Environmental Accounting Using Emergy: Evaluation of the State of West Virginia By D. E. Campbell 1, S. L. Brandt-Williams 1 M. E. A. Meisch2 1USEPA, National Health and Environmental Effects Research Laboratory, Atlantic Ecology Division, Narragansett, RI; 2Dept. Environmental Engineering Sciences, University of North Carolina, Chapel Hill, NC. U.S. Environmental Protection Agency National Health and Environmental Effects Research Laboratory Atlantic Ecology Division Narragansett, RI 02882 1 TABLE OF CONTENTS DISCLAIMER……………………………………………………………………………4 ACKNOWLEDGMENTS………………………………………………………………..4 PREFACE………………………………………………………………………………..4 Significance of the Report………………………………………………………...4 Structure of the Report…………………………………………………………….5 INTRODUCTION………………………………………………………………………...6 METHODS………………………………………………………………………………..7 Understanding the System………………………………………………………...7 Overview of Emergy Analysis Methods…………………………………………..8 Diagramming and Models…………………………………………………8 The Energy Systems Language……………………………………9 Simulation Models……………………………………………….11 The Emergy Tables………………………………………………………11 Data Sources and Model Evaluation……………………………………..12 Transformities……………………………………………………………12 Flow Summary and the Calculation of Indices…………………………..13 Creating the Emergy Income Statement…………………………………………13 Evaluating Renewable Resources………………………………………..13 Evaluating Nonrenewable Resources……………………………………14 Evaluating Exports and Imports…………………………………………15 Determining the Emergy in Materials……………………………16 Determining the Emergy in Services…………………………….17 Creating the Emergy Balance Sheet……………………………………………..19 Constructing the Emergy-Economic Overview………………………………….19 Summary of Emergy and Dollar Flows………………………………….19 Determining the Renewable Emergy Base for a System………………..20 Emergy Indices…………………………………………………………………..21 The Emergy to Money Ratio……………………………………………..21 The Emergy Exchange Ratio…………………………………………….21 The Investment Ratio…………………………………………………….22 The Environmental Loading Ratio……………………………………….22 Indices of Self-sufficiency and Dependence……………………………..22 Indices of Sustainable Use……………………………………………….22 Indices of Quality of Life……………………………………………..….23 Energy and Emergy Signatures…………………………………………….…….23 RESULTS − AN EMERGY EVALUATION OF WEST VIRGINIA………………..…23 Introduction………………………………………………………………………23 The Efficacy of Emergy Accounting in Answering Management Questions……24 Narrative History of West Virginia………………………………………………25 Salt……………………………………………………………………….27 Coal………………………………………………………………………27 Timber……………………………………………………………………28 2 Oil……………………………………………………………………..…29 Natural Gas…………………………………………………………..….29 Limestone……………………………………………………………..…29 Sand…………………………………………………………………..….29 Iron……………………………………………………………………....30 Textiles…………………………………………………………………..30 Chemicals……………………………………………………………......30 Electric Power………………………………………………………..….31 An Energy Systems Model of West Virginia……………………………………31 The Emergy Income Statement for West Virginia……………………………...36 The Emergy Balance Sheet for West Virginia………………………………….43 Overview Models and Flow Summary………………………………………….44 Emergy Indices…………………………………………………………………46 The Emergy Signature for the State…………………………………………….48 Analysis of West Virginia and Comparison with Other States…………………48 Characteristics of West Virginia Based on Emergy Analysis…………..48 Comparison with Other States…………………………………………..52 Summary of Findings as Related to Management Questions…………………...56 West Virginia and the Future……………………………………………………57 DISCUSSION………………………………………………………………………..….58 Standard Methods versus Intellectual Clarity…………………………………...58 Methods Developed and Refined in This Study…………………………………59 Reliability of the Data and Uncertainties in Emergy Analysis…………………..59 Emergy Accounting and Environmental Decision-Making ……………………..60 Recommendations to Managers………………………………………………….61 Future Research and Reports…………………………………………………….61 REFERENCES…………………………………………………………………………..61 DATA SOURCES……………………………………………………………………….65 APPENDIX A− Primary Symbols of the Energy Systems Language…………………. 69 APPENDIX B − Notes on the Calculation and Adjustment of Transformities………….71 B1. Notes on the Transformites Used in Emergy Calculations………………….72 B2. Transformities for SCTG Commodity Classes……………………………...73 B3. Calculation of New and Revised Transformities……………………………74 APPENDIX C − Notes on the 1997 Energy and Emergy Accounts …………………....76 C1. Notes for Table 4 − Renewables……………………………………………76 C2. Notes for Table 5 − Nonrenewables…………………………………………86 C3. Notes for Table 6 − Imports…………………………………………………88 C4. Notes for Table 7 − Exports…………………………………………………96 C5. Notes for Table 8 − Stored Assets…………………………………………..98 C6. Notes for Table 9 – Summary Flows ……………………………………….99 APPENDIX D − Calculating Imports and Exports of Materials and Services…………102 D1. Creating Import and Export Spreadsheets for Materials…………………...103 D2. Method for Calculating Services…………………………………………...110 APPENDIX E − West Virginia Emergy Analysis for 2000……………………………114 3 DISCLAIMER The research described in this report has been funded wholly (or in part) by the U.S. Environmental Protection Agency. This report is contribution number AED-03-104 of the National Health and Environmental Effects Research Laboratory, Atlantic Ecology Division. This document has been subjected to the Agency’s peer review process and has been approved for publication. The mention of trade names or commercial products does not constitute endorsement or a recommendation for use ACKNOWLEDGMENTS Many people have contributed to the work presented here. We are most grateful to the Canaan Valley Institute (CVI)-USEPA work group that met many times over the past two years and to Tom DeMoss, Randy Pomponio, Paul Kinder, and Pat Bradley, for input on management concerns, Barbara Brown and Wayne Munns for oversight of the project at the Atlantic Ecology Division (AED) of the USEPA’s National Health and Environmental Effects Research Laboratory (NHEERL) and CVI scientists, George Constanz, Ron Preston, Ryan Gaujot and Jennifer Newland and managers Paul Kinder, Bekki Leigh, and Kiena Smith. PREFACE Purpose of this Report This USEPA Project Report has two purposes. The first purpose is to provide an introduction to Emergy Analysis methods with particular emphasis on those methods used to characterize a state within the larger context of its region and the nation in a peer-reviewed Government document. The second purpose is to present the results of an emergy analysis of the State of West Virginia and to examine the efficacy of this study in answering the questions that environmental managers asked about this state when considering policy needs at the level of the state as a whole. Significance of the Report Historically, questions related to environmental policy have been difficult to solve, because solutions depend on accurately balancing the needs of both human and natural systems. The USEPA has recognized that a knowledge gap exists in our ability to assess the effects of environmental policies using a comprehensive, integrated approach. Assessment methods that can bridge this gap are needed to address complex issues of environmental policy. Based on past studies, environmental accounting using emergy was identified as a method that had been used by scientists to bridge the gap. In September of 2001 a joint project between the Canaan Valley Institute (CVI), a private nonprofit corporation headquartered in Thomas, WV and the USEPA Organization for Research and Development was begun to assess the environmental, social, and 4 economic system in West Virginia and to evaluate the integrated effects of environmental policies on multiple scales. In connection with this project, an emergy analysis of West Virginia was performed to give an overview of the state and to supply key indices needed for the analysis of smaller scale systems found within the state. The emergy analysis shown here is a product of this collaboration. Economists often struggle to understand the concept of emergy and why we go to so much trouble to document economic and ecological flows and storages in these terms. The practical answer is that the accounts for environmental systems cannot be kept in dollars alone, because environmental systems are based on the work of both humanity, which is paid for by a counter flow of dollars, and the work of ecosystems, for which no money is paid. An accurate picture of environmental systems requires that we account for the flows and storages of energy, matter, and information that are responsible for supporting economic and social activities and that may not be accompanied by flows of money. Energy can be used as a common denominator for quantifying all these flows. Converting flows of energy to emergy puts the work done by the economy and the environment on the same scale, so that economic and environmental flows are directly comparable. Emergy accounting can potentially give environmental managers tools similar to those regularly used by financial analysts to make business decisions. The analysis methods and tools presented in this report make it possible for managers to first examine complete accounting data and analysis for environmental systems before making policy decisions about those systems. The results given in this report characterize the State of West Virginia and its relationships with its region and the nation. These insights may be useful in establishing a context for determining overarching policies for the state, but finer scale analyses must be performed to address more specific environmental management