Part I – EO as the Essential Ingredient to Ecosystem Accounting 

In the first of a two-part series, leading experts discuss what Ecosystem Accounting is, how it works and why Earth Observation data is so essential.  

When it comes to ecosystem accounting, the place to start is figuring out what it’s all about. According to the UN System of Environmental Economic Accounting (more on them shortly), ecosystem accounting is an integrated, comprehensive statistical framework for organising data about habitats and landscapes, measuring ecosystem services, tracking changes in ecosystem assets, and linking this information to economic and other human activity. 

“For the past 75 years, we have been measuring our success and well-being in the dollars and cents of the Gross Domestic Product (GDP), while letting nature pick up the tab for our pollution, deforestation and degradation,” says UN Chief Economist Elliott Harris.  

Ecosystem accounting changes this by going beyond GDP and making nature count. “With this framework, every country in the world will be able to measure its natural capital and understand the immense contributions of nature and the importance of protecting it,” adds Harris.  

Going beyond the GDP 

Although in development since the 1990s, ecosystem accounting really came into its own with the launch of the System of Environmental Economic Accounting-Ecosystem Accounting standard in 2021.  

The United Nations’ System of Environmental Economic Accounting (SEEA) facilitates more informed decision-making by organising and presenting statistics on the environment and its relationship with the economy. To do this, it follows a similar accounting structure as the System of National Accounts, the internationally agreed standard set of recommendations on how to compile measures of economic activity, such as GDP. 

“If we want to manage our ecosystems better, we need to have good information on them,” said Lars Hein, Professor of Ecosystem Services and Environmental Change and Deputy Chair of the Environmental Systems Analysis Group at Wageningen University, who spoke during a TEDx talk.  

The problem with GDP is that it doesn’t tell us anything about how the environment is changing. “Ecosystem accounting adds this information into our economic statistics,” said Hein. “It is a system that can be used to analyse how ecosystems are doing and how people are using those ecosystems.”    

“Ecosystem accounting is a game-changer, putting nature on the same level as the economy and going well beyond GDP,” said Alessandra Alfieri, Head of Environmental Economic Accounts Section at the UN Statistics Division. “Decisions can no longer only take into account the economy, they must also look at the environment.” 

Alfieri made her remarks during a November 2021 EO Cafe entitled Ecosystem Accounting, One Step Further to Achieve the Green Deal Objectives. 

Inherently spatial  

To provide such game changing information, the SEEA notes that ecosystem accounting takes a spatial approach to identifying the location and size of ecosystem assets, the ecosystem services provided, and the location of beneficiaries (e.g., households, businesses, governments). For example, the beneficiaries of water filtration ecosystem services are likely located downstream of the ecosystem asset that provides that benefit. 

Another example can be seen in a forest ecosystem. Here, Alfieri explained that ecosystem accounting will measure the extent of the forest ecosystem asset, its condition (quality of the ecosystem, such as soil depth), the ecosystem services (how the ecosystem benefits the economy or people, such as filtering water), and the benefit (i.e., clean water that is used by society) over a period of time. It then presents this information using maps.  

Because ecosystem accounts are inherently spatial, there’s an implication that they heavily depend on the availability of spatially explicit datasets – including Earth Observation data. “By connecting satellite images with ecosystem accounts, it becomes possible to work with updated information and maps, meaning you can connect ecosystem accounting directly to policy making,” said Hein.     

There’s no EA without EO  

The emergence of dense EO data streams at appropriate scales, combined with advances in digital technologies, offers numerous advantages for countries. “With EO data, any country can efficiently monitor the extent and conditions of their ecosystems, determine ecosystem services and implement their ecosystem accounting,” said Marc Paganini, Technical Officer in the Directorate of Earth Observation Programmes at the European Space Agency and an EO Cafe panellist. 

Because the classification of ecosystem types is the backbone of ecosystem accounts, Paganini explained that, for the EO community, the challenge is to develop reliable mapping of ecosystem types that go beyond traditional land cover use and instead links to the adopted ecosystem typologies. “We also need to be able to integrate EO data with other spatial datasets,” he said.   

These challenges aside, Earth Observation is clearly the key to implementing successful ecosystem accounting – and EO companies should leverage the opportunity. “There’s no spatial data without EO, and without such data, there’s no ecosystem accounting,” said Jan Erik Petersen, Head of Spatial Assessment Team at the European Environment Agency, who also spoke at the EO Cafe webinar. 

To learn more about this opportunity, stay tuned for Part II of our series, which will take a deep dive into how Earth Observation can shape ecosystem accounting and look at the specific tasks that EO is already being used for. The article will also cover ecosystem accounting obligations in Europe, both for Member States and companies, and what this means for EO specialists.  

Interested in leveraging the opportunities that ecosystem accounting presents? We can help, so drop us a line to learn more. 

Also, be sure to mark your calendar for the 2022 Workshop on Earth Observation for Ecosystem Accounting. Organised by the European Space Agency, in collaboration with the Environmental-Economic Account section of the United Nations Statistics Division and the Earth Observations for Ecosystem Accounting initiative of the Group on Earth Observations, the online event is taking place 28 November – 1 December.