Concepts and definitions

CEPA-classification

The classification of environmental protection activities. For example waste water management, waste management, air protection, nature conservation, and administration and other environmental protection.

Environment

The concept of environment refers to the physical, social and cultural factors that are present in the natural or built environment and with which humans have an interactive relationship. The environment is perceived above all as the human living environment on the state and quality of which human activity has a positive or negative impact.

Environmental protection

Measures taken by an enterprise whose primary aim is to collect, process, reduce, prevent or eliminate the emissions, waste or other environmental hazards caused by its activity.

Environmental protection expenditure

Environmental protection expenditure refers to the total of investments and operating costs arising from environmental protection measures.

Environmental protection investments

Environmental protection investments refer to the capital an enterprise spends on the environmental protection measures whose primary aim is to collect, process, reduce, prevent or eliminate the emissions, waste or other environmental hazard caused by its activities.

Final consumption of environmental protection services

According to ESA 2010 (§ 3.94) final consumption expenditure (P.3) consists of expenditure incurred by resident institutional units on goods or services that are used for the direct satisfaction of individual needs or wants or the collective needs of members of the community.

Final consumption of EP services by households (ESA 2010, § 3.95) consists of expenditure incurred by households on the purchases of EP services. This is consumption to satisfy their individual needs. It includes households’ “payments for non-market output” i.e. their payments of various fees and charges that represent less than 50% of the costs of production of the non-market EP services. The final consumption expenditure of households is recorded at purchaser's prices.

In national accounts, the consumption of products for the benefit of the community at large e.g., public administration, justice services, defence services, etc. is conventionally attributed to the general government. This is the final consumption by the general government. Those services are typically produced by the government itself, so they can be identified and measured from the production side.

Correspondingly, final consumption expenditure of EP services by general government and NPISH (ESA 2010, §§ 3.97, 3.98 and 3.117) is equal to the value of their non-market output less payments for non-market output.

Full-time producers of environmental protection services

Industrial activities 37 (Sewerage), 38 (Waste collection, treatment and disposal activities; materials recovery) and 39 (Remediation activities and other waste management services) can be called full-time producers of environmental protection services, because the size of environmental protection expenditure in these activities is significant.

Intermediate consumption of environmental protection expenditure

In connection with environmental protection expenditure, intermediate consumption describes self-used environmental production (=environmental protection expenditure) generated during production from auxiliary activities, which are needed for primary or secondary production.

For example, self-used environmental production includes use of energy and materials, wages and salaries, service operations, etc.

NEEP = National expenditure on environmental protection

An approximation of national expenditure on environmental protection can be compiled from the sum of the following components:

• total output (environmental protection market output, environmental protection non-market output and environmental protection ancillary output),

• plus gross fixed capital formation (GFCF) and net acquisition of non-financial, non-produced assets for environmental protection,

• minus intermediate consumption of environmental protection services by corporations as specialist producers.

This is an indirect, supply-side estimate of expenditure. The imports, exports and international transfers of environmental protection services, as well as the VAT and other taxes less subsidies on environmental protection services, are not (yet) estimated due to incomplete data sources. It is assumed that these components have a small impact on the total national expenditure of the EU-28 as a whole. Work is ongoing to improve the estimates of national expenditure on environmental protection.

Output of environmental protection services

Output (market, non-market, ancillary) of environmental protection services is defined in EPEA as the sum of environmental protection market output, environmental protection non-market output and environmental protection ancillary output. Market output is the output disposed of on the market or intended to be disposed of on the market. Non-market output is provided to other units for free, or at prices that are not economically significant. Ancillary output is intended for use for production activities within an enterprise. Environmental protection ancillary output called 'legally acceptable valuation' is measured as the sum of the components 'compensation of employees' and 'intermediate consumption' for the environmental protection ancillary activity.

Referencing instructions:

Official Statistics of Finland (OSF): Environmental protection expenditure accounts [e-publication].
ISSN=2489-6071. Helsinki: Statistics Finland [referred: 16.11.2019].
Access method: http://www.stat.fi/til/ympsm/kas_en.html