Environmental economy - statistics
Data extracted August 2018.
Planned article update: September 2019.
The environmental economy - also referred to as the environmental goods and services sector (EGSS) - supplies products such as organic vegetables and renewable energy that help to protect the environment and preserve the stock of natural resources. This article presents statistics on gross value added, employment, and exports of the environmental economy in EU Member States. Together with Eurostat's article on employment and growth in the environmental economy it provides insight into an economic sector that is vital for Europe's transition towards a circular and efficient low-carbon economy.
According to Eurostat estimates, the environmental economy grew by 1.5 % in 2015, generating a gross value added of EUR 302 billion and contributing with 2.0 % to the GDP of the European Union. Employment grew by 2.2 % in the same year, reaching 4.1 million full-time equivalent jobs. About 77 % of gross value added and 85 % of employment is related to market output, that is, environmental goods and services sold or intended to be sold on the market; the remainder stems from output produced for own use (ancillary or final) or for non-market purposes (as give-away for free or for non-significant prices). As data reporting is mandatory for market output only, this article presents statistics on the market output of the environmental economy.
Gross value added from market output grew by 2.2 % in 2015, contributing EUR 234 billion or 1.6 % to the union-wide GDP. In the same year, employment grew 2.8 % to 3.5 million full-time equivalents. While trends differ between countries (Figure 1), the environmental economy has been growing in 2015 in the majority of EU Member States (see also article on growth and employment in the environmental economy).
Gross value added
Market output of the environmental economy varied between 0.5 % of GDP in Ireland and 5.7 % of GDP in Finland in 2015 (Figure 2). In Finland, large parts of the gross value added of the environmental economy stem from forest management and renewable energy production. The environmental economy has been growing faster than the overall economy in twelve Member States. Most noticeably, contributions to the GDP increased in Estonia (13 %), Bulgaria, and Hungary (both 10 %), while they decreased in Slovenia (-19 %) and Romania (-16 %). In the majority of Member States, resource management generates more value added than environmental protection activities (Figure 3).
Employment in the environmental economy is related mainly to wastewater and waste management, the production of renewable energy, and measures to save heat and energy (Figure 4). Although employment trends vary between Member States and environmental activities (Figure 5), Eurostat estimates that growth in market output has generated EU-wide 96 000 new full-time equivalent jobs in the environmental economy in 2015.
Exports of environmental goods and services contribute 15 % in Finland and 11 % in Denmark but only 0.2 % in Hungary to the economy-wide exports. In Finland, exports comprise a substantial amount of wood and paper products. In Denmark, exports are largely driven by machinery and equipment for the production of renewable energy (Figure 6).
Accounts of the environmental economy can help monitor economic policies at both national and European level. Disaggregated data on the production of environmental goods and services are specifically suited to establish cross-country comparisons for selected economic domains. Let's consider gross value added from market output of the renewable energy sector, which comprises in addition to energy production also monitoring and management services, construction works, and the manufacturing of energy-producing equipment such as photovoltaic cells and wind turbines. The value added from these activities can be linked with data from energy balances to obtain insight into the productivity of the renewable energy sector.
Calculating productivity as the ratio between gross value added [EUR] and physical energy production [GJ] reveals considerable differences between Member States (Figure 7). The analysis also provides scope for an in-depth assessment of factors explaining productivity levels, among them: (i) income, (ii) energy prices, (iii) public support for renewable energy, (iv) composition of the renewable energy mix, and (v) the contribution of actual energy generation versus production of energy-generating equipment to the gross value added of the sector. In the Netherlands and Denmark, for instance, the manufacturing of energy-producing equipment contributes more than half to the value added of the renewable energy sector while in the United Kingdom value added almost exclusively stems from the production of renewable energy itself.
This article presents the most recent data on gross value added, employment, and exports related to market output of the environmental economy. The data presented here were collected by Eurostat as part of the first mandatory reporting of Member States in 2017, following the mandate of Regulation (EU) No 691/2011.
Accounts of the environmental economy are established according to the principles of national accounting and by following the documentation in the EGSS Handbook and EGSS Practical Guide. As data reporting for the environmental economy became only mandatory in 2017, not all countries cover relevant goods and services in a comprehensive manner yet. Aggregated statistics for the EU-28 are therefore not calculated from the data reported by Member States but are estimated based on a standardised data integration that combines various sources such as: national accounts, environmental expenditure statistics and accounts, structural business statistics, industrial commodity statistics, labour statistics, international trade statistics, agriculture statistics and energy statistics. As the data displayed in this article refer to market output, they are not directly comparable to those presented in Eurostat's article on employment and growth in the environmental economy, which covers market, non-market, and ancillary output as well as output for own final use within enterprises.
With data compilation for the environmental economy being further developed in most EU Member States, the accuracy and completeness of data will continue to improve in the future. Data verification and the closing of data gaps will remain an important aspect in Eurostat's efforts to increase the quality of the accounts for the environmental economy.
The European Union implemented environmental-economic accounts by Regulation (EU) No 691/2011 (later amended by Regulation (EU) No 538/2014) as satellite accounts to their established national accounts. The environmental-economic accounts also adhere to the accounting principles followed in national accounts and are consistent with the United Nation's System of Environmental-Economic Accounting – Central Framework (SEEA-CF), which serves as an international statistical standard. At present, six separate modules cover: (i) air emissions, (ii) environmental taxes, (iii) economy-wide material flows, (iv) environmental protection expenditure, (v) physical energy flows, and (vi) environmental goods and services. The latter is commonly referred to as the environmental economy and constitutes the subject of this article.
Scope and variables
Goods and services are considered part of the environmental economy if their primary purpose is (i) to prevent, decrease or eliminate pollution or any other degradation of the environment or (ii) to maintain the stock of natural resources. Such environmental goods and services comprise a large basket of products including renewable energy, electric and efficient vehicles, organically grown fruits and vegetables but also sewage and waste treatment services or the rehabilitation of mining sites. As it is often difficult to determine the primary purpose of products, the environmental purpose is identified in practice through: (i) technical features that must be suitable to protect the environment or preserve natural resources and (ii) the presumed or actual environmental effect of a good or service. To guide the data collection of Member States, Commission Implementing Regulation (EU) No 2015/2174 proposes an indicative compendium of goods and services with a presumed environmental purpose. Accounts of the environmental economy capture all such goods and services produced within a country and report on the related output, gross value added, employment, and exports as defined in the international System of National Accounts (SNA 2008) and its European version, the European System of National and Regional Accounts (ESA 2010).
This article applies the following definitions:
- Market output consists of all products from the environmental economy that are disposed of or are intended to be disposed of on the market, either through sales at economically significant prices or through barter or payments in kind. Market output is valued at basic prices, that is, the prices received from purchasers plus subsidies minus taxes on products. The reporting of market output in EGSS accounts is mandatory for Member States, whereas the reporting of (i) non-market output generated by governments and non-profit organisations, (ii) output produced for own final use, and (iii) ancillary output for transformation through in-house production processes are subject to voluntary reporting.
- Gross value added is the difference between output and intermediate consumption. The gross value added of all economic sectors plus taxes minus subsidies on products comprises the gross domestic product (GDP) of a country.
- Employment captures the number of persons engaged in the environmental economy with the production of market output. Employment is quantified in full-time equivalents, defined as total hours worked divided by the average annual hours worked in a full-time job.
- Exports capture all transactions of market output from the environmental economy, including sales, barter and gifts, from residents to non-residents.
Output, gross value added, employment, and exports are reported in the accounts of the environmental economy as totals and disaggregated by (i) economic domain into 21 activities according to NACE Revision 2 and (ii) two principal classes of environmental activity, that is, environmental protection and resource management.
- Environmental protection includes activities such as the protection of air and climate, treatment of waste, or environmental research and is categorized according to the international standard on the Classification of Environmental Protection Activities (CEPA 2000). Nine classes are differentiated that are further disaggregated into sub-groups (see EGSS guide book).
- Resource management includes activities such as the production of energy from renewable sources or the management of minerals and is not subject to an international standard. Instead, activities are classified into 7 classes, each disaggregated further into sub-groups according to the generic Classification of Resource Management Activities (CReMA) developed by Eurostat task forces.
- Environment, see:
- Environmental goods and services sector (env_egss)
- 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)
- Regulation (EU) No 691/2011 on European environmental economic accounts
- 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)