Testing ecosystem accounting in the United States: A case study for the Southeast

Highlights

• Ecosystem accounting illustrates social and economic dependence on ecosystems.

• We develop pilot ecosystem accounts for U.S. Southeast in selected years, 2001–2015.

• Using NESCS can help separate useful metrics for condition, supply and use accounts.

• Condition account includes pollinator habitat and water purification metrics.

• Supply and use account shows increase in birding days, decline in air pollutants.

Abstract

Ecosystem accounts, as formalized by the System of Environmental-Economic Accounting Experimental Ecosystem Accounts (SEEA EEA), have been compiled in a number of countries, yet there have been few attempts to develop them for the U.S. We explore the potential for U.S. ecosystem accounting by compiling ecosystem extent, condition, and ecosystem services supply and use accounts for a 10-state region in the Southeast. The pilot accounts address air quality, water quality, biodiversity, carbon storage, recreation, and pollination for selected years from 2001 to 2015. Results illustrate how information from ecosystem accounts can contribute to policy and decision making. Using an example from Atlanta, we also show how ecosystem accounts can be considered alongside other SEEA accounts to give a more complete picture of a local area’s environmental-economic trends. The process by which we determined where to place metrics within the accounting framework, which was strongly informed by the National Ecosystem Services Classification System (NESCS), can provide guidance for future ecosystem accounts in the U.S. and other countries. Finally, we identify knowledge gaps that limit the inclusion of certain ecosystem services in the accounts and suggest future research that can close these gaps and improve future U.S. ecosystem accounts.

Introduction

Natural capital accounting is a method of assessing the contributions of ecosystems to the economy consistent with the System of National Accounts, which governments use to measure economic activity (Guerry et al., 2015, WAVES., 2012). Examples include the contributions of recreation (BEA, 2018), land (Wentland et al., this issue), or water (Bagstad et al., this issue) to the U.S. economy and accounts developed for ecosystem services in other nations (see Heris et al., this issue, examples for Europe in this issue and Section 1.1). The information contained in natural capital accounts highlights the connections between ecosystems and economic systems, and can give governments, businesses, and other resource managers a better understanding of (1) economies’ reliance on ecosystems and (2) the effects of economic and policy choices on ecosystems. The accounts track changes in ecosystems that have implications for various industries and user groups, and can support natural resource and ecosystem management to sustain economic benefits into the future.

Ecosystems yield complex flows of value that older iterations of national and corporate accounts have hidden or ignored, such as the protection of lives and property from flooding, crop pest control by wildlife, and recreational value associated with wildlife and landscapes (Boyd et al., 2018). Certain ecosystem assets (represented as stocks in ecosystem accounts), ecosystem service flows from those assets, and wealth are hidden or omitted by previous accounting practices, preventing informed decision making (Hein et al., 2015, Hein et al., 2016). Ecosystem accounting is a practical attempt to build data and accounting structures to fill many of these gaps, thereby improving asset and income management.

Since the early 1990s, the United Nations and partner organizations have developed a standard framework for natural capital accounting called the System of Environmental-Economic Accounting, or SEEA. The core of SEEA is the Central Framework, which quantifies environmental goods and their contributions to the economy, including land, water, minerals, and a number of other resources such as timber and fish (U.N. et al., 2014a). Accounts for several components of the SEEA Central Framework (SEEA CF) have been developed recently for the U.S. (Bagstad et al., this issue, Wentland et al., this issue). Complementing the Central Framework, the SEEA Experimental Ecosystem Accounts (SEEA EEA) track the extent and condition of ecosystem assets (e.g., stocks of forests, wetlands, cropland) and the flows of various ecosystem services they provide to people and to the economy (U.N. et al., 2014b).¹

For the SEEA Central Framework accounts, there is general agreement about what should be measured. However, as reflected in the SEEA EEA’s still-experimental status, defining what should be included in ecosystem accounts is more problematic. Difficulties of theory, definition, and scale arise when attempting to link environmental data, models, and economic measures (U.N., 2017). While some other countries have developed ecosystem accounts for key resources, we know of only two other examples for the U.S.: ecosystem extent, condition, and supply and use tables for Long Island’s South Shore Bays (Dvarskas, 2019) and national-scale urban ecosystem accounts (Heris et al., this issue). This paper demonstrates how ecosystem accounts can be developed for the U.S. at a regional scale in alignment with the SEEA EEA framework and the latest U.S. Environmental Protection Agency efforts to classify final ecosystem services in a consistent, systematic, and intentional manner (National Ecosystem Services Classification System, NESCS, U.S. EPA, 2015).

Ecosystem accounts following the SEEA EEA framework have been compiled at both national and subnational scales to track environmental-economic trends in a number of developing and industrialized countries. Examples include Canada (Statistics Canada, 2013), Australia (Australian Bureau of Statistics, 2017, Eigenraam et al., 2013, Eigenraam et al., 2016, Keith et al., 2017), the Netherlands (Remme et al., 2018), and Peru (Conservation International, 2016a, Conservation International, 2016b). The World Bank’s Wealth Accounting and Valuation of Ecosystem Services (WAVES) program has also published ecosystem accounts for the Philippines (Losada et al., 2017, WAVES, 2016a, WAVES, 2016b, WAVES., 2017). Substantial efforts are underway to construct ecosystem accounts for member nations of the European Union through the European Commission (European Commission, n.d. and European papers, this issue). In addition, the U.N. Statistics Division is leading work in Brazil, China, India, Mexico, and South Africa (System of Environmental Economic Accounting, n.d.). The United Kingdom began work on natural capital accounts in 2011 and has developed accounts for many ecosystems and sectors, including valuation of some ecosystem services (Bright et al., 2019).

Ecosystem accounts enable natural resource trends and tradeoffs to be identified more clearly by aggregating and presenting data consistently. Since they track ecosystem service trends retrospectively, ecosystem accounts can highlight otherwise hidden environmental degradation, natural resource depletion, or unsustainable use patterns. Their retrospective trends also provide a baseline for considering alternative future policy actions and understanding their impacts on specific economic units (i.e., households, individual industries or groups of industries, or government). Despite this potential, political and institutional obstacles hinder the use of information from natural capital accounts more broadly in policymaking (Ruijs et al., 2019), as do technical obstacles in terms of the data and expertise required to compile accounts and evolving best practices for the SEEA EEA (UN et al., 2014b, United Nations, 2017, United Nations, 2018). While natural capital accounts are typically seen as credible and trustworthy, it often takes time and experience to gain this political acceptance, which is aided by its understanding and support from high-level government agencies. Natural capital accounts also gain from cooperation, data sharing, and trust among agencies housing the data and with expertise to produce them, which often comes from interagency working groups similar to the U.S. group preparing this and other accounts (Boyd et al., 2018, Ruijs et al., 2019). A 2014 international survey of the use of natural capital accounting for policymaking found a few examples, including setting policy targets for acid rain and eutrophication in the Netherlands (Virto et al., 2018). Forest accounts compiled for Guatemala drew attention to the extent of forest loss, due in large part to unregulated extraction of timber and other forest products, and found that the total contribution of Guatemala’s forests to its economy is much higher than recorded in the standard national accounts (Food and Agriculture Organization of the United Nations, 2017, WAVES., 2014). Guatemala’s forest accounts spurred policy initiatives providing incentives for forest protection and restoration targeted toward conservation, stabilization of the fuelwood and timber supply, and job creation. They were also used in Guatemala’s 2014 national development plan (Nacional, 2014, WAVES., 2014), which aims at more data-driven decision making (Castaneda et al., 2017).

Regular monitoring of ecosystem services is already having impacts on local and regional policy in the U.S., although it is not always referred to as ecosystem accounting. For example, urban foresters and the mayor’s office for Tampa, Florida, have been inventorying their urban forest with data stretching back to 1975, using methods similar to ours for air pollution removal (Campbell and Landry, 1999). This has demonstrated the value of the city’s natural capital to politicians and the public. The inventory of ecosystem services provided by urban forests was repeated in 2006 (Andreu et al., 2008), leading to adoption of the City of Tampa tree ordinance (Ord. No. 2006-74, § 9, 3-23-06), which requires a re-inventory of Tampa’s urban forest every five years. The monitoring program aims to develop a science-based, publicly supported, fiscally responsible Urban Forest Management Plan based on shared vision and goals (Mayor's Steering Committee on Urban Forest Sustainability, 2009). The first 5-year re-inventory was completed in 2011 (Landry et al., 2013) and was followed by enactment of an Urban Forest Management Plan (Northrop et al., 2013) setting policy and criteria for monitoring the success of management alternatives. Those criteria were applied in the 2016 report (Landry et al., 2018) and will continue to be tracked in 2021 and subsequent years. While not organized using the SEEA EEA structure, their tables similarly categorize the condition of the urban forest and ecosystem services provided to residents of Tampa and surrounding areas, using physical and monetary measures. The regular repetition and growing policy relevance of this program show how ecosystem accounts can similarly be both practical to implement and influential to decision makers. While Tampa’s example is an impressive one of a bottom-up effort, it is limited to one large city in the U.S. Southeast. Pairing large-scale (national or subnational) ecosystem accounts with citizens and decision makers could provide data for improved decision making in locations lacking a history of urban forest accounting like Tampa’s.

The SEEA EEA was originally released in 2014, with supplemental technical recommendations published in 2017, and additional revisions currently underway (Fig. 1; UN et al., 2014b, United Nations, 2017, United Nations, 2018). The SEEA EEA framework links physical and monetary accounts, which, in principle, allow ecosystem accounts to be integrated with System of National Accounts and SEEA Central Framework accounts. The functional relationships roughly follow a stocks-and-flows design, where natural capital includes stocks and ecosystem services are flows.

Five primary ecosystem accounts are delineated in the SEEA EEA framework. The first is an area-based account of ecosystem extent (Fig. 1, box 1). As productivity within any area is contingent on the integrity of ecological characteristics and processes, the second account is an ecosystem condition account (box 2). Combining information from the extent and condition accounts informs the physical ecosystem services supply and use accounts (box 3). These first three accounts quantify biophysical characteristics and matter, energy, or information flows, while the fourth and fifth accounts focus on monetary value. With appropriate valuation methods, physical ecosystem services supply and use data can be used to generate monetary accounts estimating the value of each ecosystem service flow for the accounting period (typically annually; box 4). Finally, a monetary ecosystem asset account (box 5) can be created by estimating the net present value of all accounted services provided by each ecosystem. The monetary ecosystem asset account also relies on information from the extent account and corrections related to each ecosystem’s capacity, which addresses its ability to provide services in the future, addressing ecosystem conversion, recovery, degradation, or enhancement (Hein et al., 2016).

Ecosystem account developers and users have recognized that it is useful to track a number of crosscutting elements in thematic accounts that complement the core set of ecosystem accounts. Thematic accounts have been proposed for four elements: land and water accounts (from the SEEA Central Framework), plus biodiversity and carbon accounts that have particular relevance for climate and conservation policy (U.N., 2017). Some of these accounts, like biodiversity, may underpin other ecosystem services but are not used directly by households, industries, or governments as final ecosystem services (see Section 2.5).

This paper sets the stage for ecosystem accounting in the U.S. by evaluating the SEEA EEA account structure and core terminology in the context of U.S. data availability and NESCS. The recent SEEA EEA Technical Recommendations note that “it will be necessary to consider the different merits and roles that might be played by the different classifications,” (U.N., 2017, ¶ 5.68), which we contribute to by crosswalking SEEA EEA and NESCS in a subnational ecosystem account to develop more theoretically robust accounts. NESCS (U.S. EPA, 2015) identifies and classifies final ecosystem services according to the environmental ‘supplier’ and human ‘user’ of the service, enabling the more consistent identification of where certain metrics best fit within the ecosystem accounting structure—particularly in ecosystem condition versus supply and use tables.

We assess the suitability of U.S. data and models for ecosystem accounting, and develop general strategies and specific approaches for populating the accounts using selected data and models. We chose metrics for the pilot accounts for a 10-state region of the Southeast U.S. to populate different parts of the SEEA EEA framework representing diverse interest areas (water purification, air quality regulation, biodiversity, carbon storage, recreation, and agriculture). Our assessment is a scoping and exploratory effort, and is not meant to be comprehensive. Finally, we explore spatiotemporal trends that can be gleaned from our pilot ecosystem accounts to understand their potential use in decision making. Our ecosystem accounting metrics record a first set of values that, like all environmental-economic accounts, should eventually become a recorded time series. These metrics could also be expanded geographically to a national scale (Heris et al., this issue).

We did not attempt to estimate monetary value of either ecosystem service flows (account 4) or ecosystem assets (account 5) because we lacked the necessary data to develop comprehensive monetary accounts for the selected services. U.S. land accounts provide an initial compilation of land cover and use that future work could further adapt into ecosystem extent accounts (account 1; Wentland et al., this issue); we summarize land-cover changes in the results and supplementary materials to aid in the interpretation of condition and supply and use accounts. The pilot ecosystem accounts for the Southeast thus focus on ecosystem condition and physical supply and use for a selected list of ecosystem services that are of interest for natural resource management decisions across the region and for which data were available.