Brazzaville, 11 December 2021 (ECA) - It is high time regional economic communities, in particular CEMAC and ECCAS, in cooperation with the United Nations Economic Commission for Africa (ECA) created a consortium on the use of natural capital accounting to stimulate economic diversification and industrialization with the private sector as key player.
Such was one of the key recommendations of an expert session on “Natural capital accounting, reassessing economic wealth and broadening fiscal space in Central Africa” organized by the Central Africa Office of the United Nations Economic Commission for Africa (ECA) on 8 and 9 December 2021 in Brazzaville, capital of the Congo.
Natural capital accounting (NCA) is a rigorous audit of the economic and monetary value of a country’s natural resources, in order to assess its real wealth, plan its development sustainably and better negotiate development financing without sinking into debt (as is currently the case for several economies in Central Africa).
NCA is a relatively new tool in environmental management. It assesses the contribution of natural ecosystems to a country’s economy, its level of dependence on natural systems, monitoring changes in the natural systems and their impacts. It can be construed as a new (and better) way to combine existing tools used in economic analysis with environmental data. In other words, while GDP is measured in terms of the total value of goods and services produced in an economy in a year, natural resources that provide ecological and other services should be included in the equation to assess the true wealth of a country.
The Brazzaville meeting was held on the margins of the 37th session of the Intergovernmental Committee of Senior Officials and Experts for Central Africa (ICE).
The purpose of the meeting was to propose a number of tools and techniques for measuring natural capital within a framework consistent with the system of national accounts.
Thus, the experts first presented the valuation of natural capital in Central Africa as “a long-term process which requires a concerted and sustained effort”.
In other words, the products and services provided by natural capital, such as water, food and climate management, are called “ecosystem services”. Everyone benefits from such services because they generate economic activity and promote a healthy lifestyle.
The experts advised that the United Nations Economic Commission for Africa (ECA) and the Economic Community of Central African States (ECCAS) come together and see how to harness the knowledge of different experts and institutions to better mainstream natural capital in the production process.
Everything would then have to start by offsetting the lack of an appropriate institutional framework by creating a CONSORTIUM on the transformation of natural capital into productive capital in Central Africa.
They said it was incumbent on ECA and ECCAS to prepare draft terms of reference and a roadmap for the establishment of such a consortium.
As part of the recommendations of the meeting, the experts stressed that “proper natural capital management requires informed decisions based on good quality data on the sub-region’s natural capital stock and trends, but also adapted economic models that take into account the interactions between the economic, social and environmental spheres”.
Furthermore, it was pointed out that for all the countries of the sub-region, one of the major constraints to optimum natural capital management is the absence of primary data needed to produce the required indicators.
Accordingly, “States, sub-regional institutions, ECA and other development partners must therefore continue to strengthen the sub-region’s statistical systems for the production of primary data, while continuing to explore innovative methods such as satellite imagery”.
Satellite imagery makes it possible to circumvent the absence of primary data at a lower cost without seriously compromising the quality of the estimates of the main indicators useful for proper natural capital management.
Suggestions were made to ECA to partner with other international institutions, to brainstorm on and take into account the cost-benefit analysis and the net impact of the natural capital valuation in the definition of environmental protection policies.
Findings stated in the report on natural capital accounting
Produced in October 2021, this document states that “natural resources and ecosystem services are degraded due to a lack of conservation incentives in markets and institutions”.
It proposes that “new laws and institutions are needed to compensate for the fact that money is traditionally given to those who produce goods, but not to those who provide services”.
It is essential to take into account the real wealth of the countries, in particular their natural capital. Long-term development is about accumulating and properly managing a portfolio of resources that includes physical (or product) capital, natural capital, as well as human and social capital.
The report advises that “a good performance indicator should, for instance, consider the use of natural capital and job creation in developing countries. Generally, economic indicators must be adapted to changing environmental conditions”.
For Issoufou Seidou Sanda, ECA expert, “natural capital is important for the economy, but it has been neglected for a very long time”. He asserts that “we are in a sub-region which is very rich in natural resources”.
To illustrate his point, Mr Seidou Sanda argues that the potential of the Congo Basin, the second ecological lung of the planet with its 220 million hectares of forests, is not always measured when calculating the gross domestic product (GDP) of the countries that constitute it.
His point of view is shared by consultant Marthe Mapoungou, who recalls that the decision to account for and develop natural capital was taken 30 years ago.
She regretted the slow pace of practical implementation (especially in developing countries) for a variety of reasons, including the lack of a method for valuing internationally recognized ecosystem services.
This is compounded by “the slowness of political leaders - in particular the authorities in charge of the economy and finance who are dragging their feet on the issue of natural capital accounting”.
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