Ecological Accounting


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“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

National expense Accounting