Natural Capital Accounting and the Sustainable Development Goals PDF

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Public Disclosure Authorized WAVES Policy Briefing May 2016 Policy Briefing Public Disclosure Authorized Summary Natural capital accounting and the The Sustainable Sustainable Development Goals Development Goals (SDGs) aim to eradicate Implementing the Sustainable Development Goals (SDGs) poverty and place all requires an understanding of the interdependencies and countries on a sustainable development path by trade-offs between the economy and environment. Natural 2030. This requires capital accounting (NCA) can aid the design of integrated better and more policies and the monitoring of the SDGs. The System of integrated information Environmental and Economic Accounts (SEEA), an international on how the economy, statistical standard, provides a methodology for compiling Public Disclosure Authorized environment and society interact. Natural capital physical and monetary accounts for a range of resources, accounting can help including minerals, water, energy and timber, and linking these deliver the SDGs by making explicit the links to information in the economy, in particular to GDP and policies between the economy for the distribution of benefits to different parts of society. The and the environment, SEEA is enhanced through Experimental Ecosystem Accounts, enabling sustainable which describe how to account for ecosystem assets and policy decisions and actions, and monitoring services both in monetary and physical terms — for example, the progress. storm protection function of mangrove forests. Background NCA and the SDGs have a shared The SEEA is a flexible tool that can Prepared by Camille Bann, purpose and philosophy, both be used to address priority issues Public Disclosure Authorized Consultant, International advocating integrated policies to in each country, addressing a Institute for Environment achieve sustainable development. range of policy questions that cut and Development Implementing the SDGs requires a across the SDGs. solid framework of indicators and Basing the SDG indicator statistical data to inform framework on statistical standards policymaking, monitor progress such as the SEEA helps ensure and ensure accountability. Natural internationally comparable, high capital accounting, which expands quality indicators that can be the scope of traditional reporting, integrated into mainstream can meet this need. information systems. www.wavespartnership.org Wealth Accounting and the Valuation of Ecosystem Services The Sustainable towards one goal can enhance progress in others.1 They reflect a Development Goals shift in global policy from a The Sustainable Development Goals predominantly economic focus to (SDGs) came into force at the start one that holistically addresses of 2016. They build on the Millennium the economic, social and Development Goals (MDGs) and environmental dimensions of articulate a new global development sustainable development. agenda to eradicate poverty and shift the world onto a sustainable While only one of the MDGs was development path by 2030. The explicitly environmental (MDG7), the SDGs are comprehensive, including SDGs put the environment on a par goals on poverty reduction, with economic and social concerns. education, health, the environment, The environment cuts across all the inequalities, and peaceful and SDGs and is directly reflected in inclusive societies. Integrated seven goals. Implementing the SDGs development is at the heart of the requires an understanding of the 2030 development agenda. The 17 interdependencies between the SDGs and their 169 targets are economy and environment, designed as a web of including the impact the economy inter-relationships and has on the long-term health of dependencies, where progress natural systems. Policy Briefing: Natural capital accounting and the Sustainable Development Goals 2 NCA as a framework for The High Level Panel of Eminent Persons on the Post-2015 the SDGs Development Agenda called for a Natural capital accounting (NCA) ‘data revolution’ to provide better, and the SDGs are highly faster, more accessible and more compatible, with a shared purpose disaggregated data. 2 The aim is and philosophy. While the SDGs for national statistical systems to While the SDGs provide a policy framework, NCA produce integrated statistics provide a policy provides the necessary data to based on a common statistical framework, natural move towards sustainable framework and process. The development. Both recognize that capital accounting SEEA represents an important integrated policies, based on a step in this process. provides the better understanding of the necessary data The SEEA presents a historic multi-sectoral interactions and to move towards trade-offs between the different opportunity to transform the national and global statistical sustainable dimensions of sustainability systems through the adoption of development. (economic, environment and social) and the distribution of common statistical frameworks, benefits within society, are crucial. along with a standards-based modernisation of statistical For policymakers to be able to production processes. The upshot make decisions which take into of this transformation will be account the impacts of policies on improved data quality, different sectors, they require coordination, integration and integrated information on the alignment of various monitoring environment and its relationship and reporting. 3 with the economy and society. Such a joined-up approach to NCA supporting development calls for an improved delivery of the SDGs information system. The System of Environmental and Economic NCA can support delivery of the Accounts (SEEA), can be a step SDGs by ensuring that natural towards fulfilling this need, resources are included in providing an internationally planning and implementation recognized and consistent at the national, sectoral and framework (including definitions, business levels. classifications, accounting The role of NCA in delivering the concepts and methods) for SDGs is recognized in the SDG accounting for natural capital. The targets. SDG target 15.9 calls SEEA measures the many facets of for ecosystem and biodiversity the environment and economy in a values to be integrated into coherent and integrated way. It national and local planning, looks not only at the use of the development process, environment but how that use poverty reduction strategies benefits or disadvantages and accounts. different parts of society. Policy Briefing: Natural capital accounting and the Sustainable Development Goals 3 For example, land accounts can and water quality (Table 1). help countries assess the value of National water statistics are competing land uses and identify typically collected the best ways to promote by different ministries and sustainable land use (SDG15). agencies (eg mining, energy, A fisheries account could inform industry and environment). the conservation and sustainable Water accounts are used as a use of the oceans and marine management tool in many resources (SDG14) by assessing countries to inform a range of the value of stocks over time, policies. In South Africa, for alternative management practices example, they inform climate and employment opportunities. change policies; in Colombia they Accounts detailing the costs and are used for water allocation subsidies required for across competing uses; and in the environmental protection can Philippines they inform water highlight sources for sustainable pricing. Botswana’s accounts conservation financing. provide useful information for taking action against a number of SDG6 and water targets under SDG6. accounts The SDGs and forest The SDG on water (SDG6) includes six targets addressing accounts specific components of water Forest accounts can inform a policy such as access to safe number of the SDGs, for example: water, efficient water allocation SDG targets by 2030 SEEA water accounts and link to targets 6.1. achieve universal and equitable access to safe Physical Supply and Use Tables (PSUT) bring together data on the and affordable drinking water for all volume of water used and discharged back into the environment by the economy (all targets) 6.2. achieve access to adequate and equitable sanitation and hygiene for all Emission Accounts describe the pressure that the economy puts on the environment in terms of pollutants discharged into water (6.3, 6.3 improve water quality by reducing pollution, 6.4 and 6.5) eliminating dumping and minimizing release of Asset Accounts measure water stocks in physical terms at the hazardous chemical and materials beginning and end of an accounting period (6.3,6.4 and 6.6) 6.4 substantially increase water-use efficiency across Economic Accounts provide a range of accounts on the cost of water all sectors and ensure sustainable withdrawals and use and supply as well as financing (all targets) supply of freshwater to address water scarcity Experimental Ecosystem Accounts can provide information on water 6.5 implement integrated water resources as an ecosystem asset and the related ecosystem service such as water management provision, water filtration, tourism and cultural services (6.3,6.5 and 6.6) Combined presentations link physical information in the PSUT with 6.6 by 2020, protect and restore water-related emissions and monetary information on production (supply) and ecosystems consumption (use) (all targets) Table 1. SDG 6: ensure availability and sustainable management of water and sanitation for all. Policy Briefing: Natural capital accounting and the Sustainable Development Goals 4  SDG 15.2 By 2020 promote the average. Poor people can be implementation of sustainable highly dependent on forests for management of all types of food and fuelwood. Land, forest forest, halt deforestation, restore and ecosystem accounting can degraded forest and substantially be used to help identify the increase afforestation and distributional consequences of reforestation globally. changes to land use, forest cover Forest assets are typically under- and ecosystem function, helping valued in national accounts due government gauge whether to the fact that only timber economic growth is inclusive. resources are counted, omitting other important forest services Adopting the SEEA for such as carbon sequestration monitoring progress and watershed benefits. This towards the SDGs deters investment in forest conservation and contributes to NCA can also support the process forest deterioration and loss of monitoring and reporting worldwide. Accounts that progress towards achieving the incorporate other uses of the SDGs. The SEEA and the System forest, such as non-timber forest of National Accounts (SNA), as products, carbon sequestration statistical frameworks based on a and water filtration give a more standard set of definitions, accurate assessment of the classifications and methodologies forest’s worth. When compiled for integrating information, can year after year, forest accounts provide high quality indicators can show the sustainability of a that are consistent, policy country’s forest, and how the relevant, methodologically services and benefits of forests sound and practical. are shared in society In 2014, the UN Statistical SDG 13.1 Strengthen resilience Commission recognized the SEEA and adaptive capacity to climatic as an important statistical hazards and natural disaster in all framework for the 2030 countries. Accounting for the development agenda and in ecosystem services provided by 2015 requested that the SEEA forests, such as water flow was reflected in the SDG regulation (minimizing the indicators. To develop a more impact of flooding downstream), integrated approach, having can help build resilience to access to the underlying statistics climate change that can link the economy and SG 10.1 By 2020, progressively environment is a good first step. Work on the development of SEEA achieve and sustain income growth of the bottom indicators is being led by the 40 per cent of the population at Inter-Agency and Expert Group a rate higher than the national on SDG Indicators. Policy Briefing: Natural capital accounting and the Sustainable Development Goals 5  Guatemala’s forest accounts, published in 2009, make explicit the link between forest resources and economic activities, as well as the cost of losing the country’s forests. The accounts reveal: The forest’s true contribution to the economy is 2.5 per cent of GDP, not 1 per cent as currently recorded in the national accounts While Guatemala’s GDP is increasing, the country’s forest assets are declining, falling by 47 per cent between 1950 and 2010 Households’ high dependence on fuelwood — 64 per cent of the population relies on fuelwood for their main source of energy. Data from the accounts were used to model the long-term relationship between deforestation, fuelwood and energy security, leading to a proposal for a new public/private strategy for the sustainable production and efficient use of natural resources, including fuelwood and soils. The adoption of the SEEA as a tool synergies and trade-offs. NCA to guide the development of could provide the conceptual relevant SDG indicators will help: framework to support this. However, realizing an integrated Integrate and streamline the information system based on the process for producing SEEA is a significant challenge. environmental-economic indicators Current policy frameworks and Produce consistent and statistics are characterized by ‘silo’ structures (ie links are not made internationally comparable statistics through the use of an between different areas). established statistical standard Environmental data are collected by agencies based on their specific Facilitate information sharing policy needs. Diverse between national statistical methodologies makes data systems and international comparison difficult. Often data reporting initiatives, supporting are not made available to other a sustainable global SDG agencies and a systematic monitoring mechanism understanding of how natural Reduce the burden on countries resource use and environmental as each request for information degradation have an impact on is based on consistent different parts of society is lacking. definitions and classifications. Establishing an integrated system Challenges and way will require a national institutional mechanism to drive integration as forward well as the sustained commitment The SDGs call for integrated by multiple data holding agencies. development, which requires an Key ministries and agencies will approach that incorporates need to be strengthened for this environmental, economic and to happen. social information and captures Policy Briefing: Natural capital accounting and the Sustainable Development Goals 6  An example: developing a standards-based indicator system for SDG 6 — clean water and sanitation The indicators for the SDGs include indicators for reporting at the international level and a range of national and thematic indicators that countries may compile based on capacity and depending on their policy priorities. 3 A list of global indicators for SDG 6 has been submitted to the Inter-Agency and Expert Group on SDG Indicators. Many of these indicators can be directly measured using the SEEA-Water methodology. For example, target 6.3 can be assessed against a SEEA-Aligned Global Indicator related to the percentage of wastewater that undergoes treatment and is informed by the SEEA Water Physical Supply and Use Tables (PSUT) and emission accounts. 3 Adopting the SEEA-Water methodology for global reporting on water-related SDG targets promotes methodological consistency across different levels of reporting and between global datasets. Proposed SEEA Target 6.3 aligned global SEEA account indicator Percentage of Improve water wastewater that PSUT quality by undergoes primary/ emission reducing secondary/tertiary accounts pollution treatment Social and distributional issues To develop an SDG indicator are core to the SDGs, and while system further, an in-depth the SEEA does capture some analysis will be undertaken for social aspects alongside each thematic area to: environment-economy data, the SEEA and SNA can foremost be Assess the potential to align global indicators with the SEEA used to show the distribution of standard benefits and damages having an impact on different parts of Assess current data availability and monitoring mechanisms at society. To date, the link with the global level social impacts is a little explored area and further development Develop national capacity to and adjustment of the SEEA is implement the SEEA and required to fully reflect these further integrate and modernize statistical issues at a national and production processes. 3 sub-national scale. Policy Briefing: Natural capital accounting and the Sustainable Development Goals 7 Due to the lack of immediate derived based on the best SEEA-based data on a global scale, available data and where possible a gradual transition to SEEA aligned with the SEEA, with processes is necessary. In the capacity to report on SEEA-based short term, indicators can be accounts developed over time. 3 Notes 1. UNDESA, 2015. Draft report of the Capacity Mobilizing the data revolution for Sustainable Building Workshop and Expert Group Meeting Development. on Integrated Approaches to Sustainable 3. UNSD, 2015. SEEA and Transforming Global Development Planning and Implementation. and National Statistical Systems for Monitoring 27–29 May 2015, New York. United Nations SDG Indicators. Tenth Meeting of the UN Department of Economic and Social Affairs. Committee of Experts on Environmental- 2. Independent Expert Advisory Group Economic Accounting. New York, 24–26 June Secretariat, 2014. A World that Counts – 2015. Download Policy Briefings at www.wavespartnership.org Wealth Accounting and the Valuation of Ecosystem Services (WAVES) is a global partnership led by the World Bank that aims to promote sustainable development by ensuring that natural resources are mainstreamed in development planning and national economic accounts.