New UN accounting framework ensures nature is counted in the economy
The United Nations has adopted a new framework that goes beyond GDP to make sure that natural capital—forests, wetlands & other ecosystems—are recognised in economic decision-making & reporting. The SEEA Ecosystem Accounting is the result of a global effort including economists at the Bennett Institute at the University of Cambridge.
This System of Environmental-Economic Accounting (SEEA) framework integrates economic and environmental data to provide a more comprehensive view of the interrelationships between the economy and the environment, highlighting the benefits Earth’s ecosystems bring to humanity.
It will help to deliver the 2030 Agenda for Sustainable Development, a green recovery from the pandemic, and meet Net Zero targets because governments, businesses, and stakeholders now have a framework for monitoring changes in natural capital and ecosystems. This is a cornerstone of the Wealth Economy, which moves beyond gross domestic product (GDP) to consider all of society’s interdependent assets – natural, human, social, and physical.
The process has involved the contribution of more than 500 experts including Cambridge economists, Dr Matthew Agarwala, Professor Diane Coyle, Professor Sir Partha Dasgupta, and Mr Dimitri Zenghelis, whose work has helped to provide the economic rationale for moving Beyond GDP.
Says Dr Matthew Agarwala, Economist at the Bennett Institute: “There is an urgent and important rationale for placing nature at the heart of economic measurement and strategy. The new SEEA Ecosystem Accounting framework will support all countries in developing rigorous statistics on biodiversity, ecosystems and the environment that reveal, rather than conceal, the impacts and dependencies of economies on nature.”
The work of the Bennett Institute for Public Policy is based on the Inclusive Wealth Framework, developed by Professor Dasgupta, which provides the theoretical foundation for the practical calculation of sustainable development indicators seen in the United Nations (UN)’s Inclusive Wealth reports (2012, 2014, 2018) and more recently, in the Dasgupta Review.
The Wealth Economy team’s research has contributed to the SEEA-EA Framework’s approach to valuation, particularly around how to reflect air quality improvements from trees and woodlands within the accounts. Globally, air pollution is responsible for over 5 million deaths each year.
Further work by Dr Agarwala and Mr Zenghelis describes why the new The System of Environmental-Economic Accounting (SEEA) Central Framework and Ecosystem Accounts are important to macroeconomic decision-makers, particularly in finance ministries, central banks, and investors. Their report, Natural Capital Accounting for Sustainable Macroeconomic Strategies is currently being developed into a training session to increase the visibility and familiarity with these accounts amongst macroeconomic policymakers and to explain how these accounts can support improved decision making around the fiscal triangle (taxation, borrowing, and spending) and central bank objectives (competitiveness, stability, and growth).
In a High-Level Policy Webinar on ‘Build Back Better – Natural Capital Accounting’ co-hosted by the Bennett Institute and the UN Department of Economic and Social Affairs (UN DESA) in December 2020, the panel including Professor Coyle, the UN Chief Economist Mr. Elliott Harris, and Professor Dasgupta, helped pave the way for the SEEA Ecosystem Accounting to be adopted by the United Nations Statistical Commission on Wednesday 10 March 2021.
Watch event, co-hosted with UN DESA, on Building Back Better: Natural Capital Accounting for a Green Recovery.