewater, treatment plants. c Emissions from municipal wastewater treatment plants, including emissions from industry establishments connected to the municipal sewage system. d Emissions from rural households not connected to wastewater treatment plants.

16 54 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) the soil and the forest is to some extent absorbed by the vegetation as a nutrient, but there is also some run-off to watercourses and the sea. Information on emissions of nitrogen and phosphorus to the water is currently available for sewage treatment plants and major point sources. When it comes to information on diffuse emissions and transport via watercourses, however, there is considerable uncertainty about the source. Work is currently in progress on the development of a suitable model for the calculation of total input and removal of nitrogen from agriculture land. The model is partly based on existing statistics on the input of nitrogen and phosphorus via commercial fertiliser and farmyard manure and removal via the harvesting of different crops. The input of nutrients to the soil takes place not only via fertiliser, but also via airborne deposition, seed and, in the case of nitrogen, via biological fixation from the air. It is removed both via crops and via leaching and denitrification. Otherwise, little is known about input to the soil via, for instance, leaching from landfills En ironmental protection expenditure How much money do industry, the state and others devote to reducing emissions in this country and to protecting and conserving our environment? What does environmental conservation cost local authorities? There is a great deal of interest in many quarters, both nationally and internationally, in issues of this sort. Eurostat, the OECD and several other international organisations attribute great importance to the development of statistics on environmental protection expenditure, and Eurostat is developing a comprehensive system of accounts (SERIEE) with the intention, among other things, of analysing the environmental protection expenditure in different sectors of society. Sweden is among the countries that have been working on environmental protection expenditure studies for many years and Statistics Sweden is participating actively in the development work at Eurostat and the ECE. Statistics Sweden has compiled statistics on environmental protection expenditure in the manufacturing industry for 1981, 1985, 1988 and 1991, on local authority environmental protection expenditure for 1991, and on the cost to the state for the 1992/93 budget year and onwards. For many years, the Environmental Protection Agency has been compiling data on state grants for environmental protection (Table 7) Results of completed studies Studies for the year 1991, where we have comparable data, show that local authority environmental protection expenditure (investments and running costs) amount to at least SEK 9.8 billion, state costs are at least SEK 5.4 billion and those borne by manufacturing industry are at least SEK 5.0 billion, i.e. a total of approximately SEK 20 billion (corresponding to 1.5% of GDP). These figures should, however, be regarded as a lower limit. Environmental protection expenditures are sometimes difficult to define, measure and distinguish, and the precision of the estimates may therefore be poor.

17 Table 7 Investments in environmental protection and ongoing environmental protection cost in industry, 1991, Million SEK Manufacturing sector End of pipe Change in Investment in Total Current Envir. investments investment process waste environmental expenditure share of total investment management investment investment percent Mining and quarrying Food, beverages and tobacco Textile, leather Wood and wood products Pulp, paper, printing Chemicals and plastics, petroleum Non-metallic mineral products Iron and steel and basic metals Machinery and equipment Other manufacturing industries Total E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999)

18 56 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) En ironmental protection expenditure in the industry Information has been gathered via questionnaires to selected workplaces in industry. This survey covered the cost of purification plants, waste management and process changes aimed at environmental improvements. A distinction was drawn between capital expenditure and ongoing costs. Environmental investments involved capital expenditure whose prime purpose was to improve the environment, but not for other reasons technical or economic, for instance, for reducing resource utilisation or occupational protection. It is difficult to define and measure environmental protection expenditure in industry, which means that the information should be treated with great caution. The costs of changes in processes are particularly difficult to calculate. Since a growing proportion of emission reductions from industrial production is being achieved through modification of manufacturing processes, the results of studies have become increasingly uncertain over the years. The cost of environmental adaptation of products lies completely beyond the scope of the study, moreover, as does preventive work on industrial management of natural resources and energy, and recycling of materials. Such measures are, however, often profitable in business terms, in cases where consumers demand goods and production methods that involve as little environmental disruption as possible. Preliminary attempts have been made to separate both current expenditure and investments in the matrix (Johansson, 1998), but since the most recent survey on environmental protection expenditures in industry was performed for the year 1991, the figures are not included in the NAMEA-matrix in this article, which covers Statistics Sweden is performing a survey on environmental expenditure in industry covering Uses Environmental accounts imply that issues of economic and environmental policy can be dealt with within the same framework and the different links between the economy and the environment can be analysed. This lays the ground for an appraisal of the economic and environmental consequences of different decisions. It also makes it easier to identify any conflicting goals in the two areas. We have identified four types of uses of the physical accounts in Sweden: As a database generating indicators that combine information on the environment and the economy. For input output analyses for calculating different distributions of emissions. As an input to economic models. Economic models could be used to evaluate economic and environmental policy. What happens to the environment if a certain economic growth is assumed? How would a certain environmental tax affect employment and value added in different branches of industry? Issues of that sort can be analysed in an economic model complemented with physical descriptions of the connection between economy and environment. The National

19 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) Institute of Economic Research is developing an environmental economic model to be used for this purpose. As a basis for monetary valuation. Environmental pressure described in physical terms might be valued in monetary terms. A number of valuation methods could be used to estimate the environmental damage caused by for example air pollution. Loss of production, change in assets and reduced welfare are some of the issues discussed in this context. A net national product partly adjusted for environmental effects might be possible to calculate, even though a comprehensive adjustment is unrealistic. As an example of how the physical accounts have been used in the political decision-making process in Sweden so far, the Energy Commission could be mentioned. In the Energy Commission, the physical accounts were used in economic models to analyse the consequences of closing down the Swedish nuclear power plants. The physical accounts have also been used in the context of green taxation and work on developing indicators for sustainable development. How we think the first two applications mentioned above have been developed and how they can be developed further is described below. The work on economic models and monetary valuation is described in publications from the National Institute of Economic Research (Ahlroth and Skånberg, 1997a,b) Indicators An economic matrix like the NAMEA for the environment is somewhat unwieldy, particularly if one includes a detailed analysis by sector and type of goods. We have therefore tried to compile and process economic and environmental data from the matrix in a more concrete manner. Work of this sort is closely associated with the development of environmental indicators. The most interesting point is perhaps that the environmental accounts extract economic environmental indicators or key ratios that present the links between the different sectors of society and environmental impact. According to the OECD definitions, an environmental indicator may reflect anthropogenic impact on the environment (pressure), the state of the environment, or measures taken to improve the environment (response) (OECD, 1994). Indicators of impact may be based on emission data, while indicators of measures may be found in the cost involved in taking the measures concerned. It is quite possible that other types of indicators for these two categories could be drawn from the environmental accounts. The sort of impact indictors that can be extracted from the current environmental accounting system may consist of the amounts of pollutants released into the environment or of aggregates of these pollutants. The aggregates are obtained by linking emission data in tonnes with other types of data in order to reflect the different aspects or relationships of particular interest. We have found three clear ways of obtaining such aggregates on the basis of emission data (Fig. 3). A. The most interesting aspect is perhaps to extract environmental economic data from the environmental accounts to show the links between different sectors of

20 58 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) Fig. 3. Three ways of obtaining aggregate data. society and environmental impact. Data on emissions and the use of hazardous substances in different activities can, for example, be related to production values, added values and employment. These indicators are expressed as ratios between a physical quantity and monetary values (or, for employment, hours). We will refer to the indicators that are a ratio between two parameters as key ratios. This gives an idea of the degree to which different sectors of trade and industry contribute to the economy and employment in relation to the emissions they generate. Examples of such key ratios are to be found in Table 8. One of the purposes of the key ratios that relate emissions to economic data is to provide material upon which to evaluate the impact of economic policy on the environment. Such key ratios may, inter alia, provide approximate measures of marginal emission quotas, which reflect the way in which emissions change in pace with changes in production volumes. It is possible that this type of ratio may be useful in the work being carried out under the auspices of the UN on developing indicators of sustainable development. When it comes to energy, it is also possible to develop this type of key ratio. Energy use in different sectors, divided into biofuel, fossil fuel and electrical energy, can now be drawn directly from the energy accounts and be related to economic variables. As regards input of raw materials, the intention is to be able to relate them to economic data in the same manner. There is still a considerable shortage of data on the use of raw materials. We believe that one very important task in the coming years will be to continue this work alongside the work of Statistics Sweden on developing ecocycle and material flow statistics. B. Another possible link is between emissions and different environmental targets, possibly combined with the cost of achieving these targets. In international negotiations, Sweden has undertaken to reduce its overall emissions of several hazardous substances and emission targets are also being set up at national level. These targets are usually formulated only as a total figure for the nation as a whole. The environmental accounts offer a greater possibility of stipulating more precise targets for different operations where appropriate, as well as of using key ratios to measure and compare the degree to which different sectors attain the targets. The environmental targets could therefore be stipulated in the form of reducing the key

21 Table 8 Emissions of CO 2,SO 2 and NO X related to production value, value added and employment 1993 aa CO 2 SO 2 NO X Production Value Employment Production Value Employment Production Value value added (tonne/kh) value added (tonnes/kh) value added (tonnes/ (tonnes/ (tonnes/ (tonnes/ (tonnes/ (tonnes/ MSEK) MSEK) MSEK) MSEK) MSEK) MSEK) Agriculture Forestry Fishing Mining, quarrying Manufacturing, total Food, textile, wood, mineral Pulp, paper, printing Chemicals and plastics Petroleum products Iron and steel Machinery and equipment Electricity, gas, district heating Water and wastewater treatment Construction Transport Dwellings and premises Trade and services Employment (tonne/kh) E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) a 1991 prices. 59

22 60 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) ratio to a figure of 1, for example, where the key ratio equals the current emission level/target level. For each type of emission (and sector), several levels may be stipulated and expressed as key ratios: ambitions, requirements, interim targets, ultimate targets, etc. The ultimate target should correspond to the long-term sustainable level (critical loads have been stipulated only for a few substances, however). C. A third possible link is to aggregate emission data on the basis of their common potential to contribute to a specific environmental threat (this idea has been implemented in Norway and the Netherlands). In the Netherlands, aggregated indicators consisting of the total of emissions that contribute to a given environmental threat, e.g. the greenhouse effect or acidification, are presented together with the environmental accounts. When summed up, each emission is weighted with a factor that is proportional to the potential of that particular emission to contribute to the damage. These weights are based on research into the relationship between dose and effect for environmental damage and are, of course, open to question. So far, Statistics Sweden has chosen to present data aggregated to environmental threats only as a pilot study, to stimulate discussion on which weights are appropriate to use in Sweden (Statistics Sweden, 1996c). In Fig. 4, air emissions of acidifying substances (i.e. sulphur dioxide, nitrogen oxides and ammonia) from Swedish sources are shown 2. Agriculture contributes with the largest share, largely due to their ammonia emissions. However, foreign emissions contribute to more than 80% of the acidification problem in Sweden. During 1998, Statistics Sweden will develop the environmental accounts to include more emissions of global warming gases, so there will be a possibility to aggregate to a threat which is not affected by country-specific conditions. With the exception of this, a further discussion with natural scientists is needed on Swedish weights. Fig. 4. Contributions to acidifying emissions from different sectors in Sweden, The potential acid equivalents used here are: sulphur dioxide 1/31 PAE/kg, nitrogen oxide 1/46 PAE/kg, ammonia 1/17 PAE/kg.

23 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) En ironmental economic profiles Another way of presenting economic data and environmental data together is what we have chosen to call environmental economic profiles. Examples of these are shown in Fig. 5 for different sectors. The environmental and economic profiles provide a comprehensive presentation of the percentage contribution of different sectors to the economy and employment, their energy consumption and their impact on the environment through emissions of carbon dioxide, sulphur dioxide and nitrogen oxides. In the environmental economic profiles, energy consumption is divided into electric energy, all fuels and biofuels. All fuels cover all types of energy that are burned, but not nuclear fuel or waste. Biofuel includes wood-based fuels and black liquors. The carbon dioxide from biofuels has been deducted from carbon dioxide emissions. As has been pointed out above, emissions from transportation are shown under the sector that performs the transport and not the sector that produces the goods to be transported. This means that emissions originating from traffic are largely shown under the transport industry Input output analysis A change in output in one sector leads to changes in production volumes and thereby in emissions in the other sectors that supply the input goods. Such effects, or indirect emissions can be calculated with the help of the input output tables in the national accounts. Furthermore, increased demand for input goods results to some extent in increased imports. The increase in emissions that result abroad can be calculated if the proportion of imported input goods is known. Here, we assume that the production of imported goods causes the same level of emissions as corresponding production in Sweden. Table 9 presents both the direct emission quotas, i.e. those that depend on the initial increase in production, and the direct and indirect emission quotas, and finally the total, in which the emissions outside Sweden are included. The direct emission quotas are not exactly the same in Table 9 as in Table 8. This is because the input output system has been used in Table 9 to obtain a different breakdown; the sectors are homogeneous in terms of goods. (This can be illustrated by an example: some food is manufactured by companies that are classed as chemicals enterprises here, the production value of such food is shown among food companies instead of among chemicals companies). The advantage of this is that it provides more accurate measures for relating emissions in production to categories of goods (Tables 10 12). One possible extension of this is to use the input output system to link together goods at consumer level with their respective production in as much detail as the system allows (so far we have broken down according to 16 groups the national accounting system shows 110 sectors). By following the economic flows in the input output system, it is possible to trace industrial emissions to categories of goods. This makes it possible to obtain a practical, albeit generalised tool for

24 62 E. Hellsten et al. / Structural Change and Economic Dynamics 10 (1999) Fig. 5. Environmental and economic profiles for 12 economic activities, shares of industries total in 1993.