GREEN/ENRA ACCOUNTING

Tonie O. Balangue, PhDPresident and Executive Director

Resources, Environmental and Economic Center for Studies, Inc.

Quezon City, PhilippinesWWW.REECS.ORG

OUTLINE

ObjectivesGDP as a measure of economic welfare What is Green/ENRA accounting?Framework & methodology of green

accountingThe Philippines’ experience: Forest

ResourcesPolicy implicationsFlying over the forestlands of the Philippines

Objectives of this presentation

Share the works of REECS in green/ENRA accounting

Methodology

Forest resources covered in the ENRA studies

Implications of the Philippines green/ENRA accounting experience

Policy recommendations

Forest depletion as of 2003 map form

GDP or GDI is a basic measure of a country's economic performance and is the market value of all final goods and services made within the borders of a country.

Green/environmental accounting

Scorekeeping and management of green resources’ depletion and appreciation in physical stocks and economic values and integration to national accounts.

Total Economic Value

Use Value/Tangible

Asset

Non-Use Value/Intangible Asset

Direct Use Value

Indirect Use Value

Option Use Value

Existence Value

Source: J. Dixon,

GREEN RESOURCES VALUATION : A MUST IN GREEN ACCOUNTING

INDIRECT USE VALUE OF FOREST AS A WATERSHED RECHARGE

COASTAL PROTECTION FOREST

Deficiencies of the present NIAS

RP’s National Income Accounting System

Fails to reflect negative effects of economic growth (Congestion, Pollution, impacts to human health, ENR depletion)

Man-made physical capital is treated as wealth and depreciated, while ENR assets (forest, soil, clean air, water) are neglected.

Ignores economic activity determinants (+,-), (pollution, environmental services, household production of food and fuel taken from the ENR)

NATURAL CAPITAL

MAN-MADE CAPITAL

NIA/GDPGREEN RESOURCES

1. GREEN RESOURCES ARE JUST SOURCES OF RAW MATERIALS TO BE USED IN THE PRODUCTION OF MAN-MADE CAPITAL

NATURAL CAPITAL

MAN-MADE CAPITAL

NIA/GDPGREEN RESOURCES

GREEN RESOURCES ARE PART OF THE WEALTH OF A NATION. THEREFORE, SHOULD BE INTEGRATED INTO THE NATIONAL ACCOUNT

GREEN/ENRA ACCOUNTIN G

Inputs, outputs, finished products, recycled products, wastes, emissions

Comparison

GDP or NDI Green Accounting

Inadequate measure of country’s economic performance

Ignore natural resources scarcities.

Undermine economic performance , growth & sustainability

Environmental degradation as an ‘external’ (social) cost of economic activity not accounted for.

Improve measure of total welfare of a country by including the net value of natural capital as affected by economic activity.

Ensures sustainability of green resources by maintaining net growth over depletion

Green resource degradation as social cost is accounted for

Coverage of ENRAP Studies (1-4)

ForestsWildlife and protected areas

RattanBamboo

Soil/landFisheriesPollutionWastesHealth impacts

Physical (area & volume) and Economic Accounting Methodology

Year 1 Year-2

Opening Stock Opening Stock

Plus Plus

Growth: Natural In-growth, Man-made growth

Growth: Natural In-growth, Man-made growth

Less Less

Reduction: Mortality, Harvests, Natural causes, Land use conversion

Reduction: Mortality, Harvests, Natural causes, Land use conversion

Closing Stock Closing Stock

Green/ENRA Accounting Results

1970 – 1989 Accounting Period PhP1985 Constant Price

Dipterocarps:

Total Dipt: – 38.99 MnCum/PhP30.6 Bn Old Growth: - 52.14 MnCum/PhP41.6 Bn Residual: +12.27 MnCum/PhP11.95Bn

Plantations : +03.66 MnCum/PhP1.7 BnPines : - 0.06 MnCum/PhP0.082 BnRattan : - 151.16MnLm/PhP0.12 BnMangroves : -0.21 MnCum/PhP0.045 Bn

FOREST DEPRECIATION: - PhP29.17 Bn (1970-1989)

POLICY RECOMMENDATIONS

1. Protection and sustainable management of remaining forest types.

2. Plant more trees in deforested areas to build up more volume growth of depleted forest types

9 mn hectares of deforested forestlands awaiting development.

3. Residual forests should be allowed to grow further and possibly closed for harvesting operations.

EXPECTED RESULTS

1. More green resources biomass growth and build up (area and volume, forest types).

2. Better environmental services (carbon sink, water, soil and soil nutrients build up, clean air, cooler temperature).

3. Higher economic value of green resources.

4. Appreciation of the adjusted GDP/NDP

What’s next?

•Enact a Bill/Law for the adoption and implementation of Green Accounting as an integral part of the National Income Accounting System of the Philippines. Complete economic valuation of environmental services is necessary for the Green Accounting before integration into the National Income Accounting System.

•Localize green accounting to guide LGUs in their investment portfolio in the environment and natural resources sector.

•Enact a Bill/Law on the implementation of Payment for Environmental Services to generate funds for the restoration and sustainable management of the ENR to mitigate and adapt to climate change.

Forest depletion as of 2003