Environmental economy - employment and growth
Data extracted in June 2018
Planned article update: June 2019
Development of key indicators for the environmental economy and the overall economy, EU-28, 2000–2015
This article presents statistics on employment and growth for the European Union’s (EU’s) environmental economy, as defined in the European environmental accounts, and particularly in the environmental goods and services (EGSS) accounts. The environmental economy encompasses two broad groups of activities and/or products (see also the section on data sources and availability): ‘environmental protection’ — all activities related to preventing, reducing and eliminating pollution and any other degradation of the environment; ‘resource management’ — preserving and maintaining the stock of natural resources and hence safeguarding against depletion. The EGSS account provides information on the production (output) of environmental products and the employment and gross value added linked to their production.
Development of key indicators for the environmental economy
According to Eurostat estimates, employment in the EU-28’s environmental economy rose from 2.8 million full-time equivalents (FTEs) in 2000 to 4.1 million full-time equivalents in 2015. The environmental economy in the EU-28 generated EUR 735 billion of output and EUR 302 billion of value added in 2015. Between 2000 and 2015, employment and value added in the environmental economy grew considerably faster than employment in the overall economy and gross domestic product (GDP) (see Figure 1).
During the period 2000–2011 there was a steady pattern of net job creation within the environmental economy. Annual employment increases were in the range of 2 % – 6 % for most years. For two years in the early 2000s, in 2002 and 2003, the employment remained almost unchanged. Subsequently, however, it quickly returned to an upward trend, which seems to continue after a decrease in 2012 and 2013.
For over a decade (between 2000 and 2011), the environmental economy consistently outperformed the overall economy in terms of the growth of its value added/gross domestic product (GDP) in volume terms. Even in 2009, when the financial crisis led to a large contraction in GDP, GVA in the sector of environmental goods and services continued to grow (although at a very slow pace). It considerably accelerated its growth in the following two years (2010-2011). In 2012, however, the GVA generated by the environmental economy decreased slightly, and its annual growth was much smaller over the most recent years.
Employment by environmental domain
In this article, environmental protection is broken down into the following domains: wastewater management, waste management and other environmental protection activities. Resource management is broken down into the following domains: management of waters and management of energy resources. The resource management categories are shown with diagonal shading in Figures 2 and 4.
Figure 2 analyses employment by environmental domain according to (groupings of) the classification of environmental protection activities (CEPA) and the classification of resource management activities (CReMA), which are specific classifications for environmental accounts (see section Data sources for more information). The figure presents an analysis by type of environmental action performed (environmental protection or resource management) and type of natural asset concerned.
The growing number of persons employed within the environmental economy since 2000 was mainly due to growth in the management of energy resources, especially those concerning the production of energy from renewable sources (such as wind and solar power) and the production of equipment and installations for heat and energy saving. Employment in this environmental domain increased from 0.5 million full-time equivalents in 2000 to 1.5 million full-time equivalents in 2015, in other words an increase of nearly a million full-time equivalents. The second most important contribution to employment growth in the environmental economy came from the domain of waste management, with employment rising from 0.8 million full-time equivalents in 2000 to 1.1 million full-time equivalents in 2015 (an overall increase of 31 %). By contrast, employment decreased in the domain of wastewater management by 12 % (77 thousand full-time equivalents) during the period 2000–12, grew slightly, to 575 thousand full-time equivalents in 2013, and remained at this level over the most recent two years for which data are available (2014-2015). Whereas environmental protection accounted for three quarters (75 %) of all employment in the environmental economy in 2000, due to the increase in employment in resource management, by 2015 environmental protection’s share was just three fifths (59 %).
Employment, production and value added in the environmental economy
An alternative approach to an analysis by environmental domain is an analysis by activity based on production units, using the statistical classification of economic activities (NACE). Because the units producing environmental goods and services operate in a range of activities, an analysis by activity provides a complementary picture to the analysis by environmental domain. Table 1 follows this alternative approach and shows that most employment within the environmental economy of the EU-28 in 2015 was found in: energy and water supply, sewerage, waste management and remediation activities (NACE Sections D and E) with 1.4 million full-time equivalents; and construction (NACE Section F) with 1.1 million full-time equivalents. By contrast, the environmental economy employed 0.7 million full-time equivalents in services activities, 0.5 million full-time equivalents in mining, quarrying and manufacturing, and 0.4 million full-time equivalents in agriculture, forestry and fishing.
Table 1 also shows the value of output and gross value added produced by the environmental economy. The activity with the highest contribution to the gross value added of the EU-28’s environmental economy in 2015 was energy and water supply, sewerage, waste management and remediation activities, with EUR 136 billion, or 45 % of the total (see Figure 3). This was by far the largest activity, and mainly includes the production of energy from renewable sources and gas from agricultural by-products and waste. The activity with the second highest contribution to the gross value added of the environmental economy was construction, reporting EUR 59 billion of value added, 20 % of the total. This activity includes the construction of buildings with low-energy consumption and passive buildings, as well as the refurbishment of existing buildings to improve energy consumption, noise insulation work, maintenance and repair of water networks, construction work for wastewater and waste treatment plants and sewerage systems. The third largest activity grouping was services, which generated EUR 50 billion of value added, 17 % of the total for the environmental economy. The remaining activities contributed 12 % of the total in the case of mining, quarrying and manufacturing and 7 % in the case of agriculture, forestry and fishing.
Note that the energy and water supply, sewerage, waste management and remediation activities generated 45 % of the value added of the environmental economy with 35 % of the labour input, whereas construction generated 20 % of the value added with 27 % of the labour input. They were therefore the activities with highest and lowest labour productivity (value added per full-time equivalent) in the environmental economy. For more information on productivity, please refer to an article on material flow accounts and resource productivity.
Evolution of gross value added of the environmental economy
The evolution of the gross value added of the environmental economy since 2000 is shown in Figure 4. It increased from EUR 136 billion in 2000 to EUR 302 billion in 2015 (note that these developments are shown in current price terms), as the environmental economy’s contribution to overall GDP increased from 1.4 % to 2.0 % during the period under consideration. Gross value added of the environmental economy rose steadily between 2000 and 2008 to reach EUR 231 billion. It remained unchanged during 2009 as a result of the impact of the financial and economic crisis, but has been consistently growing for the subsequent years up to 2015.
Gross value added of environmental protection activities increased from EUR 103 billion in 2000 to EUR 168.5 billion in 2015, and its contribution to GDP remained unchanged over this period (at 1.1 %). Gross value added of resource management activities had a lower baseline value in 2000, namely EUR 33 billion (or 0.3 % of GDP) but reported faster growth to reach EUR 134 billion (or 0.9 % of GDP) in 2015, largely due to an increase of energy production from renewable sources (for example, wind, solar power and biofuels) and products for energy and heat saving.
Source data for tables and graphs
This article uses data from the environmental goods and services (EGSS) account, which is one of the European environmental economic accounts. Environmental accounts analyse the interaction between the environment and the economy by organising information on the environment in a way that is consistent with the accounting principles of national accounts. The environmental economic accounts can be used, for example, to identify: which are the most polluting activities or the ones that most deplete natural resources; what is the role of government and households; how expensive it is to protect the environment and who pays for it; how large is the environmental economy within the overall economy; how large is the production and consumption of natural resources and energy. European environmental accounts are established by Regulation (EU) No 691/2011 on European environmental economic accounts. Accordingly, Member States will have a legal obligation to report EGSS data starting from end-December 2017.
The environmental goods and services account provides estimates about employment, output and value added generated in the production of goods and services that are used to measure, prevent, limit, minimise and correct environmental damage and to prevent the depletion of natural resources. The environmental accounts methodology is in line with the United Nations (UN’s) system of integrated environmental and economic accounting (SEEA), which is an international statistical standard. This article presents data on gross value added at current prices (i.e., at prices of the year to which the data refers) or in volume terms, as chain-linked volumes for the reference year 2010 (at 2010 exchange rates). The volume measures are overall used to analyse the economic growth over time, discounting the effect of price changes, such as inflation.
The scope of the environmental goods and services sector (activities and products encompassed) are defined in the Commission Implementing Regulation (EU) No 2015/2174 on the indicative compendium for environmental goods and services sector, Annex.
The EU-28 aggregates reported in this article are not compiled as a direct sum of EU Member States estimates. Instead, Eurostat uses a standardised data integration approach combining national data available from various Eurostat data collections and other international and national sources. Data sources used for the production of Eurostat's estimates include the following: national accounts, environmental expenditure statistics and accounts, structural business statistics, industrial commodity statistics, labour statistics, international trade statistics, agriculture statistics and energy statistics. The methods are documented in EGSS Handbook and EGSS Practical Guide.
Employment is defined in the same way as in national accounts. Employment is measured in full-time equivalents (defined as total hours worked divided by average annual hours worked in full-time jobs).
Output consists of the value of goods or services that have been produced that become available for use outside the producer unit, any goods and services produced for own final use, and goods that remain in inventories at the end of the period in which they are produced. In the environmental goods and services account, ancillary output is also included.
Gross value added for an activity represents the contribution made by these activities towards GDP. In broad terms, it is the difference between the value of output and intermediate consumption.
EGSS scope and environmental domains
The environmental goods and services account comprises two broad groups of activities and products:
- environmental protection — activities whose primary purpose is the prevention, reduction and elimination of pollution and any other degradation of the environment;
- resource management — activities whose primary purpose is preserving and maintaining the stock of natural resources and hence safeguarding against depletion.
Specialised classifications exist for environmental protection activities (CEPA) and resource management activities (CReMA). Data are collected and disseminated using the following breakdown.
- CEPA 1 — protection of ambient air and climate, of which,
- CEPA 1.1.2 and 1.2.2 — protection of climate and ozone layer
- CEPA 2 — wastewater management
- CEPA 3 — waste management
- CEPA 4 — protection and remediation of soil, groundwater and surface water
- CEPA 5 — noise and vibration abatement
- CEPA 6 — protection of biodiversity and landscapes
- CEPA 7 — protection against radiation
- CEPA 8 — environmental research and development
- CEPA 9 — other environmental protection activities
- CReMA 10 — management of water
- CReMA 11 — management of forest resources, of which,
- CReMA 11.A — management of forest areas
- CReMA 11.B — minimisation of the intake of forest resources
- CReMA 12 — management of wild flora and fauna
- CReMA 13 — management of energy resources
- CReMA 13A — production of energy from renewable resources
- CReMA 13B — heat/energy saving and management
- CReMA 13C — minimisation of the use of fossil energy as raw materials
- CReMA 14 — management of minerals
- CReMA 15 — research and development activities for resource management
- CReMA 16 — other resource management activities
CEPA 2000 is a recognised international standard included in the family of international economic and social classifications. It can be downloaded from the Ramon website.
There is increased awareness of the need for combating environmental pollution and preserving natural resources. In the context of globalisation, technological change and new political priorities, policymakers have expressed strong interest in the environmental economy. This is widely seen as having great growth potential, generating wealth and creating jobs as well as playing a major role in the transition of economies towards sustainable development. See, for example, the ‘Employment package’ of the European semester launched in April 2012 and the November 2013 Decision of the European Parliament and of the Council on a General Union Environment Action Programme to 2020 — Living well, within the limits of our planet.
As such, national and international data on environmental goods and services are relevant for policymakers and the research community, especially within the field of economics. Indeed, the environmental goods and services account is the ideal framework to compile and report data on employment that directly depends on the production of outputs intended to protect the environment and to manage natural resources. Due to its compatibility with the definitions and concepts from national accounts the environmental goods and services database is an indispensable input to microeconomic and macroeconomic analyses of the green economy, environmental and resource policy analysis and the monitoring of policy targets. Output and employment data are widely used for analysing economic sectors and for monitoring their performance and development. Gross value added is mainly used to compare the activity related to environmental goods and services with GDP.
- Environment, see:
- Environmental goods and services sector (env_egs)
- Employment in the environmental goods and services sector (env_ac_egss1)
- Production, value added and exports in the environmental goods and services sector (env_ac_egss2)
- Production, value added and employment by industry groups in the environmental goods and services sector (env_ac_egss3)
- Commission Implementing Regulation (EU) No 2015/2174 on the indicative compendium for environmental goods and services sector
- Regulation (EU) No 549/2013 of 21 May 2013 on the European system of national and regional accounts in the EU (ESA2010)
- Regulation (EU) No 691/2011 on European environmental economic accounts