Chapter

Chapter III. Physical flow accounts

Author(s):
United Nations;European Commission;Food and Agricultural Organization of the United Nations;International Monetary Fund;Organization for Economic Co-operation and Development;World Bank
Published Date:
April 2017
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3.1 Introduction

3.1 An economy cannot function without using natural resources and other inputs from the environment and using the environment to absorb the unwanted by-products of economic production. Measuring the flows of natural inputs into and releases of residuals from the economy can therefore provide instructive information. This measurement is generally carried out using physical units of measure.

3.2 The usefulness of accounting for physical flows is considerably strengthened when they are organized using the same framework used to assess economic flows in monetary terms. This allows for consistent analysis of the relationships between the flows of natural inputs and economic activity, the relationships between economic activity and the releases from the economy and, significantly, the relationships between the flows in physical and monetary terms. The organization and combined presentation of both physical and monetary flows on specific topics are discussed in chapter VI.

3.3 The framework for measuring physical and monetary flows is also aligned with the framework for the measurement of environmental assets as presented in chapter V. This is a particularly important connection for natural resource flows and for the assessment of production processes in extracting industries. Relevant flows are recorded both in the asset accounts and in physical supply and use tables.

3.4 The use of the SEEA framework allows robust indicators to be established for the consumption of resources relative to economic indicators such as output and value added, since there is a parallel in the underlying accounting principles. Indicators on energy use, water consumption and air emissions by industry are further evidence of the potential uses of data organized in a coherent and consistent manner.

3.5 The compilation of data on physical flows requires the use of a range of data sources and classifications. The present chapter provides an overall framework for this compilation work; more detailed guidance on specific topics, for example, energy, air emissions and water, can be found in other handbooks, manuals and guidelines. References to relevant publications are presented at the end of this publication.

3.6 At one level, measuring physical flows requires large amounts of basic data, consistent classifications and measurement units, and an agreed framework within which data can be structured at different levels of disaggregation. At another level, within the same framework, more aggregate measures of physical flows may be compiled, perhaps focusing only on specific types of flows (e.g., the use of energy by households for transport, or the abstraction of water for use in agriculture).

3.7 Therefore, while this chapter provides a comprehensive examination of the systems of physical flow accounting in common use, it should be recognized that a complete implementation of the accounts presented here is ambitious and by no means always necessary, since useful analysis can be conducted with any of the individual components of a full set of physical flow accounts.

3.1.1 The physical flow accounting framework and subsystems

3.8 The physical flow accounting framework presented in this chapter provides a set of accounting principles and boundaries within which a consistent recording of all types of physical flows relating to economic activity can be made. Most commonly, the recording of physical flows will focus on particular areas of interest, such as flows of energy or water, in part because physical flows may be measured in a variety of units which cannot necessarily be compared or aggregated. This is also due to the breadth and complexity of recording all relevant physical flows in a single account. Therefore, while this chapter presents a complete accounting framework for all physical flows, it is expected that compilers will focus on the application of the general principles in specific areas, such as the measurement of physical flows of energy, water, air emissions and solid waste.

3.9 The framework for the measurement of physical flows is based on the structure of the monetary supply and use tables used to measure economic activity. In broad terms, these tables show transactions in products between industries, households, government and the rest of the world. These tables are based on the principles outlined in the 2008 SNA and are introduced in chapter II.

3.10 The same structure can be used to record the underlying physical flows relating to the transactions between the different economic units. Further, flows to and from the environment can be linked in by adding relevant columns and rows to the monetary supply and use table. These additions yield a physical supply and use table (PSUT) that can record all physical flows: (a) from the environment, (b) within the economy and (c) back to the environment.

3.11 However, unlike transactions, it is not immediately obvious that all physical flows can simply be aggregated or that all physical flows should be recorded similarly. Consequently, three different subsystems have developed within the broad supply and use framework: material flow accounting,13 water accounts and energy accounts.

3.12 In all three subsystems, the scope of physical flow accounting includes flows from the environment to the economy, flows within the economy and flows back to the environment. However, in each subsystem, different measurement units are generally used. In material flow accounting, flows are measured in terms of mass (e.g., in tonnes).14 In water accounts, the unit of measurement is volume (e.g., cubic metres) and in energy accounts the unit of measurement is energy content (e.g., joules). While all three subsystems represent only part of the total physical flows, each subsystem is a complete and balanced system of flows.

3.13 Within each of these subsystems of physical flow accounting, greater refinements of focus can be undertaken consistent with the general principles of PSUT. This is especially the case for material flow accounts. At an aggregate national level, i.e., that summing all industries, economy-wide material flow accounts (EW-MFA) can be compiled. At the same time, it is also possible to focus on detailed accounts relating to individual products, or on the flows of specific types of residuals such as emissions to air or solid waste.

3.14 Within all subsystems, there may also be interest in focusing on only one component of the physical flows, for example, energy use by industries and households, rather than on those flows in conjunction with all PSUT-related flows. Nonetheless, even in this narrower context, the same concepts, definitions and standards are applied so that the organization of data and the development of broader information systems can be supported.

3.1.2 Chapter structure

3.15 The physical supply and use approach is explained in section 3.2, including definitions of natural inputs, products and residuals. These definitions are fundamental in defining the boundaries between the environment and the economy and hence in constructing meaningful supply and use tables.

3.16 In section 3.3, a range of general accounting matters are discussed, including gross and net recording of flows and the treatment of flows between countries.

3.17 In the final three sections, the measurement of individual physical flow accounts is discussed: energy accounts in section 3.4, water accounts in section 3.5 and a number of material flow accounts, including air emission, water emission and solid waste accounts, in section 3.6.

3.2 The physical flow accounting framework

3.18 The present section applies the supply and use approach to physical flow accounting through the introduction of the broad framework and its underlying accounting principles, followed by definitions of the three key flows: natural inputs, products and residuals.

3.2.1 The physical supply and use table approach

3.19 As explained in chapter II, in the context of measuring physical flows related to supply and use, the economy is defined by the production boundary of the SNA. The production boundary comprises a specific set of economic activities carried out under the control and responsibility of institutional units in which inputs of labour, capital, and goods and services are used to produce outputs of goods and services (products).15 The SEEA recognizes that some of the inputs (natural inputs of materials and energy) come from the environment and that, as a result of the production, consumption and accumulation of products, a range of other physical flows occur that can result in the return of materials and energy to the environment.

3.20 Flows from the environment into the economy are natural inputs, flows within the economy consist of either products or residuals, and flows from the economy to the environment are residuals. This series of flows is represented in figure 3.1. Some natural inputs, after entering the economy, are recorded as immediately returning to the environment, as they are no longer required by the economy. Natural inputs that are not used in production, for example, mining overburden, mine dewatering and discarded catch in fishing, are called natural resource residuals. Also, some residuals remain in the economy instead of returning directly to the environment, for example, solid waste collected and stored in controlled landfills.

Figure 3.1Physical flows in relation to the production boundary of the economy

3.21 The underlying framework for the recording of physical flows follows the monetary supply and use tables for products as defined in the SNA and summarized in chapter II of the SEEA. The monetary supply and use table covers all flows of goods and services within the production boundary of the SNA.

3.22 The intent in physical flow accounting is to record the physical flows underpinning the transactions recorded in the monetary supply and use tables, primarily with respect to goods, and to then extend the monetary supply and use table to record physical flows from the environment to the economy (such as flows of natural resources) and physical flows from the economy to the environment (such as emissions to air and water).

3.23 Conceptually, flows solely within the environment are out of scope of physical supply and use tables, although there may be instances where the recording of such flows is useful for analytical purposes. Examples of these flows include the evaporation and precipitation of water and soil moved through soil erosion. The asset accounts presented in chapter V include flows within the environment to the extent that the flows reflect changes in the stock of environmental assets.

3.24 This general framework of flows may be applied in the case of individual commodities or groups of commodities. For example, flows of the hazardous element mercury might be tracked from the point of its extraction from the environment through its circulation within the economy and release to the environment. Alternatively, there may be interest only in analysing physical flows into the economy or out of the economy without necessarily linking the two. For example, the analysis of solid waste will focus on flows within the economy (e.g., flows to waste treatment plants) and from the economy to the environment, but not on flows from the environment to the economy.

3.25 The general framework for the full articulation of physical flows is depicted in table 3.1 in the form of a physical supply and use table (PSUT). A full articulation of all flows is generally most relevant for energy and water, where all flows can be meaningfully expressed in a single unit, for example, joules or cubic metres.16

Table 3.1General physical supply and use table
Supply table
Production; generation of residualsAccumulation
Production; generation of residuals by industries (including household production on own account), classified by ISICGeneration of residuals by householdsIndustries—classified by ISICFlows from the rest of the worldFlows from the environmentTotal
Natural inputsA. Flows from the environment (including natural resource residuals)Total supply of natural inputs (TSNI)
ProductsC. Output (including sale of recycled and reused products)D. Imports of productsTotal supply of products (TSP)
ResidualsI1. Residuals generated by industry (including natural resource residuals)J. Residuals generated by household final consumptionK1. Residuals from scrapping and demolition of produced assetsL. Residuals received from rest of the worldM. Residuals recovered from the environmentTotal supply of residuals (TSR)
I2. Residuals generated following treatmentK2. Emissions from controlled landfill sites
Total supply
Use table
Intermediate consumption of products; use of natural inputs; collection of residualsFinal consumptionaAccumulation
Industries—classified by ISICHouseholdsIndustries—classified by ISICFlows to the rest of the worldFlows to the environmentTotal
Natural inputsB. Extraction of natural inputs B1. Extraction used in production B2. Natural resource residualsTotal use of natural inputs (TUNI)
ProductsE. Intermediate consumption (including purchase of recycled and reused products)F. Household final consumption (including purchase of recycled and reused products)G. Gross capital formation (including fixed assets and inventories)H. Exports of productsTotal use of products (TUP)
ResidualsN. Collection and treatment of residuals (excluding accumulation in controlled landfill sites)0. Accumulation of waste in controlled landfill sitesP. Residuals sent to the rest of the wordQ. Residual flows to the environmentTotal use of residuals (TUR)
Q1. Direct from industry and households (including natural resource residuals and landfill emissions)
Q2. Following treatment
Total use

3.26 The rows of the table show the types of natural inputs, products and residuals. The rows for natural inputs and residuals represent an extension in the PSUT compared with the monetary supply and use table in the SNA. The top half of the table, the supply table, sets out the flows relating to the production, generation, and supply of natural inputs, products and residuals by different economic units or the environment. The bottom half of the table, the use table, sets out the flows relating to the consumption and use of natural inputs, products and residuals by different economic units or the environment. Each of these flows is defined and discussed in detail in this section.

3.27 The columns of the PSUT are structured to reflect both the activity underlying the flow (e.g., whether it is related to production, consumption or accumulation) and the economic units involved. The second column covers the use of natural inputs, the production and intermediate consumption of products, and the generation and receipt of residuals by all enterprises in the economy. It is classified by industry using the ISIC.

3.28 The third column covers the consumption of products by households and the generation of residuals from this consumption. The activity of households in extracting and collecting natural inputs from the environment for their own consumption is a productive activity; hence, this activity should be recorded in the second column under a relevant industry class.

3.29 Unlike the monetary supply and use table, no entries in physical terms are made in relation to government final consumption expenditure. Government final consumption expenditure represents the acquisition and consumption by governments of their own output and does not have any directly associated physical flow. All of the physical flows related to the intermediate consumption of governments, for example, paper and electricity, are recorded in the first column under the relevant industry class (commonly, public administration). The generation of residuals by governments in the production of their output is also recorded in the second column.

3.30 There may be analytical interest in distinguishing the non-market productive activity of households and governments from the market activity within particular industries (e.g., the abstraction of water on own account by households for final consumption). In these cases, alternative presentations of PSUT may be developed where the information on the relevant productive activity, which is an “of which” within a broader industry class, is rearranged and shown next to other flows associated with households (e.g., final consumption) or government.

3.31 The fourth column, entitled “Accumulation”, covers changes in the stock of materials and energy in the economy. From a supply perspective, this column records reductions in the physical stock of produced assets through, for example, demolition or scrapping. It also displays emissions from controlled landfill sites generated by materials discarded in previous accounting periods. From a use perspective, the accumulation column records additions to the physical stock of produced assets (gross capital formation) and the accumulation over an accounting period of materials in controlled landfill sites. Amounts of water, energy and materials that are incorporated into other products are also recorded in the accumulation column of the use table.

3.32 Accumulation flows may be classified by industry using the ISIC and, if so, can be combined with industry-level information from the second column to provide an overall assessment of flows of residuals by industry. At the same time, retaining the distinction between residuals from current activity (from the second column) and residuals from past activity (from the fourth column) may be important for some analyses. Alternatively, the accumulation flows may be classified by product, for example, by type of scrapped produced asset. Further discussion on the recording of scrapped and demolished produced assets is included later on in this section.

3.33 The fifth column recognizes the exchanges between national economies in the form of imports and exports of products and flows of residuals. Residuals received from the rest of the world and residuals sent to the rest of the world primarily relate to the movement of solid waste between different economies. Excluded from these flows are so-called transboundary flows, for example, polluted water flowing downstream into a neighbouring country or air emissions transferred into the atmosphere of other countries. Transboundary flows are considered flows within the environment and are hence out of scope of the PSUT framework. Where relevant, these flows may be recorded as supplementary items. They may also be relevant in broader assessments of the state of the environment, for example, assessments of the quality of water resources over time.

3.34 The sixth column is the significant addition to the monetary supply and use table structure. It is in this column that flows to and from the environment are recorded. Within the PSUT, the environment is a “passive” entity which does not undertake production, consumption or accumulation in the same way as units inside the economy. Nonetheless, the incorporation of the environmental column allows a full accounting for flows of natural inputs and residuals, which would otherwise not be possible.

Accounting and balancing identities

3.35 The PSUT contains a range of important accounting and balancing identities. The starting point for the balancing of the PSUT is the supply and use identity, which recognizes that, within the economy, the amount of a product supplied must also be used within the economy, most likely by a range of different economic units, or exported. Thus (using references to the cells in table 3.1)

3.36 The supply and use identity for products also applies in the monetary supply and use table. In the PSUT, the supply and use identity is also applied to flows of natural inputs and residuals, i.e., the total supply of natural inputs must equal the total use of natural inputs (TSNI = TUNI) and the total supply of residuals must equal the total use of residuals (TSR = TUR).

3.37 When applied to all three types of physical flows these equalities also relate to the fundamental physical identities underpinning the physical supply and use tables, i.e., the conservation of mass and the conservation of energy. These physical identities imply the existence of material and energy balances for all individual materials within the system.

3.38 It can be shown that, over an accounting period, flows of materials into an economy must equal the flows of materials out of an economy plus any net additions to stock in the economy. This is known as the input-output identity. The net additions to the stock comprise additions and deductions over an accounting period in (a) gross capital formation in investment goods and inventories of products; (b) physical flows of residuals to and from the rest of the world; (c) residuals recovered from the environment (e.g., oil collected following an oil spill); and (d) the accumulation of solid waste in controlled landfill sites (excluding emissions from these sites).

3.39 Thus, the input-output identity describing the physical flows between an economy and the environment (using references to the cells in table 3.1):

  • Materials into the economy = Flows from the environment (A) + imports (D) + residuals received from the rest of the world (L) + residuals recovered from the environment (M)

  • is equal to

  • Materials out of the economy = Residual flows to the environment (Q) + exports (H) + residuals sent to the rest of the world (P)

  • plus

  • Net additions to stock in the economy = Gross capital formation (G) + accumulation in controlled landfill sites (O) - residuals from produced assets and controlled landfill sites (K)

3.40 This identity may be applied at the level of an entire economy (as described) and also at the level of an individual industry or household, where notions of imports and exports relate to flows to and from the rest of the economy as well as to the rest of the world.

3.41 A number of stages in the flows of residuals need to be recognized. In the first stage, residuals are generated or come into the economy as reflected in cells (I1 and J-M) in table 3.1. These residuals are received by other units in the economy (N), accumulate in controlled landfills (O), are sent to other countries (P) or are returned to the environment (Q1). The residuals received by other units (N) may be treated or processed and then either sold as recycled or reused products (for example, reused water) or returned to the environment. If the residuals are sold as recycled or reused products, the production is recorded in (C) and the purchase in (E) or (F). The supply of the residual to the environment (possibly after treatment) is recorded in (I2) and the use in (Q2).

3.42 Natural resource residuals are shown as entering the economy from the environment (A and B2) and then as returning to the environment (I1 and Q1). Unlike natural inputs that are used in production, there are no flows of natural resource residuals in the products rows of the PSUT.

3.43 In practice, a complete PSUT is rarely compiled other than for energy and water. Nonetheless, these accounting identities and a common set of accounting principles can be applied even where only individual commodities or small groups of similar commodities are being recorded. In particular, clear boundaries in respect of the point of transition between the environment and the economy must be established.

3.44 The general definitions and boundary issues relating to natural inputs, products and residuals are presented directly below.

3.2.2 Definition and classification of natural inputs

3.45 Natural inputs are all physical inputs that are moved from their location in the environment as a part of economic production processes or are directly used in production.

3.46 The three broad classes of natural inputs are natural resource inputs, inputs of energy from renewable sources and other natural inputs as presented in table 3.2. This section discusses each of these classes and notes some specific measurement issues for natural resource inputs concerning the flows of resources affected by extraction processes but not used by the economy (i.e., natural resource residuals) and the treatment of cultivated biological resources.

Table 3.2Classes of natural inputs
1Natural resource inputs
1.1Extraction used in production
1.1.1Mineral and energy resources
1.1.1.1Oil resources
1.1.1.2Natural gas resources
1.1.1.3Coal and peat resources
1.1.1.4Non-metallic mineral resources (excluding coal and peat resources)
1.1.1.5Metallic mineral resources
1.1.2Soil resources (excavated)
1.1.3Natural timber resources
1.1.4Natural aquatic resources
1.1.5Other natural biological resources (excluding timber and aquatic resources)
1.1.6Water resources
1.1.6.1Surface water
1.1.6.2Groundwater
1.1.6.3Soil water
1.2Natural resource residuals
2Inputs of energy from renewable sources
2.1Solar
2.2Hydro
2.3Wind
2.4Wave and tidal
2.5Geothermal
2.6Other electricity and heat
3Other natural inputs
3.1Inputs from soil
3.1.1Soil nutrients
3.1.2Soil carbon
3.1.3Other inputs from soil
3.2Inputs from air
3.2.1Nitrogen
3.2.2Oxygen
3.2.3Carbon dioxide
3.2.4Other inputs from air
3.3Other natural inputs n.e.c.

Natural resource inputs

3.47 Natural resource inputs comprise physical inputs to the economy from natural resources. Thus, natural resource inputs comprise inputs from mineral and energy resources, soil resources, natural timber resources, natural aquatic resources, other natural biological resources and water resources. Natural resource inputs exclude the flows from cultivated biological resources. Cultivated biological resources are produced within the economy and hence are not flows from the environment.

3.48 For natural resources, the point at which they are recognized as entering the economy needs to be defined for each type of resource. It is recognized that some amount of economic production must be undertaken before a natural resource can be considered extracted and it therefore becomes a matter of determining the point at which the natural resource is best meaningfully described as extracted, and hence “enters the economy” as part of a longer production process.

3.49 All natural resource inputs are recorded as entering the economy from the environment. The majority of natural resource inputs that enter the economy (e.g., extracted minerals, removals of timber, water abstracted for distribution) become products. However, some natural resource inputs do not subsequently become products and instead immediately return to the environment. These flows are termed natural resource residuals.

3.50 There are three types of natural resource residuals:

  • (a) Losses during extraction, which cover resources that the extractor would prefer to retain (e.g., losses of gas through flaring and venting);

  • (b) Unused extraction, which covers resources in which the extractor has no ongoing interest (e.g., mining overburden, mine dewatering and discarded catch);17

  • (c) Reinjections. These flows cover natural resources that are extracted but are immediately returned to the deposit and may be re-extracted at a later time (e.g., water reinjected into an aquifer and natural gas reinjected into a reservoir).

3.51 Table 3.3 presents examples of different natural resource inputs. It separates the quantities of resource extracted into those amounts that are intended and available for use in the economy (i.e., extraction used in production) and those amounts that return to the environment (i.e., natural resource residuals). In general terms, the point of entry to the economy is the point at which the resource is available for further processing. The notion of processing includes the transportation of the resource; hence, the extraction point should be as close to the physical location of the resource as possible.

Table 3.3Examples of natural resource inputs
Natural resourceExtraction used in productionNatural resource residual
Mineral and energy resourcesGross ore; crude oil; natural gasMining overburden; flaring, venting at well head; reinjection of natural gas
Soil resourcesExcavated soil used for agricultural, construction and land reclamation purposesDredgings; unused excavated soil
Natural timber resourcesRemovals of timberFelling residues
Natural aquatic resourcesGross catch less discarded catchDiscarded catch
Other natural biological resourcesHarvest/captureHarvest/capture residues
Water resourcesAbstracted waterMine dewatering

3.52 In some cases, there is a clear link between the class of natural resource that is extracted and the associated natural resource residual. For example, felling residues are in the same class of natural input as removals of timber resources. However, in other cases, the classes are different. For example, for soil and rock moved in the extraction of minerals, the total natural resource input will be a combination of the minerals extracted and the soil and rock moved (mining overburden).

3.53 In situations where a natural resource residual is subsequently sold, for example, felling residues for fuelwood, the flows are recorded as extraction used in production. The recording of extractions used in production and natural resource residuals is consistent with the recording of extraction in the asset accounts described in chapter V.

Biological resources

3.54 Biological resources require special consideration in the determination of the boundary between the environment and the economy. To ensure consistency with the production boundary, a distinction must be made between those resources that are considered to be cultivated as part of a process of production (cultivated biological resources) and those resources that are not produced (natural biological resources).

3.55 The criteria used to make the distinction include the extent of direct control, responsibility and management over the growth and regeneration of the biological resource. These criteria are discussed in greater detail in chapter V with regard to timber resources (sect. 5.8) and aquatic resources (sect. 5.9). A consistent application of the criteria should be maintained for the purposes of both asset accounts and physical flow accounts.

3.56 Applying the distinction is important because the accounting treatment varies depending on whether the resource is natural or cultivated. For natural biological resources, the resources are considered inputs to the economy at the time they are extracted, following the logic underlying the presentation in table 3.3. However, cultivated biological resources are not considered natural resource inputs and are instead treated as growing within the economy.

3.57 This difference in treatment has implications for the recording of other physical flows. For natural biological resources, the use of oxygen and nitrogen, and the uptake of soil nutrients and water are treated as flows within the environment and only the actual harvest of resources is considered to flow into the economy.

3.58 For cultivated biological resources, a complete accounting of physical flows requires the recording of the nutrients and other substances absorbed from the environment as natural inputs, since the biological resources themselves are already “in” the economy. The physical flows resulting from metabolism (e.g., photosynthesis and respiration) and transpiration either are embodied in products or return to the environment as residuals.

Inputs of energy from renewable sources

3.59 Inputs of energy from renewable sources are the non-fuel sources of energy provided by the environment. These are increasingly important sources of energy for economies in many countries. Inclusion of these inputs provides a basis for a complete balance of the flows of energy between the environment and the economy when measured in terms of energy content (joules). Inputs of energy from renewable sources are classified by source. The different sources include, but are not limited to, solar, hydro, wind, wave and geothermal. Inputs of energy sourced from natural resources, such as natural timber resources, are not included under this heading, nor are energy inputs from cultivated timber resources, other cultivated biomass, or from solid waste.

3.60 Estimates of inputs of energy from renewable sources should reflect the amount of energy that can be harnessed by the technology put in place to collect the energy, for example, solar panels and wind turbines. Estimates should not be based on the total potential energy that might be harnessed, particularly where there is no equipment in place to capture the energy. In practice, estimates of inputs of energy from renewable sources will generally reflect the amount of energy actually produced, commonly but not exclusively, in the form of electricity.

3.61 Special consideration is required with regard to hydropower since, depending on the physical flow accounting involved, the relevant natural inputs may be recorded as inputs from renewable energy sources or as natural resource inputs. For the purposes of compiling energy accounts, the entries concerning the flows from the environment should be considered inputs from renewable energy sources equal to the electricity produced by the hydropower plant, measured in joules. For water accounts, the flows from the environment should be recorded as natural resource inputs of water resources equal to the volume of water that passes through a hydropower plant. No double-counting is implied, since each of these accounts is compiled separately in different units for different purposes.

Other natural inputs

(a) Inputs from soil

3.62 Inputs from soil comprise nutrients and other elements present in the soil that are absorbed by the economy during production processes. Inputs from soil include nutrients (e.g., nitrogen, phosphorus and potassium) absorbed by cultivated plants as they grow. By convention, the carbon bound in soil that is released to the environment as the result of cultivation is recorded as an input from soil in order to ensure a balance in the overall system. Only the amounts actually absorbed or released are considered natural inputs. Note that these inputs are distinct from the bulk extraction and movement of soil resources that is included under natural resource inputs. Inputs of soil water to the economy are recorded as part of water resources within natural resource inputs.

(b) Inputs from air

3.63 Inputs from air comprise substances taken in by the economy from the air for purposes of production and consumption. They include the compounds and elements (including nitrogen, oxygen and carbon dioxide) used by cultivated biological resources and the substances absorbed during combustion and other industrial processes. They are part of the structure of PSUT, as they enable a balance of materials to be recorded in the system.

3.2.3 Definition and classification of products

3.64 Following the SNA, products are goods and services that result from a process of production in the economy. The scope of products included in physical flow accounts is limited to those with positive monetary value.

3.65 For an individual enterprise, different types of production may be recorded. Products that are sold to other economic units are considered to result from either the primary or secondary production of the enterprise, depending on the relative significance of the product. In principle, the enterprises that produce the same primary products are grouped to the same industry class.

3.66 In some cases, products are produced on own account. This occurs when they are not sold to other economic units but either are used directly for the final consumption of the producer (e.g., production of agricultural output consumed by farmers) or are a form of capital formation (e.g., own-account construction of a house). In both cases, the physical flows should be recorded to ensure consistency with the output and production boundaries of the monetary supply and use tables.

3.67 An enterprise may also undertake ancillary production, which generally involves the production of supporting services (such as accounting, employment, cleaning and transport services) that might be purchased from other enterprises but are produced in-house to support the production of primary and secondary products. The SNA recommends that only in cases where ancillary production is significant should distinct measures of output for the production of these different services be recorded. In such cases, separate establishments should be created that are treated as undertaking the ancillary production. However, in most cases, the production of these services is not recorded as a separate set of outputs; instead, the relevant inputs are recorded as constituting part of the overall inputs to the production of the enterprise’s primary and secondary products.

3.68 There are also some products that are used as part of production processes within an enterprise (intra-enterprise flows) that are not recognized by monetary transactions in the SNA. For example, electricity generated through the incineration of solid waste for use within a firm would not be recorded in monetary terms in the SNA. These intra-enterprise flows may be recorded for physical flow accounting, however, since there are physical flows that take place. However, the extent of recording should be consistent with the analytical purpose at hand.

3.69 There are many situations in which households undertake production involving the extraction or collection of natural resource inputs and then consume this production on own account. Examples include the collection of fuelwood, the abstraction of water, and catching fish in recreational fishing. In these cases, the production is recorded as part of the production of the relevant economic activity in the industry column of the PSUT. Consistently, the use of natural inputs by households is also recorded in the industry column. Depending on the significance of the activity, it may be useful to separate this production from that of other units undertaking the same activity. The corresponding household final consumption of own-account production is shown in the third column of the PSUT.

3.70 An important product flow in the PSUT framework is the flow of fertilizers, including those fertilizers produced on own account such as manure. The spreading of fertilizers on soil results in two flows. First, there are nutrients that are absorbed by the crops; this amount is considered a product flow, that is, it remains within the economy. Second, there are nutrients that are not absorbed; these are recorded as flows of residuals from the dissipative use of products.

3.71 Products may be either goods or services. In general, the product component of physical flow accounts will focus on goods that are transacted between economic units. However, in some cases—for example, the provision of wastewater treatment services—there may be an interest in comparing physical flows (e.g., the flow of wastewater into and out of a sewerage facility) with the associated payment for services.

Classification of products

3.72 Generally, physical flows of products are classified using the Central Product Classification (CPC). For some specific accounts, for example, energy and solid waste accounts, specialized product classifications may be appropriate. These are discussed in the relevant sections.

3.2.4 Definition and classification of residuals

3.73 Residuals are flows of solid, liquid and gaseous materials, and energy that are discarded, discharged or emitted by establishments and households through processes of production, consumption or accumulation.

3.74 Residuals may be discarded, discharged or emitted directly to the environment or captured, collected, treated, recycled or reused by economic units. These various transformation processes may lead to the generation of new products that are of economic value to the unit undertaking the transformation even if the residual, when first discarded or emitted, has no economic value to the household or establishment discarding or emitting the residual.

3.75 In situations where the intent is to discard a product but the discarder receives money or other benefits in exchange for the discarded product, this is treated as a transaction in a product and not as a residual. These flows may be of particular interest in the compilation of solid waste accounts.

3.76 A distinction must be made between payments made by a generator of residuals to establishments that collect, treat or otherwise transform residuals, and the flows of the residuals themselves. The payments made are treated as payments for services and as transactions in products, while the flows of residuals are recorded separately. A specific case where this distinction applies relates to flows of solid waste between countries. The payments for the services provided for the transport and treatment of waste by other countries are recorded as imports and exports of services, while the physical flows of waste are separately recorded as flows of residuals.

3.77 Residuals should be recorded at the time the emission or discard event takes place. The timing of the emission or discard event may be quite distinct from the time of the acquisition, which is the appropriate time for recording the flow from the perspective of the monetary accounts. A specific case concerns consumer durables such as refrigerators, washing machines, cars and other products which households use over extended periods of time. In the monetary accounts, consumer durables are recorded as purchased and consumed in the same accounting period. This is in contrast with the treatment of fixed assets purchased by enterprises, which are recorded as consumed over the operating life of the asset. Emissions from consumer durables and discards of consumer durables should be recorded at the time they occur, even though the consumption activity will have been recorded in the monetary accounts in a previous period.

3.78 Controlled and managed landfill sites, emission capture and storage facilities, treatment plants and other waste disposal sites are considered to be within the economy. Therefore, flows of residuals into these facilities are regarded as flows within the economy rather than as flows to the environment. Subsequent flows from these facilities may either be directly to the environment as residuals or lead to the creation of other products or residuals.

3.79 Household or industrial waste may be dumped (possibly illegally) in open country or by the roadside. Similarly, tankers at sea may wash their tanks (also possibly illegally) or lose their cargo through wreckage. These flows should be recorded as residuals flowing from the economy to the environment.

3.80 Efforts might be made to recover residuals, including natural resource residuals, from the environment and bring them back into the economy either for treatment or for disposal at a landfill site. This is the only case where flows of residuals from the environment to the economy should be recorded. In numerical terms, the amount may be small but, in respect of particular incidents (e.g., the wreck of an oil tanker near a protected coast) or specific locations, there may be an advantage in identifying these flows explicitly.

3.81 The attribution of residuals to individual economies is consistent with the principles applied in the determination of the residence of economic units as outlined in chapter II. Residuals are attributed to the country in which the emitting or discarding household or enterprise is resident (for details, see sect. 3.3). The question whether the residual has been emitted or discarded into a national environment or into another country’s environment is not directly addressed in this recording, although it may be of interest in determining the change in the state of a national environment over time.

3.82 In principle, flows of residuals between the national environment and another environment are not recorded in the PSUT, as there are no flows out of or into an economy. Nonetheless, depending on the nature of the relationship between the different national environments, there may be interest in recording these flows. For example, countries at the downstream end of a river system may be interested in the flows of residuals generated by other countries and transported by a river or the deposition of acidification (“acid rain”) originating from acidifying emissions in other countries.

Groups of residuals

3.83 There are a wide variety of different types of residuals, which are not usually accounted for as a single type of flow using mutually exclusive classes. Instead, different groups of residuals are analysed based on the physical nature of the flow, or the purpose behind the flow, or simply to reflect the balance of physical flows leaving the economy. Definitions of the most widely accepted groupings of residuals are presented below.

(a) Solid waste

3.84 Solid waste covers discarded materials that are no longer required by the owner or user. Solid waste includes materials that are in a solid or liquid state but excludes wastewater and small particulate matter released into the atmosphere.

3.85 Solid waste includes all materials sent to or collected by waste collection or treatment schemes including landfill establishments. Solid waste also includes those same materials if they are discarded directly to the environment, whether legally or illegally. In addition, solid waste may include some discarded materials exchanged between economic units, for example, scrap metal, for which the discarder receives payment. In these circumstances, the solid waste is considered a product (since the solid waste has a positive value) rather than a residual. Further delineation of the distinction between solid waste residuals and products is contained in section 3.6, as part of the description of physical flow accounts for solid waste.

(b) Wastewater

3.86 Wastewater is discarded water that is no longer required by the owner or user. Water discharged into drains or sewers, water received by water treatment plants and water discharged directly to the environment are all considered wastewater. Wastewater includes return flows of water which are flows of water direct to the environment, with or without treatment. All water is included regardless of the quality of the water, including returns from hydroelectric power generators.

3.87 Wastewater also includes reused water which is wastewater supplied to a user for further use, with or without treatment. Wastewater that is recycled within the same establishment is not recorded in SEEA accounts.

(c) Emissions

3.88 Emissions are substances released to the environment by establishments and households as a result of production, consumption and accumulation processes. Generally, emissions are analysed by type of receiving environment (i.e., air, water bodies, soil) and by type of substance.

3.89 The major focus in accounting for emissions is on releases directly to the environment. In some cases, releases of substances by establishments and households may be collected and contained within economic units (e.g., methane gas may be captured by landfill operations to generate electricity), or transferred between economic units for treatment or other use (e.g., substances in wastewater may be sent to sewerage facilities for treatment before the return of water to the inland water system), thus lessening the potential pressure on the environment.

3.90 The total quantity of releases of substances by establishments and households is referred to as gross releases. Gross releases comprise emissions to the environment, and substances captured within economic units or transferred to other economic units.

3.91 Emissions to air are gaseous and particulate substances released to the atmosphere by establishments and households as a result of production, consumption and accumulation processes. By convention, emissions to air exclude the release of steam or water through evaporation. Further details on accounting for emissions to air are presented in section 3.6.

3.92 Emissions to water are substances released to water resources by establishments and households as a result of production, consumption and accumulation processes. For any individual establishment or household, emissions to water are measured in terms of the additional substances that the establishment or household has added to water rather than in terms of the total quantity of substances in the water discharged by the establishment or household. In this way, substances that were already in the water received by the establishment or household are not attributed to that unit.

3.93 Emissions to water exclude those materials that cannot be carried by regular flows of water such as large items of solid waste. These materials are included in measures of solid waste.

3.94 Since a large proportion of gross releases of substances to water by establishments and households occur through sewerage systems, accounting for these releases generally covers both emissions to the environment and releases to economic units (largely sewerage facilities). Further details on accounting for emissions to water and associated releases to economic units are presented in section 3.6.

3.95 Emissions to soil are substances released to the soil by establishments and households as a result of production, consumption and accumulation processes. Some substances emitted to soil may continue to flow through the environment and enter the water system. In principle, flows of substances having been recorded as emissions to soil by an individual establishment should not also be recorded as emissions to water by the same establishment.

(d) Dissipative uses of products

3.96 Dissipative uses of products covers products that are deliberately released to the environment as part of production processes. For example, fertilizers and pesticides are deliberately spread on soil and plants as part of agricultural and forestry practice, and in certain countries salt is spread on roads to improve road conditions for drivers. In these cases, a proportion of the amount of product released may be used or absorbed as part of the production process and hence becomes incorporated in new products. The remaining proportion will remain in the environment and should be recorded as a residual flow to the environment.

(e) Dissipative losses

3.97 Dissipative losses are material residues that are an indirect result of production and consumption activity. Examples include particulate abrasion from road surfaces, abrasion residues from car brakes and tyres, and zinc from rain collection systems. These residues should be accounted for as dissipative losses, as part of ensuring an overall balance of flows from the economy to the environment.

(f) Natural resource residuals

3.98 Natural resource residuals are natural resource inputs that do not subsequently become incorporated into production processes and, instead, immediately return to the environment. Natural resource residuals are recorded as a generation of residuals by natural resource extracting industries and as a flow of residuals directly to the environment.

3.99 Examples of natural resource residuals include the flaring and venting of natural gas, discarded catch in fishing and felling residues from the harvesting of natural timber resources. Excluded from natural resource residuals are residuals associated with the harvesting of cultivated biological resources such as crop residues, felling residues from cultivated timber resources, and manure from the farming of livestock. These residuals are recorded as solid waste. A more detailed discussion of natural resource residuals was presented in paragraphs 3.47–3.53 above.

Losses

3.100 Residuals are also considered in terms of losses. This is of particular interest in the analysis of physical flows of energy and water. Four types of losses are identified according to the stage at which they occur through the production process. It is to be noted that some types of losses may be necessary for maintaining safe operating conditions, as is the case for flaring and venting in the extraction of natural gas, while others may be unwanted losses, as is the case for water evaporation from distribution channels.

3.101 The four types of losses are:

  • (a) Losses during extraction, which are losses that occur during extraction of a natural resource before there is any further processing, treatment or transportation of the extracted resource. Losses during extraction exclude natural resources that are reinjected into the deposit from which they were extracted. This may be the case, for example, for natural gas reinjected into a reservoir, or water abstracted from groundwater and reinjected into an aquifer. Some losses during extraction may also be recorded as natural resource residuals;

  • (b) Losses during distribution, which are losses that occur between a point of abstraction, extraction or supply and a point of use;

  • (c) Losses during storage, which are losses of energy products and materials held in inventories. They include evaporation, leakages of fuels (measured in mass or volume units), wastage and accidental damage. Excluded from the scope of inventories are non-produced assets, even though they might be regarded as being stored. Thus, for example, the evaporation of water from artificial reservoirs is excluded from losses during storage. These reductions in the quantity of water resources are shown in asset accounts (chapt. V);

  • (d) Losses during transformation refer to the energy lost, for example, in the form of heat, during the transformation of one energy product into another energy product. It is essentially an energy balance concept reflecting the difference in calorific value between the input and output commodities. Losses during transformation apply only to energy flows.

3.102 Losses should be recorded if there is a preference on the part of the economic unit to retain the physical quantities that return to the environment. Particularly in situations where resources are being extracted, some physical quantities of resources may be “lost” as part of the extraction process; but if these quantities are of no interest to the extractor, then they should not be considered losses.

3.103 From the perspective of suppliers of products, the amounts of water, electricity, other energy products and other materials that are illegally diverted from distribution networks or from storage may be considered losses due to theft. However, since in physical terms, the water, energy or other material is not lost to the economy, they are not considered losses in the SEEA. Nonetheless, there may be interest in compiling data concerning theft as a subset of overall use of water, energy and other materials. It should be noted that losses due to theft may be difficult to measure in practice and may often be included in losses in distribution.

Classification of groups of residuals

3.104 There is no single classification of all residuals. A complication arises from the fact that the various groups of residuals overlap. In the context of organization of information suitable for answering different policy and research questions, there is no clear-cut approach that might be taken to resolve issues of double-counting. Such double-counting would arise if a complete classification was constructed based on the structure of the various groups of residuals just defined.

3.105 An example of the potential overlap is provided by the treatment of flaring and venting of natural gas at the well head. These flows of gas are considered natural resource residuals, losses during extraction and a component of air emissions.

3.106 Table 3.4 gives an indication of the types of materials that are commonly included in the different groupings of residuals to support analysis of residuals in terms of whether the focus is on the purpose behind the discard (e.g., disposal of solid waste), the destination of the substance (e.g., emissions to air) or the processes leading to the emission (e.g., dissipative losses).

Table 3.4Typical components for groups of residuals
GroupTypical components
Solid waste (includes recovered materials)aChemical and health-care waste, radioactive waste, metallic waste, other recyclables, discarded equipment and vehicles, animal and vegetal wastes, mixed residential and commercial waste, mineral wastes and soil, combustion wastes, other wastes
WastewateraWater for treatment and disposal, return flows, reused water
Emissions to airCarbon dioxide, methane, dinotrogen oxide, nitrous oxides, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride, carbon monoxide, non-methane volatile organic compounds, sulphur dioxide, ammonia, heavy metals, persistent organic pollutants, particulates (e.g., PM10 dust)
Emissions to waterNitrogen compounds, phosphorus compounds, heavy metals, other substances and (organic) compounds
Emissions to soilLeaks from pipelines, chemical spills
Residuals from dissipative use of productsUnabsorbed nutrients from fertilizers, salt spread on roads
Dissipative lossesAbrasion (tyres/brakes), erosion/corrosion of infrastructure (roads, etc.)
Natural resource residualsMining overburden, felling residues, discarded catch

Accumulation of residual flows

3.107 The environmental pressures imposed by residuals relate to residual flows from the current period as well as those from past periods, given the potential of residuals to accumulate. The effects of continuing the existing flow of residuals may differ significantly depending on the level already accumulated at the beginning of the period. The measurement of the effect of flows of residuals on the state and quality of the ecosystems that receive them is addressed in SEEA Experimental Ecosystem Accounting.

3.108 It is to be noted that the damage inflicted by the ambient concentrations of a residual often increases non-linearly with the amount of residual generated. However, the supply and use tables described in this section detail only the quantity of residuals generated in a single period and do not exhibit the consequences of cumulating this amount with past or future amounts of the same (or other) residuals. It is noted in this regard that the effect on the environment will vary depending on the type of residual and the type of environment.

Recording of scrapped and demolished produced assets

3.109 The general physical supply and use table shown in table 3.1 includes an entry for residuals from scrapping and demolition of produced assets (cell K). The recording of these residuals under the column for accumulation highlights the fact that the assets being scrapped were produced in previous periods, in contrast to residuals that are the result of current-period production activity.

3.110 Many of these residuals will be collected and treated (and possibly recycled) by waste treatment and similar enterprises. In the use table, these residuals are shown as received by waste treatment enterprises (cell N), accumulated in controlled landfill (cell O), sent to the rest of the world (cell P) or flowing directly to the environment (cell Q).

3.111 Of particular interest in recording these residuals is to attribute the residuals to the users of the scrapped and demolished produced assets. A difficulty arises when the scrapped assets are sold to another economic unit (the scrapping unit), which then manages the process of final scrapping and demolition. Ideally, the residuals should always be attributed to the former user of the asset in production.

3.112 There are two approaches to recording flows associated with scrapped and demolished produced assets. The first entails classifying the flows in the accumulation column by industry and appropriately attributing the residual flows to the industry that had previously used the scrapped asset in production. These flows would then be shown as received by the waste treatment industry (cell N) or sent directly to a controlled landfill (cell O). Alternatively, if classifying the flows in the accumulation column in this way is not possible, then two additional entries may be recorded in the second column. One entry would be in cell N, reflecting the implicit use of the scrapped asset by the scrapping industry, and the second entry would be in cell I, reflecting the generation of residuals by the scrapping industry that are subsequently collected by the waste treatment industry or sent to controlled landfills. Two entries are required to maintain a balance of flows for the industry that is scrapping the produced asset.

3.113 In practice, there may be difficulties in attributing the scrapping and demolition of produced assets to the former user because assets, particularly buildings, may be sold just prior to scrapping or demolition. Hence, at the time the event generating the residual occurs, a different industry may be the owner and “user” of the produced asset. Where possible, the residual should be attributed to the industry that has most recently used the produced asset as a capital input to a production process.

3.3 Principles of physical flow accounting

3.3.1 Introduction

3.114 The application of the broad framework for physical flow accounting outlined in section 3.2 requires the adoption of a range of accounting principles and conventions. A number of these are explained in chapter II, including the principle of double-entry accounting, the units of measurement, and the definitions of economic units and industries.

3.115 The present section describes some specific recording principles relevant to physical flow accounting, namely, gross and net recording of physical flows, the treatment of international flows of goods and the treatment of goods for processing.

3.3.2 Gross and net recording of physical flows

3.116 The PSUT framework presented in section 3.2 records all flows between the environment and the economy, and between different economic units, and, where applicable, records flows within economic units. This recording of flows is referred to in the SEEA as gross recording. The key advantage of a gross recording approach is that a full reconciliation of all flows at all levels of the supply and use table, for example, by industry and by product, can be made.

3.117 However, recording all of these flows may hide some key relationships; hence, for analytical purposes, alternative consolidations and aggregations of flows have been developed. These alternative approaches are often referred to as net recordings, although the nature of the consolidations and aggregations varies and there is therefore no single application of net recording.

3.118 It is noted that the terms “gross” and “net” are used in a wide range of accounting situations. In the SNA, the term “net” is used to indicate that an accounting aggregate has been adjusted for consumption of fixed capital (depreciation). In other situations, the term “net” is used simply to express the difference between two accounting items. The terms “gross” and “net” are also used to describe aggregates that have related but different measurement scopes.

3.119 One of the common areas where gross and net recording is applied is that of energy accounts. Energy accounts compiled on a gross basis show all flows of energy between economic units; some of these are flows of energy products to energy producers (e.g., flows of coal to electricity producers) while others are flows to an end-user (e.g., flows of electricity to households). Net energy accounts exclude non-consumptive energy uses representing the transformation of one energy product into another product and hence allow a focus on the end use of energy.

3.120 Generally, care should be taken when using and interpreting the terms “gross” and “net” and clear definitions of inclusions and exclusions should be sought and provided.

3.3.3 Treatment of international flows

3.121 The treatment of physical flows to and from the rest of the world needs a careful articulation. An underlying principle applied in the SEEA is that relevant flows are attributed to the country of residence of the producing or consuming unit. This differs from the territory principle of recording, which is applied in a number of statistical frameworks. The territory principle attributes the relevant flows to the country in which the producing or consuming unit is located at the time of the flow.

3.122 In accordance with both the SNA and the Balance of Payments and International Investment Position Manual, 6th ed. (BPM6) (International Monetary Fund, 2009), the residence of an institutional unit is determined by the economic territory with which it has the strongest connection.18 In the majority of situations, the concepts of territory and residence are closely aligned; but there are important activities, in particular international transport, that need to be considered individually so that the appropriate treatment can be decided. This subsection discusses international transport, tourist activity and natural resource inputs.

International transport

3.123 The appropriate recording of international transport activity is important, particularly for information concerning the use of energy and the associated release of emissions. The appropriate and consistent attribution of physical flows relating to international transport to individual countries is an important component of the SEEA.

3.124 To ensure consistency with other parts of the accounts, the treatment is centred on the residence of the operator of the transport equipment. Usually, this will be the location of the headquarters of the transport operator. Therefore—regardless of the distances travelled, the number of places of operation, whether the transport service is supplied to non-residents or whether the transport service is between two locations not within the resident country—all revenues, inputs (including fuel, wherever purchased) and emissions are attributed to the country of residence of the operator.

3.125 Once the determination of the residence of the operator of international transport equipment using standard SNA and BPM principles has been made, the appropriate accounting is carried out as illustrated by the following examples:

  • (a) A ship, whose operator is a resident of country A, transports goods from country B to country C, and refuels in country C before returning home. In this case, purchases of fuel are attributed to country A (being exports of fuel from country C and imports of fuel by country A). Payments for transport service by country C are exports of services by country A. All emissions by the ship are attributed to country A;

  • (b) A passenger aircraft, whose operator is a resident of country X, transports people from country X to country Y and returns to country X. The passengers are from countries X, Y and Z. In this case, any purchases of fuel are attributed to country X and are recorded as imports if purchased in country Y. Payments by the passengers are recorded as exports of services by country X if the passengers are resident in country Y or Z. All emissions by the aircraft are attributed to country X.

3.126 Special attention must be paid to the bunkering of fuel, primarily for ships and aircraft. Special arrangements may be entered into whereby a unit resident in a country stores fuel in another country while still retaining ownership of the fuel itself. Following the principles of the SNA and the BPM, the location of the fuel is not the primary consideration. Instead, the focus must be on the ownership of the fuel. Thus, if country A establishes a bunker in country B and transports fuel to that country in order to refuel a ship that it operates, then the fuel is considered to have remained in the ownership of country A and no export of fuel to country B is recorded. Thus, the fuel stored in country B is not necessarily all attributable to country B. This treatment is likely to differ from the recording utilized in international trade statistics; and adjustments to source data may therefore be needed to align recording to this treatment.

Tourist activity

3.127 The recording of tourist activity is consistent with the recording of international transport activity in that the concept of residence is central. Tourists include all those travelling outside their country of residence, including short-term students (i.e., those studying abroad for less than 12 months), people travelling for medical reasons and those travelling for business or pleasure. The consumption activity of a tourist travelling abroad is attributed to the tourist’s country of residence and not to the location of the tourist when the consumption is undertaken. Thus, purchases by the tourist in other countries are recorded as an export by the country visited and as an import of the country of residence of the tourist.

3.128 Solid waste generated by tourists will generally be attributed to local enterprises (e.g., hotels and restaurants). Emissions from local transport used by tourists in a foreign country (e.g., taxis and minibuses) are attributed to the local transport company and, as noted in regard to international transport, emissions from aircraft and other long-distance transport equipment are attributed to the country of residence of the operator. In neither case are the emissions attributed to the tourist.

3.129 Emissions from cars are also attributed to the country of residence of the operator (in this case, the driver of the car), whether the car is owned by the driver or hired from a car rental firm.

Natural resource inputs

3.130 Natural resource inputs are physical inputs to the economy from natural resources. They derive from stocks of natural resources comprising mineral and energy resources, soil resources, natural timber resources, natural aquatic resources, other natural biological resources and water resources, all of which are considered to be owned by residents of the country in which the resources are located. By convention, natural resources that are legally owned by non-residents are considered to be owned by a notional resident unit and the nonresident legal owner is shown as the financial owner of the notional resident unit. Consequently, in general, the extraction of natural resource inputs must occur within a country’s economic territory by economic units that are resident in the country.

3.131 Where illegal extraction takes place—for example, when non-residents illegally harvest timber resources—the reduction in the country’s resources should be recorded in the asset account (see chap. V) as part of extractions of natural resources. However, the associated natural resource input in the PSUT should be shown only in the accounts of the country in which the illegal extractor is resident. No exports should be recorded.

3.132 The major exception to this kind of treatment occurs with respect to natural aquatic resources. Following accounting conventions, the harvest of aquatic resources is allocated to the residence of the operator of the vessel undertaking the harvesting rather than to the location of the resources. Thus, the amount of natural resource input that should be recorded for a country is equal to the quantity of aquatic resources caught by vessels whose operator is resident in that country, regardless of where the resources are caught. Natural resource inputs are not recorded for the harvest of aquatic resources by vessels operated by non-residents in national waters and neither are exports recorded in this situation. In the accounts of the country to which the non-resident operator is connected, there should be entries for natural resource inputs for aquatic resources caught in non-national waters but no reduction in national aquatic resources in the asset accounts for this harvest.

3.3.4 Treatment of goods for processing

3.133 It is increasingly common for goods from one country to be sent to another country for further processing before being (a) returned to the original country, (b) sold in the processing country or (c) sent to other countries. In situations where the unprocessed goods are sold to a processor in a second country, there are no particular recording issues. However, in situations where the processing is undertaken on a fee-for-service basis and there is no change of ownership of the goods (i.e., the ownership remains with the original country), the financial flows are unlikely to relate directly to the physical flows of goods being processed.

3.134 From a monetary accounts perspective, the enterprise processing the goods assumes no risk associated with the eventual marketing of the products and the value of the output of the processor is the fee agreed for the processing. This fee is recorded as an export of a service to the first country. A consequence of this treatment is that the recorded pattern of inputs for the enterprise that is processing goods on behalf of another unit is quite different from the pattern of inputs when the enterprise is manufacturing similar goods on its own account.

3.135 A simple illustration may be given in relation to the production of petroleum products. A firm that refines crude oil on own account engages in intermediate consumption of crude oil and other inputs, and output of refined petroleum products. A firm that is processing crude oil on behalf of another firm has, in physical terms, similar inputs and uses the same produced assets but, in its accounts, shows neither the intermediate consumption of crude oil nor the output of refined petroleum products. Instead, an output equal only to the processing fee is recorded.

3.136 For similar amounts of crude oil processed, the estimates of value added and other inputs (i.e., labour and produced assets) are likely to be comparable. However, by recording only the processing fee rather than the full value of the goods processed, the nature of the aggregate supply and use relationship is changed.

3.137 Although this treatment accords with that of the SNA and provides the most appropriate recording of the monetary flows, it does not correspond to the physical flows of goods. Consequently, a different treatment of goods for processing is recommended for physical supply and use tables. This entails recording the physical flows of goods, both as they enter into the country of the processing unit and as they leave that country. Tracking the physical flows in this way enables a clearer reconciliation of all physical flows in the economy and also provides a physical link to the recording of the environmental effects of the processing activity in the country in which the processing is being undertaken, including, for example, emissions to air. The same considerations apply to flows of goods for repair and merchanting.

3.138 Generally, information on the physical flow of goods between countries is available in international trade statistics. However, it is necessary to identify those flows of goods where the ownership has not changed and to apply a different treatment in monetary terms compared with that of the international trade data.

3.139 Depending on the products and industries that are of interest, reconciliation entries may be required if accounts combining physical and monetary data are to be compiled.

3.4 Physical flow accounts for energy

3.4.1 Introduction

3.140 Energy flow accounts record flows of energy, in physical units, from the initial extraction or capture of energy resources from the environment into the economy; the flows of energy within the economy in the form of the supply and use of energy by industries and households; and, finally, the flows of energy back to the environment.

3.141 The compilation of energy flow accounts allows for a consistent monitoring of the supply and use of energy by energy type. Indicators of energy intensity, efficiency and productivity can be derived from the accounts in combination with monetary information.

3.142 Energy flow accounts are a subsystem within the general physical flow framework. Energy accounts data are compiled by converting physical measures of mass and volume such as tonnes, litres and cubic metres into a common unit representing energy content in net calorific terms. The use of the joule as a common measurement unit is recommended by the International Recommendations for Energy Statistics (IRES).19

3.4.2 Scope and definitions of energy flows

3.143 Energy flows consist of flows of (a) energy from natural inputs, (b) flows of energy products and (c) energy residuals. Flows of air emissions and solid waste generated by energy production and use are not included, although all types of waste used as inputs in the production of energy are included.

3.144 Energy from natural inputs encompasses flows of energy from the removal and capture of energy from the environment by resident economic units. These flows include energy from mineral and energy resources (e.g., oil, natural gas, coal and peat, and uranium), natural timber resources and inputs from renewable energy sources (e.g., solar, wind, hydro and geothermal).

3.145 Energy from cultivated biomass, including from cultivated timber resources, is treated as produced within the economy and is therefore first recorded as the flow of an energy product. However, to ensure a complete balance of energy flows in the PSUT, a balancing entry equal to the energy products from cultivated biomass is recorded as a component of energy from natural inputs in both the supply and the use tables.

3.146 Energy products are products that are used (or might be used) as a source of energy. They comprise (a) fuels that are produced/generated by an economic unit (including households) and are used (or might be used) as sources of energy; (b) electricity that is generated by an economic unit (including households); and (c) heat that is generated and sold to third parties by an economic unit.20 Energy products include energy from biomass and solid waste that are combusted for the production of electricity and/or heat.21 Some energy products may be used for non-energy purposes.

3.147 A distinction can be made between primary and secondary energy products. Primary energy products are produced directly from the extraction or capture of energy resources from the environment. Secondary energy products are the result of transformation of primary, or other secondary, energy products into other types of energy products. Examples include petroleum products from crude oil, charcoal from fuelwood and electricity from fuel oil.

3.148 Heat and electricity may be considered either primary or secondary products depending on the process of their production. For example, if heat is captured directly from the environment through solar panels, it is considered a primary energy product; it is considered a secondary energy product if produced from other energy products such as coal or oil.

3.149 Generally, physical and monetary flows of energy products should be classified using the Standard International Energy Product Classification (SIEC) presented in the IRES. Often, monetary flows will be classified using the CPC. Since there is not a one-to-one relationship between SIEC and CPC categories, a correspondence between these classifications will be needed for detailed analysis of combined physical and monetary data sets.

3.150 Energy residuals in physical terms comprise a number of components. Most focus is on energy losses which are defined consistently with the general definition of losses outlined in section 3.2. Particular examples of energy losses include losses through flaring and venting of natural gas and losses during transformation in the production of primary energy products from energy from natural inputs and in the production of secondary energy products. Energy losses during distribution may arise from the evaporation and leakages of liquid fuels, loss of heat during transport of steam, and losses during gas distribution, electricity transmission and pipeline transport. Energy residuals also include other energy residuals, particularly heat generated when end-users (either households or enterprises) use energy products for energy purposes (e.g., electricity).

3.151 In order to fully balance the energy PSUT, it is also necessary to record two other residual flows. The first is derived from the energy embodied in energy products used for non-energy purposes, which is shown as leaving the energy system as a residual flow. Non-energy purposes include the use of energy products to manufacture non-energy products (e.g., the energy product naphtha is used in the manufacture of plastic, a non-energy product), and the direct use of energy products for non-energy purposes (e.g., as lubricants). The second additional residual flow results from the generation of energy from the incineration of solid waste. The energy embodied in solid waste is shown as entering the energy system as a residual flow before becoming an energy product. Neither of these residual flows is considered part of energy residuals.

3.4.3 Physical supply and use table for energy

3.152 Physical supply and use tables for energy record the flows of energy from natural inputs, energy products, energy residuals and other residual flows in physical units of measure. They are based on the principle that the total supply of each flow is equal to the total use of the same flow (i.e., total supply of energy products equals total use of energy products).

3.153 Table 3.5 represents the SEEA physical supply and use table for energy. The table encompasses flows of all energy from natural inputs and energy products, including those energy products that are transformed into other energy products. Therefore, the energy content of some products is counted more than once. Coal, for example, is used as input into a transformation process for obtaining electricity and heat, and the accounts record the energy content of the coal as well as the energy content of the resulting electricity and heat.

Table 3.5Physical supply and use table for energy(joules: net calorific units)
Physical supply table for energy
Production (including household production on own account); generation of residualsFlows from the rest of the world
Agriculture, forestry and fishingMining and quarryingManufacturingElectricity, gas, steam and air conditioning supplyTransportation and storageOther industriesHouseholdsAccumulationImportsFlows from the environmentTotal supply
ISIC AISIC BISIC CISIC DISIC H
Energy from natural inputs
Natural resource inputs
Mineral and energy resources1 161.01 161.0
Timber resources5.05.0
Inputs of energy from renewable sources
Solar20.020.0
Hydro100.0100.0
Wind4.04.0
Wave and tidal
Geothermal
Other heat and electrical
Other natural inputs
Energy inputs to cultivated biomass2.02.0
Total energy from natural inputs1 292.01 292.0
Note: Dark grey cells are null by definition.
Production (including household production on own account); generation of residualsFlows from the rest of the world
Agriculture, forestry and fishingMining and quarryingManufacturingElectricity, gas, steam and air conditioning supplyTransportation and storageOther industriesHouseholdsAccumulationImportsFlows from the environmentTotal supply
ISIC AISIC BISIC CISIC DISIC H
Energy products
Production of energy products by SIEC class
Coal225.0225.0
Peat and peat products
Oil shale/oil sands
Natural gas (extracted)395.0395.0
Natural gas (distributed)369.1369.1
Oil (e.g., conventional crude oil)721.0721.0
Oil (oil products)347.0930.01 277.0
Biofuels5.30.21.57.0
Waste39.054.516.9 1110.4
Electricity212.022.0 1234.0
Heat78.578.5
Nuclear fuels and other fuels n.e.c.
Total energy products44.31 116.0401.7661.11193.93 417.0
Energy residuals
Losses during extraction45.045.0
Losses during distribution12.012.0
Losses during storage6.06.0
Losses during transformation7.0204.4211.4
Other energy residuals50.33.2418.790.6632.096.0240.01 530.8
Total energy residuals50.348.2431.7307.0632.096.0240.01 805.2
Other residual flows
Residuals from end use for non-energy
purposes51.051.0
Energy from solid waste93.593.5
Total supply94.61 164.2884.4968.1632.096.0240.093.51 193.91 292.06 658.7
Note: Dark grey cells are null by definition.
Physical use table for energy
Intermediate consumption; use of energy resources; receipt of energy lossesFinal consumptionFlows from the rest of the world
Agriculture, forestry and fishingMining and quarryingManufacturingElectricity, gas, steam and air conditioning supplyTransportation and storageOther industriesHouseholdsAccumulationImportsFlows from the environmentTotal supply
ISIC AISIC BISIC CISIC DISIC H
Energy from natural inputs
Natural resource inputs5.01 161.01 166.0
Inputs of energy from renewable sources124.0124.0
Other natural inputs0.30.21.52.0
Total energy from natural inputs5.31 161.00.2225.51 292.0
Energy products
Transformation of energy products by SIEC class
Coal223.0223.0
Peat and peat products
Oil shale/oil sands
Natural gas (extracted)395.0395.0
Natural gas (distributed)87.087.0
Oil (e.g., conventional crude oil)360.0360.0
Oil (oil products)16.016.0
Biofuels
Waste31.031.0
Electricity
Heat
Nuclear fuels and other fuels n.e.c.
Total transformation of energy products360.0752.01 112.0
Note: Dark grey cells are null by definition.
Physical use table for energy
Intermediate consumption; use of energy resources; receipt of energy lossesFinal consumptionFlows from the rest of the world
Agriculture, forestry and fishingMining and quarryingManufacturingElectricity, gas, steam and air conditioning supplyTransportation and storageOther industriesHouseholdsAccumulationImportsFlows from the environmentTotal supply
ISIC AISIC BISIC CISIC DISIC H
Energy products (cont’d)
End-use of energy products by SIEC class
Coal2.00.117.01.0−21.01.91.0
Peat and peat products
Oil shale/oil sands
Natural gas (extracted)
Natural gas (distributed)2.039.00.112.026.02.0201.0282.1
Oil (e.g. conventional crude oil)361.0361.0
Oil (oil products)34.02.0326.0621.049.0102.0−3.080.01 211.0
Biofuels0.30.21.55.07.0
Waste3.00.14.037.01.033.00.31.079.4
Electricity7.01.022.050.010.015.029.0100.0234.0
Heat2.010.52.01.019.044.078.5
Nuclear fuels and other fuels n.e.c.0.0
Total end-use for energy purposes50.33.2418.790.6632.096.0240.0−21.7744.92 254.0
End-use of energy products for non-energy purposes51.051.0
Energy residuals
Losses during extraction45.045.0
Losses during distribution12.012.0
Losses during storage6.06.0
Losses during transformation211.4211.4
Other energy residuals1 530.81 530.8
Total energy residuals1 805.21 805.2
Other residual flows
Residuals from end use for non-energy purposes51.051.0
Energy from solid waste39.054.593.5
Total use94.61 164.2884.4968.1632.096.0240.029.3744.91 805.26 658.7
Note: Dark grey cells are null by definition.

3.154 The columns of the energy supply and use table follow the structure of the general PSUT presented in table 3.1. The level of industry detail highlights those industries that most commonly play a significant role in energy production or use; but there is no restriction in the amount of industry detail that may be incorporated. The accumulation column records changes in the inventories of energy products that can be stored, for example, coal, oil and natural gas.

Key components of the PSUT for energy

3.155 The key components of the PSUT for energy encompass (a) the supply and use of energy from natural inputs, (b) the supply of energy products, including energy products produced on own account; (c) imports and exports of energy products; (d) the transformation and end use of energy products; and (e) the supply and use of energy residuals and other residual flows. These five areas are discussed directly below.

(a) Supply and use of energy from natural inputs

3.156 The first section of the energy supply table and the first section of the energy use table cover the flows of energy from natural inputs. The structure of these sections is analogous to the sections on natural inputs in the general PSUT represented by table 3.1. In the supply table, energy from natural inputs is shown as being supplied by the environment. In the use table, energy from natural inputs is shown as being used by the extracting industries. The total supply of each input must equal the total use of each input.

3.157 Flows of energy from natural inputs may be presented at varying levels of detail, which will depend on which inputs are of most relevance and on the extent of the interest in the country in developing an analytical focus. For those inputs that are types of mineral and energy resources (e.g., oil and natural gas), all of the extracted resource is recorded regardless of the ultimate purpose for the use of the extracted natural resource. On the other hand, for natural timber resources, only that amount extracted for fuelwood is recorded as energy from natural inputs.

3.158 In principle, the inputs of energy from renewable sources (solar, hydro, wind, wave and tidal, geothermal, etc.) should reflect the amount of energy incident on the technology put in place to collect the energy. In practice, inputs of energy from renewable sources are recorded in terms of the amounts of heat and electricity produced through the relevant technology. Consequently, in practice, losses of energy in the capture of energy from renewable sources are not included in the PSUT. Energy from hydroelectric schemes is recorded in terms of energy produced.

3.159 For those inputs that are types of mineral and energy resources, losses of energy during extraction are included in the total amount of resource extracted from the environment, in line with the general treatment of natural resource residuals and losses. Entries for losses during extraction should also be made in the bottom parts of the supply and use tables concerning energy residuals.

(b) Supply of energy products

3.160 All energy products supplied from one unit to another, including between units within a single enterprise, are included in the flow accounts, regardless of whether the energy product is sold or exchanged as part of a barter transaction or provided free of charge.

3.161 Energy products are primarily produced by establishments classified to ISIC section B, Mining and quarrying; ISIC section C, Manufacturing; and ISIC section D, Electricity, gas, steam and air conditioning supply. For many countries, the main source of supply may be imported energy products. Energy products are classified following the Standard International Energy Product Classification (SIEC).

3.162 Energy products are produced as secondary production by many establishments and also for use within an establishment (i.e., for own-account production and use). Where it is possible to quantify the own account intra-establishment production and use of energy products, these flows should be recorded in the accounts as flows of energy for own use.22 In table 3.5, the flows relating to own-account production and use are not separately identified.23

3.163 A special case in the supply of energy products is energy production by households. Households may purchase and install equipment for the generation of energy products (e.g., solar panels) and also may collect and use energy resources such as fuelwood to generate energy products. The energy produced is either consumed on own account or sold on the market (e.g., in the case of electricity sold to an electricity grid).

3.164 Following the general principles of recording production, all activity should be allocated to the relevant industry whether for own-account consumption or for sale. Distinct compilations of those amounts of energy produced by households for sale, compared with production for own use, may also be created. Energy produced for own-account consumption should be recorded as household final consumption in the use table.

(c) Imports and exports of energy products

3.165 Imports and exports of energy products should be recorded when a change of ownership involving a resident and a non-resident unit occurs. Energy products in transit through the economic territory should generally not be included in imports and exports. However, for electricity and heat, it may be difficult to distinguish between transit flows and other flows and, in practice, all flows of electricity and heat into a country may be recorded as imports, and all outgoing flows may be recorded as exports. Energy products sent abroad for processing should be treated following the treatment of goods for processing described in section 3.3.4.

3.166 Energy use by resident units abroad, essentially covering tourists driving abroad and companies engaged in international transport activities, should be recorded in the accounts either as the use of the industries earning the value added from these activities or as a use of the households operating the transport equipment. All energy use by non-resident units within the national boundary (ships, planes, trucks and tourists) should be excluded.

(d) Transformation and end use of energy products

3.167 The use of energy products is split into two sections in the use table. The first section, entitled “Transformation of energy products by SIEC class”, records the transformation of energy products into other energy products. For example, the mining and quarrying industry may be recorded as producing coal as an energy product in the supply table and its use in producing electricity would be shown under the transformation of energy products, as the use of coal by the electricity supply industry.

3.168 The second section, entitled “End use of energy products by SIEC class”, records the use of energy products in producing goods and services that are not energy products. These goods and services may be used for intermediate consumption, or for household final consumption, may represent a change in inventories of energy products, or may be used for export. The end use of energy products is shown in two parts: uses for energy purposes and uses for non-energy purposes. Non-energy uses of energy products include, for example, the use of oil-based products as lubricants or in the production of plastics. In table 3.5, while only the end use of energy products for energy purposes is shown as allocated by type of energy product, this allocation is also possible for end use for non-energy purposes.

3.169 In total, intermediate consumption includes the use of all energy products by industries as inputs in a production process, regardless of the nature of the production process, i.e., whether it is a process converting an energy product into another energy product for further use in the economy (transformation), or whether it is a process that ultimately uses the energy content of the energy product so that no further use of the energy is possible (end use) in some cases by incorporating the energy product in a non-energy product.

3.170 Some energy products may be stored by industries for later transformation or end use. The net changes in the quantities stored are considered changes in inventories and are recorded in the accumulation column for each relevant energy product. Exports of energy products are also recorded as part of end use.

3.171 Final consumption refers to the consumption by households of energy products purchased or otherwise obtained from energy suppliers. All final consumption reflects the end use of energy and includes the energy products produced by the households themselves, e.g., energy produced from fuelwood gathered by households and electricity generated by windmills for own use.

3.172 The concept of final consumption of energy in the SEEA differs from the concept of final consumption used in energy balances as defined in IRES. In energy balances, final consumption relates to the total end use of energy by industries and households (excluding change in inventories and exports). It is therefore a broader measure than final consumption in the SEEA which relates only to end use by households.

(e) Energy residuals and other residual flows

3.173 The bottom parts of the supply and use tables record entries associated with energy residuals and other residual flows. Different types of energy residuals are recorded: losses during extraction, losses during distribution, losses during transformation, losses during storage, and other energy residuals (including residuals from end use for energy purposes). The different energy residuals are recorded as being supplied by various industries and households in the supply table and received by the environment in the use table.

3.174 Losses of energy products are recorded as part of the intermediate consumption of the producer when the losses occur before a change of ownership from the producer to the user has taken place. However, losses of energy products after they have been delivered from the producer to the user of the product (e.g., from storage) should be recorded as part of intermediate or final consumption of the user.

3.175 For other residual flows, the energy embodied in energy products used for non-energy purposes is shown as supplied by various industries and households and, by convention, is recorded as being retained in the economy as an increase in accumulation in the use column. By convention, the energy from solid waste is shown as supplied from within the economy in the accumulation column and a matching positive entry is recorded in the use table in the column(s) for the industry incinerating the solid waste.

3.4.4 Energy statistics, energy accounts and energy balances

3.176 Energy statistics, energy accounts and energy balances all provide information on energy supply and energy use. Energy statistics result from collecting and compiling information on production, imports, exports and domestic use of energy products on the basis of specific surveys and from using, for example, business statistics and international trade statistics. Energy balances reorganize these basic statistics by confronting and consolidating supply and use, and by highlighting the transformation of energy within the economy. Similarly, energy accounts, which primarily use national accounts classifications and definitions, can be seen as a reorganization and broadening of scope of energy statistics. Both energy balances and energy accounts apply the principle that supply equals use; however, supply and use are defined in different ways in these two systems.

3.177 In contrast to the energy accounts, energy balances normally include only physical data on energy. Since one of the main purposes of energy accounts is to link physical and monetary data in a comparable way, this leads to different definitions and a different organization of energy data in physical terms so that they can be aligned with the data in monetary terms in the national accounts.

3.178 One main difference between the energy balances and the energy accounts is reflected in how activities are classified and the treatment of various activities within the national boundary. The energy accounts use the concept of residence to determine whether a specific energy flow should be included, for instance, as imports and whether it is to be included as part of energy use. The boundary of the energy balances follows the territory principle of recording.

3.179 One method of reconciling aggregates that are derived from energy accounts and energy balances is through the compilation of bridge tables. Bridge tables show the adjustments required to either energy accounts or energy balances to account for the conceptual differences between the approaches. A full description of the relationship between energy accounts and energy balances and associated bridge tables is included in “SEEA-Energy”.

3.4.5 Energy aggregates

3.180 Accounting for energy flows provides a framework for the assessment of energy production and consumption and related issues of resource use and air emissions. Two energy aggregates are defined in the SEEA that are appropriate in dealing with particular analytical and policy questions. Other aggregates and indicators may also be compiled using data contained in the energy PSUT, with differences in what is included and excluded based on what questions are of policy or analytical interest.

3.181 Gross energy input reflects the total energy captured from the environment, energy products that are imported and energy from residuals within the economy (e.g., from incinerated solid waste). It can therefore serve as an indicator of the pressures placed on the environment (or other countries’ environments) in the supply of energy to the economy. In terms of entries contained in the energy PSUT, gross energy input is equal to energy from natural inputs plus imports of energy products plus energy from waste. For analytical purposes, it may be useful to disaggregate energy from natural inputs into the energy from natural resource inputs, the energy from renewable sources and the energy inputs to cultivated biomass, since each of these types of natural inputs corresponds to different environmental pressures.

3.182 The second main energy aggregate is net domestic energy use. Net domestic energy use reflects the net amount of energy used in an economy through production and consumption activity and can be utilized to assess trends in energy consumption by resident units. Net domestic energy use is defined as the end use of energy products (including changes in inventories of energy products) less exports of energy products plus all losses of energy (losses during extraction, losses during transformation, losses during storage and losses during distribution). It is regarded as a “net” measure, since for energy products that are transformed into other energy products, only the transformation losses are included, not the total input of energy products into the transformation process. Separate analysis of the components of net domestic energy use (e.g., total end use of energy products less exports, and total energy losses) can also provide important information concerning energy use.

3.183 For the total economy, gross energy input and net domestic energy use differ only by the amount of energy products exported. Both aggregates may also be compiled for individual industries and for households by using the same definitions applying to the total economy but by focusing on the relevant columns in the PSUT. These and other aggregates and indicators can be linked to data in the economic accounts in physical and monetary terms, in order to derive measures of intensity and productivity in energy use.

3.5 Physical flow accounts for water

3.5.1 Introduction

3.184 Water flow accounts describe flows of water, in physical units, encompassing the initial abstraction of water resources from the environment into the economy, to the water flows within the economy in the form of supply and use by industries and households, and finally, flows of water back to the environment. The present section describes a complete PSUT for water flows, noting that individual components of the PSUT could be compiled separately. Related accounts for emissions to water (sect. 3.6) and asset accounts for water resources (sect. 5.11) are also relevant.

3.185 For the purposes of water resource management, the compilation of data for a river basin or other hydrologically relevant area may be appropriate. It is noted, however, that while physical data may be available for such geographical areas, corresponding economic data will generally be available only for administrative regions; therefore, these two geographical boundaries may not align.

3.5.2 Scope of water flows

3.186 Water is in continuous movement. Solar radiation and gravity keep water moving from land and oceans to the atmosphere in the form of water vapour (evaporation and transpiration) and falling back through precipitation. The focus of the SEEA is the inland water system, with provision for the inclusion of sea or ocean water abstracted for production and consumption (e.g., saline water for desalinization or cooling).

3.187 The inland water system comprises surface water (rivers, lakes, artificial reservoirs, snow, ice and glaciers), groundwater and soil water within the territory of reference. All flows associated with the inland water system are recorded in the asset accounts for water resources, including flows to and from accessible seas and oceans. The PSUT records the abstraction of water from the inland water system, and seas and oceans by economic units; the distribution and use of this water by various economic units; and the returns of water to the inland water system and seas and oceans. Flows such as the evaporation of water from lakes and artificial reservoirs and flows between water bodies are considered flows within the environment and are recorded in the asset accounts, as described in chapter V.

3.188 Emissions to water (e.g., pollution) are recorded in a separate PSUT which is discussed in section 3.6. The broader issue of the impact of economic activity on the quality of water requires an assessment of the quality of the stock of water resources. Water-quality accounts are discussed in more detail in SEEA-Water (United Nations, 2012b).

3.5.3 Physical supply and use table for water

3.189 Physical supply and use tables can be compiled at various levels of detail, depending on the required policy and analytical focus and data availability. A basic PSUT for water contains information on the supply and use of water and provides an overview of water flows. The PSUT is divided into five sections which organize information on (a) abstraction of water from the environment; (b) distribution and use of abstracted water across enterprises and households; (c) flows of wastewater and reused water (between households and enterprises); (d) return flows of water to the environment; and (e) evaporation, transpiration and water incorporated into products.

3.190 Table 3.6 presents the SEEA physical supply and use table for water. The columns of the PSUT are structured in the same way as the general PSUT represented by table 3.1.

Table 3.6Physical supply and use table for water(millions of cubic metres)
Physical supply table for water
Abstraction of water; production of water; generation of return flowsFlows from the rest of the world
Agriculture, forestry and fishingMining and quarrying, manufacturing and constructionElectricity, gas, steam and air conditioning supplyWater collection, treatment and supplySewerageOther industriesHouseholdsImportsFlows from the environmentTotal supply
(I) Sources of abstracted water
Inland water resources
Surface water440.6440.6
Groundwater476.3476.3
Soil water50.050.0
Total966.9966.9
Other water sources
Precipitation101.0101.0
Sea water101.1101.1
Total202.1202.1
Total supply abstracted water1 169.01 169.0
(II) Abstracted water
For distribution378.2378.2
For own-use108.4114.6404.213.9100.12.3743.5
(III) Wastewater and reused water
Wastewater
Wastewater to treatment17.9117.65.61.449.1235.5427.1
Own treatment
Reused water produced
For distribution42.742.7
For own use10.010.0
Total17.9127.65.61.442.749.1235.5479.8
Note: Dark grey cells are null by definition.
Abstraction of water; production of water; generation of return flowsFlows from the rest of the world
Agriculture, forestry and fishingMining and quarrying, manufacturing and constructionElectricity, gas, steam and air conditioning supplyWater collection, treatment and supplySewerageOther industriesHouseholdsImportsFlows from the environmentTotal supply
(IV) Return flows of water
To inland water resources
Surface water300.052.50.20.5353.2
Groundwater65.023.547.3175.00.54.1315.4
Soil water
Total65.023.5300.047.3227.50.74.6668.6
To other sources5.9100.0256.30.2362.4
Total return flows65.029.4400.047.3483.80.74.81 031.0
of which: Losses in distribution47.347.3
(V) Evaporation of abstracted water, transpiration and water incorporated into products
Evaporation of abstracted water29.538.32.51.80.73.610.086.4
Transpiration40.21.241.4
Water incorporated into products6.53.710.2
Total supply267.5314.8812.3442.6627.355.7250.31 169.03 939.5
Note: Dark grey cells are null by definition.
Physical use table for water
Abstraction of water; intermediate consumption; return flowsFinal consumptionFlows to the rest of the world
Agriculture, forestry and fishingMining and quarrying, manufacturing and constructionElectricity, gas, steam and air conditioning supplyWater collection, treatment and supplySewerageOther industriesHouseholdsAccumulationExportsFlows to the environmentTotal use
(I) Sources of abstracted water
Inland water resources
Surface water55.379.7301.04.50.1440.6
Groundwater3.134.83.2432.92.3476.3
Soil water50.050.0
Total108.4114.5304.2437.40.12.3966.9
Other water sources
Precipitation1.0100.0101.0
Sea water100.01.1101.1
Total0.00.0100.02.1100.00.0202.1
Total use abstracted water108.4114.5404.2439.5100.12.31 169.0
(II) Abstracted water
Distributed water38.745.03.90.051.1239.50.0378.2
Own use108.4114.6404.23.1100.12.310.8743.5
(III) Wastewater and reused water
Wastewater
Wastewater received from other units427.1427.1
Own treatment
Reused water
Distributed reuse2.040.742.7
Own use10.010.0
Total12.040.7427.1479.8
Note: Dark grey cells are null by definition.
Abstraction of water; intermediate consumption; return flowsFinal consumptionFlows to the rest of the world
Agriculture, forestry and fishingMining and quarrying, manufacturing and constructionElectricity, gas, steam and air conditioning supplyWater collection, treatment and supplySewerageOther industriesHouseholdsAccumulationExportsFlows to the environmentTotal use
(IV) Return flows of water
Returns of water to the environment
To inland water resources668.6668.6
To other sources362.4362.4
Total return flows1 031.01 031.0
(V) Evaporation of abstracted water, transpiration and water incorporated into products
Evaporation of abstracted water86.486.4
Transpiration41.441.4
Water incorporated into products10.210.2
Total use267.5314.8812.3442.6627.355.7250.310.21 158.83 939.5
Note: Dark grey cells are null by definition.

3.191 The breakdown of the economic activities, classified according to the ISIC, distinguishes the following groups:

  • ISIC divisions 01-03: Agriculture, forestry and fishing24

  • ISIC divisions 05-33 and 41: Mining and quarrying; manufacturing; and construction, respectively

  • ISIC division 35: Electricity, gas, steam and air conditioning supply

  • ISIC division 36: Water collection, treatment and supply; sewerage, waste management and remediation activities

  • ISIC division 37: Sewerage

  • ISIC divisions: 38, 39 and 45-99: Other industries

3.192 Industry divisions ISIC 35, 36 and 37 are specifically identified because of their importance in the supply and use of water and provision of water-related services. ISIC division 35 covers users of water for hydroelectric power generation and cooling purposes. ISIC divisions 36 and 37 cover activities of the main industries for the distribution and treatment of water and wastewater.

3.193 Described directly below are the key components of the physical supply and use table for water.

Abstraction of water

3.194 The abstraction of water is recorded in part I of the supply table, entitled “Sources of abstracted water”, as being supplied by the environment. The same volume of water is recorded in part I of the use table, “Sources of abstracted water”, by the industry that undertakes the abstraction. Water may be abstracted from artificial reservoirs, rivers, lakes, groundwater and soil water. The capture of precipitation through, for example, the capture of water from the roofs of houses in water tanks, is recorded as abstraction through precipitation. Precipitation direct to the inland water system is recorded not in the PSUT but in the asset account for water resources.

3.195 Abstraction is defined as the amount of water that is removed from any source, either permanently or temporarily, in a given period of time. Water used for hydroelectric power generation, is considered abstraction and is recorded as a use of water by the abstractor. Water abstracted but not used in production, such as water flows in mine dewatering, are recorded as natural resource residuals. Water abstraction is disaggregated by source and by industry.

3.196 Following the general treatment of household own-account activity, the abstraction of water by households for own consumption should be recorded as part of the activity of the water collection, treatment and supply industry (ISIC 36). In addition, there may be a range of different methods of water supply; for example, water supply to agricultural enterprises may be undertaken quite differently from water supply to urban areas. Additional columns may be included in the supply table in order to highlight different types of water abstraction covered under ISIC division 36.

3.197 Consistent with the treatment in the asset accounts for water resources, the water in artificial reservoirs is not considered to have been produced, i.e., it is not considered to have come into existence via a process of production. Consequently, abstraction from artificial reservoirs is recorded as abstraction from the environment and flows of precipitation into artificial reservoirs and flows of evaporation from the reservoirs are not recorded in the PSUT for water. These flows are recorded in the asset accounts for water resources as part of the overall accounting for the change in the stock of water resources over an accounting period.

3.198 Abstraction of soil water refers to the uptake of water by plants and is equal to the amount of water transpired by plants plus the amount of water that is embodied in the harvested product. Most abstraction of soil water is used in agricultural production and in cultivated timber resources but in theory the boundary extends to all soil water abstracted for use in production to include, for example, soil water abstracted in the operation of golf courses.25 Abstraction of soil water is calculated based on the area under cultivation using coefficients of water use. Different coefficients should be used for different plants and should take into consideration location effects (e.g., soil types, geography and climate).

3.199 In principle, an amount of abstracted water is retained at the end of each accounting period for use in the next accounting period, for example, in storage tanks. However, this volume of water is relatively small in comparison with the overall flows of water during an accounting period and is also small relative to the stock of water held in the total inland water system. Therefore, in practice and by convention, the net change in the accumulation of abstracted water over an accounting period is assumed to be zero.

Distribution and use of abstracted water

3.200 Water that has been abstracted must be either used by the same economic unit that abstracts it (and in this case is referred to as abstracted water for own use) or distributed, possibly after some treatment, to other economic units (referred to as abstracted water for distribution). Most of the water for distribution is recorded under ISIC division 36, Water collection, treatment and supply. However, there may be other industries that abstract and distribute water as a secondary activity.

3.201 Part II of the supply table, entitled “Abstracted water”, shows the supply of abstracted water by the industries undertaking the abstraction, differentiating between water abstracted for distribution and water abstracted for own use. This part of the supply table also records imports of water from the rest of the world. The total of water abstracted for own use, water abstracted for distribution, and imported water represents the total water available for use in the economy.

3.202 The use of this water is shown in part II of the use table, entitled “Abstracted water”, where the water available for use is recorded under the intermediate consumption of industries, the final consumption of households and exports to economic units in the rest of the world.

3.203 The abstracted water received from other economic units is the amount of water that is delivered to an industry, households or the rest of the world by another economic unit. This water is usually delivered through systems of pipes (mains), but other means of transportation are also possible (such as artificial open channels and trucks).

3.204 Within the economy, water is often exchanged between water distributors before being delivered to users. These water exchanges are referred to as intra-industry sales. There are cases, for example, where the distribution network of one distributor does not reach the water user and hence water must be sold to another distributor in order for it to be delivered. In principle, all intra-industry sales should be recorded following standard accounting principles. However, these exchanges are not recorded in the PSUT, as this would increase the total flows recorded even though there may be no additional physical flows of water; that is to say, the intra-industry sales are transactions of water in situ and the same physical flow of water occurs whether intra-industry sales take place or not. Nonetheless, depending on the volumes of water involved, it may be useful to present these intra-industry flows in a supplementary table.

Flows of wastewater and reused water

3.205 After accounting for the distribution and use of water, it is necessary to consider flows of wastewater between economic units. Wastewater is discarded water which is no longer required by the owner or user. Wastewater can be discharged directly into the environment (in which case it is recorded as a return flow), supplied to a sewerage facility (ISIC division 37) (in which case it is recorded as wastewater to sewerage) or supplied to another economic unit for further use (in which case it is recorded as reused water). Flows of wastewater include exchanges of wastewater between sewerage facilities in different economies. These flows are recorded as imports and exports of wastewater.

3.206 In situations where wastewater flows to a treatment facility or is supplied to another economic unit, flows of water are recorded in part III of the supply table, entitled “Wastewater and reused water”, and part III of the use table, entitled “Wastewater and reused water”. Flows of wastewater are generally residual flows between economic units, since it is usually the case that the flow of wastewater to a sewerage facility is also accompanied by a payment of a service fee to the sewerage facility, that is to say, the sewerage facility does not purchase the wastewater from the discarding unit.

3.207 Reused water is wastewater supplied to a user for further use with or without prior treatment, excluding the reuse (or recycling) of water within economic units. It is also commonly referred to as reclaimed wastewater. Reused water is considered a product when payment is made by the receiving unit.

3.208 Reused water excludes the recycling of water within the same establishment (on site). Information on these flows, although potentially useful for analysis of water-use efficiency, is not generally available. However, a reduction in the total volume of water used, while the same level of output is maintained, can provide an indication of an increase in water-use efficiency which, in turn, may be due to the reuse of recycled water within an industry.

3.209 Once wastewater is discharged into the environment (e.g., into a river), its re-abstraction downstream is considered not a reuse of water in the accounting tables, but rather a new abstraction from the environment.

Return flows of water to the environment

3.210 All water that is returned to the environment is recorded as being supplied to the environment in part IV of the supply table, entitled “Return flows of water”. In some cases, these flows will comprise flows of wastewater direct to the environment from industries and households, i.e., flows of wastewater not sent to treatment facilities. In other cases, these flows will comprise flows of water from treatment facilities following treatment. In the supply table, such flows are shown as being supplied by the various industries and households either to the inland water system or to other sources, including the sea. Corresponding volumes of water are recorded in part IV of the use table, entitled “Return flows of water”, with the flows shown as being received by the environment.

3.211 Some return flows of water to the environment are losses of water. Consistent with the general definition of losses outlined in section 3.2, losses of water encompass flows of water that do not reach their intended destination or have disappeared from storage. The primary type of losses of water are losses during distribution.

3.212 Losses during distribution occur between a point of abstraction and a point of use or between points of use and reuse of water. These losses may be caused by a number of factors including evaporation (e.g., when water is distributed through open channels) and leakages (e.g., when water leaks from pipes or distribution channels, including rivers in some cases, into the ground). In practice, when losses during distribution are computed as a difference between the amount of water supplied and the amount received, they may also include problems associated with water meters and theft.

3.213 Urban run-off, a significant flow of water, is that portion of precipitation on urban areas that does not naturally evaporate or percolate into the ground, but flows via overland flow, underflow or channels, or is piped into a defined surface-water channel or a constructed infiltration facility. Urban run-off that is collected by a sewerage or similar facility is recorded as the abstraction of water from the environment (and, by convention, attributed to the sewerage industry (ISIC division 37)) in the supply table. It may then be treated before returning to the environment or it may be treated and distributed as reused water. Urban run-off that is not collected by a sewerage or similar facility but flows directly to the inland water system is not recorded in the PSUT.

3.214 Although separate estimates for urban run-off may be available in some countries, these flows generally cannot be measured directly. Estimates may be obtained by measuring the difference between the volumes of wastewater discharged by economic units (industries and households) into sewers and the volumes of wastewater collected by the sewerage system.

Evaporation of abstracted water, transpiration and water incorporated into products

3.215 To fully account for the balance of flows of water entering the economy through abstraction and returning to the environment as return flows of water, it is necessary to record three additional physical flows: evaporation of abstracted water, transpiration and water incorporated into products.

3.216 Flows of evaporation are recorded when water is distributed between economic units after abstraction, for instance, during distribution via open channels or while in water storage tanks and similar structures. The transpiration of water occurs when soil water is absorbed by cultivated plants as they grow and is subsequently released to the atmosphere.

3.217 Amounts of water incorporated into products (e.g., water used in the manufacture of beverages) are shown as supplied by the relevant industry, commonly a manufacturing industry.

3.218 The supply and use of evaporation of abstracted water, transpiration and water incorporated into products is recorded in part V of the supply and use tables, entitled “Evaporation of abstracted water, transpiration and water incorporated into products”. Ideally, these flows would be recorded separately, with the flows of evaporation of abstracted water and transpiration shown as going to the environment from the relevant water user, and the flows of water incorporated into products shown as retained in the economy, in the accumulation column. In practice, direct measurement of these flows, particularly as it relates to the distinction between transpiration and the water incorporated into cultivated plants, is usually not possible and hence a combined flow may be recorded.

3.5.4 Water aggregates

3.219 Water accounting provides a useful tool for improved water management. Many aggregates and indicators can be derived from PSUT and, using the structured framework, these data can be linked to data from the economic accounts in physical and monetary terms, to derive measures of intensity and productivity of water use. Three water aggregates are defined in the SEEA that are suited to particular analytical and policy questions. Other aggregates and indicators may also be compiled using data contained in the water PSUT with differences in what is included and excluded based on what questions are of policy or analytical interest.

3.220 Gross water input reflects the total water that is abstracted from the environment or imported. It can therefore provide an indicator of the pressures placed on the environment (or other countries’ environments) through the supply of water to the economy. In terms of entries contained in the water PSUT, it is equal to total abstracted water plus imports of water. For analytical purposes, it may be useful to disaggregate gross water input by source (e.g., surface water, groundwater, soil water or other sources including precipitation and sea water). Gross water input can also be measured by industry.

3.221 Net domestic water use focuses on the use of water by resident units. This aggregate excludes all flows of water between economic units (and hence is a net measure) and also deducts all exports of water. It is most directly defined as the sum of all return flows of water to the environment plus evaporation, transpiration and water incorporated into products. Net domestic water use can be compiled for individual industries and for households. Where exports and imports of water are relatively small, there will be little difference between gross water input and net domestic water use at a national level. However, there may be interest in compiling this aggregate at an industry level, for example, for agriculture or for the water collection, treatment and supply industry, or for regions within a country between which imports and exports of water may be significant.

3.222 The third main aggregate is final water use (generally referred to as water consumption within water statistics). Final water use is a key indicator of environmental pressure with respect to water, since it allows for the fact that a large proportion of the water abstracted is returned to the environment and hence may be re-abstracted. Final water use is equal to evaporation, transpiration and water incorporated into products and reflects the quantity of water no longer available for use.

3.223 The aggregates and indicators just described do not cover all changes in the stock of water in inland water resources. Of particular interest may be losses of water through evaporation, particularly from artificial reservoirs. These losses are recorded in the asset accounts for water resources described in section 5.11.

3.6 Physical flow accounts for materials

3.6.1 Introduction

3.224 The third subsystem of physical flow accounting encompasses flows of materials. In contrast to energy and water, materials are a far more diverse set of natural inputs, products and residuals. Consequently, although in principle a complete accounting for material flows on the basis of the mass of each type of material may be accomplished, in practice accounting for materials tends to focus either on particular materials or on specific types of flows.

3.225 In addition, there is interest in focusing on particular parts of the overall material flow cycle. For example, in section 3.2, emissions were classified as a type of residuals and defined as substances that are released by establishments and households into the air, water or soil as a result of production, consumption and accumulation processes. The focus on accounting for emissions is therefore not on the complete cycle through the economy of the particular substances that constitute emissions but only on the flow from the economy to the environment. Similar considerations apply in accounting for solid waste.

3.226 The present section discusses the main areas in which development of physical flow accounting for materials has taken place: (a) product flow accounting, (b) accounting for air emissions, (c) accounting for emissions to water and associated releases to economic units, (d) accounting for solid waste and (e) economy-wide material flow accounting (EW-MFA). In all cases, the accounting systems work within the context of the principles and structures outlined in sections 3.2 and 3.3.

3.6.2 Product flow accounting

3.227 For the management of specific products, it may be useful to trace the physical flows of an individual material from the environment, through the economy, and back into the environment. At a very detailed level, it is possible to track flows of elements, such as mercury, that may be of interest due to their hazardous nature. Using similar methods, flows of nutrients in the soil might be tracked in terms of the uptake of the nutrients by crops and the embodiment of these nutrients in other products.

3.228 As materials flow through the economy, they may become embodied in products that are more complex. These material flows can be analysed by combining the physical flow data with the economic relationships in standard supply and use tables. In this way, it is possible to estimate the quantity of specific materials required to yield final products. Such information is relevant for demand-based analysis of material flows and for the calculation of the upstream requirements of production which are necessary for life-cycle analysis and related analytical techniques.

3.229 A particular example of this type of material flow accounting is the compilation of nutrient balances. Nutrient balances track the flows of soil nutrients (nitrogen (N), phosphorus (P) and potassium (K)) from the soil through various products. Nutrient balances, particularly if calculated at a broad scale, necessarily require the use of multiple coefficients for the estimation of not only the total quantity of inputs, but also the extractions of nutrients embodied in products (e.g., harvested crops and fodder used for livestock).

3.230 Three major types of physical flows are used to construct nutrient balances on a broad scale:

  • (a) First, product flows of fertilizer products, which may be organic or inorganic and are measured in tonnes of nutrients;

  • (b) Second, flows of other organic inputs, which include own-account production of nutrients on farms through use of manure, and nutrients from natural cycling processes, such as natural fixation, that occur during the accounting period. These other organic input flows are estimated in a variety of ways depending on the type of flow;

  • (c) Third, nutrients removed from the system when crops are harvested and when other plants and grasses are used for grazing by livestock. These flows are also estimated by applying relevant coefficients to data on the physical supply of crops, grasses and fodder and taking into account farming practices. The difference between the total inputs and the removals is the nutrient balance and represents the surplus or deficit of nutrients resulting from production processes.

3.231 Nutrient balances are related to the dissipative use of products (primarily fertilizers) (described in sect. 3.2.4) in agricultural and forestry activities. Positive nutrient balances (meaning that there are residuals from the dissipative use of products) are not necessarily lost to the relevant production unit. Depending on a number of factors, some of the residuals could remain in the soil as a stock of nutrients which might be useful for crop production in the future. However, a proportion of the positive balance for a given nutrient also commonly leads to degradation of nearby surface water and groundwater as well as emissions to air, e.g., in the form of nitrous oxide (a greenhouse gas). The case of negative nutrient balances (i.e., where removals exceed inputs for N, P or K) can be an indicator of a lack of sustainability in production since, ultimately, the production of crops cannot continue without an appropriate balance of each of the major nutrient categories in the soil.26 There are no residual flows in this situation.

3.232 While product flow accounting may be undertaken following different accounting rules suited or tailored to an individual product, it is recommended that accounting be undertaken consistent with the boundaries and definitions outlined in sections 3.2 and 3.3. This permits a much broader range of linkages and analysis, especially with associated economic data.

3.6.3 Accounting for air emissions

3.233 Emissions to air are gaseous and particulate substances released to the atmosphere by establishments and households as a result of production, consumption and accumulation processes. The SEEA air emissions account records the generation of air emissions by resident economic units, by type of substance.

3.234 In some situations, the gaseous and particulate substances generated through economic activity may be captured for use in other production processes (e.g., methane gas may be captured in landfill sites to generate energy) or transferred between economic units for use in production or for storage (e.g., of carbon emissions). To fully account for the flows of particular gaseous and particulate substances, it may be of interest to record the flows of these substances within and between economic units, in addition to emissions to air. This extension is not described in this section but in accounting terms, it follows the same general principles outlined in this chapter.

3.235 Since the focus is on the generation and release of residuals, there is no requirement that a complete PSUT be constructed. Rather, emphasis is on determining an appropriate scope for the measurement of air emissions which aligns with the scope and boundaries used in the compilation of the economic accounts.

3.236 The SEEA air emissions account is presented in table 3.7. Its structure is a reduced and reoriented version of that of the general PSUT presented in table 3.1. The left-hand part is the supply table, which shows the generation of emissions by industries and households, by type of substance. For the purpose of accounting for emissions of carbon dioxide, it is recommended that, where possible, carbon dioxide emissions resulting from the burning of fossil fuels should be distinguished from carbon dioxide emissions from biomass.

Table 3.7.Air emission account(tonnes)
Supply table for air emissionsUse table for air emissions
Generation of emissionsAccumulationFlows to the environment
Industries—by ISICHouseholds
Agriculture ISIC AMining ISIC BManufacturing ISIC CTransport ISIC BOtherTransportHeatingOtherEmissions from landfillTotal supply of emissionsEmissions released to the environmentTotal use of emissions
Type of substance
Carbon dioxide10 610.32 602.241 434.427 957.082 402.418 920.517 542.21 949.1701.6204119.6204119.6204119.6
Methane492.034.115.80.821.92.415.51.7222.0806.3806.3806.3
Dinitrogen oxide23.73.50.82.61.00.20.10.132.032.032.0
Nitrous oxides69.46.037.9259.589.038.012.11.30.3513.6513.6513.6
Hydrofluorocarbons0.30.40.70.70.7
Perfluorocarbons
Sulphur hexafluoride
Carbon monoxide41.02.5123.846.266.2329.151.25.71.1666.9666.9666.9
Non-methane volatile organic compounds5.26.540.016.427.234.529.43.20.9163.3163.3163.3
Sulphur dioxide2.70.428.062.48.10.40.40.10.0102.5102.5102.5
Ammonia107.91.70.20.92.311.41.20.2125.9125.9125.9
Heavy metals
Persistent organic pollutants
Particulates (including PM10 and dust)7.00.18.59.34.46.02.80.50.038.538.538.5

3.237 The column for accumulation shows the release of air emissions from controlled landfill sites as these reflect a release of emissions from production, consumption and accumulation activity in earlier periods. These emissions should be attributed to the waste management units that operate the landfill sites.

3.238 Air emissions by households are broken down by purpose (transport, heating, other). Additional purposes may be added depending on analytical requirements and available information.

3.239 The right-hand part of the table represents the use table which covers the release of emissions to the atmosphere.

Issues in the measurement of air emissions

(a) Economic boundary with respect to air emissions

3.240 Some air emissions will occur when economic units undertake activity in other countries. Consequently, while the majority of air emissions will be released into the national environment, some air emissions from resident economic units will be released into the environment of the rest of the world. Consistent with the general definition of the economic boundary using the concept of residence, air emissions accounts for a nation will exclude emissions released within a national territory by non-residents (such as tourists and foreign transportation operations), whereas the emissions abroad of resident economic units will be included.

3.241 The nature of air emissions means that it is quite possible for air emissions released in one country to be carried through the atmosphere into the territory of another country. While these flows may be of considerable interest in understanding the state and quality of the atmosphere of a national environment, they are out of scope of air emission accounts, as they occur within the environment.

3.242 Air emission accounts also do not record the extent of the capture or embodiment of gases by the environment, for example, carbon captured in forests and soil.

(b) Other scope and boundary issues

3.243 Included within the scope of air emissions in the air emissions account is a range of other emissions that are the direct result of economic production processes, namely, the emissions from cultivated livestock due to digestion (primarily methane), and emissions from soil as a consequence of cultivation or of other soil disturbances, arising, for example, from construction or land clearance. Emissions from natural processes such as unintended forest and grassland fires and human metabolic processes which are not the direct result of economic production are excluded.

(c) Environmental boundary with respect to air emissions

3.244 Secondary emissions occur when emissions from various economic processes combine in the atmosphere to create new substances. These new combinations should be considered changes occurring in the environment and excluded from air emissions accounts.

3.245 Flaring and venting of residual gaseous and particulate materials into the atmosphere are part of the process of extracting natural gas and crude oil. These releases are included in the air emissions accounts.

3.246 Emissions from manure collected and spread on agricultural land are within scope of the air emissions accounts. The use of manure is considered the dissipative use of a product and, following the general guidelines in section 3.2, the emissions from the manure are considered flows from the economy to the environment rather than flows within the environment.

3.247 The air emissions generated by industries and households should be measured at the point at which they leave an establishment, that is to say, they should be measured after the substances have passed through any relevant filtering or emission reduction technology or process within the establishment.

3.248 For example, landfill sites may generate air emissions but may also capture these gases to produce other outputs—for example, energy from methane captured on site—thereby releasing different air emissions direct to the atmosphere. However, only those emissions that leave the establishment should be recorded and attributed to the waste management industry.27

(d) Attribution of air emissions

3.249 Air emissions are released due to production, consumption and accumulation processes of industries and households. In order to permit effective linking of physical flow data to monetary data, the physical flows of emissions should be classified using the same classifications used in the SNA. For household consumption, it is necessary to consider both the purpose of the consumption and the actual product being used by households. This requires consideration of data classified by the Classification of Individual Consumption According to Purpose (COICOP) and by CPC.

3.250 The attribution of air emissions is of particular relevance in the measurement of air emissions from durable goods such as cars. Air emissions accounts should attribute the emissions according to the nature of the activity for which the durable goods are being used rather than according to the characteristics of the durable good. Thus, emissions from a car used for private household transport should be attributed to households, while emissions from a car used for the delivery of goods by a retailer should be attributed to the retail industry.

3.251 In addition to air emissions that are released through the operation of durable goods, there may also be emissions that are leaked into the atmosphere both during the good’s operating life and after it has been discarded. These leakages should be recorded as they occur and attributed to the owner of the good at the time of the leakage. It may be that the “ownership” of the discarded good is a landfill site, in which case the leakages should be recorded as part of the overall air emissions from the landfill site and attributed to the waste management industry operating the site.

3.252 Usually, emissions from solid waste in landfill sites will not relate directly to inflows of solid waste and other materials to the site during the current accounting period but, instead, will be due to the accumulation of solid waste over time. For this reason, it may be of analytical interest to consider only those emissions generated through the day-to-day operation of the landfill sites (e.g., emissions from the burning of fuel for trucks and machines), as the emissions from solid waste cannot be directly related to broader measures of economic activity in the current period.

3.253 Following the general accounting treatment for the activity of general government units, air emissions generated by government are recorded against the relevant industry activity (e.g., public administration). It is noted that waste management units often operate as part of general government activity. It may be difficult to separate these operations from the broader general government unit by which they are managed. Nonetheless, given the importance of waste management activities in accounting for air emissions, it is recommended that all possible efforts be made to identify these activities separately within the broader suite of general government activities.

The relationship between air emissions accounts and other accounting frameworks

3.254 There is significant policy interest in air emissions, particularly carbon dioxide and other greenhouse gas emissions. For different reasons, other accounting frameworks are of particular importance in relation to the SEEA air emissions accounts.

3.255 The first is the accounting for emissions inventories under the auspices of the United Nations Framework Convention on Climate Change (United Nations, 1994). Many countries compile relevant statistics on emission inventories on a regular basis and there are close parallels in the accounting for air emissions as described in the SEEA. The main adjustments required to create a bridge between SEEA air emissions accounts and data required for the Framework Convention involve the emissions of residents abroad and non-residents in the territory. The focus of these adjustments is on land, water and air transport and national fishing vessels operating abroad.

3.256 The second important framework is the energy accounts described in section 3.4. Because a significant source of carbon dioxide and greenhouse gas emissions is the burning of fossil fuels, there are important connections between the measurement of air emissions and the measurement of energy accounts. Indeed, it is common for relevant sections of air emissions accounts to be compiled based on data contained in energy accounts.

3.6.4 Accounting for emissions to water and associated releases to economic units

3.257 Emissions to water are substances released to water resources by establishments and households as a result of production, consumption and accumulation processes. Emissions to water resources can constitute a major environmental problem and cause the quality of water resources to deteriorate. Some of the substances emitted into water resources are highly toxic and thus affect negatively the quality of the receiving water resource. Similarly, the presence of other substances, such as nitrogen and phosphorus, can lead to eutrophication, and organic substances can have effects on the oxygen balance, thus affecting the ecological status of a water resource.

3.258 Within the SEEA framework, it is relevant to account for both emissions of substances to water resources and releases of the same substances to the sewerage system by establishments and households. These releases are received and treated by sewerage facilities before emissions to water resources occur. The accounting coverage is therefore gross releases of substances to water resources and the sewerage system by establishments and households. The relevant flows are depicted in figure 3.2.

Figure 3.2Flows in water emissions accounts

3.259 Accounts for gross releases to water, commonly referred to as water emissions accounts, present information on the activities responsible for the emissions and releases, the types and amounts of substances, as well as the destination of the emissions (e.g., water resources or the sea). Water emissions accounts are a useful tool for designing economic instruments, including new regulations to reduce emissions into the inland water system or seas and oceans. When analysed in conjunction with the technology in place to reduce gross releases and treat wastewater, data from water emissions accounts can be used in impact studies concerning the efficiency of current technologies in reducing substances in the water and concerning the potential of new technologies.

Coverage of water emissions accounts

3.260 Water emissions accounts record the quantity of substances added to water by establishments and households during an accounting period. The quantities are expressed in terms of mass (kilograms or tonnes, depending on the substance under consideration). Water emissions accounts cover: (a) substances added to wastewater and collected in the sewerage system; (b) substances added to wastewater discharged directly to water bodies; and (c) substances from non-point sources, for example, emissions and releases from urban run-off and emissions from agriculture. The water emissions accounts thus provide a description of the wastewater flows described in the PSUT for water in section 3.5, in terms of substances resulting from economic activity. The direct dumping of waste into water bodies is not covered in water emissions accounts but in solid waste accounts.

3.261 Sources of water emissions and releases are classified as point sources or non-point sources. Point source water emissions and releases are those for which the geographical location of the discharge of the wastewater is clearly identified. They include, for example, water emissions and releases from sewerage facilities, power plants and other industrial establishments. Non-point (or diffuse) sources of water emissions and releases are sources without a single point of origin or a specific outlet into a receiving water resource. Water emissions from non-point sources include substances carried off the land by urban run-off and releases of substances that result from a collection of individual and small-scale activities which, for practical reasons, cannot be treated as point sources. By convention, the emissions and releases associated with urban run-off that pass through sewerage facilities are attributed to the sewerage industry.

3.262 Emissions relating to returns of irrigation water and rain-fed agriculture are described in terms of the substances that are added to the return flows of water from agricultural land, primarily fertilizer and pesticide residues in the soil which infiltrate groundwater or run-off to surface water. Strictly speaking, flows of substances from soil to water resources should be considered flows within the environment and hence out of scope of the system of physical flows recorded in PSUT. However, given the significant policy interest in these flows, they may commonly be incorporated into water emissions accounts.

Water emissions account

3.263 The structure of the SEEA water emissions account is presented in table 3.8. Its structure is a reduced version of that of the general PSUT presented in table 3.1. The top half of the table, the supply table, shows the generation of water emissions and releases by industries and households, by type of substance, and the treatment of releases by the sewerage industry. The bottom half of the table, the use table, shows the collection of releases to wastewater for treatment by the sewerage industry and the emissions to the environment.

Table 3.8.Water emissions account(tonnes)
Physical supply table for gross releases of substances to water
Generation of gross releases to waterAccumulationFlows with the rest of the worldFlows from the environment
Sewerage industryOther industriesHouseholdsEmissions from fixed assetsTotal supply
Emissions by type of substance
BOD/GODa5 59411 9982 71220 304
Suspended solids
Heavy metals
Phosphorus8361 5875332 956
Nitrogen10 03347 2581 90859 199
Releases to other economic units
BOD/COD a7 9278 95016 877
Suspended solids
Heavy metals
Phosphorus8146 7867 600
Nitrogen15 13930 46345 602
Physical supply table for gross releases of substances to water
Generation of gross releases to waterFlows with the rest of the world
Sewerage industryOther industriesHouseholdsFlows to the environmentTotal Use
Emissions received by the environment
BOD/CODa20 30420 304
Suspended solids
Heavy metals
Phosphorus2 9562 956
Nitrogen59 19959 199
Collection by other economic units
BOD/CODa16 87716 877
Suspended solids
Heavy metals
Phosphorus7 6007 600
Nitrogen45 60245 602
Note: Dark grey cells are null by definition.

3.264 The level of industry detail in the table is dependent on data availability and analytical interest. Where focus is on a particular type of substance, the rows of the table may be structured to reflect the destinations of the emissions and releases generated. Thus, for any particular industry or household, it is possible to show the quantity of emissions that flow directly to the environment and releases that flow to sewerage facilities. The environment column may also be disaggregated to show releases to the inland water resources or to the sea.

3.265 For analytical reasons, it may be useful to reallocate the emissions of substances by the sewerage industry to the economic unit responsible for the original release. In this regard, it is often difficult to calculate, as the sewerage industry usually treats flows of wastewater coming from diverse users of the sewage system in aggregate. Therefore, in general, an allocation is obtained by applying treatment or abatement rates of the sewerage facility to all releases collected by the facility. For details, see System of Environmental-Economic Accounting for Water (United Nations, 2012b).

3.266 The exchange of relevant substances with the rest of the world (imports and exports) covers the exchanges of substances associated with the release of wastewater from one economy to a sewerage facility in another economy. Water emissions accounts do not include “imports” and “exports” of substances through natural flows of water resources. Thus, the quantity of relevant substances in rivers crossing country borders and/or flowing to the open sea are not recorded in the water emissions account.

3.6.5 Solid waste accounts

3.267 Included in the accounts are emissions of relevant substances from fixed assets (such as vessels operating within a country’s water resources) due, for example, to corrosion or fuel leaks. These flows are recorded in the accumulation column. Finally, emissions due to activities undertaken in water resources or seas (e.g., dredging of waterways and ports) are included and recorded against the relevant industry.

3.268 Solid waste accounts are useful in organizing information on the generation of solid waste and the management of flows of solid waste to recycling facilities, to controlled landfills or directly to the environment. Measures of the amount of waste in aggregate or of quantities of specific waste materials may be important indicators of environmental pressure. The construction of solid waste accounts allows these indicators to be placed in a broader context with economic data in both physical and monetary terms.

The definition of solid waste

3.269 Following the definition provided in section 3.2, solid waste covers discarded materials that are no longer required by the owner or user. Where the unit discarding the materials receives no payment for the materials, then the flow is considered a residual flow of solid waste. Where the unit discarding the materials receives a payment but the actual residual value of the material is small—for example, in the case of scrap metal sold to a recycling firm—this flow is considered a product flow of solid waste.

3.270 Discarded materials sold as second-hand products—for example, a second-hand car or furniture—should be treated as flows of products and not treated as solid waste. In the determination of whether a material is a second-hand product, consideration may be given of the extent to which the receiving unit can reuse the product for the same purpose for which it was conceived.

3.271 In practice, in many countries, statistics on solid waste will be based on legal and administrative lists of materials determined to be solid waste. However, the principles above should provide a basis for the measurement of solid waste in countries where legal or administrative processes concerning waste do not exist or are limited in scope. These principles may also provide a basis for the establishment or amendment of lists of solid waste materials.

Structure of the solid waste account

3.272 The structure of the solid waste account is presented in table 3.9 located on pages 90 and 91. It follows the logic of the general PSUT described in section 3.2. There is no standard international classification of solid waste but for illustrative purposes, the table includes an indicative listing of types of solid waste based on the statistical version of the European Waste Catalogue (EWC-Stat).28

Table 3.9.Solid waste account(tonnes)
Physical supply table for solid waste
Generation of solid wasteRest of the worldFlows from the environment
Waste collection, treatment and disposal industry
Incineration
LandfillTotalOf which: Incineration to generate energyRecycling and reuseOther treatmentOther industriesHouseholdsImports of solid wasteRecovered residualsTotal supply
Generation of solid waste residuals
Chemical and health-care waste1601 830201402 150
Radioactive waste55
Metallic waste40103207010440
Non-metallic recyclables302 7202 1001304 980
Discarded equipment and vehicles14028050470
Animal and vegetal wastes10 3301 7008012 110
Mixed residential and commercial wastes10304 1704 660100108 980
Mineral wastes and soil30029 10057017030 140
Combustion wastes4 0502 0001 5502405 840
Other wastes46040500
Generation of solid waste products
Chemical and health-care waste160160
Radioactive waste
Metallic waste16001001 700
Non-metallic recyclables1 0302 9403 970
Discarded equipment and vehicles
Animal and vegetal wastes5 3108 46013 770
Mixed residential and commercial wastes
Mineral wastes and soil35080430
Combustion wastes37828622050648
Other wastes
Note: Dark grey cells are null by definition.
Physical use table for solid waste
Intermediate consumption; collection of residualsFinal consumptionRest of the world
Waste collection, treatment and disposal industry
Incineration
LandfillTotalOf which: Incineration to generate energyRecycling and reuseOther treatmentOther industriesHouseholdsExports of solid wasteFlows to the environmentTotal use
Collection and diposal of solid waste residuals
Chemical and health-care waste2905709103802 150
Radioactive waste55
Metallic waste1020020030440
Non-metallic recyclables5505002 9301 3401604 980
Discarded equipment and vehicles301037060470
Animal and vegetal wastes308306308 3101502 18061012 110
Mixed residential and commercial wastes7306 4502 3001 07010630908 980
Mineral wastes and soil1 01072022 6305 17061030 140
Combustion wastes504005 1902005 840
Other wastes2012040320500
Use of solid waste products
Chemical and health-care waste50110160
Radioactive waste
Metallic waste301501 5201 700
Non-metallic recyclables502 5001 4203 970
Discarded equipment and vehicles
Animal and vegetal wastes6308 0105 13013 770
Mixed residential and commercial wastes
Mineral wastes and soil70200160430
Combustion wastes60048648
Other wastes
Note: Dark grey cells are null by definition.

3.273 The upper half of the table is the supply table, whose first part, covering “Generation of solid waste residuals”, shows the generation of solid waste by industries and households. It also shows the supply of solid waste from the rest of the world (recorded as imports) and also solid waste recovered from the environment (e.g., oil recovered following an offshore oil spill, debris collected following a natural disaster, or the excavation of soil from locations at which hazardous chemicals were used).

3.274 The bottom half of the table is the use table, whose first part, covering “Collection and disposal of solid waste residuals”, shows the collection and disposal of solid waste through various activities within the waste collection, treatment and disposal industry and through related activities in other industries. It also shows the flow of solid waste to the rest of the world as exports and the flow of solid waste direct to the environment.

3.275 The columns of the table highlight the various activities of the waste collection, treatment and disposal industry. These are landfill operation, incineration of solid waste (of which incineration of solid waste to produce energy is separately identified), recycling and reuse activities, and other treatment of solid waste. Other treatment includes the use of physical-chemical processes, the use of mechanical-biological processes, and the storage of radioactive waste. More industry detail may be provided depending on analytical requirements and available information. Of particular interest may be the identification of cases where the activities just listed are undertaken as secondary or own-account production within other industries.

3.276 So that all information on the waste collection, treatment and disposal industry can be presented as a single group, the accumulation of waste in landfill sites is not presented in a distinct accumulation column as in the general PSUT.

3.277 In the second part of the supply table, on “Generation of solid waste products”, and in the second part of the use table, on “Use of solid waste products”, the flows of solid waste that are considered products rather than residuals are recorded, following the distinction described above. The flows recorded here relate to cases where a solid waste product is identified at the time of disposal by the discarding unit. The flow is recorded in the second part of the supply table, matched by a use of solid waste products in the second part of the use table. Sales of scrap metal would be recorded in this way.

3.278 Sales of products manufactured from solid waste, or simply obtained from waste collection, should not be included. For example, paper discarded by households, which is collected by a charitable organization and subsequently sold in bulk to a paper recycling firm, is recorded in the solid waste account only in respect of the initial flow of solid waste from households to the charitable organization.

3.6.6 Economy-wide material flow accounts (EW-MFA)

3.279 The purpose of economy-wide material flow accounts (EW-MFA) is to provide an aggregate overview, in tonnes, of the material inputs and outputs of an economy, including inputs from the environment, outputs to the environment, and the physical amounts of imports and exports. EW-MFA and associated balances constitute the basis for derivation of a variety of material flow-based indicators. Given their generally close alignment with PSUT, EW-MFA may be a useful starting point for the development of a fully articulated PSUT for the whole economy.

3.280 EW-MFA are well aligned with the PSUT described in this chapter but they do not attempt to focus on the detail of physical flows, particularly as related to flows within the economy. They generally focus on the mass of material entering the economy from the environment—natural resources and other natural inputs—and the mass of residuals flowing to the environment. Given their economy-wide focus, EW-MFA also focus on physical flows of goods to and from the rest of the world. With a macropurpose in mind, some practical choices on treatment have been made so that flows within the EW-MFA system can be estimated more straightforwardly. These choices are outlined below.

3.281 A full description of EW-MFA accounting and the associated indicators can be found in Economy-wide Material Flow Accounts and Derived Indicators: A Methodological Guide (European Commission and Eurostat, 2001). Useful background information may also be found in the OECD publication entitled “Measuring material flows and resource productivity: OECD guidance manual” Vol. II: “A theoretical framework for material flow accounts and their applications at national level” (OECD, 2008).

Differences in treatment between EW-MFA and PSUT

3.282 International trade. EW-MFA estimates of physical flows of imports and exports are typically based on international trade data. While some adjustments are made to account for significant items such as fuel purchases abroad by resident economic units, a full adjustment of the trade data to a residence basis of recording as used in the PSUT is not currently attempted in EW-MFA accounts. It is noted that in comparing the PSUT with EW-MFA, it is necessary to consider the treatment of goods for processing, goods for repair, and merchanting, as described in section 3.3.

3.283 Recording of flows associated with biological resources. In EW-MFA, the treatment of cultivated crops, trees and other harvested plants differs from the treatment in the PSUT in that the flow from the environment to the economy is recognized at the point of harvest rather than as growth occurs. Consistent with drawing the boundary in this way, the uptake of soil nutrients and water and the inputs associated with photosynthesis are considered flows within the environment (between the soil and atmosphere and the plant itself), whereas in the PSUT, the plants are considered to be already within the economy and hence these flows are considered inputs from the environment to the economy and are recorded as natural inputs (see sect. 3.2). In effect, by recording the amount harvested rather than the input flows from the soil and the atmosphere, EW-MFA assume that the quantities harvested embody all of the different natural inputs. Since the harvested amounts can be more easily measured at an aggregate level, this different boundary is appropriate for EW-MFA purposes.

3.284 In respect of cultivated livestock, aquatic and other animal resources, the flows from the environment to the economy are treated in the same way in both EW-MFA and the PSUT. Thus, as explained in section 3.2, the growth of cultivated livestock and fish is recorded as it occurs rather than at the point of harvest or slaughter.

3.285 The treatment of natural biological resources, both plants and animals, is also the same in both approaches: all wild plants and animals are recorded as entering the economy at the point of harvest.

3.286 Because of the treatment of cultivated plant resources, many natural inputs are not directly recorded in the EW-MFA. However, some inputs from air are recorded in relation to the respiration of livestock and the inputs absorbed during combustion. These inputs are referred to as “input balancing items” in EW-MFA.

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