Towards Environmental Historical National Accounts for Sweden
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UMEÅ STUDIES IN ECONOMIC HISTORY 21 Magnus Lindmark TOWARDS ENVIRONMENTAL HISTORICAL NATIONAL ACCOUNTS FOR SWEDEN Methodological Considerations and Estimates for the 19th and 20th Centuries Towards Environmental Historical National Accounts for Sweden Methodological Considerations and Estimates for the 19th and 20th Centuries Akademisk avhandling som för avläggande av filosofie doktorsexamen i ekonomisk historia vid samhällsvetenskapliga fakulteten,Umeå universitet, kommer att offentligt försvaras lördagen den 19 december 1998, kl 10.15. Lokal: Hörsal C, Samhällsvetarhuset Opponent: Jorgen Peter Christensen, 0konomisk institut, Kjefbenhavns Universitet, Danmark Abstract New questions in a changing economy demands development of both contemporary and historical national accounts. One such question concerns economic and environmental relationships. From a national accounting perspective this issue has been approached in terms of environmental accounting. The aim of this study is to investigate how proposals for integrated environmental and economic accounting can be used for an extension of the Historical National Accounts for Sweden and for examining the long-term relationship between economic growth and environmental degradation and resource depletion. This issue is approached through methodological considerations and estimates of iron ore and timber depletion and discharge of pollutants. The conclusions are that it is possible to construct environmental historical national accounts, but that the lack of historical data and theoretical difficulties cause a high level of abstraction and other problems concerning the series. The empirical investigations show that the 19th century can be considered a period of depletion intensive growth. Furthermore, there seems to be evidence of a correlation between changes in the natural resource net prices and previous periodizations of Swedish economic development. Concerning pollutants, the analyses shows an increase of the aggregated discharges until the late 1960s. However, the pollution intensity of growth has fallen throughout the period, possibly in a pattern of long trend periods. Keywords: historical national accounts, environmental history, environmental accounting, historical environmental accounting, iron ore, standing timber, pollution, environmental Kuznets curve. «a; ttì S) . S/* UMEÅ STUDIES IN ECONOMIC HISTORY 21 TOWARDS ENVIRONMENTAL HISTORICAL NATIONAL ACCOUNTS FOR SWEDEN Methodological Considerations and Estimates for the 19th and 20lh Centuries Magnus Lindmark Doctoral thesis at Umeå University 1998. The thesis is included in the series Umeå Studies in Economic History The work has been made within the project Extended National Accounts for Sweden supported by The Bank of Sweden Tercentenary Foundation {Riksbankens Jubileumsfond). © 1998 Magnus Lindmark Printed at Tid-tryck, Umeå 1998 ISBN 91-7191 -546-x ISSN 0347-254-x ACKNOWLEDGEMENTS This thesis was made within the project Extended National Accounts for Sweden supported by The Bank of Sweden Tercentenary Foundation (Riksbankens Jubileumsfond). Financial support from the Kempe foundation (Kempefonden) is also acknowledged. Besides, the author would like to thank the following people for making this work possible: First and last and always, Professor Olle Krantz, for tutorship and for his great contributions through his vast knowledge of historical national accounting and economic history, Assistant Professor Sven Gaunitz, for contributing with his expertise on forest history, for stressing the importance of meta-analyzes and for reading the manuscript some two minutes to midnight, Dr. Lena Andersson-Skog, for carefully reading the manuscript, for contributing with constructive criticism and for stressing the importance of meta-analyzes, Dr. Dan Bäcklund, also for carefully reading the manuscript and for contributing with constructive criticism, Dr. Tage Sundström, for introducing and stressing the importance of thermodynamics, Laura Purdy, for being from Texas...thanks.. .Daniella dos Santos Medeiros, for scientific enthusiasm, Guinness for strength, Peter Vikström, for the structural time series analyzes and 'em other gals and pals of the Ph.D. group at the department (in order of appearance) Hans-Olov, Thomas, Torbjörn, Helén S., Erik, Hasse, Kjell, Helén B. and Fredrik ...cheers!!...and finally Heidi, Tonje and Simon, for stressing the importance of not working too much! Magnus Lindmark CONTENT I. ABBREVIATIONS, CLASSIFICATIONS ETC. I List of abbreviations I Classifications and Accounts in SNA used in the investigation II Industry groups of HNS and approximative corresponding ISIC II Non-financial assets in EHNA, Classification of columns (CC) II HNS/NA/EHNA Overview III Classification of rows used in EHNA III 1. AN INTRODUCTION TO ENVIRONMENTAL HISTORICAL NATIONAL ACCOUNTING Introduction 1 Background 1 Society and the environment: approaches to the past and present 6 Objectives of the thesis 12 Environmental accounting in perspective 15 Comments and conclusions 19 2. SEEA AS AN ACCOUNTING FRAMEWORK FOR EHNA Introduction 21 The System of integrated Environmental and Economic Accounting 21 Valuation of natural assets in SEEA 29 SEEA IV subsystems. An overview 33 Some basic categories of indicators in EHNA 37 Economic valuation in EHNA 40 Comments and conclusions 41 3. IRON ORE: STOCK ESTIMATES IN PHYSICAL UNITS Introduction 43 Subsoil assets in SNA93, SEEA and EHNA 43 Resource definitions 46 Historical geological investigations 47 Estimating proven reserves according to SNA defmtions 54 A Comments and conclusions 58 Appendix 63 4. IRON ORE: STOCK ESTIMATES IN MONETARY UNITS. AN ESTIMATE OF THE IRON ORE NET PRICE Introduction 64 Methods for valuing exhaustible natural resources 64 Calculation of iron ore net prices: the net price method 74 The iron ore net price as a percentage of extraction costs 78 Comments and conclusions 80 5. IRON ORE: INTEGRATING ENVIRONMENTAL AND HISTORICAL NATIONAL ACCOUNTING Introduction 81 Value added estimates for the iron ore industry 1800-1952 81 Gross operating surplus at factor prices 86 Consumption of fixed capital 87 Comments and Conclusions 87 EHNA iron ore accounts 88 6. TIMBER: ESTIMATES OF CHANGES IN THE SWEDISH STANDING TIMBER VOLUME Introduction 94 Accounting principles in SNA93, SEEA and EHNA 96 Estimates of the standing timber volume 1800-1990 102 Comments and conclusions 111 Appendix 113 7.TIMBER: THE ECONOMIC VALUE OF TREES IN TIMBER TRACTS AND UNCULTIVATED FORESTS Introduction 116 Forest prices 116 Reconstructing missing price data 118 Dasgupta's scarcity indicator 128 B Comments and conclusions 130 Appendix 131 EHNA Timber accounts 132 8. POLLUTION: FLOWS AND AVOIDANCE COSTS. ESTIMATES IN MONETARY UNITS Introduction 137 General notes on the method employed 138 Estimates of historical emissions 143 Additional estimates: the 19th century 176 Comments and conclusions 177 EHNA pollution accounts 179 9. ANALYZES OF EHNA SERIES Introduction 182 A previous periodization 183 Interpretations of the iron ore net price and the stumpage price 185 Conclusions from the net price study 189 Depletion and the industrialization process of Sweden 190 An interpretation of the contribution of pollutants to the eco-margin 194 Comments and conclusions 205 Appendix 208 10. SUMMARY Purpose of the thesis 210 The accounting framework 211 Depletion costs 214 Degradation costs 216 Analyzes 216 REFERENCES 222 C DIAGRAMMES AND TABLES Note: first figure denotes chapter and the second table number.M = Matrix, T = Table, D = Diagram. Matrix and table M2:1. EHNA matrix with physical and monetary accounts 22 T2:1. Indicators and basic data sources in EHNA 38 T3:l: Iron ore reserves in Sweden 1893 - 1995 as stated in different investigations. 54 T4:l. The reference group of enterprises. Data for 1956 76 T5:l. Summary of indicators used for the value added estimate 1925-1933 83 T5: 2. Input cost index 1896 to 1925 85 T7: 1. Average stumpage prices for Sweden 1876-1908 121 T7:2. Weighted average stumpage prices in Sweden 1876-1908. 122 T7:3. Coefficients of variation. Selected years. 123 T7:4. Weights 1876- 1908 123 T8: 1. NOx Environmental costs 146 T8:2. The share of motor vessels in inland shipping 155 T8:3. Lead avoidance costs T8:4. Avoidance costs in the investigation 176 T9:1. Trend periods of the eco-margin I (except C02) 197 T9:2. Periodizations of trend periods in Swedish economic development and environmental indicators 205 T 10:1. HNS/NA/EHNA Overview 212 Diagrammes D3:1. Iron ore: other volume changes, Sweden 1910-1985 59 D3:2. Iron ore. Estimated proven reserves. Sweden 1893-1990 60 D4:l. The normal profit rate. Return on total capital. Sweden 1890-1990 77 D4:2. The Dasgupta scarcity indicator (net price/production costs) 1889-1969 79 D6:l. The Swedish standing timber volume 1800-1925. Different assumptions. Log scale. 112 D6:2. The Swedish standing timber volume 1800-1980. 113 D7:l. Estimated, weigthed stumpage prices. Sweden 1877-1908 124 D7:2. The timber extraction rate 1831 to 1908. 125 D7:3. Gross saw timber prices, saw timber stumpage prices, estimated extraction cost and Lundgren's extraction costs 1878 - 1908. (Öre per cubic metre) 127 D7:4. Estimated gross timber price, stumpage price and D extraction cost 1803-1908. 128 D7:5. The Dasgupta scarcity indicator 130 D8:l. NOx emissions to air. Sweden 1900-90. 145 D8:2. Sulfur dioxide to air. Sweden 1900-90 148 D8:3. C02 Emissions. Sweden 1900-90 150 D8:4. CFC Emissions in Sweden. 1948-90. Index 1960=1 153 D8:5. VOC emissions. Sweden 1900-90 157 D8:6. Carbon monoxide emissions. Sweden 1900-90 159 D8:7. Emissions of fine particulates. Sweden 1900-90 161 D8:8. BOD7 Emissions. Sweden 1900-90 164 D8:9. Emissions of heavy metals to air. Sweden 1900-90 167 D8:10. Emissions of heavy metals to water. Sweden 1900-90 168 D8:l 1. Lead to air, water and land. Sweden 1900-90. 169 D8:12. Mercery emissions to air. Sweden 1900-90 170 D8:13. Use of K, P, and N fertilizers. NH3 emissions. Sweden 1900-90 173 D8:14. Use of pesticides/biocides in the primary sector and the household sector. Sweden 1900-90 175 D8:15. The eco-margin in Sweden 1800-1990. Emissions. 178 D8:16. The eco-margin in Sweden 1800-1990. Emissions inch C02 178 D9:l.