1 UNDP-UNEP Poverty Environment Initiative Working Paper The application of the System of Environmental-Economic Accounting (SEEA 2012) for integrated planning, budgeting and monitoring for poverty related Sustainable Development Goals (SDG) The Poverty-Environment Accounting Framework (PEAF) September 2016 Prepared by Mark Eigenraam, Director, IDEEA 1 , consultant to the UNDP-UNEP Poverty-Environment Initiative (PEI) with contributions from Seonmi Choi, Regional Manager- UNDP-UNEP PEI Asia-Pacific, United Nations Environment Programme 1 www.ideeagroup.com
1 IntroductionThereisbroadrecognitionthattherearestronglinksbetweenpovertyandtheenvironment,oftenreferred to as the poverty-environment-nexus (PEN). However, it is not clear how to report andaccount for these links in an empiricalmanner to support bothpoverty andenvironmental policyanddecisionmaking. In order to report empirically on the links there is need to understandhowchanges intheenvironment impactonpovertyand,conversely,howchanges inpoverty levelsarelinkedtochangesintheenvironment.
Clearly theenvironment,encompassingall natural resources, is important since itunderpinsmosteconomicactivityandisasourceofindividualandsocialwellbeing.Forinstance,naturalresourcesincluding land,water, soil, forests, andminerals, are all necessary inputs to economic activity. Inbroad terms, there are three key links betweenpoverty and the environment– (i) access to, anddistribution of natural resources; (ii) distribution of benefits (both monetary and non-monetary)derived from natural resources; and (iii) the condition of natural resources and their capacity toprovidebenefitstopeople.
1.1. UNDP-UNEPPoverty-EnvironmentInitiative(PEI)
Over the past 10 years, the joint UNDP-UNEP Poverty Environment Initiative (PEI) has beensupportingministriesofplanning,financeandenvironmentaswellaslocalgovernmentstoidentifycountry-specific poverty-environment nexus issues and strengthen countries’ own system ofdevelopmentplanningandpolicy-makingprocessestoachievepovertyreductionandenvironmentalmanagementobjectivesinanintegratedmanner.
The PEI works with key government partners to raise awareness, influence policy making andstrengthenthemainstreamingofthePoverty-EnvironmentNexusissuesintodevelopmentplanningandbudgetingprocesses,sectorprogrammes,investmentmanagementprocessesandsub-nationalplanning.PEIissupportingcountriestoachievethefollowingoutputsby2017:
Thisreportbuildsspecificallyontheobjectivesofoutput2,theinstitutionalisationofenvironmental-economic accounting systems by explaining the logic, rationale and framework of environmental-economicaccountinginthepoverty-environmentnexusmainstreamingcontext.
With PEI support, countries havemade a notable progress in integrating pro-poor environmentalpriorities into the national, sectoral and sub-national development planning and budgetingprocesses.However,manyPEI-supportedcountrieshavebeenexperiencingchallengesinmeasuringand accounting for the nexus between poverty and environment in an empirical and systematicmannerthroughoutthecoredevelopmentplanningprocess.
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1.2. Purposeofthepaper
This working paper has been prepared to review the approach of PEI in identifying, measuring,accounting for and reporting on the Poverty-Environment Nexus (PEN) and to explore ways tostrengthenPEI’scurrentapproach.ThisreportprovidesanassessmentoftheopportunitiestousetheSystemofEnvironmentEconomicAccounting(SEEA)toenhancethePENmainstreamingworkofPEIandotherpartners.
This paper will also contribute to one of the focus areas of the current phase of PEI which is toanalyse achievements and lessons learned to build on PEN knowledge and prepare products toinfluenceregionalandglobaldevelopmentagendasinsupportofsustainabledevelopment.
In order to understand and analyse both these questions, this paper will develop and present aframework that reflects the inherentconnectionswithin thePEN.The resulting frameworkwillbeused to provide links (through quantitative data or demonstrate causal relationships) betweenchangesinpovertyandchangesintheenvironmenttosupportbothpolicyanddecisionmaking.
Poverty itself isdifficult todefineandmeasure.Therearemanypoverty indicators thatarebasedsolelyonincome.Incomebasedindicatorsfocusonathresholdlevelofincomeandpeoplethatarebelowthethreshold,areconsideredtobepoor.Thisapproachtoestimatingpovertyiscommonindeveloped economies. However, income based approaches do not account formany of the non-marketgoodsandservicesthepoorrelyupon,inparticularthegoodsandservicesprovidedbytheenvironment.
There are a number of alternative approaches tomeasuring poverty that go beyond income andincludeindicatorsofhealth,educationandlivingstandards.Quiteoftenindicesaredevelopedthatincludeanumberof these factorsand theseare referred toasmulti-dimensionalpoverty indexes(MPI).
Figure 1 below is an example of an MPI that includes health, education and living standardindicators. Within each of the indicators there are sub-indices, for instance the health indicatorincludesindicatorsonnutritionandchildmortality.
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Figure1Multi-dimensionalpovertyindex(MPI)2
Generally,MPIsmakereferencetoelementsoftheenvironmentbutprovidelimitedinformationtounderstand thecausal linksbetween theenvironmentandpoverty to informpolicyanddecisionmaking.Forexample,in
Figure1above,theenvironmentmaybeimplicitlyrecognisedinthesub-indicesofwaterandassets3but it isnotclearhowthequalityofenvironmentalassetsoraccesstothemistaken intoaccountnor are the linkages between environmental indicators and other dimensions of poverty madeapparent.
TherearesomeeffortsunderwaytoincorporatesomeenvironmentalfactorsintoanMPIframeworkor to theHDI such as a “greenHDI”. However, even if additional indicators or sub-indicators areincorporatedtoreflecttheenvironmentalconcernsofthepoor,thereisnounderpinningrationalefor theselectionandweightingof these indicatorswithintheoverall index (aproblemthatbesetsmost composite indicators). As a result, interpretation of the results and the ability to use theinformationtoinformpolicyresponsesandlinkwithunderlyingenvironmentassetsislimited.
By increasing the number of environmental factors, existing approaches in povertymeasurementsuch asMPImay be able to respond partially to the question on how changes in the extent andcondition of environmental assets affect changes in poverty. However, existing approaches inpoverty measurement, even if they further incorporate environmental and climatic factors intoindicatorsofpoverty,cannotrespondtoanothercriticalquestionon“Howchanges inpovertyaredrivingorinfluencingchangesintheenvironment(extentandconditionofenvironmentalassets)”?
2.2 MultipledimensionsofPoverty-EnvironmentNexus
The linkages between poverty and the environment are complex, and strongly influenced bydemographic, institutional and cultural factors. In some circumstances, a positive relationshipbetween poverty and environmental degradation has been identified, lending support to thehypothesisthatpoorproducerssystematicallydegradethenaturalresourcesonwhichtheydependif they have no alternatives. In addition, a positive relationship is observed between poverty andenvironmentandclimate-relateddisasterrisks.Povertyisoneofthekeydeterminantsofexposureto environment and climate-relateddisaster risks,with impacts on income, health, education and
UnderstandingandquantifyingthePENisessential fordevelopingpoliciesacrossabroadrangeofareas – labour, economic, environmental, markets, institutional, etc. The following discussionexamines some of the dimensions inwhich poverty exhibits itself and is linked to environmentalassets.Thisdiscussionwillbeusedtohelpguidethenatureandformofinformation(environmental-economicaccounts)thatcanbeusedtobetterunderstandandquantifythePEN.
Spatialdependencies:Thereareanumberofspatialdependenciesthatexistbetweenthepoorandtheenvironment.Thepoor’sexposuretoenvironmentaldegradationisdistinctivefortworeasons.First,thelocationandthesurroundingsinhabitedbythepoorareoftenenvironmentallyvulnerableordegraded.Forinstance,adegradedwatersource(lakeorriver)resultsinpoorwaterqualityandifconsumed ill health. The individual natural resources the poor have access to are often fragile ordegraded and present significant risks to both current and future health and income generation.Second,the lackofastrongresourcebasemakes itdifficult forthepoortooptoutofadegradedenvironment and generate income from alternative sources or using less degraded resources5. Inthatsense,thepoorinmanyinstancesarevictimsoflocation(circumstance)ratherthandegradersoftheenvironment.
Diverting labour:Environmentaldegradationcan lower labourproductivity,evenwhenpeoplearerelatively healthy. For example, as fuel wood becomes scarce, poor households must spend anincreasing amount of time collecting it. Time taken away from other productive activities likeagriculturehasanopportunitycost for thepoorandcanresult in lower incomes.Further, familiesarenotabletocompensateforthisdiversionoflabourresultinginareductioninhouseholdincomefromagriculture anddeterioration in food consumption levels andnutritional status.Often this isalso linked to gender issueswerewomenareoften required to spendmore time collectingwoodandwaterforthefamily.
Reducedproductivityofthepoor’snaturalresources:Wherethepoordependonbiomassfuelandconfront increasing fuel-wood scarcity, they often shift to using animal dung, fodder, and cropresidues for fuel. Since reducedquantities of these residualmaterials are returned to the soil, itsfertilitymaydecline.Wherethepoordependontheconsumptionofwildanimalsareexposedtoafall in quality of natural resources their capture of the animals becomes scarce and they turn todomesticatedstockandanimals.The increasedpressureondomesticatedherdsoftenreducesthepoor’s ability to produce in the future and be exposed to greater risk without a buffer in stocknumbers.
Growth in rural populations can put extra pressure on local and surrounding land resources toproducemorecropsresultingintheshorteningoffallowperiodsforlandinthecommunity.Thistoocanhaveanegativeimpactonthehealthofthesoilandhenceitsproductivity.
Poverty may also constrain farmers’ ability to maintain soil productivity through more intensiveapplicationofvariableinputs,suchasfertiliserandwater.
Impactofpovertyonresourcemanagement:Thepoorstrugglingattheedgeofsubsistencelevelsofconsumptionarepre-occupiedwithsurvivalstrategiesonaday-to-daybasis.Theirabilitytoplanahead isoften restricted toacritically short timehorizon,oftenmeasured indaysorweeks.Theyhave less ability to save for the future. As a result, they cannot opt for investment in naturalresources including in better crop varieties that can have higher yields or withstand highertemperature or drier weather conditions, which is likely to provide a return in themedium- andlong-run.Ahigh,subjectivediscountrate(highrateofpuretimepreference)impliesrapidresourceextractiontomeetpresentincomeorconsumptionneeds,andlowinvestmentinnaturalresourcestoimprovefuturereturns.Thishassignificantdynamicimplicationsforgrowthandsubsequentlyonpoverty reductionover the long termandenvironmental resource recoveryandplanningover thelongterm.
Risk and access to natural resources: Generally, the poor are faced with higher risks or greateruncertainty. Poor farmers may perceive their access to land as tenuous because of conflictsassociated with managing and accessing the land. Further, because of other claimants, or theoverlapofdifferentlandrights,thepooraregenerallymarginalised.Better-offfamilies(oftenrural)aremorelikelytohavethecapacitytoestablishfarmclaimstolandwhereatransitionisoccurringfrom commonproperty to private property, orwhere there are lengthy and costly administrativeprocedures for establishing legal title to land. Under such circumstances, the poor’s interest inundertaking longer-term investment in the productive capacity of land is likely to be severelydiminished.
CommonPropertyResource(CPR)oftenservesasaformofinsurancethatpoorruralresidentscanturntoiftheyfacesetbacksintheirprimaryincomegeneratingactivities.However,oftentheissuesaffectingthepoorinparticularregionsarecommontoallofthemthusplacingincreasedshorttermpressureonanyotherCPRlocatedwithintheregion.Degradingnaturalresourcessignificantlyaffectaccess to this natural form of insurance for the poor and expose them to greater risk anduncertainty.
The poor’s constraints in managing risks: Poor households mostly at risk of falling belowsubsistencelevelsofconsumptiontreatavailablenaturalresourcesasanassettobedrawndownintimes of emergency. The options for managing the resources are often limited or not alwaysavailable tothepoor.Theirassetsandagriculturalstoresareminimalandquicklydepleted.Creditandinsurancemarketsforthepoorarefrequentlyfragmentedornon-existent.Thislackofoptionsimplies higher levels of uncertainties and insecurities with implications for the management ofenvironmentalresources.
Based on the above discussion the following environmental features emerge as important: assetlocation (spatial dependencies), extent and condition of environmental assets, sustainability(degradation), resource (asset) management, patterns of change (time and location), productivity(bothlabourandenvironmentalassets)andrisk(thresholdsandresilienceofenvironmentalassets).TheSEEAframeworkprovidesguidanceonhowtomeasureandreportonthesefeaturesinordertomakelinkstoeconomicwellbeing.ThefollowingsectionsoutlinehowtheSEEAmaybeextendedtofocus onmeasurement and reporting to of environmental features to inform poverty policy anddecisionmaking.
In 2012 the United Nations (UN) adopted a new approach to accounting for the connectionsbetween the environment and the economy called the System of Environmental-EconomicAccounting(SEEA).SEEAisaninformationandanalyticalframeworkforlinkingeconomicactivitiestothequantityandqualityofenvironmentalassets6.ItprovidesstatisticalstandardsthatbuildontheprinciplesoftheSystemofNationalAccounts(SNA)–theaccountingframeworkthatunderpinsthemeasurementofgrossdomesticproduct,nationalwealthandotherkeymacro-economicvariables.The SEEA framework (presented in two documents - the SEEA Central Framework and the SEEAExperimentalEcosystemAccounting)encompassesaccountingforminerals,energy,water,fisheries,landandecosystems,biodiversity,agricultureandforestry.SomeoftheseenvironmentalassetsandactivitiesarereportedinstandardeconomicaccountsfollowingtheSNA,buttheSEEAextendstheinformationsetusingasystemsapproachwhichexplicitlyaccountsfortheextentandconditionofenvironmental assets and how changes in them impact on individuals and society. Indeed, a keyfeature of the SEEA is the recognition and quantification of the linkages between environmentalassetsandsocialandeconomicwellbeing.
ThechallengeinapplyingtheaccountingprinciplesoftheSEEAtohelpunderstandthePENistotakepovertyrelatedmeasuresofsocialandeconomicwellbeingandlinkthemtoenvironment.TheSEEAprovides anopportunity to re-examine themethodsemployed tounderstand thePEN. Employingstatisticalandaccountingstandardsbringsanewapproachtodefining the ‘environment’andalsoprovidesformoreformalapproachestolinkingtheenvironmenttosocialandeconomicwellbeing.
In order to support the integrated analysis that is required formeasuring and accounting for thePoverty-EnvironmentNexus,anadaptationoftheSEEAframeworkisproposedthatbringsrelevantinformation, notably concerning the features listed in Section 2 above, into a common andintegratedsetting.Thenextsection introducestheSEEA,describestheecosystemaccountingcoremodel and discusses how the SEEA framework can be adapted to link specifically with povertythroughaPovertyEnvironmentAccountingFramework(PEAF).
3.1 AnIntroductiontotheSEEAAkeymotivation forenvironmental-economicaccounting is thatpreviousapproaches toanalysingthe economy did not recognise the vital nature of the relationship between humans and the
environment. The SEEA provides a platform for the integration of information on environmentalassetsandenvironmentalflowswithinformationoneconomicandotherhumanactivity.
Figure 2 presents a generic overview of the SEEA framework showing the links between theenvironmentandtheeconomy.Theenvironmentprovidesnatural inputs to theeconomythatarethencombinedwithman-madecapitalandlabourtoproducegoodsandservices.Theeconomyinturn produces residuals during the production process of which some are returned to theenvironment.Theenvironmentcanalsoassimilatesomeofthoseresiduals,suchasnutrientrunoffintowaterwaysandemissionstotheatmosphere.
Figure2OverviewoftheSEEA
The SEEAhas emerged fromwork initiatedby the international community of official statisticianswith an initial edition of the SEEA in 1993 following the first Rio conference on sustainabledevelopment. A revision process that commenced in 2007 led to the release of two key SEEApublications, the SEEA Central Framework (SEEA CF) and the SEEA Experimental EcosystemAccounting(SEEAEEA).TheSEEACFhasbeenadoptedbytheUnitedNationsStatisticalCommission(UNSC)asan international statistical standardonparwith theSystemofNationalAccounts (SNA)which is the standard underpinning the measurement of gross domestic product and other keyeconomicvariables.TheSEEACFisbasedonthesameaccountingstandardsthatareusedintheSNAtoensureconsistencyandcoherencebetweenthetwoandenablelinksbetweenenvironmentalandeconomicdata.IntheSEEACF,environmentalassetsareaccountedforasindividualresourcessuchastimberresources,soilresourcesandwaterresources.
Ecosystemaccounting,asdescribedintheSEEAEEA,complementsandbuildsontheaccountingforenvironmentalassetsdescribedintheSEEACF.Inecosystemaccountingtheindividualresourcesareaccounted for in terms of their combination within an ecosystem. “Ecosystems are a dynamiccomplex of plant, animal and micro-organism communities and their non-living environment
interactingasafunctionalunit.”(ConventiononBiologicalDiversity(2003),Article2,UseofTerms).Ecosystemsmaybeidentifiedatdifferentspatialscalesandarecommonlynestedandoverlapping.Consequently, for accounting purposes, ecosystem assets are defined through the delineation ofspecificandmutuallyexclusivespatialareas.
While there has long been recognition of ecosystems in the context of environmental-economicaccounting,andparticularlyoftheneedtoaccountforthedegradationofecosystems,theapproachdescribed in the SEEA EEA has only emerged in recent years. Its design is attributable to therelatively recentdevelopmentof concepts concerning ecosystem services.With these concepts, ithas been possible to incorporate accounting for ecosystems using the accounting principles andtechniques that have been developed for the measurement of manufactured assets such asbuildings,dwellings,machinesandequipment.
The ecosystem accounting approach outlined in SEEA EEA extends and complements a range ofother ecosystem and biodiversity measurement initiatives in a number of important ways. Inparticular,it:
• recognises the residuals from economic activity that are often associated with health andwelfareimpacts(impactsthataregenerallymoreacuteforthoseonlowincomesorpoor)
Morerecently,aseparateapplicationoftheSEEACFhasbeendeveloped;theSEEAforAgriculture,Forestry and Fisheries (SEEA AFF). SEEA AFF has been developed by the Food and AgricultureOrganizationof theUnitedNations (FAO). It isa statistical framework for theorganizationofdatathat permits the description and analysis of the relationship between the environment and theeconomic activities of agriculture, forestry and fisheries. These primary activities are dependentupon the environment and the resources and services it provides and, at the same time, theactivitieshaveimpactsonthelocalandsurroundingenvironment.
Understanding the relationship between these activities and the environment supports a broaderunderstanding of the nature and impact of the production of agricultural, forestry and fisheriesproducts, andprovides information for theanalysisof food security; environmental conditionandthe sustainability of food, fibre and material production; the potential for bioenergy and theassociatedtrade-offs,andissuesrelatedtoruralincomes,employmentandpoverty.
AdditionalthematicSEEAdocumentshavebeendevelopedintheareasofwaterandenergy,andaseparatereleasedescribesrelevantapplicationsandextensionsforSEEAbaseddatasets.Overall,theSEEA family of publications provides a comprehensive description of how environmental andeconomicdatacanbeintegratedforanalyticalpurposes.
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3.2 Ecosystemaccounting
Figure3providesanoverviewoftheSEEAecosystemaccountingcoremodel.Ecosystemassets, inaccounting terms referred to as ecosystemunits, range fromhighlymodified to natural includingforests (nativeandplantation),waterways, rivers,wetlands, estuaries, floodplains, cropping land,grazingland.Anecosystemunitcanbedescribedanddelineated(mapped)basedondifferencesinplantcommunities.
Theconditionofeachassetprovidesinformationabouthowtheassetisperforminganditscapacitytoproduceecosystemservices.Generally, theconditionof theasset is reportedempirically in theform of an index or aggregate measure (Eigenraam, Obst et al. 2016). For example, a set ofbenchmarkindicatorscanbedevelopedthatdescribethesoil,plantdensityandtype,weedandpestpresence,etc.Foranygivenlocation,thebenchmarkscanbeusedtocomparewhatisexpectedtobepresentforanecosystem(forest,pasture,etc)towhatisactuallypresent.Eachcomponent(soil,plantdensityandtype,weedandpestpresence)isthenweightedandaggregatedtogiveanoverallscoreorindexofcondition.Theconditionoftheecosystemassetimpactsontheproductivityoftheasset (tonnes per hectare) and, in turn, its ability to provide ecosystem services and, ultimately,benefits (e.g. foodand fibre, cleanair andwater) thatusedby individuals,businessesand societymoregenerally,collectivelyreferredtoasbeneficiaries.
Figure3Ecosystemaccountingcoremodel
Both the extent (area, size) and condition of an ecosystem determine its ability to function andprovideservicesandbenefits.Themodelencompasses (i) theservices that flow intotheeconomy(e.g. soil nutrients, water, timber) and (ii) the services that influence our physical/cultural livingenvironment (e.g. water filtration and habitat). Both of these types of services contribute to oursocialandeconomicwellbeingreceivedintheformofbenefits.FollowingtheMillenniumEcosystemAssessment(MA,2005)ecosystemservicesinclude:
• Regulatingservicesresultfromthecapacityofecosystemstoregulateclimate,hydrologicalandbio-chemicalcycles,earthsurfaceprocesses,andavarietyofbiologicalprocesses.Theseservicesoften have an important spatial aspect. For instance, the flood control service of an upperwatershedforestisonlyrelevantinthefloodzonedownstreamoftheforest.
• Culturalservicesaregeneratedfromthephysicalsettings,locationsorsituationswhichgiveriseto intellectual and symbolic benefits that people obtain from ecosystems through recreation,knowledgedevelopment,relaxation,andspiritualreflection.Thismayinvolveactualvisitstoanarea,indirectlyenjoyingtheecosystem(e.g.throughnaturemovies),orgainingsatisfactionfromtheknowledgethatanecosystemcontainingimportantbiodiversityorculturalmonumentswillbepreserved.
Benefits include the social, economic and environmental benefits society gains from the servicessuppliedbyenvironmentalassets.Benefitsmayaccrueinbothmonetaryandnon-monetaryterms.Changes in theextentandconditionofenvironmental assetswill havean impactof the supplyof
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benefits.Allbenefitsareassociatedwithabeneficiary–anindividualabusinessorgroupofpeople.The benefits provided by an environmental asset may be transported and distributed to global,nationalorlocalbeneficiaries.
4 The Poverty Environment Accounting Framework(PEAF)
The Poverty Environment Accounting Framework (PEAF) is an application of the accountingprinciples described in the System of Environmental-Economic Accounting (SEEA) to advance themeasurementandanalysisofthePovertyEnvironmentNexus.Thedescriptioninthissectionreflectsthe firstarticulationof thePEAFand,as such, servesasabasis for furtherdiscussion, testingandrefinementthroughtheUNDP-UNEPPEIprogrammeandotherrelevantinitiativesandpartners.
ThePEAF isnotanewaccountingstandardbut isanadaptationof theSEEAtoportraythecasualrelationships between the environment and poverty and thus support quantifying, reporting andaccountingforthePENtosupportdecisionmakingandpolicyanalysis.AkeyaimofthepaperistodescribethePEAFbuildingontheprinciplesandguidelinescontainedintheSEEA.
4.1 IntroductiontothePEAF
The PEAF is a framework that is used to produce a set of information to underpin Poverty-Environment Nexus (PEN) specific indicators. The key difference of the PEAF from traditionalapproachesisthedeliberateattempttoproduceaninformationsetthatisinherentlyintegrated.Anintegrated informationsetallowsforthecoherentquantificationandempiricalexaminationofthePEN, and can be used to inform policy and decisionmaking – both from a planning, investmentdecision-makingandperformanceassessmentperspective.
ThePEAFisanintegratingframeworkforpoverty-environmentdataandstatisticsthatcanbeusedtohelpunderstandhoweffectiveinstitutionalpoliciesandprogramsareataddressingthePEN.Theinformationsetshould,consequently,strengthentheabilityofinstitutionstoengageinPENrelatedpoliciesinasystematicandcoordinatedmanner.ThePEAFisnotanewaccountingstandardbutanadaptationof the SEEA to portray the causal relationshipsbetween theenvironment andpovertyandthussupportquantifying,reportingandaccountingforthePENtosupportdecisionmakingandpolicyanalysis.
ThePEAF shownbelowemerges from theapplicationof the coremodelof ecosystemaccountingthus bringing together assets, condition, services, benefits and beneficiaries. A key feature of thePEAF is the recognition of beneficiaries (including the poor) and their connection to theenvironment.This focusmakestheframeworkfundamentallyanempiricalapproachtoaccountingandreportingonthePEN.
InlinewiththeSEEAEEA,thefoundationofthePEAFisthespatialunitsofecosystemassets.Itistheaccessto,andcontrolof,spatialareas–i.e.specificareasoflandandecosystems-bypeople,boththepoorandthewealthythatunderpinsthelinkbetweentheenvironmentandhumanactivity.Byframing poverty-environment accounting in terms of spatial areas, the accounting frameworkprovidesameansbywhichawiderangeofdatacanbeintegrated.Itisthisspatialperspectivethatunderpins the PEAF and makes quantifying the PEN possible. Using the condition, services andbenefitselementsoftheecosystemcoremodel,thePEAFenvisagesproducingbasicdatatablesandaccounts to support analysis of alternativemanagement and policy approaches to improving theconditionofenvironmentalassetsandreducinglevelsofpoverty.
Insection2.2,thefollowingenvironmental featureswere identifiedascoreelementsthatneedtobemeasured and reportedon in order to link the environment to poverty: asset location (spatialdependencies),extentandconditionofenvironmentalassets,sustainability(degradation),resource(asset) management, patterns of change (time and location), productivity (both labour andenvironmentalassets)andrisk(thresholdsandresilienceofenvironmentalassets).
Itiscriticaltounderstandwherethepoorandnaturalresourcesarelocated.ThePEAFincorporatesinformation on the location of environmental assets and their condition which can be used toquantifythebenefits (foodandfibre)thatcanbeprovided.Location isalsoan importantfactorofpoverty in terms of geographic distribution of exposure to different types of environment andclimate relatedhazards acrossdifferent incomegroups. Further, this information canbe linked tospatialdistributionsofpoverty(e.g. intermsofnumbersofpeoplebelowcertainincomelevels)toassesspotentialimpactsonaccess,commonpropertyissues,travelandmobilityintimesofhardship
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and stress and importantly the substitutability of natural resources in a spatial context. PEAFaccountsthatconsiderlocationcanalsobeusedtounderstandrural-urbanmigrationpatternsandpotential drivers, such as situations in which rural environmental assets are being degraded orotherwiseusedunsustainably.Alternatively,theaccountscanfocusonurbanareasandaccountforlocationalchanges inurbanamenity linkedwithenvironmentalchanges includingairpollutionandhealthimpacts.
Usinginformationatthespatial level(assets)ofthePEAF,it ispossibletoundertakeananalysisofhow institutionaland legal frameworks influenceaccessandcontrolofecosystemassets. It isalsopossibletomeasurechangesinecosystemcondition.Combiningthesetwoelements,itispossibletodevelopaspatialmapofthedistributionandconditionofecosystemassetsontheonehandandthelocation of the poor to help understand how distance from resources and location impact onmultipledimensionsofpoverty.
Measures of resource condition (quality) are essential to understanding the capacity of a naturalresource to provide services and benefits. The PEAF incorporates condition accounts at a spatiallevel and reports on the quantity of benefits being provided by environmental assets. Further,environmentassetaccountscanalsobepresentedtohighlightmeasuresofdegradationandreporton changes in environmental assets due to humanuse and changes due to natural disasters (e.g.flood,cyclone,drought).Forwaterresourcemanagement,understandingtheconditionandextentof rivers andwetlands is essential and links also to issues of the availability of clean and reliablewater resources. This type of information can be used to inform investment programs that couldfocuson resource recovery (ahealthier riveror lake)or targetedcleanwaterdistribution systems(filtrationofpoorqualitywaterforpotableuse).
By combining information froma number of accounts, sustainability indicators canbedeveloped.Forexample,understandtheflowofservicesandbenefitsrelativetothechangingconditionofthenaturalresource.SuchmeasurescanalsobelinkedtospatialstatisticsonpovertytohelpinformthePENinanempiricalmanner.ThedesignofinformationproducedusingthePEAFexplicitlyrecognisestheimportanceoftimeseriesinformationtounderstandthecurrentandfutureuseofresourcesandto find pathways towards sustainable use. From a PEN perspective, understanding sustainabilitysupports answering questions such as whether the current flow of services and benefits can besustained into the future; andwhether the current rate of degradation can be sustainedwithoutinvestmentinresourcecondition(oratwhatpointanirreversiblethresholdmaybereached).
Thresholds (the risk to assets) concerning the extent and condition of environmental assets areimportant to understand so that policies and programs can be put in place to prevent completesystemfailure.Akey featureof thePEAF is that thedesignof theassetandconditionaccounts isbased on ecological principles. The principles take into account ecological thresholds and theresilienceof ecological assets. This typeof information is important formanaging riskboth in theshortandlongterm.
Labourproductivity refers to theabilityofpeople tomanageenvironmentalassetsefficientlywiththeminimumof labour as an input. Due to the integrated nature of the PEAF– building on, and
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linkingwithtraditionaleconomicandlabourstatistics–itispossibletoprovidemorecomprehensivemeasuresofproductivitytakingintoaccountlabourforce,degradationandsustainability.Usingthisinformation, it is possible to better target educational and capacity building programs aimed atimproving the ability of people to use environmental assetsmore effectively, in effect increasingproductivity by increasingoutputormoreeffectively employing labour,manufactured assets, andnaturalresources.
Boththelevelofpovertyandthedriversofpovertyaredynamic–itisimportanttounderstandhowthe pattern of use and the flow of benefits is changing through time to direct resourcesappropriately.Asnoted fordegradation, thePEAFaccountsexplicitly considerdynamicdrivers forboththelongandshortterm.Timeseriesinformationcanbeproducedtoidentifykeydynamicsandtherateofchangeforspecificlocationsandenvironmentalassets.ThisinformationcanthenbeusedtotargetbothlongandshorttermstrategiestohelpaddressthePEN.
There ismuchsocialandeconomicdatathat iscollectedandusedtoreportonpoverty.However,much of the data is collected in isolation from the underlying environmental asset base.Withoutclearlinkstoenvironmentalassetsitisverydifficulttomakecasuallinksbetweenchangesineitherpovertyortheenvironment.BothcanbereportedonindependentlybutitisnotpossibletoquantifytheconnectionbetweenthemandempiricallyexaminethePEN.
Inthiscontext,thePEAFrespondstotwokeyissues:
I. The hierarchy between statistics and indicators is not well understood i.e. indicators arecommonlyselectedbasedonissues(povertyortheenvironment)ratherthanemergingfromanintegratedmeasurementframeworkthatreflectsanunderstandingoftheassetbase.
• SEEACentral Framework:water accounts (volumeanduseofwater from the lake), forestaccounts, land accounts (rice, farming, irrigation), tourism accounts, fish productionaccounts
• SEEA Ecosystem accounting:wetland accounts, species accounts (both in the lake and onland),ecosystemdiversityaccount(nativeforests),riverqualityandextentaccounts(flowingintothelake)
There isaclearoverlap in theaccountsusingeachof theSEEA focusareas.For instance,water isaccountedforinfourareas.However,thedistinctivefeatureisthathavingdesignedthecollectionofbasicdata, thePEAFcanbeused toapplya single coherentdata set to lookatwater issues frommultiple perspectives – i.e. different perspectives emerge from the different accounts within thePEAF.Forexample,fromabasicwaterdataset,anumberofwateraccountscanbeproducedthatmeettheneedsofusers includingaccountsreflecting:watersupply,waterquality,accesstocleanwater, water use by industry, location of water supplies, and water use by purpose (drinking orirrigation).
Basedonabroadsetofaccounts,aseriesofindicatorscanbedevelopedbasedonthemanagementand policy questions users are interested in examining. It should be noted that the selection anddefinitionof indicators shouldbebuiltonbasic statistics andaccountsnot theotherwayaround.Often users (of indicators) develop a suite of indicators based on a discussion or the selection of
policy issues and then look for data to populate the indicator. In these cases, it will often benecessary to accept proxy datawhere none exists thus reducing the efficacy of the indicator. Byadopting an approach to developing indicators based on basic statistics and accounts, users canidentifydatagapsand initiatenewdatacollectionandaccounts if required.Theadvantageof thisapproach is thatnewdataarecollected inan integratedmannerandcanbecombinedwithotherstatisticalandaccountinformation.
Asanexampleofhowthisapproachcanworkconsider the themeofwaterquality.Waterqualitymeasuresareoften included inmulti-dimensionalpoverty indices.However, inabroader context,poorwaterqualityisasymptomofpoorqualityenvironmentalassets.Forinstance,apollutedriveror a degradedwetland can lead to lowwater quality. If the focus is solely on the issue ofwaterquality,aplausibleresponseistotargetwaterpurificationasasolution.However,thatmaybeonlypartofthesolution.Theotherpartofthesolutionistounderstandwhythewaterisofpoorqualityandwhethertheunderlyingenvironmentalassetsaredegraded.Policyresponsecanthenconsiderwhatcanbedoneto improveassetconditionso thatwaterquality is improved.Theadvantageofthisapproachisthatanyimprovementintheunderlyingenvironmentalassetwill likelyhaveotherbenefits over and above improvements in water quality. In sum, through the PEAF relevantinformation on both water quality and environmental asset condition is considered jointly, andcoherently,andthusprovidesamoreholisticinformationbasefordevelopingpolicyresponses.
Woodfromforestsforenergyproductionisanotherexample.Anenergyinitiativeorprogramthataimstoprovideelectricityorgasasasubstitutetowooddoesnotaddressthatunderlyingproblemof a degraded forest asset. If the forest assets were managed differently or forest assets wereexpanded,thesupplyofwoodwouldchange.ThePEAFprovidesanapproachtoconsiderthistypeofinformationinacoherentmanner.
Atthebaseoftheinformationpyramidareasetofactivitiesincludingregulation,management,andpolicies which all impact on the use and condition of environmental assets. These activitiesmayoriginate fromanynumberofagencies (forexampleenvironmental,planningand finance)andbemotivatedbydifferentobjectives.However,inessencethechoicesofallagencieshaveanimpactonthesamesetofunderlyingenvironmentalassets.WithinaPEAFbased informationset,onesetofinformationontheunderlyingenvironmentalassetsandrelatedflowsismaintainedandthenusedacrossdifferentpolicyagencies.Thisisanalogoustothesituationforeconomicstatisticswhereonemeasureofeconomicactivity,GDP,iscompiledforacountryandusedbyallpolicyagencies,aswellasthefinancesectorandotherprivatesectoroperations.
ApplyingthePEAF,andkeepinginmindtheinformationpyramid,itispossibletousebasicdatatocompile accounts and then to develop indicators to report on the PEN. The following sectionsprovidefurtherdetailonhowSEEAdatasetscanbeusedtounderstandthePEN.
Thediscussionaboveprovidesabroadcharacterisationoftherelationshipsbetweendifferenttypesof information. In practice, information is required at different levels to inform specific policyquestionsanddecisionmakingcontexts,suchasthoserelatingtothePEN.Aggregateenvironmentalaccounts are used to develop macro level indicators of the relationship between environmentalassetsand social andeconomicwellbeing. For specific analyticalpurposes, thesemacro indicatorscan be disaggregated to different levels including industry, institutional sectors, type ofenvironmental activity, asset types and population groups. The following descriptions of thesedifferentapproachestodisaggregationareprovidedbasedontheSEEAApplicationsandExtensions.
• Industry Level Disaggregation: in accordance with standard industry classifications (ISIC).Industry disaggregation aids understanding of how structural changes in the economy affectenvironmental pressures and the use of environmental resources. It is also useful inunderstandingthecontributionofdifferentindustriestocommonenvironmentalissues(suchasGHGemissions,waterpollution)whenreviewingtheintegrationofenvironmentalandindustryspecificpolicies.
• Institutional Sector Disaggregation: such levels of disaggregation help to distinguishgovernment responses from those of the corporate, government or household sectors. Thiscouldbe relevant toa rangeof issues, includingunderstandingexpenditureonenvironmentalprotection,whichsectorspayenvironmentaltaxesandwhoreceivesresourcerent.
• Disaggregation by type of environmental activity: represents an extension beyond standardindustrydisaggregation.Herethepurposeofactivityundertakenbyeconomicunits(enterprises,governments and households) may be broken down into different types of environmentalactivity following theClassificationofEnvironmentalActivities (CEA)described inChapter4ofthe SEEA Central Framework. Examples of relevant types of environmental activity includeenvironmentalprotectionactivityandresourcemanagementactivity.
• Disaggregation by Product or Asset Type: can help in understanding issues such as theextractionofresources inrelationtotheiravailability/sustainabilityofuse.Anotherexample isdisaggregationbytypeofenergyproduct,whichcanbeusefulinunderstandingthefuelmixandothercompositionalissuesintheanalysisofenergysupplyanddemand.
• Disaggregation by population groups: for example, by age classes, gender and income levelsmay be important in understanding the distributive aspects and social consequences ofenvironmental policies and economic instruments. The combination of data required fordisaggregation by population groups with SEEA based information is considered further inChapter4ofSEEAApplicationsandExtension.
Of particular interest in analysing the PEN are the dis-aggregations by institutional sector, inparticular households; dis-aggregations by industry, including agriculture, mining, manufacturing,minerals, forestryand fisheries;anddis-aggregationsbypopulationgroups,particularlyby incomeandconsumptioncohorts.
Giventhepotentialforfocusingonlowerlevelgroupingsofinformation,SEEAbasedindicatorscanhelpcaptureandinformthemulti-dimensionalpovertyandenvironmentnexus.Asdescribedinthisreport, poverty will commonly be linked to environmental condition and often the poor andvulnerable groups rely on theenvironment for their livelihoods andwell-being. For these reasonsthepoorcanalsocontribute toandbeaffectedbypoliciesdesigned tomanagenatural resourcesandrespondtorelatedenvironmentalissues.
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Given themanydifferent factors influencingwell-being, livelihoods,and sustainabledevelopment,no single indicator, such as income or other financial data, can reflect the multiple aspects ofpoverty,deprivation,and links totheenvironment.Themultipledimensionsofpoverty link totheenvironmentandtheeconomyinmanyways.Theselinksincludeempowerment, inclusion,health,education, living standards,environmentaldegradation,ecosystemservices, income,employment,food,water,sanitation,energy,safety,andaccesstobasicservicesandinfrastructure.
Keyareas inwhichSEEAmightbe furtherdisaggregated to capture relevant information relate todataonspatiallocationofstocksandflowsofwater,energyandlandresources.Waterandenergyresourcesarecentraltotheoperationofwell-functioninghouseholdsandcommunitiesinallpartsoftheworld.Theextensionofmostdirect relevance is thebreakdownofhouseholdconsumptionofwaterandenergybyhousehold.
Thetypesofdisaggregationthatareappliedwilldependonthelocation,analyticalinterestanddataavailability. There may be interest in disaggregating information on household consumption ofenergy and water use by purpose, i.e. differentiating energy used for heating, cooking,transportationorwaterusedforwashing,cooking,bathing,etc.Alternatively,theremaybeinterestin dis-aggregations that aid in the study of equality and development. In this case data thatdifferentiates urban, regional and ecosystem specific areas, special population groups (e.g., theelderly,familieswithyoungchildren,specificethnicgroups)orhouseholdconsumptionandactivitybyincomedecileorquintile,maybemostrelevant.
5 PEAFinpractice
ThePEAFaccountsplayan importantrole in integrating informationonecosystemsusingaspatialapproach.Whennationallevelindicatorshideimportantregionalvariations,spatialdisaggregationisa necessary component in understanding the relationship between, for example, the location ofnaturalresourcestocks,settlementareasandeconomicactivities.TheSEEALandaccountspresentamethod of assessing shares of land use and land cover within a country. Further, land is afundamental resourceandoften linked topovertyeitherviaaccess,degradation,productivityandcommonuse.
SincethefinalisationoftheSEEACentralFramework in2012therehasbeenaconcertedeffortbycountries to implement environmental-economic accounting. Key agencies leading the effortsincludetheNationalStatisticsOffices,FinanceandEnvironmentalagencies. Initially theseagencieswere motivated to understand investment in the environment and how economic and socialwellbeing are linked to the environment. However, it is now recognised that many governmentprogramsatboththenationalandgloballevelsareengaginginthemanagementofenvironmentalassets anddealingwith climate changemitigation and adaptation but approaching itwith slightlydifferentobjectives.Thishasledtoamuchbroaderrecognitionofthepotentialroleofacommon,coherentandintegratedsetofenvironmental-economicinformationthatcanbecompiledcentrallyandusedbymanyagencies.
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5.1 PEAFandPEITools
ThePEAFwillhelpguidetheproductionofasinglesetofdatathat isfully integratedandspatiallyspecific.Fromthatdatasetitisthenpossibletobuildaccountsandindicatorstosupportthedesignand implementation of P-E programs, monitor and evaluate P-E programs and support thesystematicand integrateddeliveryofcurrentPEItools.ListedbelowaresomeofthecurrenttoolsbeingemployedaspartofthePEIandotherrelevantpoverty-environmentmainstreaminginitiativesandabriefanalysisofwhattheaccountsthatthePEAF(basedonSEEA)couldprovide.
The sustainable use of natural resources (environmental assets) is a key long-term driver ofsustainable incomeandwellbeing.Asnotedaboveifthereareclimaticorotherexternalpressureson thepoor theymayusenatural resources inanunsustainablemanner.TheSEEA isdesigned toprovideinformationonthedegradationofenvironmentalassetswhichisanindicatorofpotentiallyunsustainableuse.
Building on the SEEA CF, the PEAF focuses on the spatial measurement and reporting ofenvironmental assets including land, water, forests,minerals, soils and energy. For instance, soil,landandfoodproductionaccountscanbelinkedtounderstandwhethersoildegradationonspecificlandisleadingtolowerfoodproductionandpotentialincreasesinpoverty.Thisinformationcanalsobe linkedtootherneighbouringecosystemassets tounderstandhowthesoildegradationmaybeleadingtodegradationofsay,riversandwetlands(potentiallyinfluencingthequalityofwaterusedbythepoor).
In Malawi, soil erosion has been largely caused by the expansion of agriculture, deforestation,overgrazing, and land scarcitywhich leads to cultivation inmarginal and fragile lands.Scarcity oflandpredisposeslandtooshortornofallowandtheresultinglandusetendstobeerosive(Yaronetal2011).UsingthePEAFtospatiallyquantifythelandthatissensitivetoerosionandlinkittospatialplanningandpopulationstatisticswouldprovidean integratedsetof information foranumberofagenciesandallownationalgovernmentstoassessthetrade-offsbetweenalternativepolicies.
TheSEEAEEAincludesmethodsforclassifyingandreportingonecosystemsassetsasanalternativerepresentation of individual environmental assets (land, water, timber). There is potential to useestimates of ecosystem condition to help understand whether ecosystem assets are being usedsustainablyor iftheyarebeingdegraded.Linkingtheassetandconditionaccounts it ispossibletodevelopestimatesofthebenefits(goodsandservices)thatcouldbeprovided.
Environmental(andSocial)ImpactAssessment
The SEEAEEAmaybeused tomeasure the extent and conditionof environmental assets to helpinformenvironmental impact.Theenvironmental impactmeasuredasapartofthistool linksveryclosely to the economic analysis of the sustainable and unsustainable use of natural resources
above. For instance, it is common to see theeconomic impactofnew investments (sayminingorforestry) show significant returns at the national level. However, those analyses generally do notaccount for changes in the environment especially at the site of the investment. Often there aresignificant local impacts from mining and forestry activity with little change in local social andeconomicwellbeing.Further,overthelongerterm,localpeopleareoftendeprivedofincomeduetochangesinlocalenvironmentalconditions(environmentalassetdegradation)andalackofaccesstothe projects benefits (often the income is channelled to national andmultinational agencies andcompanies).
Itisclearthatatalocallevel,thesocialimpactsarearesultofchangesintheunderlyingassetsandthe benefits they are providing.Once again the information about the benefits anenvironmentalasset is providing can be used to estimate social impacts in the form of ecosystem services andbenefitsavailableforuse.Therearealsoanumberofotherserviceslinkedtoculturalpracticesandnormsthatmaybelinkedtoenvironmentalassetsthatcouldbeincorporated.
Millennium Ecosystem Assessments offer a framework for demonstrating connections betweenecosystemservicestosustainpeople’slivelihoodsandnationaleconomies,andforquantifyingtheirvalue in monetary terms where possible. However, the approach used in each assessment isdifferentforeachcountry,whereasaconsistentcoremodelforlinkingecosystemstoeconomicandsocialwellbeingisrequiredtounderstandcausallinks.Byimprovingtheunderstandingofthecausallinks, it is possible to evaluate and target interventions aimed at improving the environment andgainingpro-pooroutcomes.Further,byapplyingthesamecoreinformationmodel, it ispossibletocomparebetweensub-nationalprogramsandalsobetweencountriestoinformprogramdesignandevaluation.
ValuationofEcosystemServices
TheSEEAprovidesguidanceonvaluationandhowitcanbeusedtounderstandchangesinthevalueofenvironmentalassets.However,ingeneral,theSEEAfocusesprimarilyontheuseofbio-physicalinformation and the development of indicators or metrics which can then be used to link withpovertyorsocialmetricsasdescribedinthePEAF.
Indeed,oftenitisnotthevalueofecosystemservicesthatisimportantbutratherthesourceoftheservices (the environmental asset) and the sustainability of those services being provided in thefuture. The first two stages of the PEAF coremodel (assets and condition) focus on the physicalaccounting of assets to gain a deeper understanding of the assets and their location. Thisinformation ismissing inmanyvaluationexercisesand/or the linksbetween theunderlyingassetsand the valuations are not well understood or demonstrated. This can lead to a lack of focus infutureprograms– the results indicatehigh valuesbut there is not sufficient information to guidefuturedecisionswithrespecttomanagingtheunderlyingenvironmentalassets.SincethePEAFhasasitsfoundationanunderstandingofthelinksbetweenenvironmentalassetsandsocial/economicwellbeing in bio-physical terms, valuation within the PEAF framework is developed in a well-establishedcontextsupportingadditionalunderstandingandcoherenceofinformation.
Thepurposeofestablishingaccountsforenvironmentalprotectionexpenditure(EPEA)istoenableidentificationandmeasurementofsociety’sresponsetoenvironmentalconcernsthroughthesupplyof,anddemandfor,environmentalprotectionservicesandthroughtheadoptionofproductionandconsumption behaviour aimed at preventing environmental degradation. To this end, EPEA gobeyond providing transparency in expenditure to providing information on the output ofenvironmentalprotectionspecificservicesproducedacrosstheeconomyandontheexpenditureofeconomicunits(governmentandprivate)onallgoodsandservicesforenvironmentalprotectionandclimatechangepurposes.
Withthisinformation,theEPEAcanbeusedtoanalysetheextentofenvironmentalprotectionandclimate changeactivitiesand toassesshowexpenditureonenvironmentalprotectionand climatechangeisfinanced.Theaccountscanalsobeusedtoderiveindicatorsforhighlightingchangeinkeyareas, suchas theexpenditureonpollutionpreventionandabatement, the contributionmadebyenvironmentalprotectionandclimatechangeactivitiestotheeconomy,andtheshifttopollution-preventingtechnologies.
Measuring the financial commitment of an economy to environmental protection may assist inevaluating the influence of environmental protection costs on international competitiveness, theimplementation of polluter pays principles, and the cost-effectiveness of environmental controlmechanisms(returnoninvestment).
Additionalanalysismayalsobesupportedby linkingexpenditureonenvironmentalprotectionandclimatechangetophysicalandspatialdata,suchastheamountofwastetreated,thequantityofairemissionsandchanges inenvironmentalassetconditionandratesofdegradation.Modelsmaybedevelopedthatlinkpotentialchangesinenvironmentalpressures,suchasairemissionsandspatiallylinkedlanddegradation,tofutureeconomicwellbeing,givenparticularamountsofexpenditureonenvironmental protection and climate change. This additional analysis can help assess the cost-effectivenessofpublicspendingonpoverty,environmentandclimatechangeandfindmeasurestoimproveefficiencyofpublicspendinginbothareas.
The analysis and comments providedon each of the tools above are preliminary. Furtherwork isrequiredtogainadeeperunderstandingof thetools,what theyaimtoachieveandhowtheyarebeingimplementedcurrently.
5.2 PEAFIndicators,monitoringandevaluation
Asnotedearlier,manyMPIs includeelementsof theenvironmentbutdonot linkexplicitly to theextent and condition of ecosystem assets. Using the information pyramid above, a new set ofpoverty-environmentindicatorsbasedonthePEAFcanbedevelopedwithastrongfocusonlocation
7SourceSEEA2012
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and links to ecosystem assets. These new indicators could be used to improve PEI and relevantinitiatives work on national monitoring systems and going beyond GDP and, thereby, influencebudgetsandinvestmentstowardspro-poorenvironmentalsustainabilitypriorities.
Table1belowprovidesexamplesof indicatorsanddatathemesbuiltaroundthecorePEAFmodelwith either a poverty or environment focus. For instance, the location and degree of poverty isneededtobothtargetspatiallyexplicitpovertyprogramsandalsolinktotheenvironmentalassetsthepoormaydependon,theformerhavingapovertyfocusandthelatteranenvironmentalfocus.Theinformationcanbecombinedtodevelopaspatiallyexplicitindicatoroftheratioofpoortothearea of an ecosystem asset (Asset-Poverty Ratio Indicator). One would expect the ratio to varyspatiallyandtobebasedonlevelsofpovertyandtheextentofecosystemassets.Theratiocanthenbelinkedtomeasuresofecosystemconditionandthecapacityofpeopletomanagetheassets.
ThisinformationdescribedinTable1isalsorelevantforMonitoringEvaluationandReporting(MER).Thus, rather thanageneralisedapproach toMER, itwouldbepossible to target theevaluationtoparticular issues, say asset condition or the success of an education program aimed at helpingmanageecosystemassets.Finally,duetothespatialnatureofthedataandindicators,theapproachisparticularlyamendabletospatialplanningandreporting.
6 PEAFandglobalreporting
At the global level, poverty-environment mainstreaming is defined as integrating poverty-environmentlinkagesintonationaldevelopmentplanningprocessesforpovertyreductionandpro-poor growth. It involves (1) establishing the links between environment and poverty and (2)identifying thepoliciesandprogrammes tobringaboutbetterpro-poor level implementation thatreflectstheneedtointegratethevaluablecontributionofenvironmentalmanagementtoimproved
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livelihoods, increasedeconomic securityand incomeopportunities for thepoor. These factorsareusuallyoverlookedingovernmentpolicymakingprocesses8.
The PEAF provides an information framework that can clearly describe the links between theenvironmentandpovertybothconceptuallyandempirically.ThePEAFprovidesarobustframeworktointegratebothpovertyandenvironmentspecificdata,andthusderivemeaningfulindicatorsandmeasuresofperformance.Further,thePEAFisspatiallyexplicit,akeyfeaturethathasbeenlackinginmanyapproachestounderstandingandreportingonthepoverty-environmentnexus.
ThePEAFcanbeusedtounderpinMERapproachestoestablishingandassessingtheperformanceof(a)policiesand(b)programmesthataimtobringaboutbetterpro-poor,environmentandclimaterelated implementation. The design of the PEAF focuses on integrating the valuable contributionenvironmental management makes to improving livelihoods, increasing economic security andincomeopportunitiesforthepoor.
The information set underpinning the PEAF can also be used to link to other global initiativesincluding:
• UNFrameworkConventiononClimateChange(UNFCCC)–makinglinksbetweenclimatechangeand its impacts on environmental assets (condition) and their ability to continue providingbenefits.Vulnerabilityandhealth–drivenbyclimatechangeandnaturaldisasters
• UNConventiontoCombatDesertification(UNCCD)–therearelinksbetweenthemanagementof land to prevent desertification and pro-poor outcomes which require an understanding ofenvironmentalassetsandhowtheyarechangingincondition.
• BIOFIN – biodiversity finance and expenditure on environmental assets thatmay also providepro-poorbenefits
• WAVES – through wealth accounting and linking to environmental assets and distributionalaspects
6.1 PEAFapplicationtoSDGs
Thereare twokeypoverty relatedSDGgoals,Goal1:Endpoverty inall its formseverywhereandGoal 2: End hunger, achieve food security and improved nutrition and promote sustainableagriculture.Table2belowliststhekeyareaswithintheSDGsthatthePEAFcouldbeusedtosupportaccounting,measurementandreporting.
Table2SDGgoalsandaccounts
SustainableDevelopmentGoals PEAFrelatedaccounts1.4 ensure that all men and women, in particular thepoorandthevulnerable,haveequalrightstoeconomicresources including ownership and control over landandotherformsofpropertyandnaturalresources
Spatial land tenure accounts linked tospatialhotspotsofpoverty
1.5 build the resilience of the poor and those invulnerable situations and reduce their exposure andvulnerability to climate-related extreme events and
Ecosystem accounts vulnerable to climatechange(thatthepoorrelyon)Ecosystem accounts that are linked to
8UNDP-UNEP Poverty Environment Initiative website
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other economic, social and environmental shocks anddisasters
regulatingclimatechange–floodcontrol
1.a Ensure significantmobilization of resources from avariety of sources, including through enhanceddevelopmentcooperation,inordertoprovideadequateand predictable means for developing countries, inparticular least developed countries, to implementprogrammes and policies to end poverty in all itsdimensions
Environmental expenditure accounts linkedto spatial location (land and ecosystemaccounts)Combined ecosystem condition accountsandenvironmental expenditure toenhancereturn on investment and the spatialcoordination of investment (povertyhotspots)
1.b Create sound policy frameworks at the national,regionalandinternationallevels,basedonpro-poorandgender-sensitive development strategies, to supportacceleratedinvestmentinpovertyeradicationactions
Combined ecosystem condition accountsandenvironmental expenditure toenhancereturn on investment and coordination ofinvestment– targeted investment linked topolicywithoutcomebasedreporting
2.3doubletheagriculturalproductivityandincomesofsmall-scale food producers through secure and equalaccesstoland
Spatial land (agriculture) tenure accountslinkedtospatialhotspotsofpovertyEcosystem (agricultural and soil) conditionto accounts measuring agriculturalproductivity
2.4 ensure sustainable food production systems andimplementresilientagriculturalpractices that increaseproductivity and production, that help maintainecosystems,thatstrengthencapacityforadaptationtoclimate change, extreme weather, drought, floodingand other disasters and that progressively improvelandandsoilquality
2.5maintain the genetic diversity of seeds, cultivatedplantsand farmedanddomesticatedanimalsand theirrelated wild species, including through soundlymanaged and diversified seed and plant banks at thenational,regionalandinternationallevels,andpromoteaccess to and fair and equitable sharing of benefitsarising from the utilization of genetic resources andassociated traditional knowledge, as internationallyagreed
Spatial ecosystem (agricultural) geneticdiversity accounts linked to diversificationriskandclimateexposure.
• 17.18 By 2020, enhance capacity-building support to developing countries, including for leastdevelopedcountriesandsmallislanddevelopingStates,toincreasesignificantlytheavailabilityofhigh-quality,timelyandreliabledatadisaggregatedbyincome,gender,age,race,ethnicity,migratorystatus,disability,geographiclocationandothercharacteristicsrelevantinnationalcontexts
• 17.19By2030,buildonexistinginitiativestodevelopmeasurementsofprogressonsustainabledevelopment that complement gross domestic product, and support statistical capacity-buildingindevelopingcountries
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7 PEAFandcountrylevelapplicationsThe following sections outline how the PEAF may be applied to enhance integrated planning,budgetingandmeasurementinBangladeshandLaosthroughPEIandotherrelevantinitiatives.
7.1 Bangladesh
TheBangladeshBureauofStatistics(BBS)hasa longhistoryofreportingenvironmentstatistics.Atthetimeofwritingthisreport,theCompendiumofEnvironmentStatisticsofBangladesh2009wasavailableforreview9.Thecompendiumcontainsdataforover60itemsfor10timeperiodsbetween1995-96and2007-08.Data included inthecompendiumrangeacrossanumberofareas includingforest, rice and cropping areas, fish catch, gross value of agricultural production, climate data(rainfall,temperature,airquality),contaminatedland,waterquality/quantity(supplyanddemand),floodareas,populationdensityandhouseholddata.
MorerecentlytheDevelopmentResultsFrameworkofthenewlyapproved7thFiveYearPlanaimstostrengthen the BBS’ branch on environmental accounts ability to generate and analyse data. Thiswork is also closely linked to the Bureau’s aims to improve the current poverty measurementmethods.
Further work has been done by the Bureau looking at links between poverty, vulnerability andclimate change. Thiswork has beenpromotedbecauseBangladesh is one of themost vulnerablecountries to climate change. This determination is based on its geography, amultiplicity of rivers(over 300 rivers and57 transboundary rivers), themonsoon climate, adeltaic landscapeofwhich80% is a floodplain, a high population density (1045/km2) and finally a predominantly agrarianeconomywithhigh levels of poverty. The following are keyobservationsmadeby theBBSwhenconsideringthenexusbetweenvulnerabilityandpoverty:
• Poverty is mainly viewed as an indicator of lack of access to resources and incomeopportunities, but it has other aspects of social positioning such as geographical location,age, sex, class, ethnicity, community structure, and community decisionmakingprocessesthatdeterminepoorpeople’svulnerability.
• Poor households often identify vulnerability as a condition that takes into account bothexposurestoseriousrisksanddefencelessnessagainstdeprivation.
• Thereisapoverty-vulnerabilitynexusholdingacause-effectrelation.Thus, they conclude that it is important to integrate poverty-environment-climate linkages intonational development planning. The Report “Bangladesh: Disaster-related Statistics 2015: ClimateChangeandNaturalDisasterPerspectives”hascoveredfollowingobjectives:
1. To measure the socio-economic characteristics of Households and Population in disasterproneareas
2. To assess the loss of agricultural production (Crops, Livestock, Poultries, Fisheries andHomesteadForestry)duetonaturaldisasters;
3. Tocalculatethedamageandlossofcultivablelandanduseablelandindisasterproneareas;4. To measure the damage and loss of residence (dwelling), cowsheds, and kitchens in thedisasterpronearea;
6. Toassessthevulnerabilityofwomen,children,agedpersonsandpeoplewithdisability7. To collect information on the perception and knowledge about climate change, impact ofclimatechange,environmentanddisastermanagement.
7.2 Bangladesh–PEAFApplicationsandExtensionsBBS hasmade significant progress in understanding the vulnerabilities and households to climateinduced shocks. This work has also been extended to undertake a preliminary analysis of theeconomicimpactsonsectors.However,thelinkbetweenpovertyandenvironmentfromastatisticalpoint of view could be improved. Key areas in which the PEAF can improve the use of currentlyavailabledatafromthestatisticsofficeinclude:
• Determining agreed disaster prone areas in terms of both administrative areas andecologicalfactors.
• Spatial mapping/delineation of ecosystem assets (particularly those related to rivers andflooding)usingSEEAbasedclassificationsofecosystemtypeanddevelopingmeasuresoftheconditionofthoseecosystemassets.Aninitialfocusmaybeondisasterproneareas.
• Spatial referencing of household data collection surveys, in particularly identifyingconsumption,incomeandwealthforpoorandvulnerablegroups.
• Developinglandusedatasets,withaparticularfocusontypesofagriculturalproduction.• Reconciling spatially detailed agriculture, forestry and fisheries production data with
national accounts estimates of production for these activities andwith landuse data sets(particular focus should be placed on understanding own-account and subsistenceproduction).
Anexampleofpolicyapplicationsforsocialprotection:UsinganintegratedsetofdataprovidedbythePEAFforparticularpoliciesorinvestmentdecisions,itcanhelpbetterintegrateclimatechangeandenvironmentaldeterminantsofpovertyintonationalpovertyreductionprogrammes.Bybettermeasuring and accounting for the causal relationships between poverty and environment/climatechange, national social protection programs can better target the beneficiaries (geographic,populationsgroupsneardisaster-proneareas–e.g.peopleundernationalpovertyline,peoplewhohavehighriskoffallingbackintopoverty,disadvantagedpopulationsorgroupsofwomen,etc.)andreducevulnerabilityofthepoortofutureenvironmentandclimaterelatedrisks,andbuildresilienceofthepooroverthelong-runthroughbuildingtheirassets(materialandnon-materialcapitalofthepoorsuchaseducation,health).Further, better integrationof environment and climatedeterminants of poverty, social protectionprograms can help the country reduce the need for future public spending on social protection.Socialprotectionprogramscouldhelpthemoderatelypoorbutvulnerablepopulationgroupsavoidfalling back to below poverty line in the event of environment/climate shocks, which could haveincreasedthenumberofpeoplewhomayneedsocialprotectionandsupport. Ontheotherhand,environmentandclimate-friendlysocialprotectionprogramscanhelpabsolutepoorliftthemselvesoutof poverty line through reducing their exposure and vulnerability to climate andenvironmentrelatedrisk.
7.3 LaosTheSeventhFive-YearPlan (2011-2015) isa continuationof theSixthFive-YearPlanand ithasanimportant role in realizing the Ninth Party Congress Resolution. It is regarded as a measure forachievingsocio-economicdevelopment,industrializationandmodernizationtowardstheyear2020.It is also expected to create new changes by taking firm steps to graduate from LeastDevelopedCountry (LDC) status by 2020, andwiden and deepen regional and international integration. TheSeventh Plan is characterized by a continuation of the dynamic plan ― “Boukthalu Plan (BreakthroughStrategy)”whichconsistsofthefollowingfourdynamicobjectives:(1)mindset;(2)humanresourcedevelopment; (3)mechanism, regime,administrative rules,and; (4)poverty reductionbymobilizing resources and implementing special policies, and constructing strategic basicinfrastructure.
The PEI program worked with the Laos government to include a series of PE indicators in thedirectionsandmaintasksofthesocio-economicdevelopmentsectionoftheSeventhFive-YearPlan(see Table 3 below). The indicators focus on districts with land use plans, households fuel use,populationfoodsecurityandpopulationsexposedtohighenvironmentalrisks.
PEIndicators Datalayer/Source Scale/Resolution PEAFAccountExtensionsNumber of districts withlanduseplansdeveloped
- District level land useplans- Kumbanandvillage-levellanduseplan- Mapofconservationareas(MAF)
Access and ownership ofENRLink to land use/condition,agriculture, water, rivers,lakes
%poorpopulationwho are exposed to, orliving in areas of, highenvironmentalrisk
- map of populationdensity(Census)- map of povertyincidences or density(Census)-mapof floodordroughtrisk(MRC,WREA,CDE)-mapofclimatechangeVulnerability(WWF)
National / district(population/poverty)
Link and overlay to ENRlocationsLinktoENRlocationsLink to conservation areas,forests, rivers, land use,ecosystemsLink to conservation areas,etc
Table3LaosPovertyIndicators
7.4 Laos–PEAFApplicationsandExtensionsThe proposed data collection objectives (see Table 3 above) consider each of the indictorsspecifically however they are not well integrated across indicators and nor do they address thespatiallylinkagesbetweendatasetsandindicators.KeyareasinwhichthePEAFcanimprovetheuseofcurrentlyavailabledataanddatacollectedaspartoftheSeventhFive-YearPlantoinformthePEIinclude:
• Assetextentaccounts–o Extend land use planning data to include full coverage to all areas of Laoswith a
focus on understanding areas used for agriculture by type of agricultural activity(e.g. crops, plantations, livestock, etc.) and productivity (output per hectare) andconditionoftheland
o Extendconservationmappingtoincludeotherenvironmentalassetsincludinglakes,rivers,wetlands,forests,andotherkeyecosystemtypesfollowingtheSEEAclassesofecosystemassets.
Anexampleofpossiblepolicyapplications:ThePEAFaccountscanbeusedtoreportonthelocationand percentage of the population that are food insecure and be used to target policy responses.Publicauthorities(local,provincialandnational)candevelopintegrateddatathroughthePEAF,anddeterminemajor causesof food insecurity related toenvironmental assets, suchas access to andownershipoverlandorotherassetssuchasNonTimberForestProducts.Furthertheaccountscanbe used to report of the condition of the lands or assets that are able to provide food securityservicesandbenefits.
Oncethesecausallinksareclear,publicauthoritiescanthenassesstheircurrentpoliciesandpublicinvestments related to these causes of food insecurity, their efficiency and effectiveness andpropose measures to address them, through changes in sectoral or local public investments orregulatory or institutional arrangements (e.g. access to productive land or forests resources ormeasurestoimprovetheirconditionsofenvironmentalassets).
8 PEAF:Nextsteps
ThisreporthaspresentedPEAFfor linkingtheenvironmenttopovertytohelpquantifythePEN. ItcanbeusedtosupplementandimprovetheapplicationofcurrentPEtools.However,furtherworkis requiredto refine the frameworkwitha focusonproviding furtherguidanceondatacollection,analysis and how the framework can be applied to inform core economic growth and povertyreduction policies, plans and programmes. Building on the SEEA and specifying poverty from aspatialperceptiveprovidesanopportunitytoimprovecurrentapproachestopovertymeasurementanddevelopnewindicatorsthatcanbeusedtobettertargetregionalandsub-nationaldevelopmentpolicies,programmesandprojects.
Basedon theanalysis contained in this report the followingarea setofpossible steps thatothercountriesmightapplytobuildonthePEAF:
1.Developing landusemapsespecially foragriculture, forestryand fisheriesandwithparticularemphasis on detailed information by crop type, plantation, grazing etc. The SEEA Land Useclassificationisparticularlysuitedtothisandforatleastagriculturalareastheinformationwillbeafocusofcollectionintheforthcoming2020RoundofAgriculturalCensuses.Thecensusisbeingco-ordinatedbytheFAOinwhichallcountriesshouldbeundertaking(theCensusformthathasbeendeveloped uses the SEEA land use classification). This information is particularly relevant to thenexusbetweenenvironmentalassetextent,condition,climatechangeandfoodsecurity.
2.Developspatialmeasuresofagriculture,forestryandfisheriesproductionwithparticularfocuson reconciliationwith national accounts estimates and own-account/subsistence production. InmanyAsiancountriesproductiondataisoftenundertakenatadetailedadministrativelevelandsothis shouldbeapossible.Co-ordinationwith the finalnational accounts resultsmaybe the largerchallenge.Thedatawillhelptounderstandthedifferencebetweenfoodproducedforsaleandfoodproducedfor‘own’consumption,andtheoverall linktoenvironmentalassetcondition.Ownershipoflandmayalsoemergeasanissuewhendeterminingiffoodissoldorconsumed.
4.Undertake land cover and ecosystem typemapping across the country applying SEEA basedclassifications.Akey stepwillbeunderstanding the linksbetween theecosystemunitboundariesandadministrativeboundariesthatgenerallyunderpinsocio-economicdata.
5. Developing condition measures for ecosystem assets. A particular focus might be placed onconditionmeasuresforagriculturalsoil,forestsandwaterbodies(riversandlakes)asthesewillbecriticalinunderstandingtheuseoftheenvironmentbythepoor.
KeystrengthsofthePEAFare:
• Its ability to inform the global sustainable development debate and link with globalmovementstowardsmoreintegratedenvironmental-economicaccounting(SEEA).
• MethodologicaldevelopmentsintheSEEAcanbeeasilyintegratedintothePEAF• The ability to move beyond current ‘symptom’ focused poverty indicators to a more
integratedandcausallylinkedsetofindicators.
Buildingonthisreportandlookingtothefuturetoestablishanevidencebasefordealingwithtrade-offsbetweenpovertyandenvironmentalpoliciesandinvestmentsandtherebyincreasingefficiencyand effectiveness of achieving the inter-related targets of the SDGs, there are a number ofopportunitiesforfurtherdevelopmentincluding:
PEAF builds on current global accounting initiatives (SEEA) however its use of the environmental(economic) data for accounting and reporting are quite new requiring communication andsocialisation.ThePEAFprovidesasimplerbutmoreintegratedapproachtoaccountingforthePEN,however how it builds and extends on current approaches is important to communicate anddemonstratethoselinkagesordertogainacceptanceandadoption.
CountrylevelpilotstudiescanbeusedtodemonstratetheutilityofthePEAFandincommunication.Thepilotstudiesprovidehands-onexperience forcountriesandalsoguidanceonhowto improvethePEAF for application inother countries. The countriesbenefit frompilot studiesbecause theywill improve their understanding of the PEAF and gain capacity (capability) in the collection andcollationofdataforreportingonthePEN.
Current PEI tools have been designed to collect and provide informationwithin focused areas ofinterest: Public (climate, environment, poverty) expenditure and institutional reviews; Economicanalysis of (un) sustainable use; Environmental and social impact assessment;Household surveys;Integratedecosystemassessments;Institutionalcapacityassessments;MonitoringandevaluationofPElinkedindicators;andValuationofecosystemservices.
However, thePEAF isan integratedandcoherentapproach to thecollectionandcollationofdatathat can be applied in a number of ways to inform most of the tools. The advantage of PEAFapproachislowercostsinthecollectionofdataandthereuseandintegrationofdatatounderstandhow key areas of interest are changing and causally linked – working across all PEI and otherintegratedplanningandbudgetingtoolsinanintegratedandcoordinatedmanner.
The current PEAF conceptual report does not provide sufficient detail for other to adopt andimplement.Furthermaterialneedstobeproducedinordertoprovidetraining.ThismaterialisalsolinkedtothesocialisationofthePEAF–withusewillcomegreaterawareness.
5) Develop a methodological reference document to support the integration andimplementationofPEAF.
Overthemediumto longtermamorecomprehensivedocumentcouldbewrittenthat linksmoresubstantially to the current SEEA family of publications and to current economic reporting,particularlytheSNAandregionaleconomic(development)reportingprocesses.
Undertake a review of the SDG reporting needs and identify specific accounts that could bedevelopedbasedonthePEAF.ProvideguidancematerialonthedataandinformationthatcouldbecollectedtobuildtheaccountsandhowtheymaybeusedtodevelopedindicatorsforPEN.
PEI isplanning togather feedback from relevantpartnerson thePEAFand test theapplicationofPEAF through selected PEI country-based projects. Based on the feedback and the country-levelapplicationresults,PEIwillfurtherrefinethePEAFtoinformglobal,regionalandnationaleffortstoadvancetheintegratedapproachtoimplementingtheSDGs.
