Entire speech

Börsen

Center for erhvervsinformation

The Environmental Report in a Future Perspective

The development of Environmental Indicators and Contribution to Green Accounting

Domingo JIMENEZ-BELTRAN

Executive Director

European Environment Agency

3rd October 1995

Verbatim text

Note: The opinions expressed by the speaker are purely of a personal nature and do not necessarily reflect the official views of the European Environment Agency or other community institutions

Rev. 1 Incorporating comments (for internal information)

Summary

Development and selection of environmental indicators is a required step on the progress to green accounting. It is also a necessary supplement, or substitute, to the traditional manner to describe progress, with economic indicators and the gross domestic product (GDP), which are no measure of sustainable development. Together with several actors on the indicator scene, the European Environment Agency has chosen the review of the European Commission's 5th Environmental Action Programme as one of the starting points for its work on indicators. Progress is compared with targets within sectors and regarding environmental quality. Results will be published later this year.

Aggregated information, with indicators on the most policy-relevant issues, is an important tool in the information strategy of the Agency. This information strategy implies building-up of a reporting system on situation and trends of driving forces, pressures, state of the environment and responses. The Agency's information network, based on the national information systems, the European Topic Centres, International Organisations and Programmes, the scientific community and the NGOs are important contributors to this aggregation of data to produce effective environmental information in an efficient way.

Introduction

Mr Chairman, Ladies and Gentlemen

Thank you for having invited me to your conference on environmental reporting.

I very much welcome this opportunity to present to you the work of the European Environment Agency in this field, because it is at the heart of our activities.

The core of the Agency's work is to develop better environmental reporting (best environmental information), and to coordinate and build up the monitoring and information capacity at European and national level to bring about and support such an improved reporting system.

And if it is fully accepted, in particular by good companies and businesses, that we have to "change course" in order to progress towards a situation of sustainable production and consumption, we simply have to recognise that we also have to change course in our environmental reporting systems, or, as we recently discussed with the USEPA, we have to re-invent the environmental information system.

And this, Mr Chairman, Ladies and Gentlemen, is exactly what we are trying to do at the European Environment Agency. We are trying to produce more effective information (better adjusted to needs) and in a more efficient way (using existing capacity)

Let me start my being a little provocative when reporting about our progress towards sustainable development or green accounting.

"If the GDP (or the economy) is up, why is America down?" was the cover title of the October issue of Atlantic Monthly. The thesis again, as we have heard for so long is, that, I quote: "GDP not only masks the breakdown of the social structure (the two-tiered economy, prosperity at the top, decline in the middle and at the bottom) and the natural habitat upon which the economy, and life itself ultimately, depends; worse, it actually portrays such breakdown as economic gain". End of quotation.

The article is built on the general idea that GDP and its various proxies (rates of growth, expansion, recovery) not only do not represent the degree of prosperity but are not the adequate language of a nation's economic reporting, since they tell you little on what is really going on, because the GDP as a gross statistical summation, does not make distinction between the desirable and the undesirable, or costs and gains, and besides it only looks at the part economists acknowledge, the part involved in monetary transactions.

The question is not only that we do not know where we are going but that we do not even know if we are going in the right direction and making progress in that sense, but, as it is said in "Alice in Wonderland" "if you do not know where you are going, any way will bring you there".

The question is that it has taken a long time to recognise that the GNP "emperor is naked". As mentioned in this article, that is explaining the manifest by a group of over 400 economists and other prominent individuals, members of a new organisation called "Redefining Progress": "Our politicians, media, and economic commentators continue to trumpet the GDP figures as information of great portent. There have been questions regarding the accuracy of the numbers that compose the GDP, and some occasional tinkering at the edges. But there has been barely a stirring of curiosity regarding the premise that underlies its gross statistical summation. Whether from sincere conviction or from entrenched professional and financial interests, politicians, economists, and the rest have not been eager to see it changed." End of quote.

But the main challenge is to find a better indicator or set of indicators of progress. The question of a green GNP has to be considered carefully since it again should be a gross statistical summation not allowing for distinguishing unacceptable trade-offs (sustainability is not an average between sustainable and non-sustainable projects, the general rule is to progressively eliminate the non-sustainable ones) or providing for a decision on accepted ones.

That is not but a summing up of the growing opinion that it will be more and more difficult to have adequate policies and to address the right problems in an increasingly complex scenario, if we do not have better indicators of the situation and progress of nations in their struggle to increase the quality of life and towards sustainable development.

Now, after many years of early warnings coming in many cases from what is called lateral thinking or NGO's experts there is a full range of official initiatives to develop and apply new reporting systems and indicators whether called "green accounting" or "green GDP"... the purpose is clearly to establish a better reporting system on the real wealth of the countries and the quality of life of their people and above all on the related progress associated with different strategies or policies, to assure a more informed and efficient decision-making and public participation process.

This lack of coverage of the current progress reporting system not only relates to environment, it relates to many other socio-economic topics, while it has been, as in many other cases, the environmental dimension that is pressing for a global or holistic evaluation. That the environmental costs or externalities are not considered, was shown already but the now accepted PPP "polluter pays principle", longly recognised (Art. 130S of the EU Treaty. Rio '92 Declaration) and little and badly applied, and is now expanding to the further reaching principle of RUPP "resource user pays principle", that is only now making its way after a difficult launching (including my personal initiative) at formal level during the Community debate preceding the '92 Rio Conference and reflected in the adopted related text.

Both principles if further developed and better applied, and not necessarily translated fully in monetary terms, should be a big step in covering the environmental aspects, as already begins to be provided for in the UN review proposal for national accounting system, and advocated by the new Club of Rome/WWF publication "Taking Nature into account", and being the reference for the set of indicators proposed by the World Bank to measure progress and being considered by the UN Commission on Sustainable Development. The recently published report of the World Bank that will be discussed at its annual meeting this week is a major step in this direction.

In the actual GDP many crucial functions like those performed in the household and volunteer sectors go entirely unreckoned for; increases in socio-economic inequities or breakdowns (like in real wealth or access to education, information (OCDE report) or health care) or big socio-economic costs (like car accidents), or in general life quality decreases, go not only undetected in the economic reporting but eventually are portrayed as economic gain in the GDP. And that is only beginning to be formally recognised now, even if there have been many early warnings in this aspect.

So while it was the greening of the GDP that opened the debate for its review, it has now been expanded to many other areas that concern the real progress in the quality of life.

In the end, and since as Einstein said "environment is everything but myself", maybe, we are basically referring to how to improve reporting on our situation and progress towards the environmentally expanded concept of development, or sustainable development, and, in particular, on its two main pillars: efficiency (in the use of resources of all kind) and equity (in the distribution of wealth of all kind) and in its interspacial and intergenerational dimension.

In the end it is not how to get reporting environmentally right but shortly right.

At this place, Børsen, I will not insist on a premonition made, I think it was in '94, by a non very orthodox British historian when he predicted that "one day we should get rid of bank notes and go back to a barter system (exchange things) and then history will begin again".

By trying to put everything into monetary terms and finally only acknowledge the part of reality that was involved in those monetary transactions we have certainly missed a lot, but now the question is, whether to solve the problem by trying to put everything in monetary terms (as many classical economists and eventually statisticians may like) or just have a brand new set of indicators of progress; and it looks as if the second one is gaining momentum.

At the Agency, we are very concerned with this exercise since the Agency is supposed to provide the policy makers (at EU and national level) with the best available environmental information for framing and implementing the environment policies (as established in the Treaty and in the successive Action Programmes) and to ensure that the public is informed; this means that we have to report on the state and trends of the environmental situation and on the actions to protect it, and to improve the related environmental monitoring and information systems (at EU and national level).

We are trying to establish a very operational approach to the whole issue of indicators.

The guiding strategy is to progressively include environmental indicators, together with the directly related societal or socio-economic indicators, in our periodical (yearly and a major one every 3 years as mandated) reporting on the state and trends in the state of the environment, and in the actions to protect it. As a goal in itself to improve environmental monitoring and policy analysis, but also to provide a good base and contribution to the build up to the medium term project now called "Green accounting" at EU level.

The idea is that, while the very complex methodology to improve the EU and national reporting systems on progress is being developed (or green accounting), we contribute to that in a practical way (learning by doing) with a disciplined, transparent and continuous exercise, on a limited environmental reporting system mostly related to environmental quality aspects and including not only descriptive indicators but also normative ones, related to the EU legislation, or accepted goals, or environmental quality levels to be achieved.

Nevertheless, this exercise goes beyond the classical concept of environmental indicators, mostly related to pollution targets and enters in the evaluation of the full chain of driving forces ----- pressures ----- state of the environment ----- responses, and in the development of more and more aggregated indicators without renouncing to explaining the process involved. The further development for application of new concepts like the MIP (or materials/energy inputs by unit of product) or the "environment space", to be applied to this environmental reporting, should also be an ongoing exercise. But in the short term we will concentrate more on the environmental quality aspects and on the enhancement and degradation of the related media or natural resources (air, water, soil, green cover, forests, biodiversity...) than on the full evaluation of natural resources and natural and built up capital and its related trade-offs. The question of natural resources evaluation is now also being considered at EU level as another basic exercise to contribute to the progress towards green accounting, or holistic progress reporting.

Our goal is clearly to progressively improve the base line and the yard sticks to follow the progress in environmental quality and to evaluate future alternative scenarios; And taking into account not only the rational model, as supported by scientific knowledge, but also the values model as provided by the emergent civil societies; that is monitoring and policy analysis as differentiated from policy making.

The Aims of the Agency

Regulation 1210/90, which established the Agency, aimed at the setting-up of the European Environment Information and Observation Network to provide the Community and the Member States with "objective, reliable and comparable information at European level enabling them to take the requisite measures to protect the environment, to assess the results of such measures and ensure that the public is properly informed about the state of the environment" with a view "to achieving the aims of environmental protection and improvement laid down by the Treaty and by successive action programmes on the environment".

The Agency's aims, mandated by the Regulation, relate not only to monitoring but also to assess policy progress and prospects. The principal areas of activity should include all elements needed to gather the information to describe the present and foreseeable state of the environment in terms of quality, pressures and sensitivity of the environment including the socio-economic dimension. The Agency has a broad mandate, enabling the Agency to comprehensively address the field of environmental information related to monitoring and policy analysis. There are also obligations to make an effort to focus this exercise to furnishing information which can be used directly in the implementation of Community Environmental Policy.

In practical terms, the Agency is required to provide the decision making and the public participation process with the best available environmental information for direct use in making progress toward sustainable development. This is the ultimate goal of the EU environmental policy as provided for by Article 2 of the Treaty and of the 5th Environmental Action Programme "Towards Sustainability" currently under review.

If you allow me to make a comment out of my speech but very much in the context of this Conference, the tasks of the Agency imply also to provide or make available or facilitate the access of industry and business in general, to the best available information to implement and develop their environmental - and corporate policies.

When I discussed the programme of the Agency with different industrial Federations at EU level I got a clear message "Please put some order in existing information" which means to further exploit and make available in a structured way relevant existing information. In practical terms we are developing a full programme in this sense including handbooks, pools and clearinghouses on areas of interest for corporate environmental management (A copy of the call for tender on projects for "dissemination and pooling of existing information and know-how - OJ C226/12 of 31 August 1995 is available) related to handbooks on existing experiences on environmental management (i.e. waste water, energy. Pools/Clearinghouses on experiences in: E.A., L.C.A. Eco-auditing, BAT- --- Risk Assessment, Sustainable Development, Environmental Education) and considering the quality of corporate environmental reports received, we are planning to establish a pool of information in that area. All that has been discussed with Industrial Federation, and I offer it to this audience

And back to the text - In this context, indicators are good tools to communicate the development trends within sectors, on state of the environment and society's responses to environmental threats, and a basic first step on the way to green accounting.

Indicators improve reporting

And indicators have to be seen in the context of the guidelines for environmental reporting:

Openness to information from different sources.

Accessibility: Free access at lowest possible costs.

Integrity and Cohesion: Keeping a global perspective and cohesiveness

between the parts and providing for early warning.

Effectiveness: Oriented or adjusted to needs, and of relevance. And produced in an efficient way; avoiding duplication.

Priority given to exploitation and use of existing information:

Putting the best available information to work.

Decentralisation in the production and dissemination of information.

Improvement of information by using it.

Developing harmonisation by exemplary action. Learning by doing.

Favouring simplification to reduce the cost of complexity.

Transparency and Independence. Reports must be close to reality and build up the credibility of the source.

Discipline and continuity. Assess progress in time and in a responsive way.

The Agency's work on indicators aims to meet these demands; those of effectiveness and simplification are paramount always ensuring policy relevance. Indicators are increasingly being called upon to play a significant role in monitoring and policy analysis, and in providing early warnings of environmental degradation or mal-function. A vast amount of data must be translated into a small number of indicators to provide a snapshot of the state of environment and the pressures and responses. (One very important group of indicators, the normative indicators measures the achievement of results, standards or goals). These indicators must also be developed in order to find new ways of measuring progress, supplementing the traditional use of economic indicators.

Environmental indicators can help us evaluate the sustainable development process. There are many descriptive indicators than can present environmental quality with traditional measurements such as levels of pollutants, depositions and number of extinct species. Normative indicators have a long tradition, especially in the area of air pollution; air quality guidelines and levels and emission standards for water are some examples. Ecological effect-oriented indicators are rarer. The critical load concept applied to the acidification problem is probably the best known effects "indicator" concept.

There are lots of pressure driving forces or indicators elucidating the developments within sectors: statistics on road transport, waste production, emissions, land coverage of agriculture and forestry etc. Response indicators are also common: protected areas, reforestation, investments and legislation etc: But it is difficult to find representative and cohesive combinations close to reality, especially those which are a counter-balance to traditional economic indicators, such as the gross domestic product (GDP).

Many actors on the scene

The Agency is among many actors in this context. The general consensus on the need for indicators to monitor progress, both concerning environmental improvement and sustainability, has led to a lot of work by international organisations as well as at the national level. OECD's pressure-state-response concept is the basis for much of the work; UNEP and SCOPE are developing indicators of sustainable development for national reporting to the UN Commission on Sustainable Development; the World Bank is reporting on "Monitoring Environmental Progress"; and the European Commission has presented an approach to "Integration of Environmental and Economic Policies".

Several non-governmental organisations have taken steps from indicators to green accounting and other broader concepts. Besides the Club of Rome's "Taking Nature Into Account", the concept of "Environmental Space" developed by Friends of the Earth in its recent study "Sustainable Europe", Europe, and "Real Value for Nature" published by World Wide Fund for Nature are just some examples.

In its communication of December 1994 on Economic growth and the Environment, the European Commission summarises the basic requirements for the development and progressive introduction in the European Union of a system of green accounting , combining environmental and resource-use indicators with conventional indicators for evaluation of progress in terms of "sustainable and non-inflationary growth respecting the environment".

Indicators for green accounting - the EEA approach

Indicators should enable policy makers to judge quickly the "health" or the "sustainability" of a subsystem. An indicator gives policy makers feedback on the environment quality and the resulting impact of the political choices made or to be made.

Feedback is crucial for the survival of each steering system (including organisations) for surviving . The following is needed:

. insight into the new situation

. insight into the development of it

. the possibility to steer.

The main purpose of indicators is to steer action; they are an element of a specific steering process, or control process to check whether society is developing in the right sustainable direction. Other purposes are: to integrate environmental concerns into sectorial policies, compare countries, regions and sectors, provide early warning information, and optimise monitoring activities.

The EEA's approach and supporting work towards green accounting via indicators has the European Commission's 5th Environmental Action Programme (5EAP) as a starting point. The action programme states that "a comprehensive reappraisal of the situation will be undertaken and an up-dated report on the state of the environment and a review of the policy-cum-strategy set out in this programme will be published before the end of 1995". The European Commission has asked the Agency to produce the state of the environment report combined with an evaluation of the progress and prospects of the 5EAP. The assessment of the state of the environment at EU level covers EU12 and extends to EU15 (including the three new member states - Austria, Finland and Sweden).The indicators being developed are a basis for periodical reporting. The chosen set of indicators will be presented annually describing the trends of driving forces, related pressures (such as emissions) and the state or quality of the environment. This should also provide a base and reference to the Commission's exercise on "green accounting".

The set of indicators has been selected on the basis of the following criteria:

. it must represent a larger phenomenon

. must be principally normative in character, i.e. comparable with an aim or reference value

. policy relevance and utility for users

. analytical soundness

. measurability.

Trend data are necessary, otherwise only a snap-shot of the environmental situation is presented. The indicators selected are divided in two groups: societal and environmental trends. The first group reflects the driving forces behind the environmental pressure and is linked with the 5EAP external integration policies. The second group contains the more traditional indicators describing the 'cause-effect* chain. The emphasis in this group is on pressure indicators (e.g. emissions), because these are more suitable to monitor policy progress.

If you only monitor progress of the state of the environment, you will monitor the successes or the failures of past policies, due to the long time lags in the response of the environmental system (e.g. the adjustment time of climate change and ozone depletion is about 100 years). In other words: to influence future developments you have to monitor current policies in order to support and steer actions.

In addition to the above mentioned encoders a shorter list of 9 'target' indicators has been selected indicating progress in relation to the 5EAP targets and how much more needs to be achieved (distance-to-target). These 'target' indicators include:

$ Carbon dioxide emissions

$ Consumption of Ozone Depleting Substances

$ Sulphur dioxide emissions

$ Nitrogen dioxide emissions

$ Volatile organic compounds emissions

$ Municipal Solid Waste arisings requiring disposal per capita per year

$ Area of EU12 where Nitrates targets are exceeded

$ Area of EU12 where Pesticides targets are exceeded

$ Percentage of EU12 population exposed to more than 65 dB(A) noise.

The quality of this report depends heavily on data availability and quality. As mentioned, two types of information were needed: information on the society (economy, population and sectorial trends) and the environment (pressures, state, impact and trends).

The Agency report for the 5th Action Programme is intended to constitute a description and an assessment of the present state of the European environment. It will update and improve upon the one reported on by the European Commission in 1992, in conjunction with the 5EAP, which is based on 1989 data. Much of the relevant data have been updated in the pan-European state of the environment report "Europe's Environment - the DOBRIS Assessment", which is being drawn from as far as possible.

The EEA programmes - some of the products and data sources

The Agency's work on indicators is part of the program "Integrated Environmental Assessment". However, there are many of the other ten programs that will result in products at different levels of aggregation based on monitoring and other sources that will be relevant for the improvement of environmental reporting.

The recently published "Europe's Environment - The Dobris Assessment" covers 46 countries and is the first pan-European report containing a detailed and comprehensive review of the state of the European Environment and is a good example of presenting the best available information in a structured way initiating when possible (air pollution, river reaches quality, urban environment...) the use of indicators.

Also, the Agency has produced the monograph on "European Rivers and Lakes", and will in the near future produce monographs on regions and topics such the Arctic, Europe's Environment and Health, European Landscapes and Urban Air Quality. These monographs, containing aggregated information and progressively including indicators, are important building blocks for the requested triennial reports on the state of the environment of the European Union.

A major step in the building of the Agency and its network has been the designation of the first European Topic Centres: on air quality, air emissions, water resources and quality, nature protection, marine and coastal environment, catalogue of data sources and land cover. They will provide an important support to the Agency in its environmental reporting activities on the related media and pressures concerned and will certainly allow for a faster and more efficient introduction of environmental indicators in reporting.

Mr Chairman, Ladies and Gentlemen, you will have the occasion in the coming weeks to see this first report of the Agency on the EU environment, making use of a limited set of societal and environmental indicators, and you will see in 96 the development of an extended agreed package of indicators to allow the Agency yearly environmental reporting (in line with economic ones), which is an ambitious task. I am sure that by making environmental reporting a continuous, timely and responsive exercise, as is the Agency aim for 96, and including indicators as much as possible to interact on a more equal basis with economic reporting, the Agency shall contribute already to the progress both of environmental reporting and green accounts.

Thank you very much for your attention.

And now if you allow me to give you a taste of the Agency's products (marketing) I will present to you with the assistance of some transparencies part of the content of the Report on the State of the Environment in Europe (Dobris Assessment) already published by the Agency, and moreover the aforementioned draft report on the progress achieved by the EU under the 5th Environment Action Programme (Sustainability and Environment in Progress SEIP 95) to be finished and published in the coming weeks.