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).

Open

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):

Open

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

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

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.

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

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)

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

• 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)

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)

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

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

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

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, NO_x, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride, carbon monoxide, non-methane volatile organic compounds, sulphur dioxide, ammonia, heavy metals, persistent organic pollutants, and particulates, including PM₁₀, PM_2.5 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 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

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

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)

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)

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)

• “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

Table 14. Ocean-related ISIC codes

Adapted from Wang (2016) and Colgan (2018). Full derivation and notes in Appendix 6.6.

• Many ocean-related sectors mentioned in national and international reports are not obvious and raise questions about how the relationship to the ocean is to be defined and measured, about the levels of aggregation in an ocean economy taxonomy, and about the relationships among industries in the ocean economy. Further research is required to develop an agreed definition and classification.

2.6.2 Reconciling activity and service approaches

• Table 15 shows a high-level summary of the broader ocean economy. It is a summary of the “products” line in Table 5 (General Supply and Use), that could be derived from compiling characteristic ocean commodities from existing monetary supply and use tables in the SNA.

• “Products and Services” supplied by industries could also be derived from the GVA of individual economic activities as described in the ocean economy satellite account. However, products and services are also imported, used in producing products, consumed by households and exported. The “use” section of this table shows the use in the economy including intermediate consumption (used to produce other goods and services), household final consumption (the energy we use and fish we eat), gross fixed capital formation (contribution to infrastructure and inventories) and exports.

• If data in Table 14 and Table 15 were complete and detailed, the totals would match. That is, the sum of the GVA of ocean commodities and the GVA of the sectors that produce them should be equal. However, data on both sectors and commodities are incomplete and one source may be used to inform the other. Further research is required to reconcile these two approaches.

Table 15. Ocean economy table: supply and use (monetary) (during accounting period)

2.7 Ocean governance accounts

2.7.1 Defining ocean governance for accounting purposes

• Ocean decision-making and decision implementation is shaped by, and embedded within, a complex web of relationships between individuals and institutions. The term “governance” is commonly used to refer to the many ways that individuals and institutions, public and private, manage their common affairs in this context. Governance of oceans is a process characterised by a wide variety of:

  • Actors / institutions: including governments, intergovernmental organisations (IGOs), private entities from commercial and non-profit sectors, and diverse communities within civil society.

  • Norms: including treaties, laws, regulations, policies, contractual agreements, technical standards.

  • Behavioural relationships: both actors and norms are influenced and shaped by relationships of authority, cooperation or influence at multiple levels. A particularly important behaviour for accounting purposes is the spending of money on ocean-related activities including but not limited to protection, management, and fiscal incentives.

  • Spatial boundaries: Different actors and norms operate at different spatial scales, including local, national, regional and international. A characteristic feature of oceans governance is the common misalignment of the spatial boundaries of governance at each of these scales, with the biophysical and spatial characteristics of the ocean environment. For example, many ecosystems and species straddle, migrate across, or are affected biophysically by activity located beyond jurisdictional boundaries (Milligan and O’Keeffe, 2019).

• These broad features of governance are an important subject of ocean accounting for several reasons, including the following:

  • Tracking how collective decisions are made about oceans is crucial to improving their effectiveness in the future.

  • Decision-making about oceans is commonly divided along sectoral lines (e.g. fisheries, transport, energy, telecommunications, tourism, environmental protection, etc.), reducing mutual awareness of ocean-related decision-making and relevant institutional responsibilities. One potential adverse consequence of low mutual awareness of decision-making is inter-sectoral spatial conflict arising from different authorities assigning competing rights to the same areas.

• Ocean governance accounts are an experimental component of the Ocean Accounts Framework that are currently being piloted and supported by targeted research. They incorporate specific elements of the SNA, SEEA–CF and SEEA–EEA but extend the scope of these frameworks to cover a wider range of phenomena.

2.7.2 Structure of governance accounts

• Ocean governance accounts can be structured into two broad categories of tables that record features and consequences of ocean-related decision-making from two complementary perspectives:

  • Spatially explicit situation: including the status for each relevant Spatial Unit of ocean zoning (jurisdictional and management zones), institutional responsibilities and rules for particular activities, social circumstances (e.g. health, poverty, social inclusion), and circumstances relevant to the integrated risk and resilience profile of relevant environments, societies, and economies.

  • Environmental Activity Accounts: focusing on recording economic activity (e.g. government spending, taxes, subsidies) that is directly associated with management of oceans, based on the concepts and approaches documented in the Environmental Activity Accounts in the SEEA–CF (see See SEEA–CF Chapter 4, 6.2.4, 6.2.5).

• Illustrative tables for each of these two categories are presented in Tables 16 and 17 below, which contain row entries for several proposed experimental components of ocean governance accounts. Table 16, recording the spatially explicit situation, can be integrated with other parts of the Ocean Accounts Framework that record economic or environmental conditions within specific Spatial Units. Some components of the Table will be more or less relevant depending on the spatial focus of the relevant account—for example indicators of certain social circumstances may not be relevant accounting subjects except for coastal Spatial Units.

Table 16. Governance table: spatially explicit situation (at end of accounting period)

Note: The spatial detail in this table is more feasible and essential for indicators related to zoning and institutions. Indicators of social circumstances and risk and resilience are still under discussion.

• Table 16 is designed to flexibly accommodate a wide range of qualitative and quantitative information sourced from other indicator and classification frameworks, including but not limited to:

  • The 2013 Framework for Development of Environment Statistics, in particular Component 6 focusing on environmental protection, management and engagement.

  • The IUCN Protected Area Categories, which classify protected areas according to their management objectives, and are used by many national governments as the global standard for defining and recording protected areas. The IUCN has also published supplemental guidelines for applying the Protected Area Categories to Marine Protected Areas.

  • Spatially disaggregated information aligned with the 38 indicators identified under the Sendai Framework for Disaster Risk Reduction, which are used as a basis for measuring progress towards the global targets recognized in the Sendai Framework.

  • Spatially disaggregated information aligned with the dimensions of poverty recognised in the UNDO Multidimensional Poverty Index.

  • Spatially disaggregated information aligned with the WHO Global Reference List of 100 Core Health Indicators.

  • The FAO Resilience Index Measurement and Analysis framework which quantitatively examines the ability of households to cope with shocks and stressors.

• Table 17, recording environmental economic activity per sector features a combined presentation of specific components of the SEEA that focus on protection and management expenditure, environmental goods and services, taxes and subsidies, etc. — for more information refer to SEEA–CF Section 4.3. Depending on availability of spatial detail, these could be compiled by spatial unit and incorporated into Table 16. This would show, for example, total environmental protection expenditures in a given spatial unit.

Table 17. Governance table: environmental economic activity per sector (at end of accounting period)

2.7.3 Specific experimental components of governance accounting

• Illustrative proposed methods and approaches for compiling these can be summarised as follows:

• Ocean zoning: Accounting for ocean zoning can be achieved by assigning consistent type classifications to Spatial Units. These provide a qualitative description of how the area within a given Spatial Unit can be distinguished from others in accordance with relevant laws, regulations and policies, for the purposes of government decision-making. Two general classification categories for ocean zoning are proposed, which are based on how ocean space is commonly classified by international agreements, and relevant national laws and policies:  

• Jurisdictional zone: international agreements, in particular the 1982 United Nations Convention on the Law of the Sea, recognise a series of maritime zones in which countries are attributed certain rights and obligations, either as the relevant “coastal state” (which claims the zone or is automatically entitled to it), “flag state” (in relation to its registered vessels) or “port state” (in relation to vessels located in port). These zones are classified in the 1982 Convention and related agreements as follows:

  • Internal waters: located landward of a “territorial sea baseline” designated by the coastal state and treated as equivalent to land territory being subject to the permanent sovereignty of that state. Ports are treated as internal waters.

  • Territorial sea: extending up to 12 nautical miles seaward from the designated baseline, subject to the sovereignty of the coastal state, with specific rights of “innocent passage” afforded to foreign vessels.

  • Archipelagic waters: located between islands of an archipelagic state (e.g. Indonesia, Jamaica, Fiji, Seychelles) enclosed by an “archipelagic baseline”, subject to the sovereignty of that state, with specific rights of passage afforded to foreign vessels.

  • Exclusive economic zone: extending up to 200 nautical miles seaward from baseline, in which the coastal state enjoys certain “sovereign rights” related broadly to the management of ocean resources (e.g. fisheries, energy). Subject to these rights, foreign vessels enjoy “freedom of navigation”.

  • Continental shelf: extending 200 miles seaward from baseline, or further in certain defined cases, in which the coastal state enjoys certain sovereign rights (e.g. related to oil and gas) and the flag state enjoys certain navigational freedoms (e.g. to lay cables and pipelines). The continental shelf and EEZ both cover the seabed and subsoil, with only the latter zone covering the water column and superjacent airspace.

  • High seas: located beyond national jurisdiction, in which countries enjoy broad non-exclusive rights (e.g. freedom of fishing) unless they agree otherwise.

  • Deep seabed: located beyond national jurisdiction, treated by the 1982 Convention and related agreements as being the “common heritage of mankind”, and subject to an international management framework (focused predominantly in practice on regulation of seabed mining).

• The suggested approach to account for these zones, which are illustrated in Figure 7 below, it to record the zone designation(s) present within each Spatial Unit, alongside a reference to the associated enabling law or policy, e.g.: “Continental Shelf: Continental Shelf Act 1972”.

• In addition to the jurisdictional zone classifications listed above, a Spatial Unit could be recorded as an Overlapping Claim Area where multiple countries assert maritime zones that have not yet been delimited by an agreed maritime boundary.

• Management or planning zone: supplementing the general jurisdictional zone designations listed above, coastal states also designate a wide variety of specialised zones under national laws and policies for the purposes of ocean management, regulation or planning. These include, but are by no means limited to: Fisheries zones, renewable energy zones, gas storage zones, protected areas, aggregate extraction zones, shipping lanes, etc. The suggested approach to account for these zones is to record the relevant classification(s) for each Spatial Unit, alongside a reference to the associated law or policy, e.g.: “Gas importation and storage zone: Energy Act 2008”.

Figure 7. Basic jurisdictional framework for ocean governance. Note: diagram excludes archipelagic waters.

• Rules and decision-making institutions: In most countries, management, regulation and planning of ocean space falls under the authority of multiple institutions, each of whom is responsible for applying specific laws, policies, regulations, and other formal or informal norms. These characteristics of ocean governance can be accounted for with succinct qualitative descriptors, similar to those suggested above for ocean zoning.

• In Table 16 these descriptors are assigned functionally — i.e. each table entry describes the institution(s) responsible for certain decision-making about a specific activity, alongside the norms considered relevant to that activity. For example, the following entries (Table 18) could be recorded for the relevant Spatial Units, providing a multi-functional summary of key governance conditions within each Unit.

• To maintain consistency within the accounts, clear entry and review protocols and illustrative sample language could be developed, including where appropriate general disclaimers that the account entries should not be relied on as definitive statements of the content of relevant laws, regulations or institutional mandates.

Table 18. Governance table: illustrative summaries of rules and decision-making institutions (at end of accounting period)

• Protection and management: The scope of these monetary flows is expenditures whose primary purpose is: (1) the prevention, reduction and elimination of pollution and other forms of degradation of the ocean environment; and (2) preserving and maintaining the stock of ocean assets and hence safeguarding against depletion. Accounting for protection and management expenditure in the Ocean Accounts Framework follows the same approach as the SEEA-CF Environmental Activity Accounts — refer to Table 4.4 of the SEEA–CF.

• Environmental goods and services: The scope of these monetary flows includes the production of a specified range of environmental goods and services, including environmental protection and resource management specific services, environmental sole-purpose products, and adapted goods. Accounting for environmental goods and services in the Ocean Accounts Framework follows the same approach as the SEEA–CF Environmental Activity Accounts — refer to Table 4.6 of the SEEA-CF

• Taxes and subsidies: Environmental taxes are those whose tax base is a physical unit (or a proxy of it) of something that has a proven, specific negative impact on the environment. Environmental subsidies and similar transfers are those intended to support activities that protect the environment or reduce the use and extraction of natural resources. Subsidies generally are current unrequited payments that government units, including non-resident government units, make to enterprises on the basis of the levels of their production activities or the quantities or values of the goods or services that they produce, sell or import.

• These fiscal flows are a relevant subject of ocean governance accounts because they can have a profound influence on decision-making concerning oceans—for example, the effort level of fishing activities. Accounting for taxes and subsidies in the ocean accounts framework follows the same approach as the SEEA–CF Sequence of Economic Accounts — refer to Table 6.3 of the SEEA–CF output and uptake metrics.

• Social circumstances: There is broad recognition that there are strong links between poverty and the environment, often referred to as the poverty-environment-nexus (PEN). These links are prevalent in many marine and coastal contexts given the exposure of coastal communities around the world to natural hazards and disasters, and to food and livelihood insecurity linked to the widespread decline of marine ecosystems.

• The Poverty Environment Accounting Framework (PEAF) provides a basis for organising health, poverty and social inclusion statistics into tables that are interoperable with other components of Ocean Accounts. PEAF is an application of the accounting principles described in SEEA that can be used to underpin a range of PEN indicators falling within the scope of the Combined Presentation Table Group.

• This experimental component of the ocean accounts framework will be prototyped using a social accounting matrix approach in alignment with Chapter 28 of the SNA 2008 with the focus on ecosystem assets and condition, services, benefits, and beneficiaries and their linkages to key socioeconomic statistics such as income, employment, health disaggregated by ocean-related target populations.

Risk and resilience

• Resilience is commonly defined as the ability of households, communities and nations to absorb and recover from shocks, whilst positively adapting and transforming their structures and means for living in the face of long-term stresses, change and uncertainty. A related concept of “ecological resilience” is commonly defined as the amount of disturbance that an ecosystem could withstand without changing self-organized processes and structures, defined as alternative stable states. A broader concept of “socio-ecological resilience” is commonly defined as the capacity to adapt or transform in the face of change in social-ecological systems, particularly unexpected change, in ways that continue to support human well-being. Regular time series of spatially explicit indicators of these phenomena can provide useful guidance to decision-makers tasked with weighing and responding to risks.

• Technologies: Investments in ocean research and technologies has led to rapid development over the past decades. Some examples include the use of advanced technologies in the fisheries and aquaculture sector, research and development on marine technology and biotechnology, as well as enhancement of early warning systems for resilience building in coastal cities. Accounting for investment in ocean-related research and technology development activities follows the general approach to functional accounts discussed in the SEEA-CF.

2.8 Combined presentation (summary tables)

• The objective of the combined presentation is to summarize, aggregate and combine the main information— physical, monetary and/or qualitative data —derived from component tables and accounts within the ocean accounts framework as well as from other accounts regarding the annual production and expenditures on ocean-related activities (see SEEA-CF, p. 253, Section 6.4).

• Including ecosystem-related information in combined presentations is a relatively new idea, so this section is intended to fuel discussion, such as the use of different 3D levels, rather than present standard approaches.

2.8.1 Defining the combined presentation

• The combined presentation organizes and records key ocean-related aggregates and indicators that illustrate interactions (i.e., benefits and costs) between the ocean and the economy into a single information “dashboard” or “report card” for decision making. The scope and structure of the combined presentations is subject to policy questions, analytical interest and data availability which may be varied depending on different local contexts. Knowledge and experiences from national pilot testing and experimentation of the ocean accounts framework could be used to derive and provide examples of report cards and their use cases in support of national ocean policies and strategies. The continued development of combined presentation is a key area of future work of this technical guidance.

• Generally, the information to be included in the benefits and costs accounts is a summary of the annual monetary and physical supply and use of ocean products and ocean non-market services, the gross value added (GVA or contribution to GDP less taxes plus subsidies on products) of the market benefits, employment in ocean-related industries, expenditures to manage the ocean, and related taxes and subsidies.

• The accounts could be detailed by relevant industries, ecosystem types, ocean products (including ecosystem services), and beneficiary types (e.g., low/high income, small-scale/large-scale fishers, coastal/inland households).

2.8.2 Components of the combined presentation

• In the SEEA-CF, combined presentations are suggested for physical and monetary flows for energy, water, forest products, and air emissions. All four tables follow the same structure of:

  • Relevant economic units – i.e. industries, households, government, accumulation, flows with the rest of the world

  • Monetary supply and use flows (including supply of products, intermediate consumption and final use, gross value added, depletion-adjusted value added, environmental taxes and subsidies and similar transfers)

  • Physical supply and use flows including Supply of natural inputs, products of residuals; Use of natural inputs, products and residuals

  • Asset stocks and flows (including opening and closing stocks in physical and monetary terms, depletion in monetary terms, and gross fixed capital formation (investment)

  • Related socio-demographic data such as employment and population

• The SEEA-CF combined presentation tables then focus on details particular to the topic, such as types of energy products, forest products or air emissions.

• The Ocean Accounts Framework provides a basis for recording many of these accounts in a spatially detailed manner, and possibly in three dimensions. This will benefit the understanding of where the assets are, from where they flow into the economy, and where their conditions are good or poor. See Table 19 for an initial summary of the types of information that could be included.

2.8.3 Ocean GVA and GDP

• The SEEA-CF (p242, Section 6.2.4) follows the SNA approach to establishing the sequence of economic accounts. This section provides guidance on including environmentally related transactions and flows in the production account, generation of income account, allocation of primary income account, distribution of secondary income account, use of disposable income account, and the capital account. Depletion adjustment can be done for each of these accounts.

• SEEA Ecosystems Technical Recommendations provides an overview of a simplified sequence of accounts (SEEA-CF, Table 8.2, p. 135). This offers two models to treat the concept of ecosystem services and related gross value added and degradation adjusted net saving. In one model, ecosystems are treated as distinct producing unite. The recommended approach, however, is to allocate the degradation of ecosystem assets to the institutional sector that owns it.

• Given the calculation of gross value added in the ocean economy satellite account, the contribution of the ocean to GDP is the GVA for all institutional sectors plus taxes less subsidies on products.

2.8.4 Depletion, degradation, adjusted net savings

• In the SEEA-CF, degradation and depletion are treated much as depreciation of fixed assets in the SNA:

  • Degradation considers changes in the capacity of environmental assets to deliver a broad range of ecosystem services and the extent to which this capacity may be reduced through the action of economic units, including households. (SEEA-CF para. 5.90)

  • Depletion, in physical terms, is the decrease in the quantity of the stock of a natural resource over an accounting period that is due to the extraction of the natural resource by economic units occurring at a level greater than that of regeneration. (SEEA-CF para.5.76)

• The discussions on the SEEA EEA Revision (Discussion Paper 5.4) adapt this as a basis for conceptualizing ecosystem degradation. To facilitate this, physical changes in ecosystem condition are separated from the decrease in expected ecosystem services flows:

  • Ecosystem deterioration is the reduction in ecosystem condition due to human activity;

  • Ecosystem degradation is the decrease in ecosystem services flows due to ecosystem deterioration; and

  • Ecosystem enhancement is the increase in ecosystem services flows due to the increase in ecosystem condition due to human activity (e.g., restoration).

• Discussion Paper 5.4 also points out some additional considerations:

  • The multiple services arising from changes in one ecosystem asset may be complementary or competing. Therefore, a change in condition may result in decreases some services and increases in others.

  • Multiple services may have different beneficiaries, affecting different economic units in different ways.

  • Changes in condition maybe due to the actions of multiple economic units (such as climate change). This could be reflected in the condition accounts as “unmanaged regression”.

• Given the possible combinations of changes in ecosystem assets, Table 18A indicates how these are to be allocated in a monetary asset table:

Table 18A. Recording changes in ecosystem assets in monetary ecosystem asset table (adapted from Table 2 in DP5.4)

• Decomposing changes in aggregate service flows into changes in volume (i.e., area of the asset) and changes in flows of individual ecosystem services (whether increasing or decreasing) given multiple conditions can be done between two periods of time (see Discussion Paper 5.4).

• The component of changes in aggregate service flows due to changes in ecosystem condition can be used in the calculation of degradation adjusted net savings as illustrated in the SEEA EEA Technical Recommendations (Table 8.2).

2.8.5 Non-SNA contributions to well-being

• As noted in Flows to the economy, non-SNA benefits of the ocean need to be accounted for but cannot be comprehensively represented in monetary terms. For this reason, it is recommended that that measurement of non-SNA benefits focus on physical measures. A combined presentation for the ocean could include physical flows of regulating and maintenance services (e.g., tonnes of carbon sequestration, hectares of habitat, metres of coastal protection) together with summaries of cultural services and monetary values.

• Some of these services can be attributed monetary values, for example, it they are directly used with no required labour and capital or have an input to economic production. The cases of direct use are rather limited to gathering of wild products. These can be valued at the market equivalent value. In cases where ecosystem services contribute to economic production, such as captured fish, then the value attributed is the contribution of the fish to the market value. That is, the market value of the fish minus the cost of catching the fish.

• Some non-market services have been attributed social or global prices, such as the social cost of carbon. This, however, is not well-accepted for other non-market services. For example, marine plants produce oxygen, which has a market price. Since oxygen is not a limited resource, it would be misleading to put a monetary value on the oxygen produced.

• Yet other non-market services, such as habitats for iconic species and ecosystems that have sacred or religious meaning, should not be valued in monetary terms because of the implication of substitution. If a price, no matter how high, is attributed to these critical natural capitals (See Environmental assets), then we are assuming that, for a price, they can be converted to other uses. They could be represented in physical asset tables as critical natural capital in hectares or species, but not valued in monetary terms.

• Therefore, it is recommended that the combined presentation for Ocean Accounts distinguish between these four types of services: direct use, resource rent, physical quantities of regulating and maintenance services, and critical natural capital incorporating social values.

2.8.6 Health, poverty and social inclusion

• Opportunities for disaggregation to better understand the links between the ocean and social concerns require the disaggregation of beneficiaries of ocean-related services and populations at risk of ocean-related disasters. The System of National Accounts suggests a Social Accounting Matrix approach to link sub-populations (e.g., women, low-income, self-employed…) of concern with economic sectors. Ocean accounting can extend sub-populations of concern to include coastal communities, small-scale fishers seaweed farmers, mangrove harvesters, and local villagers.

• One aspect of being a beneficiary is employment in the industry. For example, the fisheries industry could (a) be aggregated by large and small-scale operations and (b) within those track employment of men/women, low-income/high-income, island/coastal/inland communities. Small scale operations and subsistence activities are often excluded in economic surveys used to compile national accounts.

• The other aspect of being a beneficiary is benefitting from non-market ecosystem services such as coastal protection and flood protection. These services could as well be disaggregated by sub-populations of concern. This could be represented in the services use account and summarized in the combined presentation as the quantity of those services used by these sub-populations relative to the size of the sub-populations. For example, at-risk poor coastal communities could represent 20% of the population yet receive only 10% of the coastal protection of mangroves due to their less favourable living conditions.

• Links between ocean services and health could be made in terms of nutrition received from the ocean and recreational benefits. The Millennium Ecosystem Assessment (MA 2005) called for “social analysis” of the distribution of the benefits of ecosystem services (Daw, 2011). Such social analysis also includes broader inclusion of socio-ecological considerations such as co-production, power relations, institutions and governance, uncertainty and value pluralism (Solé & Ariza, 2019). In their literature review, Solé & Ariza (2019) conclude that “coastal ES studies fall short of considering the social components and social-ecological interactions of coastal systems”. Therefore, establishing a comprehensive list of beneficiaries of ocean services, the services from which they benefit, and the extent of those benefits will continue to be a challenge. While there is literature on disaggregated beneficiaries of ocean services (Lange & Jiddawi, 2009, Hicks & Cinner, 2014, Hossein et al. 2017, ESPA n.d.), this will require targeted literature search and codification. Fisheries and Oceans Canada (2020) has initiated such a project and expects results by the end of 2020.

Table 19. Combined presentation (physical and monetary) (during accounting period)

At the current stage of development, Table 19 is experimental and will require further research to develop approaches to allocating several of these indicators to specific industries.

2.9 Ocean wealth accounts

• This component of the Ocean Accounts Framework is dedicated to presenting summary information, in physical and monetary terms, concerning the status of a country’s (or other region’s) stock of ocean wealth. Wealth for the present purposes is broadly defined, to include all relevant:

  • stocks of environmental assets recorded on a SEEA balance sheet;

  • Economic/financial/produced assets recorded on an SNA balance sheet;

  • Societal assets (e.g. human or social capital) that are not yet recorded in internationally standardised formats within national accounting systems.

  • Status indicators for policy-relevant subsets of environmental wealth, including natural capital deemed “critical” according to nationally defined criteria, and discrete environmental assets that are amenable to measurement in terms of their resource life.

• Tables 20 and 21  below provide illustrative examples of summary presentations of national ocean wealth that can be derived from more detailed balance sheets within the Ocean Accounts Framework. Illustrative Tables and approaches to account for societal assets are under development and will be incorporated into future versions of this Guidance, informed by the OECD Human Capital indicators and generally related work.

2.9.1 Economic assets

• Table 20 focuses on economic wealth, recording the status of relevant SNA assets in monetary terms at the end of an accounting period. The table is experimental in that future research would be required to allocate wealth of corporations, households and governments to the ocean.

2.9.2 Environmental assets

• Table 21 focuses on environmental assets, recording the status of relevant SEEA assets in physical or monetary terms at the end of an accounting period. Additional columns could be added for stocks of ocean assets that are considered of particular importance — for example Ocean Assets designated as critical because of their irreplaceability, cultural importance, or other criteria (see below).

2.9.3 Critical natural capital

• Critical natural capital (CNC) refers to ecosystems, other environmental assets, species and processes that are ecologically, socially, or economically essential (Brand 2009; Rounsevell et al., 2010). Some definitions also include a criterion that the natural capital is “critical” because it is threatened (de Groot et al. 2003). CNC is not treated in the SEEA, although it is recognized that valuing natural assets in monetary terms is not a comprehensive assessment of their importance.

• A more precise definition would require assumptions about “critical to whom?”, “over what time frame?”, and “critical for what?”. However, societies are well experienced in identifying some critical elements of nature that are so important to them that they set them aside from being substituted for other forms of capital. For example, most countries identify national parks and protect species. Many also consider some areas as “sacred” or of other cultural significance. In doing so, they are agreeing that this area or this species will not be sold or traded for any price.

• One possible representation in the Ocean Assets Environment Balance Sheet (Table 21) would be to include marine protected areas and cultural sites in terms of area, but not in monetary terms. Further, the number of protected coastal and marine species could be included. The table could be extended to show other areas or species of significance, as indicated in national policies, plans and strategies. This recognizes that all areas of ecological, economic, and cultural significance may not be formally designated as protected areas.

2.9.4 Resource life

• “Resource life” is the number of years any asset can be expected to provide a service. In national accounting, this is based on a rate of depreciation of capital assets. The resource life of natural assets is dependent on rates of depletion and degradation (see Depletion, degradation, adjusted net savings). This is a useful, if inexact, indicator that could be included in the Ocean Assets Environment Balance Sheet (Table 21).

• If a renewable asset is used sustainably, then its resource life could be infinite. However, the life of non-renewable assets is determined by the pattern of future exploitation. Fossil fuels, for example, are not renewed over the time scale of ocean accounting. Renewable assets, such as fish and seaweed, grow back after being harvested. However, this growth may be less than the amount harvested.

• To calculate the resource life of any asset, it is necessary to know the total stock of that asset, the rate of natural additions and removals if any, and the rate of managed additions and removals. This is described in Environmental asset accounts.

• The additional pieces of information required to calculate the resource life are the expected additions and removals into the future. The simplest approach would be to take the current net removals and divide by the current quantity if asset. For example, if an area of 500 ha of coral reef is being reduced (exploitation and degradation minus regrowth and restoration) by 20 ha per year, one could estimate a resource life of 25 years.

• A less imprecise approach would be to establish an expected future scenario based on assumptions of patterns of exploitation and regrowth. For example, a national plan assuming an infinite life of fish stocks may not have taken into account that the future regrowth of fish stocks may be limited by pressures from exploitation and degradation.

2.9.5 Societal assets

• Societal assets (e.g. human or social capital) are not yet recorded in internationally standardised formats within national accounting systems. The OECD defines human capital as the “knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being”. Societal assets, including human capital, are therefore interlinked with factors of economic growth and sustainability.

• The OECD provides guidance on methods to measure human capital, providing a distinction between indicator-based and monetary-based approaches. Indicators include a range of proxies such as adult literacy rates, school enrolment ratios, and average years of schooling. Monetary estimates involve direct, indirect, and residual approaches, related to official statistics produced from national accounts. The guidance advocates for the use of a range of indicators, noting the difficulty in aggregating statistics into an overall measure.

• The World Bank has produced a human capital index, which quantifies “the contribution of health and education to the productivity of the next generation of workers”, linking indicators of health and education to the productivity of individuals and countries. Integrating measures of ocean-related societal assets is an area of development for this framework.

Table 20. National wealth table: Ocean Economy balance sheet (monetary)

Table 21. National wealth table: Ocean Asset environment balance sheet (physical or monetary units) (at end of accounting period)