Eco-efficiency indicators in German Environmental Economic Accounting

Abstract

Any economic activity involves using the natural environment. At the same time the principle of sustainable development requires to deal with nature as carefully as possible. Therefore it is important to measure how and to which extent nature is used by economy over time. There are three essential classes of input factors from nature into economy that may be distinguished: the supply of goods (such as raw materials), the supply of area for the location of economic activity and nature's function as a sink for the discharge of residuals and pollutants. For these classes more detailed input factors can be specified. In addition to the measurement of mere quantities information on the efficiency of the factor use is of major importance. In German Environmental Economic Accounting (EEA) productivity indicators are used to measure eco-efficiency at the national level. The article describes how productivities are defined and which natural input factors are covered in German EEA. Two examples (raw materials, carbon dioxide emissions) show in detail how the productivities are calculated. The methods described are illustrated by various figures for Germany. 1. Productivity as a measure for eco-efficiency Any economic activity, be it the production of goods and services, be it consumption, involves using our natural environment. There are many ways of using nature. Materials are withdrawn from nature as raw materials, areas are used as a location for economic activities, and for the discharge of residuals and pollutants nature is used as a sink, i.e. substances are taken up by nature. 1 By this the environment provides various inputs - in the form of (non produced) goods or services - to economy which are essential for the generation of economic output. Doing business in line with the principle of sustainable development requires dealing with nature as carefully as possible, that future generations may enjoy an intact environment, too. This means that the quantitative use of nature should be as small as possible or respect natural assimilation capacities. Looking at the quantities of natural input factors exclusively, however, would only give half of the picture: It is also important how much is produced by using one unit of nature as input. In the current debate those aspects are discussed under the principle of eco-efficiency. Both aspects - sufficiency and efficiency - complete each other in showing how any economic activity deals with nature. In this context, eco-efficiency indicators play the role to show how efficient the economic activity under consideration deals with nature's goods and services. This can be measured by establishing a mathematical relationship between economic output and environmental input. Most commonly the ratio