Bioaccounting measurement of environmental assets: Beyond environmental accounting[1]
Purpose: This paper aims to develop a framework for the bioaccounting measurement of environmental assets based on natural wealth sustainability. Specifically, we propose a theoretical structure for qualitative and quantitative organization-level assessments of the existence and circulation of water, air, wildlife, flora, soil and subsoil resources.
Design/methodology/approach: This research used an inductive method with a qualitative and quantitative approach. We postulate a systemic and comprehensive bioaccounting measurement of environmental assets, including heterogeneous and homogeneous methods and quantitative and qualitative valuations of the resources that comprise environmental assets.
Findings: We describe a theoretical structure for the bioaccounting measurement of environmental assets based on the sustainability of natural wealth through heterogeneous and homogeneous measurement methods and show how to integrate these assets through our homogeneous method.
Originality: We structured the bioaccounting measurements, which are presented individually for each class of environmental assets. Each of these assets requires subcategories (accounts, subaccounts, and resources) and recognition/measurement units. Environmental Value Units (EVUs) are used to standardize the plurality of measurement units.
Research limitations/implications: The development of this general theoretical structure will require the integration of theoretical, conceptual, and technical developments from multiple disciplines. We hope that the scientific community will evaluate and study this proposal for faster progress towards its practical implementation in organizations.
Keywords: Environmental Asset, Bioaccounting, Measurement, Strong sustainability.
This document presents an ecologically oriented proposal through the three-dimensional theory of accounting (T3A), which proposes evaluating organizational management in the integral control of wealth, that is, in its environmental, social, and economic dimensions (Mejia et al., 2014).
Bioaccounting is the accounting discipline that studies the environmental dimension of wealth through qualitative and quantitative assessments of the existence and circulation of the resources that make up each of the accounts that constitute environmental assets, such as water, atmosphere, flora, fauna, soil, and subsoil. This approach aims to contribute to the sustainability of nature through optimal accumulation, generation, distribution and dynamic preservation from a deep ecology approach that implies removing humans as the central element (Atkins et al., 2014). The term “bioaccounting” represents an original conceptualization expressing the emergence of a novel accounting discipline associated with strong sustainability[2]. This concept differs both in form and essence from traditional environmental accounting, which is typically associated with weak sustainability (Mejía Soto, 2015).
The originality of this proposal lies in the way we structure the bioaccounting measurements, which are presented individually for each class of environmental assets (hydric, atmospheric, wildlife, flora, soil and subsoil). Each asset class is very broad and requires subcategories (accounts, subaccounts, and resources) and recognition/measurement units. The Environmental Value Units (EVU) (see Section 5.2.2.) seek to standardize the plurality of measurement units. For this purpose, it is necessary to use conversion and weighting factors (explained in Section 5.2.1.) to go from, for example, a water or atmospheric unit to an EVU.
Bioaccounting measurements allow us to evaluate an organization’s management of environmental wealth. The results obtained from the behaviour of controlled natural resources can be a) positive or sustainable, which is achieved when there is an increase in resources; b) negative or unsustainable, when there is a decrease; or c) zero or stable, when there is dynamic preservation of the resources under study. The measurement proposal presented here to the academic community for discussion is a record of environmental stocks of assets at an initial and a final stage so that it represents the changes in resources over time (stock comparison approach over time).
Given that the general structure of financial accounting applied to environmental assets does not have a sufficiently large impact on the sustainability of natural wealth, our main purpose is to present a theoretical general structure for the bioaccounting measurement of environmental assets based on the sustainability of natural wealth.
We recognize the distinctions between environmental and ecological economics that influence environmental accounting and bioaccounting, respectively. The nonmonetary fields, intrinsic valuations, and nonmonetary accounting that are part of ecological economics complement the monetary valuations and accounting developed by environmental economics. For this reason, from an ecological perspective, the need arises to present different bioaccounting statements that account for the sustainability of resources over time and not only for the generation of profits and permanence of the organization over time, which do not seek the protection and sustainability of these resources as a priority and correspond to the perspective of environmental economics.
New accounting should be framed as contributing to the praiseworthy purposes of conservation, care, protection and dynamic preservation of resources and their ecosystem structures. The T3A represents a break from traditional conceptions, implying an ontological revision and, therefore, an expansion of the object of study to include environmental, social, and cultural aspects, surpassing strictly financial views. We define sustainability as an ethical conception with a scientific basis that establishes the capacity of socioecological systems to conserve the optimal biophysical and geophysical conditions for preserving life in all its manifestations.
Rather than merely balancing profit and planet, there is a need to present alternative bioaccounting statements that reflect the sustainability of resources over time—not solely the generation of profits and the continuity of the organization—while recognizing the intrinsic value of nature and the commitment to its protection as the foundation of all long-term economic and social systems.
[1] The full paper is already published. This extended abstract summarizes its main results according to the key theme of the 30th Annual IAJBS World Forum "Sustainable Strategies: Balancing Profit and Planet".
[2] ‘‘Weak sustainability allows human-made capital to substitute for natural capital. Strong sustainability does not” (Dresner, 2002, p. 77 ). In essence, weak sustainability is based upon the notion that what we currently consider the products of economic growth can be allowed to compensate for (for example) loss of species; habitat; natural resources; or eco-system functions. Under the strongest form of sustainability (very strong sustainability), human life as we know it would almost certainly be impossible, ;Gray, 2010).