Environmental protection expenditure
From Statistics Explained
- Data from July 2012. Most recent data: Further Eurostat information, Main tables and Database.
This article provides information relating to expenditure that is carried out in the European Union (EU) (and non-member countries) with the purpose of protecting the environment; this covers spending on activities that are directly aimed at the prevention, reduction and elimination of pollution or any other degradation of the environment.
Clean air, clean water, healthy ecosystems and fertile soils are vital for human life, and it is therefore not surprising to find that environmental protection expenditure plays a prominent role in a wide range of EU policy areas – primarily through initiatives that seek to promote sustainable development, protect ecosystems and halt or reverse declines in biodiversity.
Main statistical findings
Environmental protection expenditure can be analysed by studying three principal actors: the public sector, industry (mining and quarrying; manufacturing; and electricity, gas and water supply), and specialised producers of environmental services (public and private enterprises specialised in environmental services such as waste collection).
Specialised producers accounted for the highest level of environmental protection expenditure in the EU-27 in 2009, some EUR 132 900 million, which equated to just over half (50.3 %) of the total level of expenditure. The remainder was split between expenditure from the public sector (EUR 80 800 million) and that from industry (EUR 50 700 million).
Between 2001 and 2009, the expenditure of specialised producers in the EU-27 grew in current price value terms by almost a half (46.5 %) – see Figure 1. There was a 27.0 % increase in environmental protection expenditure made by the public sector between 2002 and 2009, while the expenditure by industry was broadly unchanged (having dipped during the early part of the decade when industrial activity was relatively weak, before rebounding between 2004 and 2008).
Contrary to the general development of rising EU-27 environmental protection expenditure over most of the last decade, the latest growth rates for the period between 2008 and 2009 reflect, at least to some degree, the impact of the financial and economic crisis. There was a reduction of 8.2 % in the level of environmental protection expenditure made by industry, while expenditure declined by 2.6 % for specialised producers and by 0.6 % for the public sector.
An alternative analysis may be carried out by studying the relationship between environmental protection expenditure and gross domestic product (GDP). For specialised producers in the EU-27 this ratio stood at 1.1 % of GDP in 2009, compared with 0.7 % for the public sector and 0.4 % for industry (see Figure 1). The relative weight of environmental protection expenditure by specialised producers (compared with GDP) rose by 0.2 percentage points between 2001 and 2009. By contrast, the relative importance of public sector environmental protection expenditure (in relation to GDP) was more or less stable between 2002 and 2009, while the level of expenditure made by the industrial sector fell in relation to GDP between 2001 and 2003, before remaining broadly unchanged through until 2009.
Figure 2 provides information relating to the various domains which account for environmental protection expenditure in the EU-27. The largest domain in 2009 concerned waste management, followed by wastewater treatment, with more than half of the expenditure within these two domains accounted for by specialised producers. By contrast, there was a relatively low level of environmental protection expenditure related to air pollution, with almost four fifths of the total (78.2 %) being accounted for by industry; the air pollution domain accounted for a quarter of the total environmental protection expenditure made within industry.
Environmental protection expenditure by the public sector
In most European countries, public sector environmental protection expenditure accounted for between 0.3 % and 0.9 % of GDP in 2009 (see Figure 3). Croatia (0.02 %), Latvia (0.08 %, 2008) and Estonia (0.16 %, 2008) were below this range, while relatively high levels of public sector environmental protection expenditure were recorded in Malta (1.6 % in 2008), the Netherlands (1.6 % in 2007) and Lithuania (1.2 %).
Figure 4 provides a breakdown of the investments and current expenditure incurred by the public sector: it shows that investment accounted for just over one quarter (25.7 %) of total expenditure in 2009 in the EU-27. The relative weight of investment was generally higher than this for most of the Member States that joined the EU in 2004 or 2007 (Slovakia was the only exception); this may reflect expenditure on fixed assets required to meet EU environmental legislation.
Waste management and wastewater treatment were the two main domains for public sector expenditure in most EU Member States (see Figure 5). Exceptions to this included Spain (where the public sector principally directed its expenditure towards biodiversity and landscape protection) and Cyprus, Italy, Denmark, France and Finland (where more than two fifths of expenditure was in the miscellaneous category, covering general environmental administration and management, education, training and information relating to the environment, as well as activities leading to indivisible expenditure and activities not elsewhere classified).
Environmental protection expenditure by specialised producers
Among the EU Member States, the expenditure of specialised producers on environmental protection generally ranged between 0.4 % and 1.5 % when compared with GDP, with an EU-27 average of 1.1 % in 2009 – see Figure 6. Only Slovakia, Finland (2006), Bulgaria, Latvia and Luxembourg had lower ratios, while at the other end of the range, Estonia recorded by far the highest ratio (3.6 % of GDP in 2008); Austria (2007) was the only other EU Member States to record environmental protection expenditure by specialised producers that was in excess of 1.5 % of GDP. The differences between countries may, at least to some degree, reflect whether the public sector provides services itself, or whether these activities have been contracted out to specialised producers; they may also be related to the specialisation and concentration of particular industrial activities within each country – for example, wastewater treatment or waste management may be internalised within industrial plants in order to recycle or re-use some of the materials that are discarded as part of the production process.
The vast majority of the environmental protection expenditure made by specialised producers was allocated to waste management and wastewater treatment (see Figure 7).
Environmental protection expenditure by industry
An average of 0.43 % of GDP was spent on environmental protection by industry across the EU-27 in 2009 (see Figure 8). This ratio was generally within the range of 0.2 % to 0.8 % of GDP.
In 2009, almost two thirds (65.7 %) of the EU-27’s environmental protection expenditure made by industry could be attributed to the manufacturing subsector. This relatively high share is not surprising given that this subsector is far larger – according to most economic measures – than the mining and quarrying subsector or the electricity, gas and water supply subsector.
Across the EU Member States, the relative weight of each of these three subsectors could be explained, at least to some degree, by natural resource endowments, as well as industrial specialisation. For example, a higher reliance on the burning of fossil fuels to generate electricity in many of the Member States that joined the EU in 2004 or 2007 may explain the relatively high degree of environmental protection expenditure within the electricity, gas and water supply subsector in these countries (for example, Latvia, Bulgaria, Slovenia and Estonia), while significant coal mining may explain the higher than average levels of expenditure for the mining and quarrying activity in Romania, the Czech Republic and Poland.
Environmental protection expenditure made by the industrial sector was concentrated on air protection measures, wastewater treatment and waste management activities (see Figure 9).
Data sources and availability
The questionnaire classifies units in the economy into four main sectors: specialised producers (in other words, public and private enterprises) of environmental protection services; the public sector (other than public specialised producers); business (other than private specialised producers); and households. In most European countries the principal environmental protection services (such as waste management and wastewater treatment) have evolved from being primarily provided free by the public sector (local government) to being more commonly provided by various forms of private and public specialised producers; the methodology used for the collection of data reflects these arrangements.
The grouping of economic units is based upon the type of environmental protection activity they carry out. Units classified under the public sector or as specialised producers of environmental protection services are units that carry out environmental protection activities for third parties.
The public sector comprises those units which carry out non-market activities for the community as a whole. Apart from legislative and regulatory tasks, public sector units may also provide environmental public goods and services; they may also subsidise environmental protection activities, for example, by providing investment grants.
Public and private specialised producers produce market services for sale to others in the economy.
Units that carry out environmental protection activities for their own internal use are part of the business sector; internal (ancillary) activities may be carried out on their own behalf to reduce the environmental impact of their production processes. For example, businesses can invest in equipment for cleaning up pollutants (for example, filters), they may invest in cleaner production technologies that reduce emissions, or they can treat their own waste.
The business sector includes all activities in NACE Rev. 1.1 Divisions 01 to 99, excluding the public sector (falling mainly in NACE Rev. 1.1 Division 75, public administration) and excluding the activities of specialised producers (falling mainly in NACE Rev. 1.1 Division 90, sewage and refuse disposal). For the purpose of this publication, an aggregate called industry (NACE Rev. 1.1 Sections C, D (excluding NACE Rev. 1.1 Division 37, recycling) and E) is used.
The households sector groups together those units that belong to the institutional sector of households in the national accounts, considered in their capacity as final consumers. Households mainly buy environmental services (for example, they pay for the collection and treatment of household waste, or the treatment of their wastewater). This article does not present any statistics on the household sector.
Environmental protection expenditure is an indicator which comprises total investments and total current expenditure. Current expenditure is the sum of internal current expenditure, plus fees and other payments for environmental protection services. For the public sector, environmental protection expenditure also includes subsidies and investment grants that are paid to other sectors.
Total environmental protection expenditure gives an idea of the money spent by each sector on environmental protection activities directly and indirectly, in other words, not only on environmental protection activities for their own use, but also by those buying environmental services from other economic units and financing environmental protection expenditure that is carried out by other units. Note that total environmental protection expenditure is not adjusted to take account of receipts from any by-products, revenues from environmental protection services or to reflect transfers/subsidies.
Care should be taken when analysing the data for environmental protection expenditure across sectors, as there may be cases of double-counting, in particular, between specialised producers of environmental protection services and those business that purchase such services.
The scope of environmental protection is defined according to the Classification of Environmental Protection Activities (CEPA 2000), which distinguishes nine different environmental domains: the protection of ambient air and the climate; wastewater treatment; 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.
A low level of environmental protection expenditure does not necessarily mean that a country is not effectively protecting its environment. Indeed, an analysis of environmental protection expenditure (as portrayed in this article) emphasises the role played by clean-up costs – in contrast, to potential cost reductions which may result from reduced emissions or more effective (less polluting) production techniques – neither of which are covered by the statistics presented here.
For many years, European statistical services have collected data on air pollution, energy and water consumption, wastewater, solid waste, and their management. These data can be used by policymakers to assess the environmental impact of economic activities (resource consumption, air or water pollution, waste production) and to assess the actions (investments, technologies, expenditure) that are taken to limit the causes and risks of pollution.
Eurostat has worked towards systematically gathering environmental statistics for all economic sectors within the EU. These statistics are used to assess the effectiveness of new regulations and policies and analyse the links between environmental pressures and the structure of the economy.
A Regulation (691/2011) on European environmental economic accounts was adopted on 6 July 2011; it provides a framework for the development of various types of environmental accounts. Although not included in the first set of modules, the Regulation does make reference to environmental protection expenditure as a future area for inclusion.
Further Eurostat information
- EU-27 environmental protection expenditure increased to 2.25% of GDP in 2009 - Statistics in Focus 23/2012
- Environmental protection expenditure in Europe - Data 1995-2009 - Statistical book, 2011
- Energy, transport and environment indicators pocketbook, 2011 - Statistical pocketbook, 2011
- Environmental statistics and accounts in Europe - Statistical book, 2010
- Environmental Protection Expenditure and Revenues in the EU, EFTA and candidate countries, 2001-2006 - Statistics in Focus 31/2010
- Environmental Protection Expenditure by Industry in the European Union 1997-2004 - Statistics in Focus 93/2008
- Environmental Protection Expenditure in Europe by public sector and specialised producers 1995-2002 - Statistics in Focus 10/2005
- Environmental protection expenditure by industry in the European Union - Statistics in Focus 14/2002
- Environmental protection expenditure in accession countries, Data 1996-2000 - Statistical book, 2002
- Environmental protection expenditure in Europe, Data 1990-1999 - Statistical book, 2001
- Environment (env), see:
- Environmental expenditure by public sector (ten00049)
- Current environmental expenditure by public sector (ten00051)
- Current environmental expenditure by industry (ten00054)
- Environmental investment by public sector (ten00050)
- Environmental investment by industry (ten00053)
- Environmental protection expenditure by industry (ten00052)
- Environmental protection spending by industry (ten00052)
- Environment (env), see:
- Environmental Accounts (env_acc)
- Environmental protection expenditure in Europe - detailed data (NACE Rev. 1.1)
- Environmental protection expenditure in Europe - detailed data (NACE Rev. 2)
- Environmental protection expenditure in Europe - indicators: Euro per capita and % of GDP
- Environmental protection expenditure in Europe - indicators: % Pollution prevention, % of gross fixed capital formation, % of output
- Environmental protection expenditure by NUTS 2 regions (NACE Rev. 1.1)
- Environmental protection expenditure by NUTS 2 regions (NACE Rev. 2)
- Environmental protection expenditures by EU institutions
- Environmental expenditure statistics: General Government and Specialised Producers data collection handbook, 2007
- Environmnetal expenditure statistics: Industry data collection handbook, 2005
- OECD/Eurostat Environmental Protection Expenditure and Revenues Joint Questionnaire/SERIEE Environmental Protection Expenditure Account: Conversion Guidelines, 2005
- SERIEE - Environmental protection expenditure accounts - Compilation Guide, 2002
- SERIEE - European System for the collection of economic information on the environment, 1994 version
- Environmental protection expenditure in Europe - detailed data (ESMS metadata file - env_ac_exp1_esms)
- Environmental protection expenditure in Europe - detailed data (NACE Rev. 2) (ESMS metadata file - env_ac_exp1r2_esms)
- Environmental protection expenditure in Europe - indicators: Euro per capita and % of GDP (ESMS metadata file - env_ac_exp2_esms)
- Environmental protection expenditure in Europe - indicators: % Pollution prevention, % of gross fixed capital formation, % of output (ESMS metadata file - env_ac_exp3_esms)
- Environmental protection expenditure by NUTS 2 regions (NACE Rev. 1.1) (ESMS metadata file - env_ac_exp4_esms)
- Environmental protection expenditure by NUTS 2 regions (NACE Rev. 2) (ESMS metadata file - env_ac_exp4r2_esms)