Environmental protection expenditure

From Statistics Explained

Data from June 2014. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: June 2015.

This article provides information relating to expenditure that is carried out in the European Union (EU) (and some 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.

Figure 1: Total environmental protection expenditure, EU-28, 2002–12 (1) - Source: Eurostat (env_ac_exp1r2) and (env_ac_exp2)
Figure 2: Total environmental protection expenditure by domain, EU-28, 2012 (1)
(% of GDP) - Source: Eurostat (env_ac_exp1r2) and (env_ac_exp2)
Figure 3: Public sector environmental protection expenditure, 2012
(% of GDP) - Source: Eurostat (env_ac_exp2)
Figure 4: Public sector environmental protection investments and current expenditure, 2012
(% of total) - Source: Eurostat (env_ac_exp1r2)
Table 1: Public sector environmental protection expenditure by environmental domain, 2012
(million EUR) - Source: Eurostat (env_ac_exp1r2)
Figure 5: Environmental protection expenditure by specialised producers, 2012 (1)
(% of GDP) - Source: Eurostat (env_ac_exp2)
Table 2: Specialised producers' environmental protection expenditure by environmental domain, 2012
(million EUR) - Source: Eurostat (env_ac_exp1r2)
Figure 6: Industrial environmental protection expenditure by subsector, 2012 (1)
(% of GDP) - Source: Eurostat (env_ac_exp2)
Table 3: Industrial environmental protection expenditure by environmental domain, 2012
(million EUR) - Source: Eurostat (env_ac_exp1r2)

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.

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-28 in 2012, some EUR 148 400 million, which equated to just over half (51.8 %) of the total level of expenditure. The remainder was split between expenditure by the public sector (EUR 87 400 million) and that by industry (EUR 50 700 million).

Between 2002 and 2012, the expenditure of specialised producers in the EU-28 grew in current price value terms by more than half (52.3 %) — see Figure 1. Over the same period there was an increase of 39.2 % in environmental protection expenditure by the public sector. Expenditure from industry dipped during the early part of the first decade of this century and again in 2009 — in both cases these reductions could be linked to relatively weak levels of industrial activity; by 2012, environmental protection expenditure by industry was 13.1 % above its 2002 level.

Contrary to the general development of rising EU-28 environmental protection expenditure over most of the last decade, the rates of change between 2008 and 2009 reflect, at least to some degree, the impact of the financial and economic crisis. There was a reduction of 7.8 % in the environmental protection expenditure of industry, while expenditure declined by 5.7 % for specialised producers (by contrast, growth of 5.4 % was recorded for the public sector); all three principal actors saw their expenditure follow an upward path from 2010 onwards.

The ratio between environmental protection expenditure and gross domestic product (GDP) provides an indication of the importance of environmental protection relative to the overall economic activity. For specialised producers in the EU-28 this ratio stood at 1.14 % of GDP in 2012, compared with 0.67 % for the public sector and 0.39 % for industry (see Figure 1). The weight of environmental protection expenditure (in relation to GDP) of specialised producers rose by 0.16 percentage points between 2002 and 2012. By contrast, the relative importance of public sector environmental protection expenditure was more or less stable over the same period (up 0.04 percentage points), while the level of expenditure made by the industrial sector fell slightly in relation to GDP between 2002 and 2012 (-0.06 percentage points).

Figure 2 provides information relating to the various domains which account for environmental protection expenditure in the EU-28. The largest domain in 2012 concerned waste management, followed by wastewater treatment, with almost two thirds 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 a large proportion coming from industry (note that no data are available for this domain for the expenditure of specialised producers); 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 relative to GDP was between 0.3 % and 1.0 % in 2012 (see Figure 3). Only Croatia (0.26 %) and Spain (also 0.26 %, 2011) were below this range, while relatively high levels of public sector environmental protection expenditure were recorded in the Netherlands (1.44 %, 2011) and Malta (1.39 %).

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 fifth (21.6 %) of total expenditure in 2012 in the EU-28. The relative weight of investment was higher than this for most of the Member States that joined the EU in 2004, 2007 or 2013 (Latvia, Cyprus and Croatia were the exceptions); 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 Table 1). Exceptions to this included Spain (where the public sector directed its expenditure towards other domains, like biodiversity and landscape protection, protection against radiation, research and development (R&D) and other environmental protection activities) and Cyprus, Denmark and France (where more than 60 % of expenditure (in Denmark more than 90 %) was in the miscellaneous category, covering protection and remediation of soil, groundwater and surface water, noise and vibration abatement, protection of biodiversity and landscapes, protection against radiation, R&D, 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 of specialised producers

Among the EU Member States, the expenditure of specialised producers on environmental protection generally ranged between 0.4 % and 1.5 % of GDP, with an EU-28 average of 1.14 % in 2012 — see Figure 5. Only Slovenia (2011), Slovakia, Croatia and Finland (also 2011) had lower ratios, while at the other end of the range, Estonia (2011) and Austria (2010) recorded by far the highest ratios (2.81 % and 2.53 % of GDP, respectively); Romania was the only other EU Member State to record environmental protection expenditure by specialised producers that was in excess of 1.5 % of GDP. These 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.

With the exception of Malta, in all EU Member States the vast majority of the environmental protection expenditure made by specialised producers was allocated to waste management and wastewater treatment (see Table 2).

Environmental protection expenditure by industry

An average of 0.39 % of GDP was spent on environmental protection by industry across the EU-28 in 2012 (see Figure 6). Among the EU Member States this ratio was generally within the range of 0.2 % to 0.8 % of GDP, falling below this range in Portugal, the United Kingdom (2011) and France (2010).

In 2012, about two thirds (67.0 %) of the EU-28’s environmental protection expenditure made by industry could be attributed to manufacturing. This relatively high share is not surprising given that this activity 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, 2007 or 2013 may explain the relatively high degree of environmental protection expenditure within the electricity, gas and water supply subsector in these countries (for example, Latvia, Slovenia and Croatia), while significant coal mining may explain the higher than average levels of expenditure for the mining and quarrying activity in Romania, the Czech Republic, Poland and the United Kingdom.

In most EU Member States environmental protection expenditure made by the industrial sector was generally concentrated on air protection measures, wastewater treatment and waste management activities (see Table 3).

Data sources and availability

Eurostat collects environmental protection expenditure data through a joint Eurostat/OECD questionnaire on environmental protection expenditure and revenues; this is based on EU methodology.

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; the public sector mainly falls in NACE Rev. 2 Division 84 (public administration). 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. Public and private specialised producers mainly fall in NACE Rev. 2 Division 37 (sewerage), Groups 38.1 and 38.2 (waste collection and treatment) and Division 39 (remediation activities).

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. For the purpose of this publication, an aggregate called industry is used, which includes NACE Rev. 2 Sections B (mining and quarrying), C (manufacturing), D (electricity, gas, steam and air conditioning supply) and Division 36 (water collection, treatment and supply).

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.

Context

A low level of environmental protection expenditure does not necessarily mean that a country is not effectively protecting its environment.

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.

Regulation (EU) No 691/2011 on European environmental economic accounts amended by Regulation 0538/2014 provides a framework for the development of various types of environmental accounts, including also environmental protection expenditure accounts.

See also

Further Eurostat information

Publications

Main tables

Environmental protection expenditure (t_env_epe)
Environmental protection expenditure by the public sector (ten00049)
Environmental investment by the public sector (ten00050)
Current environmental expenditure by the public sector (ten00051)
Environmental protection expenditure by industry (ten00052)
Environmental investment by industry (ten00053)
Current environmental expenditure by industry (ten00054)

Database

Environmental protection expenditure (env_epe)
Environmental protection expenditure in Europe - EUR per capita and % of GDP (env_ac_exp2)
Environmental protection expenditure in Europe - % pollution prevention, % of gross fixed capital formation, % of output (env_ac_exp3)
Environmental protection expenditure in Europe - detailed data (NACE Rev. 2) (env_ac_exp1r2)
Environmental protection expenditure in Europe - detailed data (NACE Rev. 1.1) (env_ac_exp1)
Environmental protection expenditure by NUTS 2 regions (env_ac_exp4r2)

Dedicated section

Methodology / Metadata

  • Methodological publications
  • ESMS metadata files

Source data for tables and figures (MS Excel)

External links


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