The second step in developing a green accounting system should focus on articulating and integrating the conceptual frameworks in each topical area where threats to sustainability are believed to exist (e.g., agriculture, forestry, fisheries, climate, species diversity, air, water, and land quality, etc.). This process would be initiated by asking individuals and researchers knowledgeable in particular subfields to identify the normative assumptions and key conceptual frameworks of their field. The process should include practitioners as well as researchers. In the field of agriculture, for example, there should be involvement from family farmers, organic farmers (both large-and small-scale), corporate farmers, genetic engineers, and consumers. Those with long practice in sustainable agriculture (e.g., Amish farmers), should also be involved. Each person might be asked to describe how he/she assesses soil quality and soil deterioration. Each would be asked to consider near-term and long-term threats to sustainability. This type of process would be replicated for each topical area.
Many kinds of measurement units should be included in a green accounting system. When long-range and multicriteria problems are involved, biogeophysical and equity indicators must figure prominently. Econometric techniques become most important after goals have been set and near-term policy decisions are required.
Our purpose in highlighting this wide variety of views on technological innovation and the preconditions of sustainability is to illustrate how one's conception of the world influences the process of framing issues. Environmental science is a social process that entails discourse and debate along with the acquisition and analysis of data (Norgaard, 1992). In this paper we argue that a successful approach to green accounting must represent the range of views expressed above. We feel that three issues in particular should receive careful consideration:
Green accounting efforts seek to measure, in an instrumental and anthropocentrically focused fashion, the "value" and status of the goods and services provided by the environment. They extend the range of consideration to include marketed raw materials (natural capital in the traditional interpretation), unmarketed goods, and waste assimilative services. Their purpose is to support modeling efforts and empirical investigations that may help us determine if we are living on interest or capital. If we are living upon capital, these research efforts may help us to make the transition to a more sustainable path.
A recent study of the attitudes of accountants, based on a questionnaire survey of the finance directors of the 1,000 top U.K. companies (Bebbington et al., 1994), indicates that a significant proportion (over 50 percent in the case of energy issues) have introduced, or are at least thinking about introducing, some accounting (in financial or statistical terms) for environmentally related activities (in particular for energy, investment appraisal, waste, packaging, and aspects of legal compliance). However, there are also, surprisingly, many accountants who have no plans to address or even claim never to have heard of any of these issues; two-thirds or more expressed negative views about issues such as packaging, legal compliance, environmental budgets, water pollution, recycling, contingent liabilities, remediation costs, air pollution, land pollution, sustainability and life
From an ecological perspective, any work that leads to a primary conclusion that greenhouse warming a century hence is probably only a few percent of GNP seems problematic. The issue is basically one of how one analyzes uncertainty and risk. It may well be that the current ''best" estimate of loss is modest. If, however, there is a significant chance that actual losses will be much greater then there axe very different policy implications. At issue is whether society wants to make its planning decisions on the basis of averages, worst-case analysis, or other planning rules. We argue that, to be acceptable, accounting systems must support the acknowledgement of both optimistic and pessimistic minority positions.
Four terms—attributes, objectives, goals and criteria—frequently appear in the literature on multicriteria decisionmaking. While there is no clear consensus on their definitions and some overlap exists, it is helpful to both make some distinctions between the terms and use them consistently. We believe that a deeper understanding of these terms can facilitate the conceptual development of green accounts. Our usage incorporates notions from Hwang (1981) and Zeleny (1982).
Approaches for analyzing green accounts that both take von Neuman and Morganstern's admonition to heart and are capable of considering multiple goals, measured with a variety of incommensurable units, already exist. The term "multiple criteria" or "multicriteria decisionmaking" (MCDM) has been given to a general collection of approaches for making decisions in the presence of multiple and often conflicting criteria. A characteristic of these techniques is that there is an effort to recognize explicitly that social decisionmaking has multiple goals, and that attempts to measure all of them using a single scalar are doomed to failure.
What might one ask of a "green accounting" system that would provide insight into the implications of radioactive waste systems? Estimates of containment and leakage involve technological and geological extrapolations into regions where, in many cases, information is limited. Costs of control technologies have a long history of underestimation. Uncertainties about time frames for construction as well as time frames and probabilities for leaks to the environment make it difficult to estimate future costs, and make use of economic discounting techniques extraordinarily problematic. In practice, the public debate over nuclear waste has largely been framed in terms of perceived risk and confidence rather than economic benefit-cost analysis.
Most current national income accounts rely on the notion that all factors of importance can be expressed in terms of a single numeraire, usually monetary. The assumption is that a single monetized equation can be written to capture all relevant senses of value. This sum, which consists of "use value," "option value," and "existence value," is referred to as total economic value (TEV = use value + option value + existence value). A critical question for "green accounting'' is whether or not to adopt this perspective. Norgaard (1990) argues that the problems that we seek to resolve through developing green accounts are entangled in the issue of monetary valuation itself. He refers to this issue as the "value-aggregation dilemma.''
The work of Norgaard and his collaborators provides a clear analytical demonstration that value judgments unavoidably enter into intergenerational economic analysis. The implication of these ideas for green accounting is to reinforce the idea, introduced earlier, that accounting systems must be designed so as to be congenial to many different views of the world, and that monetizing techniques should play a minor role in long-term goal setting relative to biogeophysically based approaches. Once goals are set, monetary techniques are essential aids to determining the economically efficient routes toward these goals.
The potential for quantification of targets and achievements through physical measures—tons of hazardous wastes, proportions of recyclable to nonrecyclable materials, concentrations of particulate emissions, etc.—is clear. Such measures are already illustrated in the publicly available reports on pollution control including, increasingly, companies' annual environmental reports (Collier et al., 1993). Internally, such measures may also be used as part of an array of targets and performance indicators within a balanced scorecard (Epstein, 1994). The increased use of nonfinancial measures, at least at lower organizational levels, is also a feature of modern management control systems with their focus on quality and continuous improvement and is increasingly important where organizations promote bottom-up empowerment rather than top-down control and are downsizing and flattening their structures (Epstein, 1994; Tyson, 1994). However, the power of the financial bottom line has always made it accountancy's strongest weapon, both in its apparent capability to summarize organizational performance across a diverse range of divisions, activities, and products and in its behavioral linkages to incentives and rewards (Ezzamel et al., 1990). Despite the major reorientations of management accounting systems in recent years, top managements are likely to continue to manage by the financial numbers (Tyson, 1994). The need to capture internal environmental considerations in terms of financial consequences (as in TCA) and to attempt to measure impacts on the environment financially external to the organization is a major challenge for the further development of environmental accounting (Cope and James, 1990).