Clarifications and recommendations concerning differences

1. Clarifications and recommendations concerning differences between the OECD guidance manual on material flows and resource productivity, Volume II and the SEEA 2003 Karl Schoer and Ole Gravgård 2nd meeting of the UNCEEA New York, 5 – 6 June 2007

2. Overview • Introduction • Terminology • Economy-wide MFA • Structure of the manual • Questions for discussion

3. Introduction • - Request of the London Group for summarizing and clarifying the • differences between the material flow accounts of SEEA 2003 and • the OECD manual part II and to suggest ways to change the presentation • of the text in the manual. • - The paper has preliminary character and presents only the view of • the authors. It could not be coordinated with OECD and EUROSTAT • due to time constraints. It is therefore suggested to put the whole matter • of harmonizing SEEA material flow accounts and the OECD manual on • the revision issue list.

4. 2. Terminology • General proposal: terminological differences between the SEEA • And the OECD-manual should be removed completely • The following issues are discussed: • 2.1 Physical flow accounts, MFA, MFAcc • 2.2 Socio-economic system versus economic system

5. 2.1 Physical flow accounts, MFA, MFAcc SEEA 2003: The term physical flow accounts is used for the description of material flows which follow the SNA concept. Economy wide material flow accounts is considered as a sub-system of physical flow accounts (input of material to and output of material from the Domestic economy) OECD manual: The term MFA is used for material flow analysis. The term material flow accounts (MFAcc) is used in a very broad sense. It includes the SEEA physical flow accounts as well as a number of non-SEEA MFAcc (e.g. specific substance flow accounts, life cycle accounts). Economy wide material flow accounts (EW-MFAcc) widely corresponds to the SEEA economy wide material flow accounts

6. 2.1 Physical flow accounts, MFA, MFAcc Recommendation: Physical Flow Accounts (non-monetary accounts) Physical Services Accounts (e.g. use of settlement and traffic area, kilometers driven, ton-kilometers) Material Flow Accounts (MFAcc) Non-SEEA-MFAcc SEEA-MFAcc PSUT PIOT EW-MFAcc

7. 2.2Socio-economic system versus economic system • SEEA: • The economic system covers all economic activities related to • production and consumption of products • OECD manual: • The economic system covers only the production activities. • The consumption activities are assigned to the social system • (as the transformation of material is not fully related to economic • Transactions) • Recommendation: • Follow the SEEA concept • The description of material flows consumer goods should be • refined by differentiating between durable and non-durable goods

8. 3. Economy-wide MFA • Harmonization issues: • 3.1 Residence versus territory principle • 3.2 Cultivated crops and trees • 3.3 Waste

9. 3.1 Residence versus territory principle • The residence principle is applied in the SNA, SEEA and • for PSUT/PIOT of the OECD manual • The territory principle is applied for EW-MFA in the • OECD manual (but not in the EUROSTAT MFA-guide for beginners) • Major quantitative differences refer to energy use and air emissions for transport. • Recommendation: • The residence principle should be adopted also for the EW-MFA • Bridge tables to the territory concept should be provided for linking the accounting data to the international and national reporting systems for energy and air emissions.

10. 3.2 Cultivated crops and trees

15. 3.3 Waste Treatment of waste disposed on controlled landfills SEEA 2003: Disposal of waste on controlled landfills is considered as remaining within the economic system. It is booked as an addition to capital stock in the PSUT/PIOT. For the EW-MFA as an alternative approach it is was also allowed to book it as a disposal of a residuals to the environment. OECD manual: Disposal of waste on controlled landfills is considered as remaining within the economic system for PSUT/PIOT as well as for EW-MFA. It is assigned to the special entry controlled landfills. Recommendation: It is recommended to follow the approach of the OECD manual.

16. 4. Structure of the manual

18. Recommendation: • It is proposed to move the order of presentation. Instead of presenting the SEEA-MFAcc as a special case it is proposed to start with the systematic description of the SEEA-MFAcc. • For the presentation of the SEEA-MFAcc it is proposed to take the close relationship between the SNA and the SEEA-MFAcc as a starting point. The system character of the SEEA type material flow accounts should be emphasized. For that purpose it seems useful to introduce the SEEA-MFAcc with the above diagram. That chart should guide the further description of the module in the manual.

19. 5.1 Questions for discussion • Does the UNCEEA support the general proposal of striving for full • harmonization of the SEEA and the OECD manual in terms of terminology • and demarcation? • 2. Does the UNCEEA support the general proposal of striving for full • harmonization of the general SEEA-MFAcc and the EW-MFAcc? • 3. What is the view of the UNCEEA regarding the proposal for restructuring • the OECD manual part II? • 4. Does the UNCEEA support the suggestion to put the questions raised • by the recommendations for harmonization on the revision issue list for • further exploration by using the concrete proposals as a starting point? • 5. What is the view of the UNCEEA on the time frame (quick e-mail discussion • or discussion at one of the next London Group meetings) for solving those issues? • 6. What is the view of UNCEEA members on the concrete proposals?