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Engaging the Finance Ministry Seen as Key Ingredient to Implementing Natural Capital Accounting

June 15, 2016 |


Source: Wealth Accounting and the Valuation of Ecosystem Services

UNE 13, 2016—This year’s WAVES Annual Partnership meeting was held in Costa Rica, a day after the country’s Central Bank released the first forest, water and energy accounts, where the Minister of Finance, the General Manager of the Central Bank, and the Minister of Environment and Energy explained the significance of the accounts to Costa Rica’s economy to members of the national media. (Coverage in Spanish in La Nación, El Financiero, Gobierno Costa Rica, and El Mundo).

“The Ministry of Finance has both a financial and an economic approach. Focusing on financial issues, means just looking at money. Our environment is part of the economic landscape and Natural Capital Accounting helps us understand this integrated approach and manage these resources for economic reasons,” said Costa Rica’s Minister of Finance and first Vice President, Helio Fallas.

The same level of engagement with the Finance Ministry was evident as Eduardo Prado, General Manager of the Central Bank of Costa Rica, opened the WAVES Annual Partnership meeting, and the current Minister of Environment and Energy, Edgar Gutiérrez, delivered the keynote address. The meeting, held May 31-June 1, 2016, was attended by nearly 100 participants from around the globe who are working on NCA—from WAVES’ eight core-implementing countries, donor countries, UN agencies, and other partners including international organizations, civil society and NGO’s.

“Natural assets such as water, soil, forests, ecosystems, create many environmental, economic and social benefits to a country with 5 percent of the world’s biodiversity…our economic activity such as agriculture, energy, and tourism depend on this heritage. Without a thorough evaluation of these natural assets, we risk their unsustainable use and their fast degradation,” said Eduardo Prado, General Manager of the Central Bank of Costa Rica.

In Costa Rica, a new unit—the Department of Macroeconomic Statistics—was created within the Central Bank specifically to compile natural capital accounts (NCA). Gutiérrez said NCA is now “part of everyday work for the Central Bank in Costa Rica. It’s a tremendous victory for this country.”

“This is the first time that a Minister of Environment has had a seat on the Economic Council of Costa Rica, which is a council of ministers that discusses economic issues. We have the Central Bank of Costa Rica, the President of the country, and the Economic Council all supporting the idea of integrating environmental issues. This would not have been possible two years ago,”said Costa Rica’s Minister of Environment and Energy Edgar Gutiérrez.

Julian Wright, an environment advisor with the UK’s Department for International Development (DFID)—one of WAVES’ donors—agreed that in order to integrate NCA into policy you need “sustained capacity and commitment at all levels” such as Costa Rica has had, and that it is particularly useful when it comes from the Ministry of Finance.

WAVES Has Made an Impact Thanks to Support from “Highest Levels”

Four years into implementation, 2016 marks the culmination of the first phase of WAVES, which has made an impact in the first set of countries—Botswana, Colombia, Costa Rica, Madagascar and the Philippines. They have established multiple sets of accounts and committed resources and staff to continue implementing NCA on their own. Also, each country has set up a dedicated unit that coordinates the work across departments, and in three of the countries the unit is housed in either the Central Bank or the Ministry of Finance and/or Planning. (Read more in the WAVES 2016 Annual Report).

During the two-day annual meeting, countries shared how working across ministries and institutions has been a key factor to successfully integrating natural resources into development planning through NCA.

“We had a lot of support from the highest level, and that political will is very important. Without support from capacity building we would not have moved this far,” said Kelapile Ndobano, Botswana’s Deputy Secretary for Macroeconomic Policy in the Ministry of Finance and Development Planning and chair of the WAVES-Botswana Steering Committee. Ndobano said that even in the face of a government freeze to create new positions, they were able to put in place an NCA unit within the Ministry of Finance and Development Planning thanks to WAVES’ work engaging stakeholders at all levels.

Botswana has constructed three sets of water accounts, begun mineral accounts, has draft energy accounts, and is in the process of compiling tourism satellite accounts. NCA is being used in the national development planning process to shape their 11th National Development Plan (NDP11).

In Colombia, fostering inter-institutional communication between agencies has been instrumental to translate the environmental, social and economic components of NCA into policy, said Jenny Rosado Ortiz, with the National Administrative Department of Statistics.

She said that “by expressing the issues in economic terms we get the attention from the political realm” and that in Colombia NCA has been used to inform the green growth policy, regional watershed management for Lake Tota, and to calculate the cost of environmental degradation from armed conflict and the economic loss that resulted from devastating forest fires triggered by El Niño.

New Countries Taking Lessons Learned Forward

WAVES’ newest countries—Guatemala, Indonesia and Rwanda, say they are carrying on the lessons learned from the first set of WAVES countries.

In Indonesia, Buyung Airlangga, the Director of Accounts Productions within the Indonesia Statistics Authority, said that as they lay the foundation for producing land and water accounts their strategy is to talk to representatives from many ministries. In Rwanda, WAVES is turning to the lessons of neighboring Botswana by engaging many stakeholders, as is Guatemala.



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