2. Structure of Ocean Accounts

Table of Contents



  • This section provides the conceptual basis for Ocean Accounts. As noted in the Introduction, existing statistical standards, the SNA and the SEEA provide much of the foundation of Ocean Accounts. However, accounting for the ocean requires an adaptation and extension of these standards in many areas. Elaborating on Figure 1, Figure 3 below illustrates the detailed structure of the Ocean Accounts Framework: The components of the framework can be summarised as follows:

  • Table groups and subcomponents: as explained previously, an Ocean Account is comprised of one or more tables that can be organised into different subject matter groups, namely:

    • environmental assets (extent and condition of biotic and abiotic components);

    • flows of goods and services (ocean services) from the ocean to the economy;

    • flows from the economy (pollutants, residuals) to the ocean environment;

    • “Ocean Economy Satellite Accounts” comprising economic contributions of ocean-related industry sectors;

    • features of ocean governance that shape our impact on the ocean environment and economy;

    • combined presentations including benefits and costs associated with the ocean environment and economy; and

    • national ocean wealth comprised of social, environmental and economic assets;

  • Each table records quantitative information (monetary value, or physical status) or qualitative descriptors (e.g. names of applicable laws & regulations) or a combination these.

  • Relationships between the phenomena that are accounted for in each of the Table groups: including flows between ocean environmental assets and the economy measured in physical or monetary terms, relevant flows of goods and services within the economy measured in monetary terms, and governance “flows” (e.g. management decisions, investments, establishment of laws and regulations) that affect specific components of the ocean environment and economy (and consequently the associated societal benefits and costs).

  • Common (linked) statistics: In several cases, the same information is duplicated across multiple Tables. For example, the monetary value of ocean protection and management expenditure is recorded in the Governance tables, and also in those concerning the ocean economy. This duplication is designed to ensure that conceptually relevant information is integrated into each Table group for ease of reporting.

  • The remainder of this Section is devoted to explaining each component of the Ocean Accounts Framework in detail.

2.1 The spatial data infrastructure for Ocean Accounts

  • The ocean is large, three-dimensional, moving, much is outside national jurisdictions and spatial data are collected by many local, national and international organizations. This poses challenges to mapping; therefore, only 20 percent of the ocean seafloor has been mapped in terms of depth (bathymetry) and less than 0.001 percent has been sampled in terms of substrate and biota (DOALOS, 2016, Chapter 33). Only the surface of the ocean is visible from satellite. This requires special attention to establishing a spatial data infrastructure that will serve to integrate many types of data including from local in situ studies.

  • The Ocean Accounts Framework accommodates both spatially explicit and spatially independent information. For example, statistics documenting protection and management expenditures might be compiled at a national level without spatial detail. Accounts on ecosystem extent, condition and services supply might be built up from site-level data.

  • Spatially explicit data are more easily compiled into Ocean Accounts when they are standardized according to an agreed National Spatial Data Infrastructure (NSDI). An NSDI may include or be independent of a national Marine Spatial Data Infrastructure (MSDI). A comprehensive NSDI would set the spatial standards for the common treatment of data on terrestrial, freshwater, coastal and marine areas. The coastal and marine components of such an NSDI would include information on bathymetry and extend to the country’s EEZ. The entire NSDI/MSDI would include a common definition of “coastal”, an agreed shoreline, a shared classification of ecosystem types, agreed projections and scales, as well as common protocols for assessing, integrating and updating data. This then becomes the standard for compiling spatial ocean data within a Geographic Information System (GIS).


Figure 3. Detailed table structure of Ocean Accounts Framework.


  • Having a common spatial standard for terrestrial and marine data would also facilitate the compilation of terrestrial-based sources of pollution (see Flows to the Environment). To do this, Ocean Accounts would need compatible data on ecosystems, populations and economic activities summarized by terrestrial drainage basin. Many statistical offices, such as Statistics Canada, regularly produce such socio-economic and environmental data aggregated by drainage basin.

  • The Ocean Accounts operate on the same spatial principles as the SEEA-EEA. Basic Spatial Units (BSUs) are the smallest measurement unit. These are classified by an ecosystem classification, such as the IUCN Global Ecosystem Typology (GET, see Classification of ocean ecosystems) according to their Ecosystem Type (ET). Ecosystem Assets (EA) are contiguous BSUs of the same ET. The Ecosystem Accounting Area (EAA), such as a country, state, or drainage (catchment) area, is the level at which the ETs are aggregated for reporting purposes. The SEEA Ecosystems revision discussions suggest the Basic Spatial Unit (BSU) as an “operational” concept. That is, the BSU may be required when detailed spatial data are compiled from various sources and then it serves as a common reference. However, data from BSUs can be used to create homogenous EAs, which serve as the level at which most data are maintained.

  • The Basic Spatial Unit (BSU) may be as small as a remote sensing image pixel (30-100m), a national grid reference system (1nm) or small administrative unit (e.g., marine statistical area). Smaller BSUs have the advantage of being more homogenous. That is, when delineating ecosystem extent, some ecosystems, such as mangroves, may be in strips of 5m wide and therefore undetectable by satellite at 100m resolution. Since ecosystems tend to be more complex in coastal areas and data tends to be more generally available, some countries maintain data at finer resolution near the coast. In this case, it may be practical to distinguish between coastal units (CBSU) and marine units (MBSU).

  • To the extent possible, all information documented in Ocean Accounts should be progressively attributed to BSUs or EAs, to:

    • build a spatial characterisation of relationships between social, economic and environmental features of oceans,

    • delineate specific ecosystem assets and

    • facilitate assessment of their condition and services provided over time.

  • Creating and applying three-dimensional Marine Basic Spatial Units (MBSUs) in an accounting framework are being explored but are not in common use (see for example, Sayre et al., 2017).

  • Within an overarching environmental-economic accounting framework, the spatial infrastructure should be mutually exclusive and collectively exhaustive with its terrestrial and freshwater counterparts—for example, MBSUs with Terrestrial Basic Spatial Units (TBSUs). Consistent with the definition of Ocean Assets (see Environmental asset accounts), certain BSUs can be classified as both terrestrial and marine, as transitional functional ecosystem types in the IUCN GET. Within this integrated spatial structure (Figure 4):


Figure 4. Basic spatial units for Ocean Accounts


  • MBSUs designate a three-dimensional volume of ocean including the seabed and subsoil. Alternatively, depending on technical capacity, it could also be considered as several integrated vertical layers: surface, water column, seafloor and sub-seafloor.

    • CBSUs designate a three-dimensional volume of shallow coastal waters (including seabed and subsoil) and a two-dimensional area of land, delineated by a Shoreline Vector.

    • TBSUs designate two-dimensional areas or three-dimensional volumes of land. (Note: Terrestrial land and ecosystem accounting frameworks are, at present, predominantly based on a two-dimensional spatial framework. Use of an integrated three-dimensional framework for both terrestrial and ocean accounting is being considered as part of the SEEA revision process. For example, a three-dimensional spatial infrastructure for terrestrial ecosystems would help distinguishing tree canopy from underlying grasses and wetlands. The spatial framework presented in this guidance anticipates this change but is intended to be practically interoperable with current two-dimensional terrestrial accounting.) Being the foundation of terrestrial environmental-economic accounting, TBSUs are beyond the scope of the Ocean Accounts Framework.

    • The summary tables suggested for Ocean Accounts generally show summary data on extent, condition, services supply or value by ET.

    • Ideally information is compiled with enough spatial detail to establish relationships between the components of the framework (assets, input flows, output flows, economy and governance). Tables outlined below are aggregated spatially for reporting purposes by “accounting area”, which could be all national coastal and marine areas, smaller administrative areas such as provinces or marine management areas, or environmental areas such as MPAs. The Malaysia ESCAP Ocean Accounts pilot has compiled accounts maintaining separation between inshore (continental shelf) from offshore (deep sea) areas.

  • Neighbouring countries could compile comparable Ocean Accounts to study the transboundary impacts and impacts relating to flows to and from Areas Beyond National Jurisdiction (ABNJ). It would then be useful to have a common spatial data infrastructure among these countries.

2.2 Scope boundaries of Ocean Accounts

  • The scope of the Ocean Accounts Framework can be defined in terms of two key scope boundaries, in addition to those defined in the SEEA-EEA (ecosystem services and assets beyond the SNA production boundary). Ocean Accounts also require the definition of: (1) spatial boundaries of the ocean environment; and (2) the sectoral boundary of economic activity determining the “Ocean Economy”. Concerning spatial boundaries, the Ocean Accounts Framework is currently designed to cover coastal and marine environments within the seaward limit of a country’s national maritime zones—i.e. up to the seaward limit of the EEZ and/or continental shelf. Global-level Ocean Accounts are also feasible and could, for example, demonstrate the extent and condition of the world’s costal and marine environments, locations of high service provision and areas that are most degraded and stressed including those in areas beyond national jurisdiction (ABNJ).

  • Biophysical definitions of “coastal” often define an area up to 100km inland (or 50m in elevation, whichever comes first) and to 50m in depth seaward (MA 2005). However, the US often includes the Great Lakes as “coastal”. Notwithstanding local definitions, this is the general definition applied in the Ocean Accounts. This then requires care in adhering to national definitions as well as coordinating with others working on terrestrial and freshwater areas. For example, estuaries can range from freshwater, to brackish to saltwater. Therefore, parts of the estuary may be under the mandate of different agencies and data may be collected using different boundaries. Further, such ecosystems may cross administrative boundaries, including national and state borders. This highlights the importance of agreed national and maritime boundaries. The Ocean Accounts framework is intended to be consistent and interoperable with ongoing terrestrial and freshwater environmental-economic accounting efforts.

  • Concerning the scope of the “Ocean Economy”, there is no widely agreed definition (OECD 2016. Ocean economies are identified by many terms including “ocean economy”, “ocean industry”, “ocean sector”, “marine economy”, “marine industry”, “marine activity”, or “maritime economy” or “maritime sector”. The term “blue economy” is increasingly being used in the context of sustainable and inclusive use of the ocean and as a parallel to “green economy”. As explained in Flows to the economy, different institutions and initiatives approach this definitional question differently. Conceptual definitions of the ocean economy include some or all the following:

    • Economic activity that is physically located on the ocean (e.g. shipping, fisheries, offshore oil and gas);

    • Economic activity that is physically proximate to the ocean (e.g. coastal tourism, coastal aquaculture);

    • Economic sectors, located on land, that depend on natural inputs from the ocean environment, either biotic or abiotic (e.g. fish processing, construction materials);

    • Economic activity that provides goods or services to sectors located on the ocean (e.g., shipbuilding, marine engineering);

    • The market value of natural inputs (fish, minerals) potentially derivable from the SEEA-CF monetary flows accounts and market and non-market value of ecosystem services potentially derivable from the SEEA-EEA services supply accounts.

    • “Indirect” or “intermediate” expenditures on goods and services used by the above “direct” economic activity; and

    • “Induced” or “final demand”, which include expenditures enabled by the above “direct” and “indirect” expenditures.

  • A comprehensive list of characteristic ocean-related economic activities is presented in Flows to the economy. This is the basis for producing “Ocean Economy Satellite Accounts”. Ocean Economy Satellite Accounts calculate the annual production of ocean-related sectors as their contribution to national GDP based on data extracted from the SNA and other economic statistics. However, a national economy also includes its assets and liabilities (National Balance Sheet), gross fixed capital formation (investments), depreciation of assets, imports/exports (Balance of Trade) and non-market goods and services. Some of these macro-economic concepts of the ocean economy are explored in this Guidance, but for the most part is considered future research (See Research agenda for ocean accounting).

  • The remainder of this section establishes the Asset Accounts upon which the Ocean Accounts are based. It then reviews the Flows to (supply) and within (use) the Economy of ocean services from those assets and Flows from the National Economy (residuals, pollutants) that affect the quantity and condition of ocean assets. Ocean Economy Satellite Accounts are also flows, but measured in terms of the contribution of characteristic ocean sectors to the national economy. The experimental Governance Accounts present information on collective decision making about the ocean in combination with the context in which decisions are made. Combined Presentations are the summary “report card” that brings together the key indicators from other accounts that can serve as a dashboard for decision making. Ocean Wealth emphasizes the many measures of ocean assets and their values to the economy and society.

2.3 Environmental asset accounts

2.3.1 Defining environmental assets

  • Assets are things of value to society—the natural, human, financial, social, intellectual, and produced wealth from which we derive benefits. The ocean is such an asset, but it is often not appropriately valued in decisions and plans. A cornerstone of the Ocean Accounts Framework is to provide a means to comprehensively measure the embodied wealth of the ocean, represented not only in terms of short-term financial gain, but also in terms of longer-term sustainability.

  • In economics, assets are defined as stores of value that, in many situations, also provide inputs to production processes. More recently, there has been consideration of the value inherent in the components of the environment and the inputs the environment provides to society in general and particularly, the economy. The terms “environmental asset” and “natural capital” are commonly used to denote the source of these inputs, which may be measured in both physical and monetary terms. The Ocean Accounts Framework covers a subset of environmental assets that are located wholly or partly seaward of the mean high-water line, including coastal and marine areas. Note: that the 1982 Law of the Sea Convention establishes a territorial sea baseline as the spatial boundary between territory and maritime zones. These baselines are either the low-water line along the coast or straight lines designated in accordance with Part II Section 2 of the Convention. The spatial scope of ocean assets (and consequently ocean accounts) is based on biophysical factors and is decoupled from legal boundaries between territory and maritime space.

  • It would be beneficial for the application of the framework to include produced capital (infrastructure, such as ports, bridges, and harbours) and human capital in the definition of ocean assets. In some respects, produced capital provides a service, it is at risk of extreme events and its construction and operation impacts the environment. Similarly, human, and intellectual capital is enhanced by learning about and experiencing the ocean, which is considered a cultural ecosystem service. Given the complexity of working through the accounting implications, this will be a topic of future research (See Research agenda for ocean accounting).

2.3.2 General classification of ocean assets

  • The SEEA–CF and SEEA–EEA establish a general classification of environmental assets that can be directly applied for ocean accounting purposes, as follows:

    • Individual environmental assets as defined by the SEEA-CF:

    • Minerals and energy resources: including deposits of oil, natural gas, coal and peat, non-metallic minerals, and metallic minerals, including scarce or valuable dissolved minerals,

    • Land and seabed: delineating the space in which economic activities and environmental processes take place and within which environmental assets and economic assets are located. For ocean accounting purposes, land also includes areas covered by water at high tide, the seabed within a country’s exclusive economic zone, and a country’s continental shelf defined in accordance with the 1982 Law of the Sea Convention.

    • Soil and seabed substrata: including semi-terrestrial soils of the intertidal area, and seabed substrata types such as rock, coarse sediment, mixed sediment, sand and muddy sand, and mud and sandy mud.

    • Timber resources: defined by the volume of trees, living or dead, including all trees regardless of diameter, tops of stems, large branches and dead trees lying on the ground that can still be used for timber or fuel. Mangrove forests are the principal living source of timber resources within the spatial scope of Ocean Accounts.

    • Aquatic resources: including cultivated or naturally occurring fish, crustaceans, molluscs, shellfish, and other aquatic organisms such as sponges and seaweed, as well as aquatic mammals such as whales. The aquatic resources for a given country comprise those resources that live within maritime zone limits throughout their life cycles. Migrating and straddling fish stocks are considered to belong to a country during the period when those stocks inhabit its EEZ. Note: See also SEEA–CF Section 5.9.2 concerning accounting for highly migratory and straddling fish stocks, and fish stocks that complete their life cycle on the high seas.

    • Other biological resources: including cultivated or naturally occurring animals and plants other than timber and aquatic resources. This could include coastal crops, livestock and wild foods contributing to a broader definition of ocean economy.

    • Water resources: including fresh and brackish water in inland water bodies, including groundwater and soil water, focusing on abstraction from the ocean and outflows to the ocean. Seawater has not been treated as an asset in the past, although its supply and use are included in water accounts.

    • Ecosystem assets as defined by the SEEA-EEA:

    • Ecosystems: namely dynamic complexes of plant, animal and micro-organism communities and their non-living environment interacting as a functional unit (As defined in Article 2 of the Convention on Biological Diversity). Ecosystem assets are an important focus of ocean accounting because they yield flows of valuable, and in many cases irreplaceable, benefits to people. Ecosystems are classified by type (e.g., forest, mangrove, seagrass) and characterized by their extent, condition, and use.

  • There are overlaps between individual environmental assets and ecosystem assets. For example, a coral reef ecosystem includes the aquatic resources (fish, crustaceans, and plants) that live in it. This is not so much an issue for the physical measures of extent, condition, and use; coral reefs are represented in hectares of area they cover, fish are represented by the tonnes of stock of a species. However, when these come to be valued in monetary terms, the value of a hectare of coral reef likely includes the value of the fish living in it. Keeping both individual environmental assets and ecosystem assets in the same tables will encourage examining the comprehensiveness of ecosystem services valuations. For example, determining whether all assets have been considered. It will also encourage avoidance of double counting if assets valued are made explicit.

2.3.3 Classification of ocean ecosystems

  • Ecosystem types (ETs) should be classified so they can be consistently organised within the ocean accounting framework over time. There is currently no international standard classification of ocean ecosystems. Many global and regional classifications exist (Appendix 6.7). Some are based on habitat types, benthic properties or a combination of characteristics such as depth, temperature, geology, chemical composition, biota, etc.

  • Coastal and marine ecosystems often considered in assessments include (but are not limited to):

    • Coastal: beaches, (sand dominated), seagrass beds, mangrove forests, intertidal and subtidal rocky shores, oyster reefs, kelp forests, and tropical coral reefs,

    • Marine (to shelf): benthic soft-bottom habitats (sponges and sessile filter feeders), phytoplankton communities (upper water column), zooplankton communities (upper and mid water column)

    • Marine (shelf to EEZ): Aphotic benthic sessile communities, uninhabited soft bottom (e.g., sand,), uninhabited rock, pelagic phytoplankton (upper water column), zooplankton communities (upper and mid water column), migratory pelagic species (pelagic fish and cetaceans).

  • The lack of detailed data on the open ocean results from the lack of historical research on open ocean benthic ecosystems. Due to the lack of data on biota existing there (less than 0.001 percent has been sampled quantitatively, (DOALOS, 2016, Chapter 33)), such deep-sea environments are often characterized by their landform (e.g., seamounts, hydrothermal vents) and substrate (sandy, rocky). Two biotic communities often identified include cold-water/deep-water corals and sponges.

  • The SEEA Ecosystems revision process has agreed to consider the IUCN Global Ecosystem Typology (GET, described below) as a “reference classification”. That is, in the absence of an agreed national classification of ecosystems, the GET is considered a useful starting point as well as a reference for international comparison.

  • The IUCN GET was developed by the IUCN Red List of Ecosystems Thematic Group. It combines process-based and biogeographic approaches across the whole planet, with the aim of developing a scalable framework that supports generalisations about groups of functionally-similar ecosystems and recognises different expressions within these groups defined by contrasting biotic composition (Note: Details omitted pending publication) The broad structure of this global ecosystem typology is listed in Figure 5 below. A list of realms, biomes and ecosystem functional groups relevant to ocean accounting is provided in Appendix 6.2.

  • Since Ocean Accounts require the establishment of ETs, classification at the functional group (Level 3) may be most useful. At this level, the IUCN GET identifies 22 marine functional groups (such as seagrass meadows) and 12 transitional functional groups (such as intertidal forests and shrublands (mangroves)). Although ecosystem assets can be disaggregated to the species level, this is rarely useful for broad assessments of ecosystem services and benefits, given the current state of data. However, information at the local ecosystem type (Level 6) may be relevant for specific issues or very localised natural resource management.

  • ESCAP has developed a feasibility study for mapping global ocean ecosystems, based on the United States’ Coastal and Marine Ecological Classification System (CMECS). CMECS (See Appendix 6.7) classifies the environment into biogeographic and aquatic settings that are differentiated by features influencing the distribution of organisms, and by salinity, tidal zone, and proximity to the coast. Within these systems are four underlying components: water column, geoform, substrate and biota. CMECS may provide more detailed classes for some marine ecosystems.


Figure 5. Structure of the IUCN Red List of Ecosystems global ecosystem typology

Source: https://global-ecosystems.org/page/typology


  • The IUCN-GET is undergoing testing through the SEEA Ecosystem revision process. This entails comparison with existing national classifications. Testing and experimentation with the IUCN-GET and CMECS in future pilot studies is encouraged.

2.3.4 Physical asset accounts

  • Table 5.2 in the SEEA-CF provides a general structure for physical accounts for many different environmental assets. It shows the diverse concepts that come in to play for different asset types. Opening and closing stocks can be represented for all asset types: minerals and energy, land, soil, timber, aquatic resources and water. However, not all reasons for additions and reductions are valid or obvious for each asset type. For example, timber, aquatic resources and water are “renewable” in that additions come from natural growth or from precipitation. Mineral resources, however, would not be subject to additions from natural growth.

  • For each asset types, it is feasible to distinguish parts that are relevant to the ocean. For example:

    • Mineral and Energy Stocks occur under land, freshwater, coastal and marine areas. These are not often distinguished as such in national statistics, but could be if the objective of the Ocean Accounts is to clearly delineate coastal and ocean-related mineral and energy assets;

    • Land Accounts (cover and use) could be extended to include offshore coastal and marine waters;

    • Timber Accounts could distinguish coastal/brackish water timber resources such as mangroves; and

    • Aquatic Resources Accounts could distinguish freshwater from brackish, coastal, and marine species.

  • Making these distinctions would use the same data sources as for SEEA-CF accounts but would require more detailed information on the locations of the assets.

  • It is important to understand the extent of the assets because the type of asset and its condition influences its capacity to provide services. Ocean assets, including ecosystem assets provide services that are spatially significant and, in some instances, relevant to other assets. For instance, seagrass may be providing local nursery habitat for fish but once the juveniles come of age they move to another ecosystem and live to adulthood (there are also numerous species that live to adulthood in bays and then breed in open oceans, and vice versa). Further, there may be different types of seagrass providing different types of services – not all seagrass provides nursery habitat.


Table 1. Physical Asset Extent Account

 

Ecosystem assets

Individual environmental assets

Mangroves

Seagrass

Coral reef

Minerals

Fish stocks

Opening stock

 

 

 

 

 

+ Additions to stock

 

 

 

 

 

  Managed expansion

 

 

 

 

 

  Natural expansion

 

 

 

 

 

  Reclassifications

 

 

 

 

 

  Discoveries

 

 

 

 

 

  Reappraisals (+)

 

 

 

 

 

TOTAL additions to stock

 

 

 

 

 

– Reductions in stock

 

 

 

 

 

  Managed regression

 

 

 

 

 

  Natural regression

 

 

 

 

 

  Reclassifications

 

 

 

 

 

  Extractions/harvesting

 

 

 

 

 

  Reappraisals (-)

 

 

 

 

 

TOTAL reductions in stock

 

 

 

 

 

= Closing stock

 

 

 

 

 

Measurement Units

Area

Area

Area

Weight, litres

Weight, number


Note: Darkly shaded areas represent undefined measures for ecosystem assets (extractions/harvesting) and expansion of minerals stocks. Terminology still requires harmonization between SEEA-CF and SEEA-EEA. For example, extraction/harvesting refers to individual assets in the SEEA-CF. Ecosystem assets are treated in the SEEA-EEA more like land cover types, which are added to and reduced by area through managed/natural expansion/regression.

  • In Table 1 “individual environmental assets” are non-ecosystem assets, such as minerals or aquatic resources as defined in the SEEA-CF. Ecosystems are accounted for in terms of area (Although there has been some discussion of accounting for ocean ecosystems in terms of volume) of ecosystem types (ETs). Individual environmental assets are measured in units specific to the asset (tonnes, m3, etc.). Reasons for additions and reductions are also different for each individual asset, depending on whether it is living and/or mobile. Table 1 could be expanded to include many ecosystem types and many individual assets (e.g., distinguishing different species of fish, crustaceans, molluscs, seaweeds, etc.).

  • It is possible to attribute monetary values to some ocean assets. Monetary Ocean Asset Accounts are described in Monetary Asset Accounts.

  • There are no agreed condition indicators for all asset types. Ecosystems can be generally assessed in terms of their biodiversity, productivity, levels of pollutants, etc. Individual environmental assets each require their own indicators of condition. Minerals may be high or low quality, accessible or inaccessible. Fish may be assessed in terms of health or age of the stock.

  • Table 2 provides a structure for reporting the summary of condition measures for ocean assets. As with extent, this would be built up from more detailed tables on the location of individual ecosystem or individual assets, condition measures over time (e.g., degree heating weeks based on sea surface temperature), and more complex source measures (e.g., distances of specific assets from population centres). This could then be summarized over ecosystem types and individual environmental asset types as in Table 3.


Table 2. Physical Asset Condition Account by MBSU for each depth layer at end of accounting period

 

Variable Examples

Ecosystem assets

Individual environmental assets

Mangroves

Seagrass

Coral reef

Minerals

Fish stocks

Area

ha

 

 

 

 

 

Acidification

pH

 

 

 

 

 

Eutrophication

BOD, COD, Chlorophyll-A

 

 

 

 

 

Temperature

°C

 

 

 

 

 

Plastics

g/m3

 

 

 

 

 

Quality

Appropriate measure

 

 

 

 

 

Accessibility

km from population centre

 

 

 

 

 

Biodiversity

Shannon Index

 

 

 

 

 

Health

Index

 

 

 

 

 

Repeated for end of accounting period

Repeated for change in condition

Notes: This Physical Asset table can be combined with other Tables that record information for each Spatial Unit in the accounting framework, for example Table 16 on governance.

  • Condition accounts in the SEEA Ecosystems revision discussions distinguish between “variables”, which are summaries of basic measures and “indicators”, which are the same measures indexed according to a reference condition. A reference condition could be a condition measured or estimated for the past or an “ideal” condition determined by scientific consensus.

  • There also is an ongoing discussion within the SEEA Ecosystems revision process regarding the treatment of biodiversity within the ecosystem accounting framework. Further, the aspiration that such tables can be produced for different depth layers is optimistic in that standard spatial techniques for managing and summarizing such data have not yet been developed.

The ESCAP China Ocean Accounts Pilot developed asset accounts for the Beihai Bay for mangroves (area and biomass), sediment and seawater nutrients (carbon, nitrogen, phosphorous), marine living resources (crab, fish, birds) and marine freshwater resources (river, rainwater and groundwater influx).

https://www.unescap.org/sites/default/files/1.3.A.1_China_GOAP_12-15Nov2019.pdf


Table 3. Summary Asset Condition Account by ecosystem type and individual environmental asset type at end of accounting period

indexed with respect to reference condition

Indicator Examples

Reference level

Ecosystem assets

Individual environmental assets

Mangroves

Seagrass

Coral reef

Minerals

Fish stocks

Area

ha

 

 

 

 

 

 

Acidification

pH

 

 

 

 

 

 

Eutrophication

BOD, COD, Chlorophyll-A

 

 

 

 

 

 

Temperature

°C

 

 

 

 

 

 

Plastics

g/m3

 

 

 

 

 

 

Quality

Appropriate measure

 

 

 

 

 

 

Accessibility

km from population centre

 

 

 

 

 

 

Biodiversity

Shannon Index

 

 

 

 

 

 

Health

Index

 

 

 

 

 

 

Repeated for end of accounting period

Repeated for change in condition

2.3.5 Monetary asset accounts

  • Not all assets can be properly represented in monetary terms. In general, the monetary value of an asset, whether it is an ecosystem or individual environmental asset, can be defined as the Net Present Value (NPV) of expected future flow of services from that asset (See SEEA-CF Chapter V). For individual environmental assets, such as minerals, harvested fish or timber, there is a market price and therefore the flow of services can be measured as the “rent”, or difference between the cost of production and the market value of the product. Some ecosystem services, such as carbon sequestration, have established “prices” and can be treated similarly. This requires appropriate valuation of the services derived from these assets.

  • However, the true “value” of ecosystem services is often embedded in long-term ecological integrity (such as coastal protection or soil formation) or cultural preferences (such as culturally significant seascapes). However, many thousands of studies have “valued” these services in monetary terms, often using methods that are not coherent with standard economic accounting. That is, standard economic accounting focuses on exchange values, whereas many valuation methods focus on the welfare values, which are benefits derived from the consumption of the services. This is discussed further in Assessing supply and use of ocean services.

  • For the purposes of ocean accounting, it is suggested that monetary asset accounts be based on monetary valuation of market services (SNA-benefits). The future flow of other ecosystem services (non-SNA-benefits) can be represented in physical terms, for example, meters of coastline protected from erosion, hectares of fish breeding habitat, or kilograms of phosphorous assimilated.

  • The monetary asset account (Table 4) for those assets whose services can be valued in monetary terms follow the structure of the physical asset accounts: opening stock, additions, reductions and closing stock.

  • The monetary asset account is built up from information on the flows of ocean services (see Flows to the Economy). For example, the physical asset accounts can also be used to estimate future additions (natural growth) and removals (harvesting, natural losses, catastrophic losses) from a commercial fish stock species. Given this estimate of future fish stocks, and assumptions about the cost of production and future prices, the value of the future flow of services can be estimated. These assumptions, as well as the chosen future period and discount rate will have large effects on the estimates of asset value.

  • Future flows can be based on current levels of production or natural additions and reductions. However, it may be more realistic to base future flows on agreed alternative scenarios (such as comparing “business as usual” with increased mangrove restoration or decreased pollution levels). This would provide a range of estimates that could be adjusted as conditions change and information improves.

  • However, showing monetary asset accounts alone may focus undue attention on the SNA-benefits (often short-term) they are based on, while detracting from the many important non-SNA-benefits.

  • Monetary valuation of ecosystem assets for accounting purposes is a key focus of the SEEA revision process. A recent discussion paper (Fenichel and Obst 2019) makes detailed methodological recommendations for ecosystem asset valuation inclusive of ocean ecosystems, concluding that welfare-based measures of change can provide input prices for observed quantities of environmental goods and natural and ecosystem assets. These can be combined with index number theory to derive appropriate nominal prices for inclusion in accounts, if they are measured at broad enough scales.

  • Developing a comprehensive view of monetary asset accounts, one that includes the future flows of SNA and non-SNA benefits, is essential to understanding the true wealth of our ocean assets (See Ocean Wealth). For example, the placement of tangible dollar values on ecosystem assets in the Kenyan mangrove restoration project. Testing these types the new approaches currently being developed will be a topic for future research.


Table 4. Monetary Asset Account (currency units)

 

Ecosystem assets

Individual environmental assets

Total

Mangroves

Seagrass

Coral reef

Minerals

Fish stocks)

Opening stock

 

 

 

 

 

 

+ Additions to stock

 

 

 

 

 

 

   Managed expansion

 

 

 

 

 

 

   Natural expansion

 

 

 

 

 

 

   Reclassifications

 

 

 

 

 

 

   Discoveries

 

 

 

 

 

 

   Reappraisals (+)

 

 

 

 

 

 

TOTAL additions to stock

 

 

 

 

 

 

– Reductions in stock

 

 

 

 

 

 

   Managed regression

 

 

 

 

 

 

   Natural regression

 

 

 

 

 

 

  Reclassifications

 

 

 

 

 

 

  Extractions

 

 

 

 

 

 

   Reappraisals (-)

 

 

 

 

 

 

TOTAL reductions in stock

 

 

 

 

 

 

Re-valuation of stock

 

 

 

 

 

 

= Closing stock

 

 

 

 

 

 

Measurement Units

Monetary

Monetary

Monetary

Monetary

Monetary

Monetary


2.4 Flows to the economy (supply and use accounts)

2.4.1 Defining flows to the economy

  • The economy and other human activities depend on flows from ocean assets. Natural inputs from individual environmental assets are extracted, harvested, captured, whereas services from ecosystem assets are “enjoyed, consumed or used” (Boyd and Banzhaf, 2017) providing benefits to people. These flows of ocean services can be recorded in Ocean Accounts in physical and monetary terms following the principles explained in the SEEA–CF, SEEA–EEA, and SNA. Ocean accounting requires distinguishing these flows, as it does with distinguishing the assets, that are relevant to the ocean.

2.4.2 General classification of flows to the economy (ocean services)

  • Flows of ocean services to the economy are divided into four categories, combining the SEEA–CF and SEEA–EEA concepts of flows:

    • SEEA-CF natural inputs (often considered “commodities” or “goods”)

    • Materials: including minerals and energy resources, soil, timber, aquatic resources, and other biological resources;

    • Energy: including inputs of energy from fossil fuels, solar, hydro, wind, wave and tidal, geothermal, and other electricity and heat;

    • Water: including surface water, groundwater, soil water and seawater.

    • SEEA-EEA ecosystem services (provisioning, regulating and maintenance, cultural)

    • Ecosystem services: defined as the contributions of ecosystems to benefits to economic and other human activity.

  • Natural inputs from the environment, as defined by the SEEA-CF are physical quantities of goods that are extracted, harvested or captured and then supplied to users. The Ocean Accounts Framework applies the same concepts and definitions but suggests distinguishing between natural inputs that are taken from the ocean from those that are taken from land or freshwater areas. For example, the physical supply and use of energy (SEEA-CF Table 3.5) could further distinguish energy supplied from coastal and marine areas (offshore oil and gas, wave, tidal, wind, etc.).

  • Natural inputs are well defined in the SEEA-CF and, other than distinguishing those flowing from the ocean, there is no further guidance on their treatment for Ocean Accounts. Ecosystem services, however, bear further discussion, given the variety of definitions and applications used.

2.4.3 Classification of ocean ecosystem services

  • Ecosystem services, while overlapping somewhat with natural inputs for provisioning services, are quite different for regulating and cultural services. Many ecosystem services, such as “recreation” are not physical flows, but other types of transactions (enjoying, appreciating, valuing, etc.).

  • Each of these services are supplied by an economic unit, whether a corporation, government or household. Many market services can be associated with the industry sector supplying them and would appear in the production statistics of those sectors. For non-market ecosystem services, the supplier or user is generally considered to be the owner of the asset. Beneficiaries, as in the case of carbon sequestration, may be in the same location or far away.

  • Ecosystem services often mentioned in ocean ecosystem service assessments (adapted from Bordt and Saner, 2019) include:

    • Provisioning

    • Biomass for nutrition (cultivated and wild animals, plants, algae or fungi)

    • Biomass for materials (cultivated and wild animals, plants, algae or fungi)

    • Genetic materials from plants and animals (pharmaceutical products, genetic inventorying and conservation)

    • Abiotic materials and energy (offshore oil and gas, minerals; wind, wave, solar energy)

    • Abiotic: substrate for transportation

    • Abiotic: seawater for drinking (desalination) or non-drinking (industrial cleaning and cooling)

    • Regulating and maintenance

    • Lifecycle maintenance and habit protection (e.g., fish breeding habitat, habitat for iconic species)

    • Mediation of wastes by estuaries (dilution, filtration)

    • Mediation of mass and liquid flows by mangroves, coral reefs, seagrasses, estuaries, rocky shores (coastal protection from erosion and waves)

    • Atmospheric composition and conditions (carbon sequestration by mangroves, coral reefs, seagrasses, tidal marshes)

    • Cultural

    • Physical and experiential interactions

    • Intellectual and representative interactions

    • Symbolic significance of beaches and open ocean

  • Further examples are provided in Appendix 6.3. Future research would be required to inventory ocean-related ecosystem services and associate them with appropriate ocean assets.

  • A list of common, widely applicable ecosystem services is under development as part of the SEEA Ecosystems revision process. The list, as of mid-2020. is described below (Table 5x):


Table 4a. List of common, widely applicable ecosystem services is under development as part of the SEEA Ecosystems revision process

Ecosystem service

Relevance to Ocean Accounts

Provisioning services

 

Biomass provisioning services

Crop provisioning services

applies to cultivated crops, mangroves and other non-fish provisioning in intertidal areas

Grazed biomass provisioning services

Timber provisioning services

Non-timber forest products (NTFP) and other biomass provisioning services (incl. those related to hunting and trapping and bio-prospecting activities)

Fish and other aquatic products provisioning services

including from coastal aquaculture and capture fisheries and marine fisheries)

Water supply (Purification and regulation)

 

may apply to mangroves, tidal flats, estuaries and coastal vegetation in terms of purifying inland water flows to the ocean

Genetic material services

 

Applies as well to materials supplied from coastal and marine ecosystems.

Regulation and maintenance services

 

Global climate regulation services

 

Including carbon sequestration and storage by phytoplankton, mangroves, and seagrasses

Rainfall pattern regulation services (at sub-continental scale)

 

intended for tropical forests, but ocean temperature and cycles will contribute substantially

Local (micro and meso) climate regulation services

 

also intended for terrestrial, but applicable to coastal ecosystems (especially mangroves).

Air filtration services

 

including by mangroves, coastal vegetation

Soil quality regulation services

 

decomposition of biological materials also occurs in marine ecosystems.

Soil erosion control services (includes also sediment retention services)

 

applies to flood protection by mangroves, coral reefs and seagrasses

Water purification services (water quality amelioration)

Retention and breakdown of organic pollutants including excess nutrients

may apply to mangroves, tidal flats, estuaries and coastal vegetation in terms of purifying inland water flows to the ocean

Retention and breakdown of inorganic pollutants

Water regulation services

Baseline flow maintenance

applies to flow/wave regulation by mangroves, coral reefs and seagrasses

Peak flow mitigation

Flood mitigation services

Seawater (Tidal) surge mitigation (Coastal protection services)

applies to flood protection by mangroves, coral reefs and seagrasses

River flood mitigation

 

Storm mitigation services

 

applies to storm mitigation by coastal ecosystems

Noise attenuation services

 

may apply to mangroves, coastal dunes

Pollination services

 

gamete dispersal in marine environments

Pest control service

 

applies to coastal and marine ecosystems

Nursery population and habitat maintenance services

 

applies to coastal and marine ecosystems

Solid waste remediation

 

applies to coastal and marine ecosystems

Cultural services (may be renamed non-material services)

 

Recreation-related services

Tourism recreation-related services

applies to coastal and marine ecosystems

Local recreation-related services

Amenity services

 

applies to coastal and marine ecosystems

Education, scientific and research services

 

applies to coastal and marine ecosystems

Spiritual, symbolic and artistic services

 

applies to coastal and marine ecosystems

Local and community use (including indigenous values)

 

applies to coastal and marine ecosystems

Ecosystem and species appreciation services

 

applies to coastal and marine ecosystems


  • One topic that requires further research is linking ecosystem processes (sometimes called “intermediate” services) with the ecosystem service classification. An ecosystem process, such as primary productivity, will contribute to many services (biomass generation, carbon sequestration, water regulation), but not be “directly used, consumed or enjoyed” by people. A better understanding of how these processes support services can lead to improved measures of ecosystem condition and capacity.

2.4.4 Physical flow (supply and use) accounts

  • Physical flow tables (aka physical supply and use tables or PSUTs) trace the physical transactions between supplier and user. The SNA traces some of these transactions between economic units in monetary terms, but the SEEA adds physical flows and acknowledges the environment as the “first supplier” of natural inputs to the economy. This adds a powerful perspective in that natural inputs can be traced from extraction, harvesting or capture to their transformation into products, exchanges between users and eventually to final consumption and release to the environment as residuals.

  • Tracing through the general supply and use table (Table 5), taking for example aquatic resources, the environment supplies tonnes of fish to the fishing industry, which is the “first user”. The fishing industry may have losses in capture (bycatch), transportation or storage, the remainder of which may be supplied as “products” directly to markets or as intermediate products to the food processing industry. Additional products may be supplied by the “Rest of the World” as imports and in combination with domestic products are supplied to the final consumer or to the “Rest of the World” as exports. At each stage, losses are recorded as waste products, which may be reused or recycled, or waste residuals, which are accumulated in landfill or flow to the environment.

  • Accounting principles and the structure of the tables help ensure that the accounts balance. For example, the total supply of natural inputs must equal the total use of natural inputs. This helps estimating missing data. For example, one data source may specify the total supply and another the use by some sectors. The difference can be allocated to the missing sectors. Putting both supply and use into the same account helps trace the flows from one stage to the other. For example, if more is supplied than used, there may be a loss in transformation or transmission.

  • While this table describes the flows of an ocean service, it the same structure is used to trace the flows of non-ocean natural inputs that may eventually flow to the ocean. Physical water supply and use accounts can indicate the amounts of wastewater released to the environment. Much of the wastewater released to surface water will eventually flow to the ocean. Accounting for water supply and use at the drainage basin level can provide an indication of the geographic and sectoral source of excess nutrients flowing to the ocean. Likewise, physical material and energy flow accounts can provide similar insights on the destination of biomass, minerals, and energy product residuals. This is discussed further in Flows to the Environment (residuals).


Table 5. Flows table: General supply and use table (physical or monetary) (during accounting period)

Physical or monetary units

Industries (and govt)

Households

Accumulation

Rest of the World

Ocean Services (From Environment)

Total

Supply table

Ocean services

 

 

 

 

 

 

 

Flows to economy from ocean assets (including ecosystem services)

Total supply of ocean services

Products

Output

 

 

Imports

 

Total supply of products

Flows to the environment

(residuals)

Output flows generated by different industry sectors

Output flows generated by final household consumption

Output flows from scrapping and demolition of produced assets

 

 

Total supply of residuals

Use table

Ocean services

Extraction, harvesting or capture of natural inputs

*

 

 

 

Total use of ocean services

Products and services

Intermediate consumption

Household final consumption

Gross capital formation

Exports

 

Total use of products

Flows to the environment (residuals)

Collection and treatment of waste and other residuals

 

Accumulation of waste in controlled sites

 

Flows to environment (of which direct to the ocean)

Total use of residuals

Note: Dark grey cells are null by definition. In this case, ocean services flow from the environment. Natural inputs are used by the economic sector that extracts, harvests or captures them.


  • In practice, households supply many of their own services from Ocean Assets (e.g. subsistence fishing, collection of firewood). To maintain compatibility with the SEEA and the broader integrity of the accounts, natural inputs must first be supplied by an industry sector. Consequently, the cell marked with an asterisk (*) is null by definition, since for supply purposes, households are included in the industry supplying that natural input (fishing, energy).

  • Note that in Table 5, the row for supply of “Ocean Services” is greyed out other than for the column “Ocean Services (From environment)”. This cell could show an aggregate monetary amount or be detailed in terms of physical quantities for each service. The physical quantities would include all natural inputs including fish captured, minerals extracted, and other services supplied.

  • Physical quantities of natural inputs extracted, harvested or captured are generally not as well recorded as the monetary value of those inputs. However, in many countries, quantities of fish catch, aquaculture production, or timber harvesting are reported in administrative records or sample surveys. Income from these activities is more likely to be reported, since this is required to estimate the value of production in the SNA and to calculate taxes. Knowing the total value and price of a given commodity (e.g., dollars per kg of fish) allows the estimation of the physical quantities (e.g., kg of fish). This applies equally to minerals, timber, water, fish, crops and livestock.

  • Ocean economy satellite accounts record the economic performance of ocean-related industry sectors. Production statistics used to establish this performance would also include data on the quantity and value of natural inputs supplied. Reconciling the services perspective of the SEEA with the sectoral perspective of the ocean economy satellite accounts is an item for future research.

  • Although the SNA, in theory, captures small-scale industry and subsistence household supply of natural inputs, they are sometimes missed in economic surveys. Some countries have conducted special surveys to capture this detail. For example, UN Environment augmented Ethiopia’s SNA with a household survey to determine the importance of forest ecosystem services to rural households. This resulted in an increase of the estimated contribution of forests to GDP from 3.8% to 6.1%. Statistics Canada added questions to its biannual Households and the Environment survey to determine the quantities of residential fuelwood consumed. Although the objective was to estimate air emissions, it also provides a potential for calculating the market value of the wood. Fisheries and Oceans Canada conducts a Survey of Recreational Fishing in Canada, which captures the number of anglers, the quantities of fish caught and related expenditures. The U.S. Forest Service periodically conducts a national survey of outdoor recreation, which is the basis for the outdoor recreation satellite account. In the U.S., there are also national surveys of recreational fishing, which are used to add recreational fishing effort into fisheries management planning.

  • Efforts by the International Institute for Environment and Development (IIED) have led to a survey and toolkit which examines the subsistence and recreational supply of ocean- related natural inputs, relevant to small scale fisheries in national accounts. Other efforts include the Environmental Defense Fund’s work on community-level fisheries in Baja California, Mexico since 2015 to create satellite fishery accounts for remote fishing villages.

  • The SEEA-CF presents separate supply and use tables for each natural input, such as water, energy and individual materials. This allows for representing the full set of flows from environment (first supplier) to first user (economic units extracting, harvesting or capturing), transformation into products, consumption of those products and eventual release back to the environment as residuals. Regarding this as a multi-stage supply-use chain (supplier to user, user becomes supplier to new users) helps enforce the accounting principles that “supply equals use”. That is, the total supply of natural inputs equals the total use of natural inputs. This requires unique units of measure for each table, such as tonnes of fish, m3 of water. PJ of energy or dollars. For this reason, the SEEA-CF maintains separate tables for each natural input.

  • SEEA-EEA presents the supply and use of ecosystem services provided by each ecosystem type. Some provisioning services can be traced from supplier to user as “materials” as in the SEEA-CF but regulating and maintenance and cultural services are not obvious direct inputs to production processes. The Ocean Accounts Framework merges the two perspectives, but this would result in a very complex table.

  • For the Ocean Accounts, it would also be practical to keep separate tables for each ocean service. That is, separate tables for fish of different types, energy, water, materials, etc. as in the SEEA-CF (SEEA-CF Tables 3.5 and 3.6) as well as for each ecosystem service. The structure in Table 5 could then be used as a summary.

  • To link to asset information (extent and condition of different ecosystem types), spatial information on the location of the supply of these ocean services could be recorded in the underlying spatial database.

  • A separate table, then could also be constructed summarizing the supply of all ocean services (including abiotic), as in Table 6. For simplicity, this is shown without the implied transformation into products and eventual release to the environment as residuals. As with the generic supply and use in Table 5, services are initially supplied by the environment, but used by many economic units. Businesses, governments, households, and the “rest of the world” (exports). In an actual table, industries would be detailed by sectors relying most on ocean services. For example, the coastal and marine tourism industry may be dependent on water purification, coastal protection, habitat provision, amenity and recreation services.

  • Quantifying these dependencies, though further research, would contribute to the creation of “economic production functions”. That is, detailing the inputs required by an economic sector including ecosystem services in physical and monetary terms. This is further discussed in terms of valuation of ecosystem services in Monetary Flow.


Table 6. Flows to the economy: Supply and use of ocean services (physical or monetary) (during accounting period)

Physical or monetary units

Industries (and government)

Households

Accumulation

Rest of the World

Ocean Services (by Ecosystem Type or Spatial Unit)

Total

Mangrove

Coral

Open marine

 

Supply table

Provisioning services

 

(See Table 7 for details)

 

Regulation and maintenance services

 

Cultural services

 

Abiotic services

 

Use table

Provisioning services

 

 

 

 

 

 

Regulation and maintenance services

 

 

 

 

 

 

Cultural services

 

 

 

 

 

 

Abiotic services

 

 

 

 

 

 

Note: Dark grey cells are null by definition. In this case, the environment provides the services and economic sectors use them.



Table 7. Examples of ocean services by ecosystem type

Type of service (per year)

Ecosystem type

Mangrove

Coral

Seagrass

Open marine

Provisioning

Timber (tonnes)

Fish catch (tonnes)

Seagrass (tonnes)

Fish catch (tonnes)

Regulating

Carbon sequestration (T), Coastal protection (ha)

Carbon sequestration (T), Fish habitat (ha), Coastal protection (ha)

Carbon sequestration (T), Fish habitat (ha),

Coastal protection (ha)

Oxygen production (T)

Cultural

Tourism (visitors)

Tourism (visitors)

Scientific (researchers)

Existence (importance)

Abiotic

Seawater for cooling (m3)

Sand (tonnes)

 

Petroleum (mega litres)

The UK Joint Nature Conservation Committee (JNCC) and Centre for Environment, Fisheries and Aquaculture Science (Cefas) in their initial set of Natural Capital Accounts for UK Marine and Coastal Ecosystems (heretofore referred to as the UK pilot) found that 36% of the marine habitats were unknown. Of those that were known, they assessed the value of waste (Phosphorous, Nitrogen, BOD) mediation by Littoral sediments, Coastal saltmarsh, Shelf-sea, Deep-sea, Coastal dunes and Sandy shores based on cost avoided to provide the same treatment. They also assessed the value of coastal protection in terms of the cost of providing equivalent protection by constructing seawalls, and the value of carbon burial at the abatement cost of non-traded carbon. They further assessed the value of marine fish and shellfish, renewable energy (wind) and abiotic products (aggregates) using the resource rent approach. (Thornton et al., 2019)

2.4.5 Monetary flow (supply and use) accounts

  • Monetary flow accounts follow the same structure as the physical flow accounts. The SEEA-CF provides guidance on assessing the economic value of natural inputs. Ecosystem services, however, cover a broader range of benefits and require different methods, often unique to each service.

  • The benefits of ocean ecosystem services are not always well represented in economic terms. therefore, monetary flows are often best considered a “low estimate”. This is especially true for non-market ecosystem services. That is, the full value to society of the service is always higher than the monetary estimate.

  • There is an extensive literature on ecosystem services valuation. However, many methods are not compatible with established national accounting and other statistical principles. The SEEA Ecosystems revision process has suggested three levels of methods (undisputed/preferred, conditional, rejected) (Table 8) and three tiers of ecosystem services valuation methods depending on data availability and technical capacity (Table 9). See Assessing extend and condition of ocean assets for a short description of some of the main methods.

  • Whether the valuation methods suggested in the SEEA Ecosystems revision process, such as production functions, will satisfy the requirements for compiling monetary flow accounts for all ocean services is a matter for further research. This is also discussed in terms of consolidating the services approach of the SEEA with the activity approach used in ocean economy satellite accounting in Reconciling activity and service approaches.


Table 8. A, B and C methods for ecosystem services valuation

A method

Undisputed/preferred

production function; hedonics; simulated exchange value; environmental protection expenditure in combination with opportunity costs of land; Marginal Value Pricing; avoidance costs (least cost alternatives iff < WTP); quota/leases

B method

Conditional

resource rent; benefit transfer using meta-regression models

C method

Rejected

restoration costs; market prices (for crops); travel costs (in case only direct costs); stated preference (with CS); unit value transfer without adjustment

Note: iff < WTP means “if and only if avoidance cost is less than Willingness to Pay”



Table 9. Tiered approach to valuation of ecosystem services approaches

Category

Service

Tier 1 (data poor/low technical capacity)

Tier 2 (moderate data/technical capacity)

Tier 3 (data rich/high technical capacity)

Provisioning

Crops

Fraction of market price*

Leases/resource rent**

Production function

Timber

Stumpage value

Fish

Resource rent

Quota/permits

Water

(Recommended not to be seen as a provisioning service)*****

Regulating

Carbon sequestration

Social cost of carbon

Social cost of carbon

Emission trading schemes

Soil retention

Benefit transfer

Avoided costs (any)

Avoided costs (least cost alternatives iff < WTP)

Air filtration

Water purification

River flood regulation

Coastal flood regulation

Water flow regulation

Cultural

Tourism

Fraction of tourism revenue spatialized based on accommodation

Fraction of tourism revenue spatialized based on accommodation

Fraction of tourism revenue spatialized based on geotagged social media data

Nearby use (e.g., recreation)

Benefit transfer

Simulated exchange value*** / Protection expenditures + opportunity costs of land

Simulated exchange value (intersection of supply and demand curve)

Adjacent use (e.g., as reflected in property value)

Expert estimates of premium

Hedonic pricing (survey data – small sample)

Hedonic pricing (property sales data – large sample)****

Notes: * e.g., applying a single fixed percentage based on a research study across all estimates

** Resource Rent approach also covers some income less costs methods

***using the 50% median approach

**** Marginal Value Pricing potentially (few applications so far)

***** Water is not the result of ecosystem processes; therefore, water supply may better be seen as an abiotic service (editor’s note).


2.5 Flows to the environment accounts (residuals)

2.5.1 Defining and classifying flows to the environment

  • The SEEA-CF (para 2.92) defines residuals as “flows of solid, liquid and gaseous materials, and energy, that are discarded, discharged or emitted by establishments and households through processes of production, consumption or accumulation”. Although there is no international standard classification of such residuals, the SEEA-CF provides guidance on accounting for returns of wastewater (in water supply and use accounts), air emissions (including CO2 from fossil fuel consumption, water emissions and solid wastes (including plastics and hazardous wastes).

  • The Ocean Accounts Framework suggests estimating residual flows that flow to the ocean, whether from terrestrial, inland water, coastal or marine sources. Air emissions are diffuse and contribute generally to atmospheric conditions rather than to local ocean conditions. Other residuals accounts, namely water supply and use (for wastewater), water effluents and solid waste accounts can be estimated by drainage basin (See for example, Statistics Canada. 2016. Human Activity and the Environment: Freshwater in Canada) and provide an indication of the geographic and sectoral source of residuals flowing to the ocean.

  • Section 3.5 in the SEEA-CF details accounting for the supply and use of water. Water Supply and Use Accounts describe the flows of water, in physical units, from initial abstraction from the environment, supply to the economy, use by industries and households, reuse and eventual discharge to the environment. This includes the use of seawater, either after desalination for domestic consumption or saltwater used in industrial processes. By compiling Water Supply and Use Accounts at the drainage basin level, it is also possible to estimate flows of wastewater to the ocean. The quality of the wastewater may range from treated, and therefore potable, to untreated. Linking these to water emission accounts (see below) would help understand the potential impacts of wastewater on ocean water quality. This Guidance does not provide additional detail on producing Water Supply and Use Accounts.

  • Section 3.6.3 in the SEEA-CF details accounting for air emissions. The substances recorded in Air Emissions Accounts are: CO2, methane, N2O, NOx, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride, carbon monoxide, non-methane volatile organic compounds, sulphur dioxide, ammonia, heavy metals, persistent organic pollutants, and particulates, including PM10, PM2.5 and dust. Each of these substances have different effects on the climate and human and ecosystem health, including through dispersion into the ocean. This Guidance does not provide additional detail on producing Air Emissions Accounts for the ocean. However, it is suggested to allocate national air emissions to ocean economic activities to monitor policies such as zero carbon marine shipping.

  • Section 3.6.4 in the SEEA-CF details the supply (generation) and use (disposition) of water emissions. Water Emissions Accounts record substance released directly by industries and households, including substances released by the sewerage sector after treatment. Substances suggested to be included in Water Emissions Accounts (see below) are: BOD/COD, suspended solids, heavy metals, phosphorous and nitrogen. Some proportion of these substances will flow to the coastal and marine ecosystems.

  • Section 3.6.5 in the SEEA-CF details the supply (generation) and use (disposition) of solid wastes including hazardous wastes. Solid wastes are generated from many sources (including industries, households, landfills and imports), collected, recycled, reused, accumulated in controlled landfill, exported and discarded directly to the environment. Therefore, Solid Waste Accounts (see below) can be more complex than other residual flows. For example, at any stage of collection, treatment, transformation or transportation, losses to the environment can occur. Compiling Solid Waste Accounts at the drainage basin level and recording the location of landfills will support estimating the quantities of solid wastes that are deposited in the ocean.

  • There is no international classification of solid wastes. The SEEA-CF draws illustrative examples from the European Waste Classification for Statistics (EWC-Stat) (Eurostat, 2010). Solid wastes most often included in Solid Waste Accounts are: chemical and health-care waste, radioactive waste, metallic waste, non-metallic recyclables, discarded equipment and vehicles, animal and vegetal wastes, mixed residential and commercial wastes, mineral wastes and soil, combustion wastes and other wastes. Wastes of specific concern to the Ocean Accounts, such as plastics, can be disaggregated from this general classification.

2.5.2 Physical flow accounts (to the environment)

The UK pilot estimated the amounts of nitrogen, phosphorous and BOD discharged from wastewater treatment plants close to the coast. (Thornton et al., 2019)

The Vietnam ESCAP Ocean Accounts Pilot estimated the quantities of COD, BOD5, Total Nitrogen, Total Phosphorous, Nitrites and Nitrates, Ammonium, Phosphate, and Total Suspended Solids generated from coastal tourism based on per capita figures reported in the literature.

https://www.unescap.org/sites/default/files/1.3.A.5_Viet%20Nam_GOAP_12-15Nov2019.pdf

  • The general physical supply and use table shown in the SEEA-CF (adapted as Table 5, above) shows the logic of all physical flows from extraction, harvest or capture from the environment to transformation and use, and finally to accumulation and disposition in the environment. As with flows to the economy, the challenge in adapting flows to the environment for Ocean Accounts is to distinguish residuals that flow to the ocean.

  • Countries with existing accounts for water, air emissions, water emissions, or solid wastes can estimate these residuals by drainage basin. For example, an initial estimate of solid waste generation by drainage basin could attribute similar solid waste generation rates, composition and collection rates to all households and estimate drainage basin amounts on the number of households in each area. This is further elaborated in Assessing pollutants.

  • Table 10 shows the supply (generation) of water emissions consisting of direct emission and release to other economic units (e.g., the sewerage industry) by drainage basin, for land-based sources and by marine area (for marine-based sources). The use part of the tables shows the parallel “use” in terms of flows to the environment and collection by other economic units.


Table 10. Basic structure for Water Emissions Account by drainage basin and marine area

Physical supply (generation) table for gross releases of substances to water

Source area

Substance

Industry

Households

 

Flows from the environment

Total supply

Sewerage industry

Agriculture

Mining

Marine transport

Other

Total

Of which from ocean

Direct emissions

Drainage basin 1

BOD/COD

D

A

 

 

 

 

 

 

E

Suspended solids

 

 

 

 

 

 

 

 

 

etc.

 

 

 

 

 

 

 

 

 

Marine area 1

Bilge

 

 

 

 

 

 

 

 

 

Heavy metals

 

 

 

 

 

 

 

 

 

Etc…

 

 

 

 

 

 

 

 

 

etc.

 

 

 

 

 

 

 

 

 

 

Releases to other economic units

Drainage basin 1

BOD/COD

 

B

 

 

 

 

 

 

C

Suspended solids

 

 

 

 

 

 

 

 

 

etc.

 

 

 

 

 

 

 

 

 

Marine area 1

Bilge

 

 

 

 

 

 

 

 

 

Heavy metals

 

 

 

 

 

 

 

 

 

Etc…

 

 

 

 

 

 

 

 

 

etc.

 

 

 

 

 

 

 

 

 

 

Physical use table for gross releases of substances to water

Source area

Substance

Industry

Households

 

Flows to the environment

Total use

Sewerage industry

Agriculture

Mining

Marine transport

Other

Total

Of which to ocean

Direct emissions

Drainage basin 1

BOD/COD

 

 

 

 

 

 

E

EO

E

Suspended solids

 

 

 

 

 

 

 

 

 

etc.

 

 

 

 

 

 

 

 

 

Marine area 1

Bilge

 

 

 

 

 

 

 

 

 

Heavy metals

 

 

 

 

 

 

 

 

 

Etc…

 

 

 

 

 

 

 

 

 

etc.

 

 

 

 

 

 

 

 

 

 

Collection by other economic units

Drainage basin 1

BOD/COD

B

 

 

 

 

 

 

 

C

Suspended solids

 

 

 

 

 

 

 

 

 

etc.

 

 

 

 

 

 

 

 

 

Marine area 1

Bilge

 

 

 

 

 

 

 

 

 

Heavy metals

 

 

 

 

 

 

 

 

 

Etc…

 

 

 

 

 

 

 

 

 

etc.

 

 

 

 

 

 

 

 

 

 

 


Note: See Table 3.8 in the SEEA-CF. “Other” industries could include for example aquaculture and coastal tourism. “Releases to other economic units” are emissions to the sewerage industry. “Direct emissions” are releases to the environment including those released by the sewerage industry. For example, agriculture releases BOD quantities in Drainage basin 1 in the amounts of A directly to the environment and B to the sewerage industry. This is recorded as C in total supply of releases to other economic units. The sewerage industry removes all but D, which is added to A directly released by agriculture to E, which is the total direct emissions. E is also the total released to the environment and total use of direct emissions. EO is the proportion estimated to flow to the ocean.

  • Supply and use of solid wastes (Table 11) are more complex, since several industries not only generate solid wastes, but also use them as products in recycling, incineration and landfill. The table shows detail by location of generation and use of waste residuals and could be expanded to include many more substances. In the “use” part of the table, solid waste residuals disposed of in the environment are distinguished by those flowing directly to the ocean.


Table 11. Physical supply and use of solid waste residuals

Physical supply of solid waste residuals

 

Source area

Substance

Generation of solid waste

Rest of the world

Flows from the environment

Total supply

Landfill

Incineration

Recycling and reuse

Other treatment

Other industries

Households

Import of solid waste

Recovered residuals

Total

Of which used to generate energy

Generation of solid waste residuals

Drainage basin 1

Chemical and health care waste

 

 

 

 

 

 

 

 

 

 

Radioactive waste

 

 

 

 

 

 

 

 

 

 

Metallic waste

 

 

 

 

 

 

 

 

 

 

Mixed residential and commercial waste.

 

 

 

 

 

 

 

 

 

 

Drainage basin 2

Mineral waste and soil

 

 

 

 

 

 

 

 

 

 

Other waste

 

 

 

 

 

 

 

 

 

 

Marine area 1

Mineral waste and soil

 

 

 

 

 

 

 

 

 

 

Other waste

 

 

 

 

 

 

 

 

 

 

etc.

 

 

 

 

 

 

 

 

 

 

 

Generation of solid waste products

 

 

 

 

Chemical and health care waste

 

 

 

 

 

 

 

 

 

 

Radioactive waste

 

 

 

 

 

 

 

 

 

 

Metallic waste

 

 

 

 

 

 

 

 

 

 

Mixed residential and commercial waste.

 

 

 

 

 

 

 

 

 

 

Mineral waste and soil

 

 

 

 

 

 

 

 

 

 

Other waste

 

 

 

 

 

 

 

 

 

 

Note: Dark grey cells are null by definition. Solid waste products are solid wastes that are discarded but resold by other industries. The table could further distinguish quantities recovered from the ocean. Ideally, the table would also distinguish the generation and use of solid waste products spatially. This would allow tracing flows of reused/recycled materials between spatial areas and eventually to the ocean.

Table 11. Physical supply and use of solid waste residuals (continued)

Physical use of solid waste residuals

 

Source area

Substance

Intermediate consumption

Final consumption

Rest of the world

Flows to the environment

Total use

Landfill

Incineration

Recycling and reuse

Other treatment

Other industries

Households

Exports of solid waste

Total

Of which to Ocean

Total

Of which used to generate energy

Collection and disposal of solid waste residuals

Drainage basin 1

Chemical and health care waste

 

 

 

 

 

 

 

 

 

 

 

Radioactive waste

 

 

 

 

 

 

 

 

 

 

 

Metallic waste

 

 

 

 

 

 

 

 

 

 

 

Mixed residential and commercial waste.

 

 

 

 

 

 

 

 

 

 

 

Drainage basin 2

Mineral waste and soil

 

 

 

 

 

 

 

 

 

 

 

Other waste

 

 

 

 

 

 

 

 

 

 

 

Marine area 1

Mineral waste and soil

 

 

 

 

 

 

 

 

 

 

 

Other waste

 

 

 

 

 

 

 

 

 

 

 

etc.

 

 

 

 

 

 

 

 

 

 

 

 

Use of of solid waste products

 

Chemical and health care waste

 

 

 

 

 

 

 

 

 

 

 

Radioactive waste

 

 

 

 

 

 

 

 

 

 

 

Metallic waste

 

 

 

 

 

 

 

 

 

 

 

Mixed residential and commercial waste.

 

 

 

 

 

 

 

 

 

 

 

Mineral waste and soil

 

 

 

 

 

 

 

 

 

 

 

Other waste

 

 

 

 

 

 

 

 

 

 

 

Note: Solid wastes are collected, sent to landfill, incinerated, sent to treatment, used by other industries, exported or discarded to the environment. Solid waste products are used by recycling, other treatment, other industries or exported.


  • Table 12 below summarizes air emissions, water emissions, wastewater and solid wastes flowing to the ocean. Ideally, the table shows the sector and drainage basin of the source. It records the estimated flows from sources that could potentially enter the ocean environment. For example, in the case of greenhouse gas emissions — the estimated emissions absorbed / buffered by oceans. The table could be combined with accounts of flows to the environment as a whole, to provide an integrated presentation of flows entering the ocean versus other environmental sinks. The link between flows to the environment and condition is difficult to establish due to time lags and complex dispersion factors. However, tracking the quantities generated and where they are generated will help understand the source of residuals existing in the ocean.


Table 12. Supply of flows to the ocean (physical) (during accounting period)

By source area (e.g. drainage basin, country)

Industries

Households

Rest of the World

Total

Agriculture

Mining

Other

Air emissions (tonnes)

   CO2

   Methane

   […]

 

 

 

 

 

 

Water Emissions (tonnes)

   BOD/COD

   Suspended solids

   […]

 

 

 

 

 

 

Wastewater (m3)

 

 

 

 

 

 

Solid Wastes (tonnes)

   Plastics

   Animal and vegetal wastes

   […]

 

 

 

 

 

 

2.6 Ocean economy satellite accounts

  • Ocean economy satellite accounts record the economic performance of ocean-related industry sectors. The term “ocean economy satellite accounts” is intended to reflect an agreed approach that supersedes the many already in use. Since these existing approaches use different data sources, classifications and methods, they are difficult to compare. Furthermore, it is a challenge to provide a single source of guidance on how to compile them.

  • The OECD (2016) provides an overview of the many national efforts to compile similar accounts, including by Canada (“maritime sector”), Portugal (“sea satellite account”), and the US (“ocean economy satellite account”). Over two dozen countries and international organisations are at various stages in the creation of formal or informal versions of their national income accounts and related statistical systems to monitor the relationship of economic activity to the ocean.

  • The intent of all these approaches is to demonstrate the importance of the ocean to the national and regional economies, to track ocean sectoral policies and to better understand the cross impacts with non-ocean policies. For example, development policies to increase construction of inland infrastructure may lead to coastal flooding and dispersion of pollutants into coastal areas. This could risk lowering production in inshore fisheries. Conversely, clearing mangroves for aquaculture, while increasing aquaculture production, could decrease coastal protection and risk flooding or eroding coastal croplands and pastures.

  • Since ocean economy satellite accounts are not defined in existing statistical standards, this section provides a typical structure as a starting point.

  • Table 13 below provides a basic example structure and measures of a potential ocean economy satellite account. The rows are characteristic ocean economy sectors, the columns represent the measures used to assess their performance. Performance can be measured in terms of Gross Value Added (GVA), Gross Output (GO) and employment. All three can be stated in terms of direct, indirect (intermediate inputs) and induced impacts (final demand). Further guidance on these measures, data sources and compilation are provided in Assessing the ocean economy.

  • “Direct” impacts, as described in Scope boundaries of Ocean Accounts, are impacts (in terms of GVA, GO and employment) of “characteristic” activities that are most directly associated with the ocean. These can be occurring in the ocean (offshore oil and gas), be dependent on ocean products (oil refining) or be providing goods and services to activities on the ocean (manufacturing of components for oil rigs) (Figure 6).


Table 13. Example Ocean Economy Satellite Account (year)

Sector

GVA (currency units constant)

Employment (thousands)

Direct

Indirect

Induced

Total

Direct

Indirect

Induced

Total

Fishing/aquaculture

 

 

 

 

 

 

 

 

Offshore oil and gas

 

 

 

 

 

 

 

 

Minerals

 

 

 

 

 

 

 

 

Boat and ship building, maintenance and repair

 

 

 

 

 

 

 

 

Marine renewable energy and distribution

 

 

 

 

 

 

 

 

Marine construction

 

 

 

 

 

 

 

 

Marine transportation & support activities

 

 

 

 

 

 

 

 

Marine tourism & recreation

 

 

 

 

 

 

 

 

Marine services

 

 

 

 

 

 

 

 

Marine research and education

 

 

 

 

 

 

 

 

Government

 

 

 

 

 

 

 

 

ENGOs

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

  Growth from previous period (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Whole economy (value)

 

 

 

 

 

 

 

 

Whole economy (% in ocean economy)

 

 

 

 

 

 

 

 

  • “Indirect” refers to the inter-industry purchases (reflected in GVA, GO and employment) triggered by direct demand. For example, oil rig operators purchase food supplies from wholesale trade. Calculating the indirect impacts on wholesale trade requires the application of input-output analysis (I-O), which traces the transactions between sectors. Depending on the selection of “direct” industries, there may be double counting. For example, much of the output of the marine fishing sector goes to the fish processing sector. If these are both considered “direct”, then their impacts will need to be adjusted to remove the value transferred between them.

  • “Induced” impacts are the amounts (in terms of GVA, GO and employment) generated by employees (in direct and indirect activities) spending their wages and incomes. For example, an employee of a fish processing (direct) company purchases a car (induced). The implications of this spending on the GVA, GO and employment of the automobile industry can also be calculated using I-O.

  • Varying definitions for ocean satellite accounting exist nationally. In the United States of America Ocean Economy Satellite Account, “intermediate inputs” is a similar concept to “indirect”. However, “final demand” is broader than “induced” since it also includes induced spending by business and government, in addition to exports. An internationally applicable standard is an area of research for this framework.

  • Linking ocean economy satellite accounts more precisely to the overall SEEA concept of natural inputs and ecosystem services requires further conceptual development. Testing is required to reconcile the “activity” perspective of ocean economy satellite accounts with the “service” perspective of the flows of natural inputs and ecosystem services. This will be included in the future research agenda.

2.6.1 Defining and classifying the ocean economy

  • The SNA 2008 conceptually includes all marine and ocean-related economic production including subsistence, informal and illegal activities. The International Standard Industrial Classification of All Economic Activities (ISIC Rev. 4) includes categories for marine fishing (0311), marine aquaculture (0321), sea and coastal water transport (501), and other ocean-specific industries. The definition of ocean related activity is continually evolving and may differ considerably by nation region, or industry. For example, there are differences between ocean-related ISIC codes (Table 14) and those used by ocean-related industry at the national level (for example: Australian and New Zealand Standard Industrial Classification codes). The definition should be measurable using a variety of economic statistics, including output, employment, wages, number of establishments, etc. consistent with national statistical series.

  • Table 14 combines ISIC codes identified by Wang (2016) and those listed by Colgan (2018) as being specifically included in ISIC Rev. 4 or referenced in national and international ocean economy reports and plans.  Appendix 6.6 provides further examples and the derivation of Table 14.


Figure 6. Relationship between ocean and ocean economy. Source: Park and Kildow, 2014