By Olimpio Nhuleipo Environmental and economic accounting is a very important national exercise. It provides information that allows for a consistent analysis of the contribution of the environment to the economy, as well as the impact of the economy to the environment. The United Nations’ Handbook of National Accounting stipulated that environmental and economic accounting is intended to meet the needs of policy-makers by providing indicators and descriptive statistics to monitor the interaction between the economy and the environment, as well as serving as a tool for strategic planning and policy analysis to identify more sustainable development paths. Environmental and economic accounting has arisen out of concern for environmental degradation and depletion of natural resources as a result of human economic activities. In addition, the current System of National Accounting (SNA), which provides economic data, for example the Gross Domestic Product (GDP), for policy research, management and decision-making, does not treat natural or environmental resources as part of national asset. The SNA is a UN standard approach to national economic accounting, which is adopted by almost all UN member states as the most acceptable accounting procedure to ensure uniformity in national economic accounting for comparison purposes. The SNA, however, accounts only for the value of man-made or owned assets such as machinery, land or livestock, thereby treating environmental assets, such as fish or forests, as non-valued abundant raw material or resource endowments to be used in the production of goods and services. The System of National Accounting (SNA) is an outcome of classical economic theories and contemporary academic discourse in the field of economics that defined sustainable economic development on the basis of the country’s man-made capital stock, natural resources endowment and on availability of technological innovations. In conventional economics or mainstream economic theories, sustainable economic growth is defined and measured on the basis of the status of man-made capital stock and technological advancement of a particular society. Man-made capital stock and technology are employed to harvest, extract and exploit natural resources (assets), which are viewed as raw materials to be used in the production process. Under the System of National Accounting (SNA), which is employed by most central bureaus of statistics across the globe, economic growth, social well-being and progress are measured by the level of GDP or Gross National Income per capita. The sustainability of the level of economic growth and social well-being is measured on the basis of the status and amount of man-made productive capital and the country’s technological ability to replace them. The dominant or mainstream economic thinking viewed natural resources as raw materials rather than as assets, and this notion influenced the national economic accounting approach. As a result, the system of national economic accounting failed to treat environmental assets as part of national assets. The idea of accounting for environmental contribution to economic growth and social well-being popped up in the 1950s, and was strengthened throughout the 1960s and the 1970s. It arose out of concern for environmental degradation, over-exploitation of natural resources or assets, loss of biodiversity, loss of habitat, loss of soil productivity and the reduction in essential ecological services and amenities due to human economic activities. It was realized that the exploitation of natural resources as raw material for the production of goods and services led to depletion and to loss of biodiversity and other essential ecological services. The loss of biodiversity and the reduction in quality of ecological services reduces social well-being of which policy-makers and development economists seek to enhance through the process of economic growth. However, the main issue is that social welfare maximization and sustainable economic growth could not be defined and achieved on the basis of man-made capital stock, technological advancement, creativity and innovation alone, due to the fact that the employment of these assets in the extraction and production of goods and services lead to environment degradation, thereby reducing social welfare. On the other hand, wealth (assets) loses value in a polluted environment, and social welfare is reduced by air and water pollution. Hence, there is a need to view natural resources as assets and account for environmental damage and contribution to economic growth and social welfare. Environmental assets such as forests, fresh air, air space, water, land and wildlife provide products and ecological services which enhance our social well-being independent of the outcome of the man- made production processes. For example, the Namibian economy depends on diamonds and nature-based tourism. The national forest resources serve as wildlife habitat, carbon sink, grazing resource, and provide shade services. If the national forest is destroyed, for instance, the tourism industry will be gone together with all other environmental services and amenities. If, for example, all of Namibia’s diamonds were depleted today, but the resource rent collected by government in the form of taxes was spent on current consumption rather than on productive use (investments) to generate alternative sources of national wealth (income), then the country’s economic growth and social welfare will be negatively affected in the long run. The preoccupation with environmental economic accounting is the resource rent, or excess profit, that the government recovers from the exploitation of natural resources by private firms. Government collects resource rent on behalf of the nation in the form of taxes to finance capital projects and human resource development. Namibia’s natural assets, like forests, which produce goods, like fuel wood, timber, etc., which are already accounted for in the SNA flow or production accounts, but which also produce environmental services such as carbon sequestration, which are not accounted for in the SNA. Then the forest assets are not accounted for in the SNA as capital or asset accounts, which means the changes in the value of forest assets, as producers of both direct use values as well as environmental services are not reflected in the National accounts. The System of Environmental and Economic Accounting aims to fill these gaps, and there is a need for the members of the Namibian public to be environmentally conscious and make use of environmental publications to acquaint themselves with environmental issues affecting or threatening their life and immediate surroundings. The point is that we should not only focus on the immediate consumptive or direct use values of natural resources such as game meat, timber and firewood, but we should consider and account for other more important services that environmental assets provide to enhance social welfare. There is a need for a paradigm shift in the way we make our living. I mean we need to employ innovative thinking that will make our behaviours and the technologies we employ to meet our daily basic needs environmentally friendly. Environmental accounts, or natural resource accounts, consist of physical and monetary accounts. These accounts are compiled by determining the volume or quantity of existing and known natural resources such as wildlife, forests and diamonds. The information on volume, flows and economic values is compiled into what is called physical and monetary accounts. The physical accounts contain the quantity and rate of decrease and increase in the volume of natural resources on annual basis. The monetary account measures the economic value of the flows in the volume of existing natural resources as a result of extraction (non-renewable) and regeneration (renewable). These accounts provide useful information about existing or standing stock of natural resource,s which is vital to operators for investment decisions in their respective industries and to government for management and policy decisions. The System of Environmental and Economic Accounting (SEEA) provides the public and private economic entities with information about environmental damages resulting from their operations and attempts to install into them a sense of accountability for their environmental actions. Environmental damage can take many forms. It can be water or air pollution resulting from industrial operations. The release of industrial waste into a nearby river results in water pollution killing fish and depriving the fishing community downstream of their fish resource and fresh water for drinking. The release of smoke from vehicles, chimneys and household burning of fossil fuel results in air pollution in the form of carbon dioxide emission, polluting the oxygen we inhale with a lot more particulate matters resulting in lung infections and human death. Unregulated logging of timber to supply the paper and furniture industries and clearance of forest for agricultural purposes can lead to the disappearance of the forest, which served as a windbreak and wildlife habitat setting in motion desertification, soil erosion, loss of biodiversity and habitat. Environmental and economic accounting is concerned with quantifying and valuing natural resources and environmental damages. The natural resource accounts present information on volume, flow and economic value of natural resources and damages which policy-makers use for decision-making. Economists and policy experts also make use of the same information for policy analysis to provide advice to the government and industries on the best policy options as far as the state of a particular resource is concerned. Environmental accounting provides useful information for proper management of natural resources and for environment protection. The environmental and economic accounting efforts made it possible and easier for governments across the globe to adopt and make use of a number of laws and policy tools to regulate the interaction between the economy and the environment. These tools include licence fees, environmental pollution taxes, loyalty fees, environmental funds and legislations for environmental impact assessment. For the first time the efforts on environmental and economic accounting led to the creation of a market for trade in carbon abatement, operative Western Europe. Firms in heavy industries are given credit or quotas, meaning fixed amount of carbon emission with an option do away with carbon-emitting technologies. What happens is that if firm A has a quota to emit twenty tonnes of carbon per annum and manages to reduce emission through creative technology to ten tonnes, then it can sell its saving or surplus of 10 tonnes to firm B in the same industry. The burning of fossil fuel, such as oil from households, motor vehicles and heavy industrial machines, emits carbon dioxide into the atmosphere, which pollutes air and damages the greenhouse, a natural atmospheric barrier that protects earthly life from ultraviolet or from exposure to extreme sun heat. The goal is to reduce global carbon emissions. This market mechanism, supported by legislations and regulations, can help reduce carbon emissions around the world, because it provides incentives to firms to invest in research and development leading to the discovery of environment-friendly technologies, while at the same time they continue their operations and trade in carbon credits. Carbon dioxide is not only responsible for air pollution, but also for global warming and for all other climate-related changes, and border less natural disasters such as draught, floods, hurricanes, disease epidemics and death of flora and fauna species. Namibia started with Environmental Economic Accounting in 1993, when an Environmental Economics Unit (EEU) was incorporated within the Ministry of Environment and Tourism (MET) as part of donors’ efforts at institutional capacity building. Through this unit, Namibia developed a number of natural resources accounts with the help of her development partners – mainly Sweden, Finland, United States of America and Germany. The Environmental Economic Accounting Unit (EEU), housed in the Directorate of Environmental Affairs (DEA), is responsible for the development of a number of resources accounts for Namibia, which range from minerals to fisheries, water, livestock, tourism, wildlife, forests and energy accounts for public consumption. These accounts are kept, maintained and updated on an annual basis as satellite environmental economic accounts to be read along with the national economic accounts produced by the Central Bureau of Statistics of the National Planning Commission (NPC). The natural resources accounts together with the national accounts form a complete picture of the state of the Namibian economy and provide complete information about the country’s wealth (man-made and natural assets). The information contained in environmental or natural resource accounts is of use to environmental managers, law-makers, and for policy decisions. The same information can be used for academic purposes by students, researchers and teachers, and also by the general public. The author is a Green Economist working with the Environmental Economics Unit (EEU), Directorate of Environmental Affairs (DEA) in the Ministry of Environment and Tourism (MET). Views expressed here are his own opinions.