Live Research Bulletin: How are private institutions helping to make the environment count in Latin America? (Part II)

Throughout the months of November and December, Development Roast will share with you a series of INESAD Live Research updates on how different institutions and individuals are rallying behind the call for green growth by trying to integrate the environment in national and sectoral accounting calculations. In Part I we discussed how the governments of Latin America are experimenting with green accounting. Today, we complete the two part live research update by taking a look at other efforts making the environment count in the region.

Where there is a dearth of government resources to compile green accounts (see our previous discussion of theory behind the techniques involved), international organizations, universities, and independent research institutions often fill the gap. Some environmental accounting studies are limited to calculating environmental costs of specific industries like logging in the Brazilian Amazon and mining in Chile. Others, like the Institute of Advanced Development Studies (INESAD)’s Bolivia’s green national accounts, take on the entire economy. Based on calculations of the country’s natural resource stocks as well as economic activity, the INESAD study concluded that the government could justify the collection of many more rents, taxes, and royalties from businesses and individuals involved in such activities as logging and agriculture than it presently collects[i]. And that it can use the income to spend on social and environmental projects for the Bolivia’s poor.

International communities have also been helpful. According to a study conducted by the Forestry Department at the Food and Agriculture Organization (FAO), for example, Brazil’s national gross and net domestic product (GDP and NDP) figures have been distorted due to the informal frontier logging sectors—those that illegally log, buy, and sell tree products and that are thus not controlled by or fiscally or legally accountable to the government—that negatively impact the supply and market value of lumber[ii]. This is because of the isolated nature of frontier areas. There the government has a difficult time monitoring and evaluating the extraction rate and area of logging activities. This results in its inability to effectively evaluate current and future forestry stocks and the activities that deplete them, which further distorts national statistics and planning. This year, an attempt to understand these trends got underway at the Brazilian Institute of Geography and Statistics (IBGE). In a recent paper, IBGE researchers have proposed to join SEEA with statistical maps showing land use and land cover changes between 2000 and 2012 to create a more in-depth and realistic estimation of Brazil’s renewable forestry resources[iii]. However, as yet, this study has not occurred and it is hard to tell if it will be able to translate its findings into policy change.

Unfortunately, despite the ability of green accounting to demonstrate the inconsistencies within government resource models, ten out of the twenty Latin American countries have no governmental oversight for environmental accounts. However, this tends to be more a result of the inability to collect the needed information, properly regulate taxes and resource rents, and/or effectively monitor resource stocks than the governments’ or SEEA’s lack of accountability. While SEEA and other systems of ‘green accounting’ have not yet been universally adopted, they have successfully demonstrated the possibility of re-evaluating current policies towards more accurate natural resource accounts. Whether or not Latin American and other governments are able to use this information towards creating more sustainable economies remains to be seen.

Stay tuned as in the next few weeks we will continue to look at green accounting efforts around the world and at the end of the month we will discuss the point of view that all of these efforts are in fact in vain as they provide mere patches on huge problems that need a more fundamental rethink of how humans connect and live with nature.

Do you think more Latin American countries should adopt SEEA guidelines for environmental-economic development? Leave a reply below.

Adam Nelson is Research & Communications interns at the Institute for Advanced Development Studies (INESAD)

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