Section 6: Environmental accounting—bringing it all together
The agriculture industry, along with fishing and forestry industries, occupies a unique position at the interface of the environment and the economy. These industries, like all others, employ labour and capital in the production of their outputs, but they also depend to a large extent on natural processes that contribute to the biomass yields that they harvest. Because of this clear dependence on ecosystem services, these industries represent an ideal opportunity to apply the environment-economy accounting approaches developed through the System of Environmental-Economic Accounting (Textbox 6).
Textbox 6: System of Environmental-Economic Accounting (SEEA)
The Central Framework of the United Nations System of Environmental-Economic Accounting (SEEA Central Framework) was adopted as an international statistical standard in 2012. This represented the culmination of 20 years of work on the concepts and methods related to environmental accounting. The following year, two other publications were welcomed by the Statistical Commission of the United Nations, namely SEEA-Applications and Extensions, and SEEA-Experimental Ecosystem Accounting. While these later two publications are not yet developed to the level of a statistical standard, they do provide advice on the best practices currently available in their respective subject matter domains and expand the SEEA beyond its initial scope.
The SEEA Central Framework is built around three main areas of accounting: physical flow accounts, asset accounts, and environmental activity accounts. Physical flow accounts record the supply and use of natural inputs (e.g., water), products (e.g., milled grain), and residuals (e.g., manure).
These accounts represent an extension of the standard economic supply and use tables. Firstly, they are provided in physical as opposed to monetary units of measure. Asset accounting looks at the stock of natural resources, providing measures of both the quantity and value of natural resource wealth. The SEEA Central Framework covers non-produced assets—in an agricultural context this would mean farmland—as opposed to the produced assets (e.g., buildings and equipment) covered in the standard economic accounts. Finally, environmental activity accounts show expenditures related to both environmental protection and to the management of natural resources. These expenditures are part of the standard national accounts measures, but they are made explicit here to highlight expenditures related to improving and managing the environment.
To make this environmental linkage explicit, the Food and Agriculture Organization of the United Nations (FAO) is extending the accounting principles described in the SEEA Central Framework to propose a new set of accounts focused on showcasing the economic-environmental links of the farming, fishing, and forestry industries. These accounts will cover such topics as pesticide use, crop production, greenhouse gas emissions and land cover change, among others. Other relevant areas under consideration include economic data (e.g., employment and value added) and soil resources (e.g., soil classification, erosion and soil quality). The work is expected to yield a set of inter-related tables and accounts with key agri-environmental indicators that will be relevant to the analysis of the agriculture, fishing, and forestry sectors in all countries.
Table 6.1 provides an example of one aspect of the SEEA-Agriculture accounts, namely the tracking of physical flows of agricultural goods in a supply and use framework. 1 As shown in this table, Canada’s crop production was heavily based, by weight, on cereals including wheat and corn, as well as on canola, soybeans and potatoes, among other crops in 2011. Tomatoes and apples were the most important vegetable and fruit crops produced domestically.
In 2011, two-thirds (66%) of domestic wheat production was exported to other countries. The remainder was used on farms for seeding purposes or as livestock feed, was used in the food manufacturing industry, or was used to produce energy.
The bulk of tame hay produced in Canada is used on farms for livestock feeding. Corn is used on farms or processed by the food manufacturing industry. Most canola and soybean production is processed in Canada or sent for export.
Canada imports much of its fruit and vegetable supply in order to meet its domestic demand. In particular, the table shows high imports and low exports for onion and shallots, apples and grapes. Almost the entire production of tree nuts is exported. Most domestic nut consumption is supported by imports.
This summary table and the more detailed table in Appendix A are initial tests of the classifications, definitions, and accounting relationships being proposed in SEEA-Agriculture and highlight some of the current data gaps in this area of accounting, as evidenced by the significant amount of stock variation for some commodities. More detailed tables and guidelines that cover the forestry and fishing sectors are also being prepared. In the end, this effort will cover environmental assets and transactions in addition to the physical flow data shown here. Statistics Canada will contribute to the testing and development of these international guidelines as the work continues.
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