Ecological Accounting

“If humanity were to replace the ‘free’ services of the natural economy with substitutes of its own manufacture, the global GNP would have to be raised by at least $33 trillion.”

E. O. Wilson, 2003.

Three types of accounting for ecological impacts:

True cost | Net cost | Assimilative cost

True cost accounting – include what the true or actual costs are in terms of externalities,

• such as: calculate common health and environmental damages.
• factor in the opportunity costs (what do you give up for this investment)
• eliminate subsidies
• Consider the expenses over the full life of the product; Life cycle accounting.

Net energy accounting – considers, by calculating the costs, or expenses involved in:

1. finding energy sources,
2. extracting the source,
3. transporting the raw materials to make into fuel,
4. energy required to make into fuel,
5. using any fuel [energy] source,
6. cleaning up after the combustion
   

Assimilative capacity accounting

• include the ability of the resource site to absorb the impact without functional collapse.
• calculate the cost of restoring damaged, degraded, or destroyed water, air or land resources.
• The Catskill Mountain watershed is worth $6 to $8 billion to New York City for drinking water