Natural capital accounting for mainstreaming climate change in decision-making

14-12-2018 | Publication

The World Bank WAVES programme supports several countries with the development of natural capital accounts (NCAs). NCAs link natural capital to a country’s system of national accounts and can also be applied to formulate climate-change-related policies.

At the request of the WAVES programme, PBL has evaluated how NCAs are currently used in climate-change-related policies. This refers to mitigation policies to reduce greenhouse gas emissions and to adaptation policies to make countries less vulnerable against the impacts of climate change. This paper shows that, as climate change touches upon almost all areas of society and government, nearly all natural capital accounts, both from the SEEA Central Framework and the SEEA Ecosystem Accounts, are useful for formulating climate-change-related policies and assessments. But, which accounts are most relevant depends on the questions policymakers face.

This paper thereby provides the following key insights:

  • Many countries have already adopted a set of SEEA accounts that are relevant for informing mitigation polices. Amongst others, air emissions accounts, Environmental Protection Expenditures Accounts and Environmental Goods and Services Accounts, energy accounts and several of the accounts from the System of National Accounts provide relevant information. So far, accounts seem to be used less often for reducing emissions related to LULUCF, the agricultural sector, waste handling or international trade, even though some interesting examples illustrate their applicability with respect to these themes, as well.
  • To date, only a limited number of countries are using the natural capital accounts for informing adaptation policies. However, those who do use it, such as Australia, Botswana and the Netherlands, show that the information in the natural capital accounts is useful for monitoring a country’s resilience to climate change impacts and in preparing adaptation policies.
  • There is a gap between potential and current use of the natural capital accounts for climate-change-related policies. To advance the application of natural capital accounting to policy, it is important that users, producers and analysists of the accounts unite to decide about the most relevant policy questions and accounts. As almost all natural capital accounts are useful, it is important to choose wisely: those accounts that can inform the most urgent policy questions.
  • This review also shows that the use of the accounts for climate issues differs between developing and developed economies. Developing economies focus more on natural resources accounts, such as accounts for land, water, forest and agriculture, which are especially used for climate change adaptation issues. The developed economies, on the other hand, focus more on the emission and energy accounts, used for informing mitigation policies. Since the majority of emission reductions needs to come from developed economies, whereas the developing economies more strongly feel the impact of climate change, this makes sense. But, as discussed, opportunities for developing and developed countries to learn from each other exist nonetheless.