Physical and monetary ecosystem service accounts for Europe: A case study for in-stream nitrogen retention

- We present a case study of ecosystem accounting based on the SEEA-EEA framework.
- Accounts for water purification are developed in physical and monetary terms.
- Flow accounts include both actual and sustainable flows.
- Capacity is assessed as Net Present Value of the sustainable flow.
- Replacement cost is the exchange value technique used for the monetary valuation.

In this paper we present a case study of integrated ecosystem and economic accounting based on the System of Environmental Economic Accounting - Experimental Ecosystem Accounts (SEEA-EEA). We develop accounts, in physical and monetary terms, for the water purification ecosystem service in Europe over a 20-year time period (1985-2005). The estimation of nitrogen retention is based on the GREEN biophysical model, within which we impose a sustainability threshold to obtain the physical indicators of capacity - the ability of an ecosystem to sustainably supply ecosystem services. Key messages of our paper pertain the notion of capacity, operationalized in accounting terms with reference to individual ecosystem services rather than to the ecosystem as a whole, and intended as the stock that provides the sustainable flow of the service. The study clarifies the difference between sustainable flow and actual flow of the service, which should be calculated jointly so as to enable an assessment of the sustainability of current use of ecosystem services. Finally, by distinguishing the notion of 'process' (referred to the ecosystem) from that of 'capacity' (pertaining specific services) and proposing a methodology to calculate capacity and flow, we suggest an implementable way to operationalize the SEEA-EEA accounts.