Environmental protection expenditure accounts


Data extracted in July 2018.

Planned article update: June 2019.

Highlights

In 2017, EU national expenditure on environmental protection amounted to EUR 316 billion.

National expenditure on environmental protection, EU-28, 2006–2017

Full article

General overview

National expenditure on environmental protection ('NEEP') consists of a country's current and capital expenditure on environmental protection activities, including net transfers to the rest of the world.

In 2017, EU-28 national expenditure on environmental protection amounted to EUR 316 billion. NEEP grew by 23.5 % at current prices compared to 2006, each year by nearly 2  % on average (see Figure 1, left scale). The largest year-on-year increases of NEEP were observed in 2010 and 2012 (by around 6 %), mainly due to an increase in households' consumption expenditure on environmental protection services and, to a lesser extent, larger intermediate consumption of environmental protection services by corporations.

Figure 1: National expenditure on environmental protection, EU-28, 2006–2017
(EUR million and % of GDP)
Source: Eurostat (env_ac_pepsgg), (env_ac_pepssp), (env_ac_pepsnsp) and (nama_10_gdp)

As % of gross domestic product (GDP), EU-28 NEEP remained relatively stable between 2006 and 2017. After a small increase in 2009 to 2.2 % of GDP, mainly as a result of a large GDP contraction during the financial crisis and economic recession, NEEP-to-GDP ratio slowly decreased, reaching 2.0 % in 2015. The ratio was estimated at 2.1 % in 2017.

In 2017, the spending of corporations on environment protection, including investments of corporations providing environmental protections services ('specialist producers'), constituted the largest component of NEEP, accounting for 58 % of the total. The share of NEEP covered by corporations was much larger than the expenditure of general government and non-profit institutions serving households (NPISH)) on the one side and households on the other side (with shares of respectively 22 % and 20 %). Since 2006, the shares of key institutional sectors have not significantly changed: share of general government and NPISH decreased slightly (from 25 % to 22 %), which was offset by an increase in the share of households (from 17 % to 20 %). The share in NEEP of the environmental protection expenditure of corporations remained almost unchanged (57 % in 2006 vs. 58 % in 2017).

Final consumption expenditure on environmental protection

In the EU-28, total final consumption expenditure on environmental protection services amounted to EUR 114 billion in 2017, which accounts for 36 % of NEEP.

Over the half (56 %) of the EU-28 final consumption expenditure on environmental protection services, ca EUR 64 billion, was covered directly by households. The value of the environmental protection services produced, and provided for free, by general government and non-profit institutions serving households (NPISH) accounts for the reminder (44 % of total; ca EUR 50 billion). Between 2006 and 2017, households' expenditure on environmental protection expenditure services significantly contributed to the increase of the total environmental protection final consumption expenditure in the EU. On average, the final consumption expenditure rose by 3.3 % per year for households and 0.9 % for general government and NPISH (see Figure 2, left scale). Nevertheless, the environmental protection final consumption expenditure still accounts for a higher share in the total final consumption expenditure of the general government and NPISH sectors (1.5 %, having decreased by 0.2 percentage points since 2006) than of households (0.8%, having increased by 0.1 percentage points since 2006; see Figure 2, right scale).

Figure 2: Final consumption expenditure on environmental protection services, EU-28, 2006–2017
(EUR million and % of sectoral total final consumption expenditure)
Source: Eurostat (env_ac_cepsgh), (nasa_10_nf_tr) and (nama_10_fcs)

Across EU Member States, the share of the environmental protection final consumption expenditure of the general government and NPISH sectors in the total final consumption of these sectors varies considerably (see Figure 3). In 2015, the year for which the most recent EPEA data by country are available, it ranged from less than 1 % in Finland (0.5 %), Sweden (0.7 %), Slovenia (0.9 %) to 5.9 % in Malta, followed by Bulgaria (3.7 %) and Lithuania (3.6 %).

Figure 3: Final consumption expenditure on environmental protection services by general government and NPISH, 2015
(% of general government and NPISH total final consumption expenditure)
Source: Eurostat (env_ac_cepsgh) and (nama_10_gdp)

For households, the share of final consumption expenditure on environmental protection services in their total final consumption varied in 2015 from 0.02 % for Malta to 1.6 % for Denmark (see Figure 4).

Figure 4: Final consumption expenditure on environmental protection services by households, 2015
(% of households total final consumption expenditure)
Source: Eurostat (env_ac_cepsgh) and (nama_10_gdp)

Environmental protection investments

This section presents EPEA data on investment expenditure by corporations and general government (also including NPISH), i.e., the expenditure undertaken to construct infrastructure, purchase land and equipment necessary to provide the environmental protection services. This investment expenditure covers e.g. spending on wastewater treatment plants, vehicles to transport waste, and acquisitions of land to create a natural reserve or cleaner equipment for producing with less polluting emissions.

In 2017, the majority of EU investments into fixed assets to provide environmental protection services or in cleaner technologies (63 %) has been undertaken by corporations, both the specialist providers of environmental protection services (e.g. private companies dealing with waste collection and processing and sewerage) and other corporations, investing in technologies and equipment reducing the environmental pressures arising from their production process (e.g. equipment reducing the air emissions). The investment spending of the corporations amounted to EUR 49 billion in 2017, compared to EUR 29 billion spent by general government and NPISH entities. Between 2006 and 2017, the investments decreased on average by 1.3 % per year (at current prices) for corporations, whilst they rose by 1.6 % for general government and NPISH (see Figure 5).

Figure 5: Investment for environmental protection, EU-28, 2006–2017
(EUR million and % of total investment)
Source: Eurostat (env_ac_pepsgg), (env_ac_pepssp), (env_ac_pepsnsp) and (nasa_10_nf_tr)

In the EU-28, the share of environmental protection investments in total investments of corporations amounted to 2.5 % in 2017, having decreased by 1.1 percentage points since 2006. For general government and NPISH the corresponding share was higher: it amounted to 7.1 % in 2017, having risen by 0.7 percentage points since 2006 (see Figure 5). In the EU Member States, in the corporations sector, investments for environmental protection purposes ranged between 0.3 % and 7.8 % of total investments (see Figure 6). The largest shares (above 5 %) were observed in Estonia, Slovenia, Poland and Romania. At the opposite end of scale, the shares were much lower (below 2 %) for Ireland, Spain, France, Belgium, Latvia, Sweden and Portugal .

Figure 6: Investment for environmental protection by corporations, 2015 (% of corporations' total investment)
(% of corporations' total investment)
Source: Eurostat (env_ac_pepssp), (env_ac_pepsnsp) and (nasa_10_nf_tr)

On average in the EU-28, the value of investments undertaken by specialist producers accounted in 2017 for over a half (57 %) of the total environmental protection investments of the corporations sector. More than two thirds of the value of the environmental protection investments was covered in 2015 by specialist producers in Austria, Portugal, Slovakia and Germany, while the large majority of the investment expenditure of the corporations sector (more than two thirds) was incurred by non-specialist producers, 'greening' their production process, in Hungary, Belgium, Romania, Czech Republic and Bulgaria.

In the EU Member States, general government and NPISH investment spending for environmental protection activities ranged between 0.2 % and 26 % of sector total investment in 2015 (see Figure 7). This share was particularly large (over 15 %) in Bulgaria, Malta, Slovenia and the Netherlands . On the other hand, for Finland, Estonia, Austria, Denmark, Lithuania and Ireland, the equivalent shares were lower than 2 %.

Figure 7: Investment for environmental protection by general government and non-profit institutions serving households (NPISH), 2015 (% of general government total investment)
(% of general government total investment)
Source: Eurostat (env_ac_pepsgg) and (nasa_10_nf_tr)

Production of environmental protection services

This part of the article presents data on the production of environmental protection services, broken down by institutional sector and environmental protection activity (using the classification of environmental protection activities (CEPA 2000)).

In many EU Member States, the largest share of the output of environmental protection services by general government and NPISH was recorded for two environmental activities: waste management and wastewater management. In the EU-28, the cumulative share of both domains reached 68 % of total output of environmental protection services in 2015 (see Table 1). The shares of the other environmental protection domains are lower. They amount to 16 % for research and development and other environmental protection activities, 11 % for activities relating to protection of biodiversity and landscapes and 5 % for pollution abatement activities. However, the EU averages mask considerable differences across reporting countries. For example, Denmark recorded the largest share of its output of environmental protection services (46 %) under protection of biodiversity and landscapes, attributing also a rather substantial share (38 %) to research and development and other environmental protection activities. In turn, France reported a share of 46 % of its environmental protection output under research and development and other environmental activities. The shares recorded for pollution abatement activities are much lower in all Member States, with the largest shares observed in Denmark (14 %), Latvia (13 %), Slovenia and Belgium (10 % for both countries).

Table 1: General government and non-profit institutions serving households_ output of environmental protection services, 2015
(EUR million)
Source: Eurostat (env_ac_pepsgg)

Data on output of environmental protection services by the specialist producers in the corporate sector cover the three key environmental protection activities: wastewater management, waste management and protection and remediation of soil, groundwater and surface water. In the large majority of the Member States, specialist producers generate the largest value of their output from their waste management activities. For 17 Member States, the share of waste management output accounted in 2015 for over two thirds of the total. Only in Poland and United Kingdom, the private providers of environmental protection services generated the largest share of their output, 57 % and 52 % respectively, from wastewater management(see Table 2). Private producers generate a relatively low value of their output from the activities relating to protection and remediation of soil, groundwater and surface water. For six Member States, the share was lower than 1 %; only in Austria, the specialist producers of environmental protection services generated more than 10 % (14 %) of their output in 2015 from these environmental activities.

Table 2: Corporations as specialist producers_ market output of environmental protection services for CEPA 2, CEPA 3 and CEPA 4, 2015
(EUR million)
Source: Eurostat (env_ac_pepssp)

The ancillary output of environmental protection by non-specialist producers was more equally spread over various environmental domains in 2015 in EU Member States. The domain of protection of ambient air and climate accounted for the largest share of the output in Germany (48 %) and Poland (44 %) -see Table 3. The share of ancillary output relating to wastewater management activities was relatively high in Estonia (53 %), Slovakia (51 %), the Czech Republic (50 %) and Latvia (39 %). The largest shares of waste management activities in the total ancillary output were observed in Slovenia (54 %), Lithuania (42 %), United Kingdom and Croatia (39 %) and Portugal (38 %). Other environmental protection domains, including protection and remediation of soil and water, protection of biodiversity and landscapes, research and development, and education accounted for a rather significant share in France (57 %), Austria (49 %) and Belgium (36 %).

Table 3: Other corporations: ancillary output of environmental protection services, 2015
(EUR million)
Source: Eurostat (env_ac_pepsnsp)

Data sources

EPEA are a module of the European environmental economic accounts set out under Regulation (EU) No 691/2011 on European environmental economic accounts. EPEA follow the international standards of the System of Environmental-Economic Accounting 2012 Central Framework (SEEA CF 2012), and are broadly compatible with the international System of National Accounts (SNA 2008) and its European version, the European System of National and Regional Accounts (ESA 2010). The EU Member States have a legal obligation to report EPEA data from 2017-onwards.

This article is based on the results of the first mandatory data collection from the EU Member States, EFTA countries, candidate countries and potential candidates for which the data availability and quality permit meaningful comparisons. At the present stage of development, not all national totals comprehensively cover all types of activities and all environmental domains. In particular, for specialist producers, only the environmental activities of CEPA2, CEPA3 and CEPA4 are captured by the majority of responding countries.

Statistics on EPEA provide data on a wide range of important economic variables, such as gross fixed capital formation, output, final and intermediate consumption, exports and imports, taxes less subsidies, compensation of employees, consumption of fixed capital, employment, current and capital transfers and earmarked taxes (for financing environmental protection measures). The data are broken down by environmental domain and institutional sector.

In this article, the estimate of the EU national expenditure on environmental protection (NEEP) for the first time covers all its components, including net exports and transfers. The EU-28 figures presented in this article are estimated, aggregating the available data from the Member States. For all EPEA reporting items used for the calculation of NEEP, data gaps were filled by Eurostat's estimates. In addition, for the reference period not covered in the mandatory EPEA data reporting, early estimates were compiled at the EU level. Country EPEA data and Eurostat estimates are compiled on the basis of the following sources: national accounts (supply and use tables), government finance statistics, structural business statistics, labour statistics and trade statistics. In many countries, results of statistical surveys, administrative sources and statistical estimations are also used for EPEA data compilation.

Sectors Institutional sectors are defined in SEEA CF 2012 and ESA 2010. EPEA use the following groupings of sectors: - Corporations as specialist producers of environmental protection services; - Other corporations (as ancillary producers); - General government and non-profit institutions serving households (NPISH); - Households (as consumers of environmental protection services); - Rest of the world (as beneficiary or origin of transfers for environmental protection).

The corporation sector covers all units classified in national accounts to sectors S.11 and S.12. The most important providers of environmental services are specialist producers, i.e. the units of the corporation sector whose principal activity is waste collection, treatment and disposal, sewerage, remediation activities and other waste management services, which are classified under NACE Rev. 2 Divisions 37, 39 and under NACE Rev2 Groups 38.1 and 38.2. The secondary output of environmental protection services is also captured in EPEA and included in the output of specialist producers. The corporations other than specialist producers which undertake environmental protection expenditure to 'green' the process of their production of non-environmental goods and services are also covered in EPEA, but under a separate sector grouping (as 'other'/ancillary producers).

Environmental domains The scope of EPEA is defined according to the classification of environmental protection activities (CEPA). Data are collected and disseminated using the following breakdown:

  • CEPA 1 — Protection of ambient air and climate
  • 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

CEPA is a recognised international standard included in the family of international economic and social classifications. It can be downloaded from the Ramon website.

Context

The increased awareness of the need to combat environmental pollution and preserve natural resources has led to an increase in the supply and demand of environmental goods and services, in other words, products to prevent, measure, control, limit, minimise or correct environmental damage and resource depletion.

Statistics on environmental protection expenditure enable to identify and measure society's response to environmental concerns and how it is financed. Environmental protection expenditure accounts (EPEA) quantify the resources devoted to environmental protection by resident economic units. They thus report the effort made by society towards implementing the ‘polluter pays principle’. Environmental protection expenditure accounts contribute directly to the EU's policy priorities on environmental protection, resource management and green growth by providing important information on the production and the use of environmental protection services.

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Environmental protection expenditure accounts (env_ac_epea)
National expenditure for environmental protection (env_neep)
Production of environmental protection services (env_peps)
Consumption of environmental protection services (env_ceps)
Environmentally related transfers (env_ert)
Environmental protection expenditure and revenues (until 2013) (env_eper)
Other environmental protection expenditure statistics (env_oepes)


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