Sai Sindhuja Chopparapu and Marc Lewis's poster discussing Green Accounting

Chopparapu, Sai Sindhuja

Lewis, Marc B.

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What Is Green Accounting?

GREEN  ACCOUNTINGGreen accounting is one of the crucial areas in today’s corporate social responsibility. Companies are incorporating the concept of environmental element in their business operations. Green accounting will help the organizations to identify the resource utilization and the incurred cost. This method records cost and benefits rendered by the ecosystem to a business concern.Environmental or “green” accounting is an expanding field focused on factors like resource management and environmental impact, in addition to a company’s revenue and expenses. Climate change will affect the quality of life on earth as well as economic factors. According to the Climate Vulnerability Monitor report, the U.S. could lose 2% of its gross domestic product as a result of droughts and water shortages by 2030.Environmental accounting segregates and identifies those parts of the gross domestic product that reflects the costs necessary to compensate for the negative impacts of economic growth. It also asses the changes  in environmental quality, resulting from pollution and other impacts of production, consumption and natural events, on the one hand, and environmental protection, on the other.WAVESThe World Bank has launched a 5-year global partnership on WealthAccounting and Valuation of Ecosystem Services (WAVES), a programto implement green accounting in a critical mass of countries, bothdeveloped and developing.WAVES promotes sustainable development worldwide through theimplementation of comprehensive wealth accounting that focuses on thevalue of natural capital and integration of “green accounting” in moreconventional development planning analysis.Objectives of WAVES-• Implement natural capital accounting based on the UN’s System ofEnvironmental and Economic Accounting (SEEA) in 6-10 countries.• Incorporate the accounts into policy analysis and developmentplanning.• Develop internationally accepted and standardized guidelines for theimplementation of ecosystem accounting.• Promote widespread adoption of natural capital accounting beyond thepilot countries through a broadWAVES provides a broad platform including the United NationsEnvironment Program (UNEP),United Nations Development Program (UNDP), other UN agencies,developed and developingnations, international organizations, NGOs and academics.Partner countries currently include:• Developing country partners: Botswana, Colombia, Costa Rica,Madagascar, and the Philippines.• Developed country partners: Australia, Canada, Japan, Norway, andthe United Kingdom.BENEFITS• Green Accounting is meant to be used for both internal and external users.• Green Accounting provides useful information regarding decision making for level  and structure of production, value of investment and environmental costs. • It identifies and analyzes the environmental costs and an afferent debt identifies and manages there ratio between the environmental expenses and its afferent debt.• It identifies collects and analysis data about raw materials energy and other information's about environmental impact of the business that will lead to more informed decision making with consequent implications for improved profitability and environmental protection.• It contributes to a better management of energy and water costs. WHAT IS GREEN ACCOUNTING?Sai Sindhuja Chopparapu, MBA student, Accounting Major,  Marc B Lewis, D.B.A. Ernest C. Trefz School of BusinessUniversity of Bridgeport, Bridgeport, CT.EXAMPLE CASESCanada’s Forest Carbon Accounting SystemCanada developed a monitoring, accounting, and reporting systemthat integrates several data sources including forest inventories; forestgrowth and yield information; statistics on change agents such aswildfire, insect disturbances, and forest management activities; and land-use changes (afforestation and deforestation). the model relies uponseveral provincial and federal government data sources and the annualreporting of greenhouse gas emissions and removals submitted forCanada’s national greenhouse gas inventory report. This data are used inthe carbon budget model of the Canadian forest sector to create a nationalcarbon account that estimates carbon stocks, stock changes and non-CO2emissions and removals to meet international reporting requirements. Thedata are also used in support of government policy to predict futurechanges in carbon stocks under differing scenarios, which enables forestmanagers to consider the effect of proposed alternatives on carbonemissions when making management decisions.Australia’s Water AccountsDroughts are common in Australia, and any change in theabundance, distribution, or availabilityof water will be extremelychallenging for the country tomitigate. , Australia has used its wateraccounts to understand the impact of and responses to water shortagesdue to climate change. Water accounts can be used to devise waterpricing and trading strategies that encourage more efficient water use andensure that water is allocated where it adds the most value. the Australiangovernment recommended that water distributedto urban users shouldbe priced to recover all costs associated with its capture, storage,treatment, and distribution, while water distributed to rural and regionalusers should be priced to cover only the current costs associated withsupplying water.LIMITATIONSValuation techniques for environmental goods and services areimperfect and shadow prices are only partial valuations. This applies toboth deductive and interrogative techniques.Social values for environmental goods and services are uncertain andchange very rapidly.Non-economic values are also important in political processes.Aggregation of individual preferences may not yield a meaningful netsocial preference.Economic values are marginal and incremental, not absolute and totalReliable industry data are not readily available.Assumptions underlying standard economic theory and analyticalmodels are often not met.

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What Is Green Accounting?

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