COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(94) 670 final 
Brussels, 21.12.1994 
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 
Directions for the EU on 
Environmental Indicators and Green National 
Accounting 
The Integration of Environmental and Economic Information 
Systems 

1. The need for new policy guiding instruments. 
Sustainable growth respecting the environment as a major new policy goal for the European 
Union is now enshrined in Article 2 of the Treaty of the European Community as amended by 
the Treaty on the European Union. Similarly Article 130r requires environmental 
protection to be integrated into the definition and implementation of other Community 
policies. 
The Commission's White Paper on Growth, Competitiveness and Employment [COM 93, 700] 
highlights the need for a 'New Model of Development' and stresses the importance of an 
integrated approach comprising economic growth, quality of life, jobs, local development and 
the environment. 
No instruments for policy guidance and public information are, however, available. What is 
needed - as a first step - is a harmonised European system of integrated economic and 
environmental indicators and accounts which addresses the problems of the various economic 
sectors and policy fields at various levels and which will allow for comparison between 
Member States. 
2. Background 
The Fifth Environmental Action Programme [COM 92, 23] contains a number of building 
blocks for a strategy aiming at sustainable development in Europe. The Programme specifies 
that 'exploiting and strengthening the experience and capacities of the European Statistical 
System to deliver environmentally relevant statistics on a regular basis, which will be 
comparable to and linked to the traditional official statistics in the economic and social fields 
[... ] should imperatively be given a high level of priority'. 
The Programme adds 'that although the value of many environmental assets is difficult to 
measure in monetary terms, and in the case of particularly important or rare elements 
should not be priced in any event, valuations, pricing and accounting mechanisms have a 
pivotal role to play in the achievements of sustainable development'. Among the measures 
required, the Programme mentions 'extension and adaptation of the traditional tools of 
economic statistics on the basis of research at national and European level including 
modification of key economic indicators, such as GNP, so as to reflect the value of natural and 
environmental resources in generating current and future incomes and to account for 
environmental losses and damage on the basis of assigned monetary value'. 
Also the Commission's recent Communication [COM 94, 465] on 'Economic Growth and the 
Environment. Some implications for Economic Policy Making' stresses the need for new 
policy guiding instruments in the form of integrated economic and environmental 
information systems. 
The Council and the Representatives of the Governments of Member States, meeting with the 
Council, reaffirms in its opinion on the Fifth Environmental Action Programme delivered 1 
February 1993, the 'crucial importance of ensuring that environmental concerns are taken 
fully into account from the outset in the development of other policies and in the 
implementation of those policies, and the need for appropriate mechanisms within the 
Member States, the Council and the Commission to help achieve this integration, upon which 
the strategy advances in the programme relies'. It invites the Commission to 'consider 
developing initiatives to this end'. It undertakes to 'consider at the national level, and at the 
level of the Council in its various formations, the introduction of comparable measures to 
achieve the same aims'. 
Likewise the European Parliament in its resolution on the Programme delivered 17 
November 1992 welcomes 'in principle the guidelines set out in the Programme and in 
particular [....] the importance which it attaches to the quality, evaluation and distribution 
of data on the environment'. It furthermore calls on the Commission to 'establish clearly the 
mechanisms for interaction and the conciliation instruments necessary to ensure the 
effective participation of all political, economic and social operators and agents, NGOs, 
consumer associations and the general public'. 
The European Parliament furthermore details its position in its Resolution of 22 April 
1994 on 'The Inclusion of environmental considerations in the calculation of the Gross 
national product' in which it advocates broad 'collaboration' on the issue, calls on the 
Commission 'to give an impetus to the scientific community [....] to come to useful and 
acceptable environmental indicators' [....] calls on the Commission to 'put forward as soon as 
possible practical proposals based on the results of the 'environmental pressure index' 
project'. 
Until now, however, specifications on how to embark on the issue has been lacking. The 
establishment of the European Environment Agency in Copenhagen (DK), which opened 
officially its activities 1 November 1994 and which will develop and structure 
comprehensive information on environmental issues underlines the need - besides the 
extreme necessity of developing a common EU ready-for-use policy guidance instrument -
for a common framework for 'green accounting' in the EU. A framework which, if worked out 
in a coordinated effort, will provide legitimacy and - most important - a common reference 
to the various activities under this heading. 
3. The aim 
On the basis of a Report prepared by the Services the Commission has developed a set of 
complementary actions establishing a European framework for 'green accounting', which 
will provide: 
i) a European System of Integrated Economic and Environmental Indices (ESI), a much 
needed direct integration of economic performance and environmental pressures of 
economic sectors in a comparable way, within 2-3 years 
ii) the larger and more fundamental work on the 'greening' of the National Accounts in 
a satellite format (detailing environmental expenditures, establishing natural 
resource accounts, improving knowledge of methodologies for environmental damage 
assessment and monetary evaluation) 
The methodology proposed permits the establishment of a number of key environmental 
indices, which can be aggregated in full or partly. 
Obviously, sustainable development comprises a large number of facets which go well beyond 
the environmental aspects which are the focus of this Communication. The framework of 
activities reflects how far one can go now, and is at the same time open to take in new 
knowledge when this becomes available. The framework also allows for the integration of 
other aspects of sustainability (e.g. social aspects). 
4. The various elements. 
Policy guidance on the integration of environmental concerns in other policies should in 
principles be based on an evaluation of - in its broadest sense - environmental damage of 
human activities as compared to economic and other social performance of this activity, and 
taking into account the cost of avoiding or remedying the damage. Evaluation of damage, 
however, is difficult, time consuming and resource intensive for a number of reasons. In 
many cases, moreover, the necessary knowledge will not be readily available and damage 
evaluation therefore a matter of costly and time-consuming research. 
The pressure that economic activities exert on the environment is easier to obtain. The first 
operational element (actions 2 and 3) of the proposed framework is therefore to establish 
within 2-3 years a European System of Integrated Economic and Environmental indices 
(ESI). The system - which will resemble the Dutch NAMEA system (Integrating indicators 
in a National Accounting Matrix including Environmental Accounts), but will be developed 
using a common European System of Environmental Pressure Indices (ESEPI) - will be 
available to Member States and the EU in 2-3 years time. It will need permanent updating. 
ESI will provide useful guidance on how to integrate environmental concerns in other policy 
areas and will thus be a powerful policy guiding instrument. This requires that sectoral 
specificities are closely integrated into the development, interpretation and use of 
indicators, indices and more aggregated information. 
ESI will also provide - for the first time - a comparable means of public information on EU 
progress towards a better balance between economic performance and environmental 
pressure. 
The economic part of ESI will be compatible with the System of National Accounts (SNA). 
What is needed - as a first step - is in effect a reformatting and extension of the existing 
National Accounts (NA), providing for the linkage to environmental indices. 
The environmental part of ESI is more difficult. The European System of Environmental 
Pressure Indices (ESEPI) will as a first major contribution indicate priorities for the 
compilation of relevant, comparable physical data on environmental pressure. It will 
identify - for each environmental problem area as defined by the 5th Action Programme, or 
later generated by the ESI itself - a common list of main pollutants. It will establish sets of 
European Weighting Coefficients (EWC) needed for a harmonised aggregation of pressures 
from different polluting agents. The system operates in a simple, transparent and time 
efficient manner. 
The ESEPI-system is designed in a way which will let environmental 'pressure' come as 
close as possible to environmental 'damage'. It is also designed to take into account a broad 
spectrum of environmental problems from unwanted changes in land use to human health, in 
principle the same methodology may be used also for the establishment of EWCs useful in 
systems like 'Life Cycle Analysis', 'Eco Labels', 'Best Available Technologies', and other areas 
of specific interest to sectoral policy making in which a common European approach is 
important. 
It should be stressed, that ESEPI only yields relative valuations of environmental damages 
and operates on a strictly non-monetary basis. Although transparent, the ESEPI does not 
reveal the reason why different experts value certain pressures higher than others. It is 
therefore essential to ensure the credibility of the EWCs by a transparent selection process 
of the experts involved. 
The combination of economic performance indicators and environmental pressure indices in 
ESI as described above, however useful, does not provide for the full integration of economic 
and environmental indicators. For this a monetary valuation of the environmental indicators 
is necessary. The second operational element of the framework (actions 4 and 5) is designed 
to promote work in these fields. 
Various attempts to establish aggregated figures on national economic performance according 
to one or more sustainability definitions have been offered by academia during the last years, 
and valuable information is still being provided, mainly as regards contributions to a better 
understanding of the concept of sustainability. 
The development of a 'greened' GNP, although having a certain appeal and potentially being a 
useful component of an integrated economic-environmental information system, raises a 
number of difficult methodological questions which rule it out as a realistic option for the 
foreseeable future. Therefore what is needed - as a first step - is an approach which makes 
environmentally interesting parts of the System of National Accounts visible by 
disaggregation, which adds other parts like resource depletion and environmental 
degradation, firstly in the form of physical indicators, later with the help of available 
techniques transformed into monetary value, still - however - keeping the various building 
blocks of such a European System of Integrated Environmental and Economic Accounting 
separate, a so-called satellite approach. 
The various building blocks may be viewed as having three levels: In the first level is found 
the information that in principle can be derived directly from the existing SNA through 
disaggregation and reformatting. Although available in principle a lot of work is needed for 
data collection, e.g. in areas like environmental protection activities, where the methodology 
SERIEE developed by Eurostat and Member States statistical offices for the collection of 
environmental expenditure data is now after some years of pilot testing ready for the actual 
collection of data. 
In the next level is found those satellite accounts which are partly available in some (but 
few) Member States: natural resource accounting, other physical data, like flows of raw 
materials, land use changes and fiow of 'residuals' , i.e. polluting agents. 
In the third level are found satellite accounts, which necessitate imputations of 
environmental costs. Although essential it is also acknowledged that this part of the 'greened' 
SNA is laborious, and to some extent still a domain of research and development. 
To these operational elements are linked a proposal (Action 1 ) to establish a common 
framework, a 'Handbook on a European System for Integrated Environmental and Economic 
Accounting (ESEA). The basic idea is to establish a framework of the various components of 
integrated economic and environmental accounting, so as to provide legitimacy to relevant 
activities - and to provide a common conceptual basis and a common reference for the work. 
The last proposal for action (Action 6) is intended to keep coordination in the area at a 
horizontal level close to the President of the Commission. 
5. Summary of main actions of the framework for EU 'green' accounting 
establishing a common framework of understanding, a 
common reference for accounting for all activities of the EU in the 
area of 'green' accounting: a 'Handbook on a European System tor 
Integrated Environmental and Economic Accounting (ESEA)'. 
2. establishing a European System of Environmental Pressure Indices 
[ESEPI]. The system will be useful for setting priorities in the 
collection of physical environmental pressure indicators, for 
collecting these indicators, for establishing sets of European 
Weighting Coefficients, and for the aggregation of indicators into 
environmental pressure indices 
3. the bringing together of indices for economic performance and 
environmental pressure, to form a European System of Integrated 
Economic and Environmental Indices [ESI], which could be achieved in 
a first run within 2 years, providing for the first time comparable 
systems of integrated environmental and economic indices in the EU 
4. continuing and enlarging work on satellites to National Accounts of 
essential value for 'green' accounting, such as environmental 
expenditures, natural resource accounting etc. 
5. improving the methodology and enlarging the scope 
of monetary valuation of environmental damage with a view of 
bringing such information into the above system 
6. ensuring horizontal co-ordination of the activities 
Conclusions 
1. The Commission is of the opinion that 
- there is a need for new instruments for policy guidance and public 
information at European level in relation to the Sustainability Development goal set 
out by the Treaty on European Union, by the Fifth Environmental Action 
Programme, as well as by the 'New Model of Development' in the Commission's White 
Paper on 'Growth, Competitiveness and Employment", 
- the integration of economic and environmental information systems 
into A European System of Integrated Economic and Environmental Indices (ESI) is a 
suitable starting point for the development of such policy guiding instruments, 
- further integration of environmental and economic information systems aiming at a 
'greening' of National Accounts following the satellite approach shouid be intensified 
in accordance with a common framework and using a common reference, 
-the integration of economic and environmental informations systems should be 
developed in six parallel actions detailed in this Communication, making sure that 
all competencies are taken into account, particularly those of the European 
Environment Agency and Eurostat. 
2. The resources necessary for the implementation of these actions will be determined in the 
context of the annual budgetary procedure, in the light of the resources available within 
category 3 of the financial perspectives. 

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3Comm.6n Ppsitapn m OJNoC213, 3.8.94. pl5, tofei^opiBd'by Council on 1546 December 1994 
1*135* . JA1CXACCSS1IX3C Miilfiahhiial actions (1995-1999) related to the ekablishinent of environmental indicators and gi een 
natic^ accounting for theEdro ;••'••'•'•'/ 
i;- IWe of operation: 
. MnlfWrnnal actions Q995-1999) related to the establishment of environmental indicaiDis and geai' •. 
2. . . Budget faeading involved: 
- B4~304T/jgfslarion and cither general acticai based ciiirieHiai Environ 
3.. Legjal basis: 
-Resolution of the Ctouncft 
of 1 February 1993 on a Ccimmimfry prograriirric of ^ to the envirbrm enr . 
^nctsuscaimblede^elippmei^ ',;;' ••': y'.y 
-Coiindl Decision 93/464^ field of •'.-.. 
scnistical information! 199^i]fWv^ :"V.('-"C'•;'•.'• ''•••'••;• -"V,'" :' ('•••••'••:•• ••'•'. • :• \ *• 
-Council Decisis 
the envizonmenial component of official statistics? 
•••.4. . • DescLiptioriof opeiaiionr 
.4.1 Specific objectives: 
Establishment of a system of enviiccmen^ indicators and euvnuiimedtal saieUile accounts as 
an instrument for guiding EU policy in accordance with the principles of sustainable growth, 
asenshrmedinAiricle2ofTheT^ . 
4-2 Duration; 1995-1999 
5. . OassificaTion of e^cndrtare or revenue: 
5.1. Non-compulsory 
5.2 DLiTerenriated 
5.3 T^ofreyeime involved: none 
-1-
ty-
6. T^pe of exrOTdunre or revenue involved: 
6.1 100% subsidy: 
Yes for certain specific elements of these actions which may rajtirc 100% subsidy. However, 
there is general operational subsidiarity in statistical actions in the EU, in that the major part 
of the cost is supported by the Member Stares. Overall, toe Ccnhmiim^ 
v .••under5%i. >.•••-.• •• • 
6.2 
6.3 Subsidy for joint financing with other sources in the public and/or private sector: 
Yes: joint financing withjpuhlic sector (nariorial statistical services). 
Interest subsidy: no 
6A Othenncoe 
Financial impact on appropriations for operations (part B of budget) 
7.1 .' Method nf calniHrfmg tnfal cnsl-of operation; 
(1000 ECU) 
Action. Note 1995 1996 1997 1998 1999 TOTAL 
1: Handbook on green 
acconnring 
i European System of 
Environmental Pressure 
Indices 
3. Integrated Economic 
and Environmental 
Indices 
4_ Environmental 
saieDite accourus 
5, Research on damage 
eyaluaricmand 
monètarization. 
techniaues 
6. Horizontal 
cxionimatibn 
TOTALS (a) 
(b) 
(c) (cD 
(pm) 
(pm) 300 
2400 
(pm) 
1000 
(pm) (pm) 
2300 
(pm) 
2000 
(pm) (pm) 
500 
(pro) 
2000 
(pm) (pm) 300 
500 5700 
(pm) (pm) (pm) (pm) 
(d) 3700 4300 2500 (pm) 
2000 
(pm) 
(pm) 
2500 
Notes: •• • 
(a) no adp^orja^ 
(b)2tis çxp&xsd dits action will te 
(c) no adcfirional resources needed. 
(dpi preparatory activities 
ïhe resources necessary for the implementation, of these actions will be c^temrmed in the contexi of thé anmail 
budgetaryprocedure, in the light of the resources available wrmin category 3 ofthe financial rjctspechves. ,<pm) 
7000 
(pm). 
(pm) 
13000 
-2- 1912*84 JASCRACCEEZDOC 
7.2 AdminigfT*i»w» rrpen<fitaTfe to hé îprin&â rmrfrarPart Br 
lean 
. ileetmgs of experts 
Conferences' 
Publications .and 
TOTALS 
13 Indicative schedule of commitment and payment appropriations: 
. . gOOOECO) ••••":.. 
. -1. • •'•.• 1 1996 ». 1997. . 1998. 1999 TOTALS 
Osrmrrtrrièîits . 3?00 4300 2500 2500 1300 
Payments ... 
1996 . 2000 200Û 
1997 1700 2100 3800 
1998 2260 1000 3200 
1999 ÏSqO . 1000 2500 
2000andlater 1 ' 1500 1500 
What anuV&aiid measures ate plarmed m the proposal forme operation? 
Contracts aid conventions made by the Commission, including those with national statistical services, 
axe concluded on the baas of the delivery of specm^productsrpaymentis remade until these are ' 
delivered. Regular contacts with ccorractoK cns^ire that weak is carried out alc^g the lines envisaged 
in the contract. 
Elements of cost-effectiveness analysis: 
9:1.1 Specific cibjectives: . % 
In the areas of environmental indicatois and environmental sarftltim accounts 
. . developmeiitofraemodologies . 
p£Lot studies inselected Member States to test clemem* of the methodologies 
publication of agreed, harmonjzed meflioaotogies, incorporated where appropriate 
collection of aritfirîonal data needed far the intégration of àivÎTonmeiiialconcerrBipDp 
statistics for major economic sectors (exier^, mchistry, agriculr^^ 
transport etc) • ..•••. 
regular production of indicators and satellite accounts 
• - olssarimation of results and of information about the methodologies used 
9:1.2 Beneficiaries; 
EU institutions, the governments of Member States, enterprises, decision-makers 
Research insanités, imivàsffîes . 
Non-govemmenral orgamzarions concerned with, environmental questions 
-5- M/I3S* JAsCRACCPEiDÛC 
9À3 Mcmtomgand 
Tlje actions foreseen hœ 
^ppficable to the' Statistical Pitagiam^ 1^4997. 
l6: :•••' •Admim<?T"^^f-»pp^f'î^-(Pa^ A nfthfcttudgel) 
'•'"•: loi "vvin the proposed oper^^ 
\ ' ..". _.-' ,.•• •.*.' .» ' 
Action 2 ; ;'• 
/ Action 4 ;-1 
i' TOTAL • ".' , 1995 1996 
1A 
LA (Pennanehtof&ials) 
1997 1998 
^1B .' 1999 TOTALS 
0 IB 
.• / >' •. 1A 
2(lAilB) 
10.2 Indicate the amount ofstaif and aamjrasnaûve expeaadirrae invoivedin the proposed: 
-••'.'••" operation. Explain the method of calculation;. , N . It is unaetstcodttat any increase m subject to the Mimai 
budgetary procedure, involving a decision on the artobuticni bfnurqan resources by the 
budgetary aumctity, orinternal redeployment: approved by the b^^ 
fcfflowir^ table indicales new posts w 
actions covered by ansfmanaal statement • _'. •; •': ] ;.'/-. '•'. ^ |-;j •'<• ••;;-.-: 
(^).arart^averagc^Wpcist70po6.K : ; \\ 
(b^ assnn^o£|eraa^ -."•••'•.* 
(c) for-two. working party meeting, pisr year widi two. gcvenimehi apaspcrMearibcr State 
* 1*129* ': IA3CRACaT2XOC -4-;-. •s 
S^cxparfanrcCIiilcA-l) 
Opci^oiialcApcndiinrc (Tide AT2) . 
"• .. * ' Linked, to new posts 
S f :. \ : Other (A-250) 
•TOTAL Notes :* 1995 1996 1997, 1998 1999: : TGfEALS 
':.;••; J 70000 140000: 140000 140000 4SO0O0: 
• V . 26600 40000 . 40000s 40000 / ifwoW 
.(pin) . 40000 -40000 40000 40000 ; 1)50000. 
> -.(pin.) 130000 220000 -220000. 220000 .' ^790000. 



ISSN 0254-1475 
COM (94) 670 final 
DOCUMENTS 
EN 16 10 14 
Catalogue number : CB-CO-94-706-EN-C 
ISBN 92-77-84532-5 
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