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Green accounting

‘Green accounting’ is the popular term for environmental and natural resource accounting, which incorporates environmental assets and their source and sink functions into national and corporate accounts (see Bartelmus, 2008, on which this entry largely draws).

The United Nations first issued a handbook on a System for integrated Environmental and Economic Accounting (SEEA) in 1993. SEEA introduces nature’s environmental and economic assets and the ‘environmental cost’ of their degradation and depletion into the System of National Accounts (SNA) (UN, 1993).

Asset accounts (see Figure 1) measure the value of opening and closing stocks of economic and environmental assets, and their changes during an accounting period. Changes in assets are brought about by the formation and consumption of produced and natural capital (assets) and other non-economic influences such as discoveries, natural disasters or natural regeneration. The latter, i.e. ‘other asset changes,’ are recorded outside of income and production accounts and affect the conventional indicators of cost, income, product and capital formation. National environmental accounting requires adding up inputs, outputs and environmental impacts, and combining them into environmentally adjusted (‘greened’) indicators. The SEEA uses both monetary values (prices and costs) and physical weights (in particular the mass of material flows) to this end.

According to Bartelmus’ review, case studies of green accounting have applied market valuation mostly to natural resource depletion. In the absence of market prices for non-produced natural assets, natural resource rents earned by selling resource outputs in markets are used for estimating the net present value and value changes (notably from depletion) of an asset. For environmental degradation, maintenance costs of avoiding or mitigating environmental impacts can be applied. A few studies used damage valuations of environmental impacts.

However, we may ask how we could possibly give a money value to the loss of biodiversity (in the present rapid extinction) by any of these methods? We do not know what we are physically losing (which species disappear – micro-organisms, for instance); much less, can we give money values to such loss?

Bartelmus sees a particular strength of green accounting as the measurement of environmental costs caused by economic agents of households and enterprises. According to him: ‘The well-known polluter/user pays principles hold the responsible agents accountable for their environmental impacts’ and ‘it can assess the economic and ecological efficiency of different environmental protection measures by governmental and non-governmental organisations’.

Critics, however, argue that the use of market values amounts to ‘pricing the priceless’ categories of nature. In their view, assessing environmental assets and their services in monetary terms ‘commodifies’ nature, or turns the products and services of nature into merchandise or commodities with money prices, whose intrinsic value should not be subjected to market preferences .

See also:

New ecological macroeconomics


Bartelmus, P. (2008) ‘Measuring sustainable economic growth and development’ , in C.J. Cleveland (ed.) Encyclopedia of Earth, available online: (accessed 7 May 2012).

United Nations, UN (1993) Handbook of National Accounting System of Integrated Environmental and Economic Accounting – System of Integrated Environmental and Economic Accounting, 198 p.

This glossary entry is based on contributions by Willi Haas, Simron Jit Singh and Annabella Musel

EJOLT glossary editors: Hali Healy, Sylvia Lorek and Beatriz Rodríguez-Labajos

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