Archive:Environmental protection expenditure

Data from October 2010, most recent data: Further Eurostat information, Main tables and Database.

The protection of the environment is integrated within all European Union (EU) policy fields with the general aim of attaining sustainable development. Clean air, water and soils, healthy ecosystems, and rich biodiversity are vital for human life, and thus it is not surprising that societies devote large amounts of money to curbing pollution and preserving a healthy environment.

This article provides details on expenditure carried out with the purpose of protecting the environment (total environmental protection investment and current expenditure). It refers to the money spent by the public sector, private and public specialised producers, and industry on activities directly aimed at the prevention, reduction, and elimination of pollution resulting from the production or consumption of goods and services.

Main statistical findings

Figure 1: Environmental protection expenditure, EU-25, 2006 (1)
(% of GDP)

Figure 2: Environmental protection expenditure, rate of change between 2000 and 2006, EU-25 (1)
(%)

Figure 3: Public sector environmental protection expenditure by environmental domain, EU-25, 2006 (1)
(%)

Figure 4:Public sector environmental protection expenditure, 2006 (1)
(% of GDP)

Figure 5: Public sector environmental protection expenditure by type of expenditure, 2006 (1)
(% of total)

Figure 6: Public sector environmental protection expenditure by environmental domain, 2006 (1)
(% of total)

Figure 7: Public and private specialised producers environmental protection expenditure, 2006 (1)
(% of GDP)

Figure 8: Public and private specialised producers environmental protection expenditure by environmental domain, 2007 (1)
(% of total)

Figure 9: Industrial environmental protection expenditure, 2006 (1)
(% of GDP)

Figure 10: Industrial environmental protection expenditure by subsector, 2006 (1)
(% of total)

Figure 1 shows that in 2006, private and public specialised producers (providing environmental protection services) had the highest environmental protection expenditure within the EU-25. Their expenditure accounted for 0.86 % of gross domestic product (GDP), which was equal to EUR 214 per inhabitant. The public sector and industry spent roughly similar amounts on environmental protection (0.47 % and 0.44 % of GDP respectively), or EUR 116 and EUR 109 per inhabitant respectively. Combining the expenditure of these three activities gives a total of 1.76 % of the EU-25’s GDP allocated to protecting the environment in 2006.

Between 2000 and 2006, environmental protection expenditure by private and public specialised producers, industry and the public sector grew in absolute and per inhabitant terms, but decreased relative to GDP for the public sector and for industry. For private and public specialised producers, environmental protection expenditure grew relative to GDP (see Figure 2). This increase and the corresponding decrease for the public sector could, in part, be due to outsourcing or the (semi-) privatisation of some environmental activities such as waste collection and wastewater treatment.

Public sector's expenditure

In 2006, some 42.4 % of public sector environmental protection expenditure in the EU-25 was devoted to non-core domains, 39.6 % to waste management activities, and 16.8 % to wastewater management (see Figure 3). Only a fraction (1.1 %) of public sector environmental protection expenditure was destined for air protection activities (these activities are almost exclusively conducted by industry).

In most EU Member States public sector environmental protection expenditure ranged between 0.3 % and 0.7 % of GDP (see Figure 4). The Netherlands (2005 data) devoted 1.4 % of its GDP to such expenditure and Denmark 1.1 % (2007 data), while Latvia (2005 data) and Estonia allocated less than 0.2 %.

Current expenditure generally accounted for the majority of the public sector’s environmental protection expenditure. Most of the Member States that joined the EU in 2004 or 2007 recorded investment shares in public sector environmental protection expenditure that were above the EU average (see Figure 5), Cyprus and Slovakia being notable exceptions. These relatively high shares of investment may, in part, be attributed to higher levels of expenditure in fixed assets that could have been needed to start a variety of activities in order to comply with more stringent EU environmental legislation. For EFTA countries and Turkey, the investment share of public sector environmental protection expenditure was generally close to the average across the EU Member States, although in Croatia it reached 96.7 % in 2007 (much higher than in previous years).

Public sector environmental protection expenditure is mainly focused on waste management and wastewater treatment (see Figure 6). However, in several EU Member States a substantial share is devoted to other domains. This was notably the case in Spain (for the protection of biodiversity and other environmental domains, 2005 data), as well as in Cyprus (2004 data), Spain (2005 data), France, Italy and Finland (where the ‘others’ category had a relatively important role; this category includes general environmental administration and management, education, training and information for the environment, as well as activities leading to indivisible expenditure and activities not elsewhere classified). The analysis of public sector environmental protection expenditure by domain also highlights the particular case of Croatia where more than 95 % of expenditure in 2007 was devoted to soil and groundwater protection.

Private and public specialised producers’ expenditure

In 2006, the environmental protection expenditure of private and public specialised producers represented 0.86 % of the EU-25’s GDP; when compared with 2000 this ratio increased by almost 8 %. Slovakia (2004 data) and Finland were the only Member States where the environmental protection expenditure of private and public specialised producers was less than 0.2 % of GDP (see Figure 7). Conversely, in Austria (2007 data) and Romania (2004 data), the share rose to more than 1.7 % of GDP. This large range may reflect the degree of internalisation by industry of some environmental activities, such as waste and wastewater management. This could particularly be the case for industrial activities with in-house waste management services aiming to recycle part of the discarded materials for reintroduction into their production process. In 15 of the 19 countries for which data are available (see Figure 8), expenditure for waste management and wastewater management together accounted for close to or more than 90 % of private and public specialised producers’ environmental protection expenditure. The remaining expenditure was for soil and groundwater protection (for example, soil decontamination activities) or was classified in the ‘other’ domain.

On average, approximately 60 % of the environmental protection expenditure of private and public specialised producers in 2007 was estimated to be directed towards waste management, with wastewater treatment the second most common domain. In Latvia (2005 data), Finland and Portugal (both 2006 data) wastewater treatment was the majority beneficiary of environmental protection expenditure among private and public specialised producers. Spain recorded an atypical structure, as around 40 % of its expenditure was devoted to domains other than waste and wastewater.

Industry's expenditure

Industrial environmental protection expenditure depends, to some extent, on the industrial structure of each country. It was generally equivalent to 0.25 % or more of GDP, with only France (2004 data), Latvia (2005 data) and Cyprus below this level – among those Member States for which data are available. This proportion rose to more than 0.8 % of GDP for six of the EU Member States, with the highest share being recorded in Bulgaria (1.0 %, 2007 data).

In most of the EU Member States, current expenditure represented a higher share of industrial environmental protection expenditure than investment. For example, in Italy, Belgium, and the Netherlands more than 80 % of the total took the form of current expenditure. The main exception was Portugal, where current expenditure accounted for only 35 % of industrial environmental protection expenditure.

As well as differences in the levels and types of industrial environmental protection expenditure, differences also emerge when analysing expenditure by subsector (see Figure 10). The manufacturing subsector accounted for the largest share of industrial expenditure in all but one of the EU Member States: in Slovakia the highest level of expenditure was accounted for by electricity, gas and water supply. The manufacturing subsector accounted for more than 90 % of industrial environmental protection expenditure in Belgium (2004 data), the highest proportion among the EU Member States.

Some Member States that joined the EU in 2004 or 2007 recorded relative high proportions of their environmental protection expenditure being accounted for by the electricity, gas and water supply subsector; this may, in part, be due to efforts made to reduce emissions from electricity generation. The share of the electricity, gas, and water supply subsector was lowest in Belgium (9.0 %, 2004 data) and Hungary (10.4 %, 2007 data). Romania, Poland and the Czech Republic (all 2007) accounted for the highest shares of industrial environmental protection expenditure contributed by the mining and quarrying subsector and these were the only Member States where the share of this activity rose into double-digits, peaking at 24.6 % in Romania (compared with an EU-27 average of 3.8 %).

Data sources and availability

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

For many years, European statistical services have collected data on air pollution, energy, water consumption, wastewater, solid waste, and their management. The links between these data and environmental data of an economic nature, such as environmental expenditure enable policymakers to consider the environmental impacts of economic activities, for example on resource consumption, air or water pollution, and waste production, and to assess actions (such as investment and current expenditure) that may be carried out to limit the causes and risks of pollution.

Data on environmental expenditure are collected through a joint OECD/Eurostat questionnaire on environmental protection expenditure and revenues (EPER). The Member States are free to decide on the data collection methods used, and the main options are: surveys, administrative sources, statistical estimations, the use of already existing sources, or a combination of methods.

Traditionally, data availability has been better for the public sector as many countries have collected data in this area for a number of years. However, problems concerning data comparability across countries exist; these are often related to the structure of expenditure. For industrial activities (mining and quarrying, manufacturing, electricity, gas and water supply) most countries provide data, while the comparability of the information is considered to be good. For private and public specialised producers (mainly NACE Rev. 1.1 Divisions 37 and 90), while overall data availability is considered to be satisfactory, there are a number of countries that have so far not provided any data.

The data currently published on Eurostat's website covers:

four economic sectors, namely the public sector, industry, private and public specialised producers and households;
several economic variables concerning current expenditure, investment, fees and purchases, receipts from by-products, subsidies/transfers and revenues;
nine environmental domains according to the classification of environmental protection activities (CEPA 2000) – protection of ambient air and climate; wastewater management; 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.

Total environmental protection expenditure is the sum of investment (with the distinction between pollution treatment and pollution prevention) and current expenditure for industry and private and public specialised production sectors, while for the public sector it equates to the sum of investment, current expenditure, and subsidies/transfers. As such, environmental protection expenditure is an indicator of the total resources used by a particular sector to protect the environment.

Investment expenditure includes all outlays in a given year (purchases and own-account production) for machinery, equipment and land used for environmental protection purposes and is the sum of two categories: end-of-pipe (pollution treatment) investment and investment in integrated technologies (pollution prevention investment). Current expenditure is the sum of internal current expenditure and fees/purchases. Subsidies/transfers (given or received) include all types of transfers financing environmental protection activities in other sectors, including transfers to or from other countries: these constitute expenditure for the paying sector (public sector), and revenue for the receiving sector (industry sector and private and public specialised producers sector).

In order to compare expenditure between countries as well as over time, environmental protection expenditure can be expressed in EUR per inhabitant and as a percentage of gross domestic product (GDP), or as a percentage of gross value added when analysing environmental protection expenditure within industrial subsectors.

Context

Businesses and households both pay to safely dispose of waste; businesses spend money to mitigate the polluting effects of production processes; governments pay to provide environmental public goods, such as the basic levels of sanitation required to safeguard health. Governments subsidise environmentally beneficial activities and use public funds to make it easier to borrow money on financial markets for environmental projects.

The analysis of spending on environmental protection has a strategic interest and allows an evaluation of environmental policies already in place. A low level of expenditure does not necessarily mean that a country is not effectively protecting its environment. Indeed, information on expenditure tends to emphasise clean-up costs at the expense of cost reductions which may have resulted from lower emissions or more effective protection measures.