An ecosystem is a community of plants, animals (including people), and microorganisms interacting with one another and their non-living environment. Healthy ecosystems improve our wellbeing and contribute to our economy. This contribution is not always clear – and can be invisible to decision-makers.
Ecosystem accounts track how changes in the environment affect our wellbeing and economy. They build on land accounts to give us the next level of detail. For example, a land account can show changes in forest cover while an ecosystem account can describe the condition of the remaining forest and the effects on local communities. Ecosystem accounts are a reliable way for economic policy to include the value of the natural environment.
Ecosystem accounting is in the early stages of development in Australia and internationally. The United Nations adopted the standard for ecosystem accounting in March 2021.
Our work to develop ecosystem accounts
We support research to develop ecosystem accounts for policy applications.
- Murray-Darling Basin pilot project
- Gunbower-Koondrook-Perricoota case study
- Box Gum Grassy Woodlands
- Mitchell Catchment
- Valuing Indigenous Cultural Connections
- National Ocean Ecosystem Account
The feasibility of Australia’s first national ecosystem account for the coastal marine environment, focusing on blue carbon ecosystems, is currently being assessed. See National Ocean Ecosystem Account.
What ecosystem accounts offer
Describe how the economy and environment are interacting over time.
Measure the private and public benefits of an investment.
Assess costs and benefits to understand which policy creates the greatest public benefit.
Assess environmental impacts to understand the best location for a development.
Analyse the relationship between environmental change and productivity to separate or ‘decouple’ productivity from harm.
How ecosystem accounts work
The four ‘building blocks’ of ecosystem accounts are:
- stocks of ecosystem assets
- the condition or ‘health’ of the assets
- the flows of goods and services from the assets
- the value of the benefits from the goods and services.
An ecosystem asset is a space that contains a specific type of ecosystem.
The benefits people receive from the environment depend on the type, size and health of ecosystem assets. Ecosystem accounts can also estimate the value of ecosystem assets directly.
Useful accounts require detailed data.
How ecosystem accounts can be used
Ecosystem accounts can be used by anyone who is interested in communicating or analysing change in complex systems where there is a relationship between the environment and the economy. For example, an investor may be interested in understanding the environmental impacts of a proposal, or a decision-maker in the public sector may be interested in estimating the ‘return on investment’ in a new policy proposal that involves ecological restoration.
Users of ecosystem accounts match the information from the account tables to their communication or decision-making needs.
Users identify which account elements are relevant by considering:
- Which aspects of the ecosystem asset are being enhanced or degraded?
- Who may be interested (key stakeholders)?
If the tables include monetary values, it helps if users understand the economic elements of the accounts, including the distinctions between:
- Use and non-use values
- Exchange and welfare values
- Market and non-market values.
These concepts are described by the Productivity Commission in their Staff Working Paper on Environmental Policy Analysis: A Guide to Non-Market Valuation (2014).
Some decisions need more information than is available in land accounts. For example, a land account can quantify changes in forest cover, but will not describe the condition of the remaining forest, or quantify the impact of the change on local communities. Ecosystem accounts bring together a richer set of environmental information, enabling decision-makers to consider deeper links between social, economic and environmental change.
Some decisions require information to be presented in monetary forms (such as cost-benefit analysis) whereas others can rely on biophysical information (such as environmental impact assessment). Ecosystem accounts can support both types of decisions.
As with all types of environmental-economic accounts, a key strength of ecosystem accounts is consistency with economic statistics, including GDP. An ecosystem account could be combined with economic statistics from the ABS to understand the relationship between environmental change and the productivity of Australians, highlighting important interactions that are often hidden from decision-makers. This information may be used to better identify policies which separate or ‘decouple’ productivity from environmental harm.
The potential uses of ecosystem accounting are diverse, including:
- environmental policy making – helping to understand which policy alternative creates the greatest public benefit
- natural resource management – helping to understand the optimal balance of productivity and environmental outcomes
- planning, development and conservation activities – helping to understand the best location for an activity or development
- providing measurement frameworks for private sector investment – helping to understand (and report) both private and public benefits of an investment.
The Department is supporting several pilot projects to test approaches for measuring ecosystems and their services that can be used to ecosystem accounts. These pilots include projects in:
- Gunbower-Koondrook-Perricoota Forest Icon site – in partnership with the Murray-Darling Basin Authority.
- Box Gum Grassy Woodlands, with the Australian National University under the Threatened Species Hub of the National Environmental Science Program.
- Mitchell Catchment, with Griffith University under the Northern Hub of the National Environmental Science Program.
Pilot accounts from these projects are expected to be released in 2021. These pilot accounts will inform the development of future ecosystem accounting projects, including the feasibility and utility of national ecosystem accounts.