Environmental accounting: useful to whom and for what?

• Published in: Ecological economics 1996-03, Vol.16 (3), p.179-190
• Main Author: Lintott, John
• Format: Article
• Language: English
• Subjects: Environmental accounting; Environmental economics; GNP; Gross national product; National accounting; National accounts; National income; Statistics; Sustainable development
• ISSN: 0921-8009; 1873-6106
• DOI: 10.1016/0921-8009(95)00097-6

The development of statistics, as with any other tool, can only be understood in relation to their particular uses. This is confirmed by the development of National Income estimates and of the National Accounts. Proposals to integrate environmental costs and benefits into the National Accounts can similarly only be evaluated by considering them in the context of their likely policy use. The most important potential use is as a general measure of welfare or progress, for policy to aim to maximise. Environmentally adjusted National Accounts correspond to a very weak view of sustainability. The use of adjusted National Income as a measure of welfare essentially assumes complete substitutability between manufactured and natural capital. Problems of monetary valuation are likely to lead to huge underestimation of environmental costs. Issues of inequality and poverty, essential to a more robust view of sustainability, are ignored. Policy targeting a revised National Income will continue to aim for ever higher output while making very limited concessions to environmental concerns. Adjusting the National Accounts for environmental costs is not the only way to ensure they are allowed for in policy making. An alternative approach, more appropriate if sustainable development in the stronger sense is to be achieved, is the construction and use of a set of social and environmental indicators.