Looking for Better Ways to Make the Environment Count Economic Statistics Don't Consider Resource Assets

December 22, 1991|By KIM CLARK

"God created things by naming them," Marcel Proust said. But for us mortals, things don't seem to exist until we put a number on them.

A case in point: After years of widespread looting of the earth's forests, spoiling of our waters and poisoning of our air, a growing number of environmentalists and economists say the ecological problem is at least partially caused by numbers.

Or rather, a lack of numbers.

Our accounting systems don't include any cost for environmental degradation, they note. Until there is a number, a price, attached to that destruction, the destruction won't stop, they say.

Of course merely changing the numbers won't immediately clean up the air and water. But, as dull as they are, accounting systems are actually the single most important mirror we hold up to the world.

You can beam down satellite pictures showing terrible wastelands where there were once lush tropical forests.

You can trot out sad rural fishermen to tell how they are scraping out subsistence livings where there were once rich fisheries.

But the problem doesn't matter where it really (forgive the expression) counts -- in the bank board rooms, politicians' back rooms, and farmers' living rooms -- until we add up how much all this is costing.

Here's how a recent World Resources Institute report describes the problem:

Everybody -- from government leaders to business people to the guy down the street -- has some way of counting up what they have and what they owe. And we all use these numbers to decide what we will do tomorrow. The numbers tell us whether we should raise taxes, whether we can afford a new machine or if we can splurge on a new pair of shoes.

But nations, and the banks that lend to them, don't count up assets (what they have) and liabilities (what they owe) the way normal people do.

Using a standardized system developed by the United Nations, they add a nice big number to the benefit side of the books when things, such as trees, are sold. But they often don't subtract a cost to balance things out. The reason: They don't know what the value of a tree is before it is cut, so they assume the value is zero.

Thus, governments around the world are raising cash by allowing lumberjacks to clear forests that prevented downstream farmers' lands from eroding and provided fuel wood for villagers, for example.

The transaction gets counted as a big plus in Gross National Product and other important statistics, even though the country may really be worse off. The value of the standing forest isn't subtracted from benefits of its liquidation.

The crazy thing is people and businesses don't use such a short-sighted accounting system.

Any business that counted up the only the money it was raking in, but wasn't keeping track of how the company's building, for example, was wearing out, wouldn't be in business long.

"The national accounting system is flawed," said James Gustave Speth, the president of the WRI. "It is like they are flying blind."

The WRI says the United Nations is the villain in this tale. The U.N. has known for years that the lack of natural resource accounting has been a problem, but is dragging its feet in making the change, Mr. Speth charged.

The WRI, it turns out, has captured widespread international discontent.

Kirk Rogers, head of regional development for the Organization of American States in Washington, said his member countries have suffered tremendous environmental degradation because of poor accounting systems.

"If the system of accounts had been established years ago, then concessions granted to timber harvesters would have been granted on much higher charges," at least, he said.

Its not just the governments that are making bad decisions based on incomplete numbers. The banks that follow the United Nations' accounting systems have worsened the environmental destruction, Mr. Rogers said. When countries fall behind in their payments, the International Monetary Fund and other lenders "put the squeeze on governments, directing them to increase exports at all costs." Often that means exploiting natural resources while cutting government expenditures on parks, he said.

"That's just dumb economics," Mr. Rogers said.

The United Nations concedes that some of the criticisms are valid, but defends its system.

Dr. Noel Brown, head of the U.N. environmental program in New York, says his staff is trying to develop a universally acceptable system for valuing natural resources, but is having difficulty winning consensus on a way of counting the value of clean air or water, for example.

He said he hopes the United Nations will install a new and more environmentally sensitive system by next year.

Though a change to the national accounting system is gaining widespread acceptance, some of its boosters concede it may not really be the salvation it is often touted as.

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