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Mdia framework-003-150407-architecture
This document introduces the concept of multi-dimensional impact accounting (MDIA), which aims to measure the broader impacts of economic activity beyond traditional financial accounting. It discusses how MDIA can provide a more holistic view of how people, activities, products and places impact quality of life, the environment, and society. Key areas of impact discussed include individuals, food, land use, water use, emissions, financial accounts, supply chains, and places. The goal of MDIA is to internalize external impacts and change how economic performance is measured and incentives are structured.
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Mdia framework-003-150407-architecture
- 1. MULTI DIMENSION IMPACTACCOUNTING File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved MDIA Architecture
- 2. You Manage whatyou Measure. Attributed to Peter Drucker When you change the way the game is scored, you change the way the game is played. MULTI DIMENSION IMPACT ACCOUNTING File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved
- 3. MULTI DIMENSION IMPACTACCOUNTING File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved
- 4. For people, thereare: ➔ The people at the Bottom of the Pyramid; ➔ An increasingly large and affluent middle class of business people, professionals and employees; and ➔ A very small but rich and powerful elite with substantial ownership interests. MULTI DIMENSION IMPACT ACCOUNTING File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved
- 5. The PURPOSE ofall economic activity is to enable an improved Quality of Life and Standard of Living for PEOPLE. ➔ More MONEY and more STUFF has been the proxy for a better quality of life and standard of living. ➔ This has been one of the drivers of the Western style consumer economy. MULTI DIMENSION IMPACT ACCOUNTING File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved
- 6. MULTI DIMENSION IMPACTACCOUNTING Man-Built Structures & Systems Sun File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved Natural Capital Individual ActivitiesHuman Capital Individual QoL Individual QoL Man-Built Structures & Systems Sun Natural Capital Human Capital Pro Good Activities Pro Money Activities Buy and Use PRODUCTS Pro Money Activities Non-Impact Recreation The IMPACT of the INDIVIDUAL
- 7. MULTI DIMENSION IMPACTACCOUNTING Man-Built Structures & Systems Sun File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved Natural Capital FOOD ActivitiesHuman Capital Individual QoL Individual QoL Man-Built Structures & Systems Sun Natural Capital Human Capital Use of Pesticides Use of Land The IMPACT of FOOD Use of Water Use of Fertilizers Air Pollution Use of Growth Hormones and Antibiotics Use of Energy Use of Equipment Use of Labor Inputs Money Price Money Profit Money Cost True Value Value Add True Cost
- 8. MULTI DIMENSION IMPACTACCOUNTING Man-Built Structures & Systems Sun File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved Natural Capital LAND USEHuman Capital Man-Built Structures & Systems Sun Natural Capital Human Capital Sustainable agriculture Water purification About LAND USE Wetlands Intensive monoculture Coastal mangrove Urban infrastructure Roads, Parking Lots There is a limited amount of land There are multiple possible uses Money Profit Land is a factor in improving human capital, producing goods and services, locating MBSS, and providing very critical ecosystem services Suburban sprawl Housing Tropical forest Habitat Industrial operations
- 9. MULTI DIMENSION IMPACTACCOUNTING Man-Built Structures & Systems Sun File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved Natural Capital WATER USEHuman Capital Man-Built Structures & Systems Sun Natural Capital Human Capital Food production uses water Beverage production uses water About WATER USE Water is essential to LIFE Nothing is more important Household water use essential Industrial processes use water Rainfall and fresh water are abundant in some places but not everywhere Household waste also pollutes Waste water pollution from processes a critical issue Important for all processes to treat water before discharge Water is abundant, but most has too much dissolved salts to be potable
- 10. MULTI DIMENSION IMPACTACCOUNTING Man-Built Structures & Systems Sun File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved Natural Capital EMISSIONSHuman Capital Man-Built Structures & Systems Sun Natural Capital Human Capital SO2 … acid rain CO2-Greenhouse Gas About ATMOSPHERIC POLLUTION Air pollution has many forms, all of which are more or less detrimental to people and planet Particulates MH4-Methane-GHG Some emissions have a direct impact on health Nitrous oxides Freon-ozone layer damage Some emissions are greenhouse gases that cause global warming The atmosphere is not an infinite free dump for undesirable and toxic emissions All emissions have a cost
- 11. MULTI DIMENSION IMPACTACCOUNTING Job-Money Work Personal Assets Housing File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved Health Time Skills Income Recreation Education ProGood Work Energy Energy Health Enjoyment Skills Experience Family Shelter Friends Money Stuff Personal Assets Energy Health Enjoyment Skills Experience Family Shelter Friends Money Stuff PLUS opportunities Improves society Food Clothes Improves family PRODUCTS Use MBSS and Natural Capital Resource Depletion Environmental Degradation BOP EOPThe Individual MBSS – Government Sector – Laws, regulations, justice, security, infrastructure MBSS Companies, organizations, financial capital, knowledge capital, processes, plant and equipment Natural Capital … Land, water, air, energy, minerals, ecosystem services Sun
- 12. MULTI DIMENSION IMPACTACCOUNTING MBSS Man-Built Structures & Systems Sun File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved Natural Capital FINANCIAL ACCOUNTSHuman Capital MBSS Man-Built Structures & Systems Sun Natural Capital Human Capital Economic Activity … Process Accounts REVENUES Products Sold X Price Products Bought X Price BOP EOP Energy Bought X Price Employee Benefits Employee Payroll Other expenditures Asset use costs Depreciation Financial expenses Pro-good expenditures Taxation Profit REVENUES Products Sold X Price VALUE to buyer Equals HUMAN CAPITAL ADD Wages and benefits What value to employee? Pro-good expenditures What value to society? Taxation What value to society? For products and energy bought and this process Free use of the commons and public services & infrastructure Degradation of land Water scarcity and degradation Air pollution: Impact on people Air pollution: Impact on climate Air pollution: Impact on people Solid waste Resource depletion Environmental Degradation POSITIVE IMPACT NOT ACCOUNTED FOR Negative impact
- 13. MULTI DIMENSION IMPACTACCOUNTING MBSS File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved Natural Capital Human Capital PRODUCT … the SUPPLY CHAIN IMPACT ACCOUNTING ADJUSTMENTS Zero to start Costs this stage Profit this stage Price this stage FINANCIAL ACCOUNTS Zero to start Costs this stage Profit this stage Price Stage 1 FINANCIAL ACCOUNTS EACH STEP OF THE SUPPLY CHAIN Cost = Price stage 1 Costs Stage 2 Profit Stage 2 Impact Stage 1 Impact Stage 1 Impact Stage 1 Cum Costs Cum Profit Price Stage 2 Impact Stage 2 Impact Stage 2 Impact Stage 2 Cum Impact Cum Impact Cum Impact Cost = Price stage 2 Costs Stage 3 Profit Stage 3 Cum Costs Cum Profit Price Stage 3 Impact Stage 3 Impact Stage 3 Impact Stage 3 Cum Impact Cum Impact Cum Impact Financial Dimension
- 14. MULTI DIMENSION IMPACTACCOUNTING MBSS File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved Natural Capital Human Capital PLACE … Where people live and work … where impact can be seen IMPACT ACCOUNTING ADJUSTMENTS Zero to start Costs this stage Profit this stage Price this stage FINANCIAL ACCOUNTS Zero to start Costs this stage Profit this stage Price Stage 1 FINANCIAL ACCOUNTS EACH STEP OF THE SUPPLY CHAIN Impact Stage 1 Impact Stage 1 Impact Stage 1 Financial Dimension
- 15. MULTI DIMENSION IMPACTACCOUNTING Job-Money Work Sun Personal Assets Natural Capital … Land, water, air, energy, minerals, ecosystem services Housing File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved MBSS – Government Sector – Laws, regulations, justice, security, infrastructure Health Time Skills Income Recreation Education ProGood Work Energy Energy Health Enjoyment Skills Experience Family Shelter Friends Money Stuff Personal Assets Energy Health Enjoyment Skills Experience Family Shelter Friends Money Stuff MBSS Companies, organizations, financial capital, knowledge capital, processes, plant and equipment PLUS opportunities Improves society Food Clothes Improves family Uses MBSS and Natural Capital BOP EOP
- 16. People … HumanCapital … STATE ➔ Quality of life is a function of: ➔ The Individual ➔ What has happened in the past ➔ What are the possibilities for the future ➔ What is happening right now ➔ Quality of life is a function of many things: ➔ Genetics ➔ Personality traits ➔ The family environment ➔ The broader circle of friends and community ➔ Knowledge from education ➔ Knowledge from experience ➔ Personal wellness ➔ Access to food and water ➔ Access to shelter ➔ Access to goods and services ➔ Security ➔ Financial wealth ➔ Job opportunities and income MULTI DIMENSION IMPACT ACCOUNTING File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved
- 17. People … HumanCapital … FLOW ➔ Basic needs are: ➔ Food ➔ Water ➔ Shelter ➔ Basic stuff ➔ A better quality of life requires: ➔ Access to health services ➔ Access to education ➔ Funds to pay for things ➔ Wealth or income from a job to provide funds ➔ Security ➔ Access to spiritual support ➔ A strong family ➔ A circle of friends ➔ A community that enhances QoL ➔ The critical constraints are: ➔ Time … only n hours per year ➔ Health / energy / capacity of the individual MULTI DIMENSION IMPACT ACCOUNTING File: MDIA-Framework-002-150406.odp Peter Burgess (c) All rights reserved