Environmental protection expenditure

Data extracted in April 2015. Most recent data: Further Eurostat information, Main tables and Database. For a fresher article on this topic see Environmental protection expenditure accounts.
Figure 1: Total environmental protection expenditure, EU-28, 2003–13 (1)
Source: Eurostat (env_ac_exp1r2) and (env_ac_exp2)
Figure 2: Total environmental protection expenditure by domain, EU-28, 2013 (1)
(% of GDP)
Source: Eurostat (env_ac_exp1r2) and (env_ac_exp2)
Figure 3: Public sector environmental protection expenditure, 2013
(% of GDP)
Source: Eurostat (env_ac_exp2)
Figure 4: Public sector environmental protection investments and current expenditure, 2013
(% of total expenditure)
Source: Eurostat (env_ac_exp1r2)
Table 1: Public sector environmental protection expenditure by environmental domain, 2013
(million EUR)
Source: Eurostat (env_ac_exp1r2)
Figure 5: Environmental protection expenditure by specialised producers, 2013 (1)
(% of GDP)
Source: Eurostat (env_ac_exp2)
Table 2: Specialised producers' environmental protection expenditure by environmental domain, 2013
(million EUR)
Source: Eurostat (env_ac_exp1r2)
Figure 6: Industrial environmental protection expenditure by subsector, 2013 (1)
(% of GDP)
Source: Eurostat (env_ac_exp2)
Table 3: Industrial environmental protection expenditure by environmental domain, 2013
(million EUR)
Source: Eurostat (env_ac_exp1r2)

This article provides information about expenditure in the European Union (EU) (and some non-member countries) to protect the environment. This covers spending on activities that are directly aimed at the prevention, reduction and elimination of pollution or any other degradation of the environment. Statistics on environmental protection expenditure enable the identification and measurement of society's response to environmental concerns and how it is financed.

Main statistical findings

Environmental protection expenditure can be analysed by the type of provider of environmental protection services. There are three main providers: the public sector, industry (mining and quarrying; manufacturing; and electricity, gas and water supply), and specialised producers of environmental services (such as waste collection); the latter can be private or public enterprises. See the section on data sources and availability below for details.

Specialised producers accounted for most environmental protection expenditure in the EU-28 in 2013, some EUR 145 billion, which was just over half (51.1 %) the total level of expenditure. The rest was split between expenditure by the public sector (EUR 87.2 billion) and that by industry (EUR 51.6 billion).

Between 2003 and 2013, the expenditure of specialised producers in the EU-28 grew by more than two fifths (41.8 %) at current prices — see Figure 1. Over the same period, environmental protection expenditure by the public sector increased by 40.0 %. By 2013, environmental protection expenditure by industry was 21.3 % above its 2003 level. Expenditure by industry dipped during the early part of the decade beginning in 2000 and again in 2009. In both cases these reductions were related to relatively weak industrial activity, for example the fall in 2009 could be associated with the global financial and economic crisis.

Indeed, contrary to the general development of rising EU-28 environmental protection expenditure over most of the last decade, the rates of change between 2008 and 2009 reflect, at least to some degree, the impact of the financial and economic crisis. There was a reduction of 7.8 % in environmental protection expenditure by industry, while expenditure by specialised producers declined by 5.7 %. By contrast, expenditure by the public sector grew by 5.1 %. Industry and specialised producers saw their expenditure follow an upward path from 2010 to 2012, whereas public sector environmental protection expenditure fell in 2010 and 2011 before returning to an increase in 2012. In 2013, environmental protection expenditure by the public sector fell once more, as did the expenditure by specialised producers, while industry reported a very small increase.

The ratio between environmental protection expenditure and gross domestic product (GDP) is an indicator of the importance of environmental protection relative to overall economic activity. In the EU-28, for specialised producers this ratio stood at 1.11 % of GDP in 2013, compared with 0.67 % for the public sector and 0.40 % for industry (see Figure 1). The environmental protection expenditure of specialised producers (as a share of GDP) rose by 0.10 percentage points between 2003 and 2013, while the ratio for the public sector increased by 0.06 percentage points. By contrast expenditure made by industry fell slightly in relation to GDP between 2003 and 2013 (-0.02 percentage points).

Figure 2 shows expenditure for different environmental protection domains. The largest domain in the EU-28 in 2013 was waste management, followed by wastewater treatment, with specialised producers accounting for more than three fifths of the expenditure within these two domains. By contrast, there was a relatively low level of environmental protection expenditure related to air pollution, with a large proportion coming from industry (note that no data are available for this domain for the expenditure of specialised producers); the air pollution domain accounted for a quarter of the environmental protection expenditure made within industry.

Environmental protection expenditure by the public sector

In most EU Member States, environmental protection expenditure by the public sector ranged in 2013 between 0.31 % and 1.06 % of GDP (see Figure 3). Only Slovakia (0.28 %) and Spain (0.22 %, 2012 data) were below this range, while relatively high levels of public sector environmental protection expenditure were recorded in the Netherlands (1.44 %, 2011 data) and Malta (1.38 %, 2012 data).

Environmental protection expenditure can be split between investment and current expenditure. Figure 4 provides this breakdown for the public sector: it shows that investment accounted for just over one fifth (21.9 %) of total expenditure in 2013 in the EU-28, the rest being current expenditure. All of the EU Member States where investment accounted for more than 35 % of the total were Member States that joined the EU in 2004 or more recently; this may reflect expenditure on fixed assets required to meet EU environmental legislation.

In most EU Member States, public sector expenditure was concentrated in waste management and wastewater treatment (see Table 1). Spain was an exception as the public sector directed its expenditure towards other domains, like biodiversity and landscape protection, protection against radiation, research and development (R & D) and other environmental protection activities. Denmark and France were also exceptions as more than 80 % and 60 % of their expenditure by the public sector was reported in the miscellaneous category, which includes: protection and remediation of soil, groundwater and surface water, noise and vibration abatement, protection of biodiversity and landscapes, protection against radiation, R & D, general environmental administration and management, education, training and information relating to the environment, as well as activities leading to indivisible expenditure and activities not elsewhere classified.

Environmental protection expenditure by specialised producers

In the EU Member States, environmental protection expenditure by specialised producers generally ranged between 0.41 % and 1.49 % of GDP, with an EU-28 average of 1.11 % in 2013 — see Figure 5. Only Slovenia (2012 data), Slovakia, Croatia and Finland (2012 data) had lower ratios, while at the other end of the range, Estonia and Austria (both 2012 data) recorded by far the highest ratios (3.29 % and 2.58 % of GDP); Cyprus (2012 data) was the only other EU Member State to record environmental protection expenditure by specialised producers higher than 1.5 % of GDP.

These differences across EU Member States may, at least to some degree, reflect whether the public sector provides services itself or contracts out these activities to specialised producers. The specialisation and concentration of particular industrial activities within each country also plays a role — for example, wastewater treatment or waste management may be internalised within industrial plants in order to recycle or re-use some of the materials that are discarded as part of the production process.

In all of the EU Member States, except in Malta and Austria, the vast majority of the environmental protection expenditure by specialised producers was allocated to waste management and wastewater treatment (see Table 2).

Environmental protection expenditure by industry

On average, 0.40 % of GDP was spent on environmental protection by industry in the EU-28 in 2013 (see Figure 6). This ratio generally ranged between 0.21 % and 0.75 % in the EU Member States, falling below this range in Portugal, Cyprus (2012 data) and France (2007 data) and rising above it in Poland, the Czech Republic, Slovenia (2012 data) and Romania.

Within industry, the highest environmental protection expenditure was made by manufacturing, about two thirds (64 %) of the industrial total in 2013. Most of the remaining industrial environmental protection expenditure was made by mining and quarrying or by electricity, water and gas supply. The high share for manufacturing is not a surprise given its far larger size (according to most economic measures like gross value added or employment) than the other industrial activities shown in Figure 6.

Across the EU Member States, the relative size of each of these three activities could be explained, at least to some degree, by natural resource endowments, as well as industrial specialisation. For example, a higher reliance on the burning of fossil fuels to generate electricity in many of the Member States that joined the EU in 2004 or more recently may explain the relatively high degree of environmental protection expenditure by the producers of electricity, gas and water supply in these countries (for example, Slovenia, Poland, Croatia and Latvia), while significant coal mining activity or oil and gas extraction may explain the higher than average levels of expenditure by mining and quarrying in Finland, Poland, the Czech Republic, the Netherlands, the United Kingdom and Romania.

In most EU Member States, environmental protection expenditure by industry was generally concentrated on air protection measures, wastewater treatment and waste management activities (see Table 3).

Data sources and availability

Eurostat collects environmental protection expenditure data through a joint Eurostat / OECD questionnaire on environmental protection expenditure and revenues; this is based on EU methodology.

The questionnaire classifies units in the economy into four main sectors: specialised producers (in other words, public and private enterprises) of environmental protection services; the public sector (other than public specialised producers); business (other than private specialised producers); and households. In most European countries the principal environmental protection services (such as waste management and wastewater treatment) have evolved from being primarily provided free by the public sector (local government) to being more commonly provided by various forms of private and public specialised producers; the methodology used for the collection of data reflects these arrangements.

The grouping of economic units is based upon the type of environmental protection activity they carry out. Units classified under the public sector or as specialised producers of environmental protection services are units that carry out environmental protection activities for third parties.

The public sector comprises those units which carry out non-market activities for the community as a whole; the public sector mainly falls in NACE Rev. 2 Division 84 (public administration). Apart from legislative and regulatory tasks, public sector units may also provide environmental public goods and services; they may also subsidise environmental protection activities, for example, by providing investment grants.

Public and private specialised producers produce market services for sale to others in the economy. Public and private specialised producers mainly fall in NACE Rev. 2 Division 37 (sewerage), Groups 38.1 and 38.2 (waste collection and treatment) and Division 39 (remediation activities).

Units that carry out environmental protection activities for their own internal use are part of the business sector; internal (ancillary) activities may be carried out on their own behalf to reduce the environmental impact of their production processes. For example, businesses can invest in equipment for cleaning up pollutants (for example, filters), they may invest in cleaner production technologies that reduce emissions, or they can treat their own waste. For the purpose of this article, an aggregate called industry is used, which includes NACE Rev. 2 Sections B (mining and quarrying), C (manufacturing), D (electricity, gas, steam and air conditioning supply) and Division 36 (water collection, treatment and supply).

The households sector groups together those units that belong to the institutional sector of households in the national accounts, considered in their capacity as final consumers. Households mainly buy environmental services (for example, they pay for the collection and treatment of household waste, or the treatment of their wastewater). This article does not present any statistics on the household sector.

Environmental protection expenditure is an indicator which comprises total investments and total current expenditure. Current expenditure is the sum of internal current expenditure, plus fees and other payments for environmental protection services. For the public sector, environmental protection expenditure also includes subsidies and investment grants that are paid to other sectors.

Total environmental protection expenditure gives an idea of the money spent by each sector on environmental protection activities directly and indirectly, in other words, not only on environmental protection activities for their own use, but also by those buying environmental services from other economic units and financing environmental protection expenditure that is carried out by other units. Note that total environmental protection expenditure is not adjusted to take account of receipts from any by-products, revenues from environmental protection services or to reflect transfers / subsidies.

Care should be taken when analysing the data for environmental protection expenditure across sectors, as there may be cases of double-counting, in particular, between specialised producers of environmental protection services and those business that purchase such services.

The scope of environmental protection is defined according to the Classification of environmental protection activities (CEPA 2000), which distinguishes nine different environmental domains: the protection of ambient air and the climate; wastewater treatment; waste management; protection and remediation of soil, groundwater and surface water; noise and vibration abatement; protection of biodiversity and landscape; protection against radiation; research and development; and other environmental protection activities.

Context

Environmental protection expenditure plays a prominent role in a wide range of EU policy areas. Clean air, clean water, healthy ecosystems and fertile soils are vital for human life.

A low level of environmental protection expenditure does not necessarily mean that a country is not effectively protecting its environment.

For many years, European statistical services have collected data on air pollution, energy and water consumption, wastewater, solid waste, and their management. These data can be used by policymakers to assess the environmental impact of economic activities (resource consumption, air or water pollution, waste production) and to assess the actions (investments, technologies, expenditure) that are taken to limit the causes and risks of pollution.

Eurostat has worked towards systematically gathering environmental statistics for all economic sectors within the EU. These statistics are used to assess the effectiveness of new regulations and policies and analyse the links between environmental pressures and the structure of the economy.

Regulation (EU) No 691/2011 on European environmental economic accounts amended by Regulation 0538/2014 provides a framework for the development of various types of environmental accounts, including also environmental protection expenditure accounts.

See also

Further Eurostat information

Publications

Main tables

Environmental protection expenditure of the public sector by type (ten00049)
Environmental protection expenditure of industry by type (ten00052)
Environmental protection expenditure of private and public specialised producers, by type (ten00061)

Database

Environmental protection expenditure in Europe - EUR per capita and % of GDP (env_ac_exp2)
Environmental protection expenditure in Europe - % pollution prevention, % of gross fixed capital formation, % of output (env_ac_exp3)
Environmental protection expenditure in Europe - detailed data (NACE Rev. 2) (env_ac_exp1r2)

Dedicated section

Methodology / Metadata

  • Methodological publications
  • ESMS metadata files

Source data for tables and figures (MS Excel)

External links