The OECD calls for improved Environmental-Economic Accounting in Australia

The OECD have called for advancements to be made in environmental monitoring and evaluation in Australia. In the third Environmental Performance Review of Australia, the OECD provides 50 recommendations to help Australia better manage its environment. The recommendations relate to climate change, waste, water, biodiversity and chemical management, environmental governance and management, and green growth.

The report contains recommendations for improving specific environmental-economic accounts and calls for the use of environmental-economic accounts in government budget documents. There are further recommendations relating to measuring and monitoring the environment, and the evaluation of environmental outcomes more generally.

Where such recommendations are made, the principles of environmental-economic accounting can be employed. The principles provide a common approach to measurement that facilitates comparison and aggregation across different spatial scales. The accounts can be used to improve decision making, transparency and compliance, and help to build positive perceptions of the environment.

The recommendations are a timely message from the OECD given the issues we are currently experiencing in the Murray Darling Basin. Perhaps better accounting for our environmental assets and water could help prevent future catastrophes.

Accounting for ecosystem services in the forest sector – Forico, Tasmania

Since 2016, Forico and IDEEA Group have worked together to apply the United Nations System of Environmental-Economic Accounting (SEEA) in the Forico Estate. Phase 1 of the work program explored the feasibility of applying the SEEA framework to the Forico estate, while Phase 2 put the concepts developed during Phase 1 into practice. It is understood that these efforts are the first to employ the UN SEEA principles to account for the environment and ecosystems at the business level.

Completed in September 2018, Phase 2 of the work program involved:

  1. accounting for the stock and condition of ecosystem assets held by Forico
  2. accounting for the flow of ecosystem services supplied by these ecosystem assets
  3. developing a method to integrate this information with financial information

A key outcome of the work was a set of environmental accounts that enable Forico to recognise the value of the ecosystem services that it delivers. Incorporating environmental-economic accounting into standard financial accounting approaches and business processes provides several benefits for Forico including:

  1. improved operational decision-making by using a more complete set of financial accounts;
  2. improved communication to stakeholders through the recognition of a wider range of environmental values; and
  3. improved strategic allocation of financial resources to maximise the flows of ecosystem services.

Additionally, the accounts could be used to report on requirements under the Forest Stewardship Council’s (FSC) newly released FSC National Forest Stewardship Standard for Australia

Forest Industry (Forico) leading the way in ecosystem accounting

Last week global forestry giant New Forest published their fifth annual Sustainability Report. It features work done by IDEEA Group with New Forest subsidiary Forico to account for the stocks and changes in ecosystem assets and to quantify and value the flow of ecosystem services provided by these assets (see p 21).

While this is probably a world first in the forestry sector, it is certainly a sign of things to come. We encourage you to check out the report and share it with others to show how ecosystem services accounting is fast becoming mainstream best practice for primary producers and other environmental asset managers.


Measuring Sustainable Tourism – UNWTO

The Need

World-wide, tourism is worth $US 7.2 trillion, which represents almost 10% of global GDP. While tourism depends heavily on the continuing flow of ecosystem services, including places for recreation such as beaches, reefs and forests, it can also place great strains on these fragile natural ecosystems.

Tourism represents a significant opportunity and challenge for sustainable development across some of the world’s most impoverished and ecologically vulnerable regions. This is reflected in a number of the UN Sustainable Development Goals (8, 9, 14 & 15) and in its declaration of 2017 as the International Year of Sustainable Tourism for Development.

The UN World Tourism Organisation (UNTWO) is leading the industry to adopt more sustainable practices, building on 25 years of research since the 1992 Rio Convention. One of today’s most critical challenges is to create destination based reporting standards that effectively integrate economic, social and environmental dimensions of local tourism impacts, to assess whether sustainable development principles are being effectively applied in practice.

The Project

The Measurement of Sustainable Tourism (MST) project was established by UNWTO in 2015. Since then they have relied on IDEEA Group to help establish and articulate MST work streams, and to facilitate engagement with a wide range of experts. IDEEA Group has been instrumental in the planning and delivery of key MST initiatives, including:

The 6th International conference on tourism statistics to be held in June 2017 will focus on measuring sustainable tourism, and aims to secure ministerial level commitment to a Manila Declaration of MST principles. IDEEA Group will once again play a leading role to facilitate the success of this conference.

The Outcomes

Applying SEEA principles to the integration of economic, social and environmental information to establish a statistical framework for MST at the local destination level has already delivered significant results in terms of participation and growing commitment from industry and government stakeholders at all levels.

Key tourism stakeholders are beginning to take MST principles into account, such as when planning transport infrastructure development, and for standardising and coordinating collection and publication of relevant data at the destination based level.

Another key outcome has been to provide a cross-functional platform for discussing the interactions and dependencies between economic and social development, environmental protection and mitigation of potential risks for the sustainable growth of tourism.

Finally, MST provides the potential to directly compare policy assumptions and outcomes across regions and countries, and so lead to more coordinated and equitable commitments to achieve sustainable development goals.

Publishing corporate ecosystem accounts – Forico

The Need

Forico is a management company established by NewForest, which needs to demonstrate both financial responsibility to shareholders and corporate social responsibility to government and community stakeholders.

45% of Forico’s estate in Tasmania is native forests, which provide vital ecosystem services such as habitat for wildlife, water filtration, flood mitigation and recreational opportunities for local residents and tourists. Forico has always gone beyond its regulatory obligations to manage these environmental assets for ecologically and socially sustainable outcomes and aims to “make every hectare count”. However, it has struggled to definitively measure or demonstrate the economic and environmental benefits that flow from this approach.

The Project

Forico has become the world’s first commercial forestry organisation to embrace the ecosystem accounting framework outlined in the UN’s System for Environmental-Economic Accounting (SEEA) as a means to demonstrate the combined economic and environmental value of its sustainable native forestry practices (Project Summary).

IDEEA Group has helped Forico develop extended accounts that record its stock of ecosystem assets, measured in biophysical terms, and flows of ecosystem services, such as those described above, alongside more traditional measures of timber harvest volumes and values. The approach also incorporates accounting for the current condition of Forico’s native forest areas in terms of their ecological integrity and robustness, and identifies the range of beneficiaries of ecosystem services flowing from these native forest assets, including government and local communities.

The Outcomes

By developing ecosystem accounts to complement its traditional economic accounts Forico has established a benchmark that will underpin continuous improvement in ecosystem management and revealed the extent of potential new revenue streams. The accounts will provide all stakeholders with clear insight into what it means to be economically and socially sustainable by revealing the environmental assets that underpin Forico’s relationship with its local economy and community. The accounts will also underpin recognition by environmental stewardship bodies such as the Forest Stewardship Council (FSC) and Water Stewardship Australia (WSA), and support positive community engagement around specific issues of environmental and social responsibility.

In terms of management insight the spatially defined, integrated model of ecosystem assets and condition used to derive Forico’s ecosystem accounts has also created a new, highly actionable platform for capturing and analysing all sorts of operational data, which opens a variety of avenues for improving the efficiency and productivity of Forico’s native forestry management.