Environmental accounting in a developing country : a case study of Egypt
The existing United Nations System of National Accounting (IJNSNA) provides useful indicators of economic performance in terms of traditional macroeconomic variables such as Gross Domestic Product (GDP), investment, savings and depreciation of capital. However, they fail to account for the depletion and degradation of environmental capital and hence give a misleading picture of sustainable development. The need for a broader assessment of growth and welfare in terms of modified accounts has therefore become a pressing concern. The main objective of this research is to modify the current Egyptian System of National Accounting (SNA) to include environmental factors, in order to provide a basis for calculating Egyptian sustainable income. Firstly, an environmental accounting approach and model is developed for Egypt to value the depletion and degradation of natural resources caused by economic activities. Secondly, valued environmental costs are incorporated into the Egyptian System of National Accounts to build up the Egyptian Environmental Macro and Sectoral Accounting, which will be helpful in decision-making, planning and policy analysis. The main findings of this research are as follows. Firstly, the environmentally adjusted macro accounting indicators portray a totally different picture of the growth and development of the Egyptian economy compared to the one resulting from conventional SNA. In addition, they indicate that Egypt has experienced an unsustainable path in at least half of the ten-year study period. Secondly, sectoral concerns, which involve measurement of sectoral productivity and performance, indicate that both the performance and the productivity of tradable sectors decrease when their depletion and degradation costs are incorporated. On the other hand, the opposite result is found for the service sectors, which may indicate a potential leading role for the service sectors in the Egyptian economy. Finally, the results indicate that Egypt's natural wealth, which lies in its people, land, the Nile river, oil and gas, and the surrounding seas, has been depleted by many economic "development' programmes that have been carried out to date.