Environmental accounting tracks the economic system's relationship with the environment by modifying national accounting systems. It accounts for natural resource use, pollution emissions, and the value of non-market environmental goods and services. Environmental accounting aims to identify environmental costs and revenues, reconcile conflicts between economic and environmental goals, and support more sustainable decision-making. It includes methods like natural resource accounts, emissions accounting, and disaggregating conventional accounts.

1. Environmental Accounting
ABHINAV RAI

2. The economy and the environment
Environment
Extractions
Insertions The economy extracts materials and
energy from the environment, using them
along with capital and labour to produce
Economy
the means to the satisfaction of human
needs and wants, and inserts back into the
environment an equal mass of waste .
Satisfactions E = S/I
with
E for efficiency
S for satisfaction
I for (environmental) input

3. Economic concept
The concept of Gross Domestic Product is a flow measure that
denotes the value of the goods and services produced during a
period as a result of the production activity of resident producer
units.
GDP does not take into account the decrease in the value of fixed
assets (e.g computers, buildings, transport equipment,
machinery, etc.) used in the production process.
The proper measure of economic performance is Net Domestic
Product (NDP) which is Gross Domestic Product (GDP) less the
depreciation of reproducible capital.

4. Environmental valuation
Environmental valuation is the process of putting monetary
values on environmental goods and services (G&S), many of
which have no easily observed market prices.
Environmental valuation is a series of techniques that economists
use to assess the economic value of market and non-market
goods, namely natural resources and resource services.

5. Environmental Accounting
Environmental accounts provide data which highlight both the
contribution of natural resources to economic well-being and the costs
imposed by pollution or resource degradation
Environmental accounting" - sometimes referred to as "green
accounting", "resource accounting" or "integrated economic and
environmental accounting" - refers to modification of the System
of National Accounts to incorporate the use or depletion of
natural resources.

6. The System of National Accounts (or SNA) is the set of accounts
which national governments compile routinely to track the activity of
their economies.
SNA data are used to calculate major economic indicators including
gross domestic product (GDP), gross national product (GNP), savings
rates, and trade balance figures.

8. Environmental accounting – functional aim
 Identify & reduce negative environmental impact of conventional accounting
 Separately identify environmentally related costs & revenues within conventional
accounting
 Try to reconcile the conflict between conventional & environmental criteria
 Devise new forms of financial & non-financial accounting systems, information
& control systems to support more environmentally benign management decisions
 Develop new forms of performance appraisal for internal & external purposes
 Operationalise sustainability

9. Method of Evaluation
 Natural Resource Accounts.
 Emission Accounting
 Disaggregation of Conventional National accounts
 Value Of non-marketed environmental goods and services
 Green GDP

10. Natural Resource Accounts
Stocks of natural resources and changes in them caused by either natural processes or human
use. They are of two types Physical asset account and Monetary asset account
Such accounts typically cover
 Agricultural land,
 Fisheries,
 Forests,
 Minerals and Petroleum,
 Water.
Evaluation
Value of Resources when goods are sold in Market
Value of Stock/ goods that are not sold in Market
Physical changes in Resources
Fluctuation in Market Price

11. Emissions Accounting
Developed by the Dutch, the National Accounting Matrix including
Environmental Accounts (NAMEA) structures the accounts in a
matrix, which identifies pollutant emissions by economic sector.
The physical data in the NAMEA system are used to assess-
 The impact of different growth strategies on environmental
quality.
 Type of pollutant emission to understand the impact on domestic,
trans border, or global environments.

12. Disaggregation of conventional national accounts`
Sometimes data in the conventional accounts are taken apart to
identify expenditures specifically related to the environment, such
as
Those incurred to prevent or mitigate harm,
To buy and install protection equipment,
 Pay for charges and subsidies

13. Value of non marketed environmental goods and services.
Whether to include the imputed value of non marketed
environmental goods and services
Value of these items is crucial if the accounts are to be
used to assess tradeoffs between economic and
environmental goals
 The accounts can end up reflecting the costs of protecting
the environment without in anyway reflecting the benefits.

14. Green GDP.
Developing a gross domestic product that includes the
environment
Actively involved in building environmental accounts minimize
its importance because environmental accounting methods are not
standardized
A green GDP can draw attention to policy problems, it is not
useful for figuring out how to resolve them.

15. Environmental Management Accounting (EMA)
(EMA) as an important sustainable development tool.
Environmental Management Accounting (EMA) is the identification,
collection, estimation, analysis, internal reporting, and use of
materials and energy flow information, environmental cost
information, and other cost information for both conventional and
environmental decision-making within an organization.

16. Uses And Benefits Of EMA

17. Uses & Benefits of EMA
> The ability to more accurately track and manage the use and flows
of energy and materials, including pollution/waste volumes, types,
and fate.
> The ability to more accurately identify, estimate, allocate, and
manage/reduce costs, particularly environmental types of costs.
> Improves Company Image with Stake Holder’s
> The lower the financial, political, and other burdens of
environmental protection on government.
> Implementation of EMA by industry should strengthen the
effectiveness of existing government policies/regulations by
revealing to companies benefits resulting from those
policies/regulations

18. EMA CHALLENGES
Current Accounting Practices
Communication/links between accounting and other departments often
not well developed
Materials use, flow and cost information often is not tracked
adequately
Investment decisions are often made on the basis of incomplete
information
Many types of environment-related cost information are not found in
the accountin grecords

19. Relationship of EMA to Other Environmental
Management Initiatives
 Pollution Prevention and Cleaner Production
 Environmental Life Cycle Assessment/Costing/Design
 Environmentally Preferable Purchasing
 Extended Producer/Product Responsibility
 Environmental Performance Evaluation & Benchmarking
 Environmental Supply Chain Management