ENVIRONMENTAL ACCOUNTING FOR OIL AND NATURAL GAS

Transcription

1 ENVIRONMENTAL ACCOUNTING FOR OIL AND NATURAL GAS A North American Case Study of Canada and the Southeast of the United States Edmund C. Merem With a Foreword by William M. Harris The Edwin Mellen Press Lewiston»Queenston»Lampeter

2 Contents Foreword by William M. Harris, Sr. PhD. FAICP. i Acknowledgments Introduction 1 Policy Concerns About the System of National Income 5 The Need for and Benefits of Environmental Accounting 7 Objectives. Purpose and Research Questions 8 Organization of the Research 10 x Chapter One - Literature Review on Green Accounting 13 The Scope of Studies 15 Rationale and Support for Environmental Accounting 16 Governmental Mandate 20 Empirical Applications. Methods and Global Dimension 22 The Case of Louisiana in the USA 22 Applications at the International Level 22 Miscellaneous Studies at the Global Level 26 Other Views and Literature Analysis 30 Views on Environmental Accounting During the Early Stages of the History 30 Literature Analysis 32 Summary 34 Chapter Two - Conceptual Analysis of Green Accounting 37 Overview of the Guiding Framework 38 Environmental Accounting Defined 40 Implementation Approaches 45 Components of Environmental Accounting Systems 45 Physical Accounts 45 Monetary Accounts 46 Environmental Protection Expenditure Accounts 46 Theoretical Approaches in Environmental Accounting 47 Depreciation Approach - 47 Environmental Damage Cost Approach 48 iii

3 Other Theoretical Notions Shaping Environment Related Expenditures 49 The Essence of Environmental Expenses Theory: Implications and Benefits 50 Critique of the Theory of System of National Accounts 52 Different Philosophical Positions Contesting the System of National Accounts 54 General Overview 54 Feminist Aspects of the Debate ' 55 Communitarian Approach to Environmental Accounting and Critiques 56 Critiques of Green Accounting Theory from Outside 57 Summary 59 Chapter Three - The Study Area Description: The North American Region.. 61 Generic Description and Profile of the Region 62 Country Level Profile 64 Canada 64 The United States of America 65 The Profile of the Provinces and States in the Study Area 66 Canada's Oil-Producing Provinces 66 Composition, Economic Development and Supplies to the United States 68 Profile of the Southeastern United States 70 Environmental Externalities and Costs 73 Environmental Costs, Damages, and Concerns in the Southeast 73 Major Environmental Concerns and Pollution Costs in Canada 76 Pollution Issues and Environmental Costs In North America 78 Carbon Dioxide Emissions from Fossil Fuel and Gas Flaring 80 Summary 81 Chapter Four - Research Design and Methodology 83 Identification of Data Sources, Variables, Scales 86 Data Needs (Temporal-Spatial) 87 Data Gathering 91 Data Analysis: Techniques 92 Data Analysis at the Provincial Level 92 Data Analysis at the State Level 94 The Green Accounting Model for Oil and Gas 100 Contextual Analysis and Interpretation 103 Summary 104

4 Chapter Five - Environmental Impact Analysis of Oil and Gas Activities Generic Assessment Ill Regional Trends On the Southeastern Oil Wells and Natural Habitats Produced Water 114 Waste Generation: Drilling Mud 114 Natural Habitats 114 Pollution: Oil Spills 115 Performance Indicators: Impact Analysis of The Southeast Oil Sector Impact Analysis for Canada: The Western Sedimentary Basin 130 Environmental Liabilities 131 Landscape Disturbance 132 Water 133 Pollution and Gas Flaring 134 Summary 136 Chapter Six - Review of Canada's Oil and Gas Pilot Project 137 Overview of Canada's Oil and Gas Project and Costing 139 Cost of the Project 140 Review of How the Project Relates to the Philosophy of Green Accounting J. 141 Implementation Plan and Factors 143 Administrative Arrangements 143 Resource Allocation 143 Activities 144 Implementation Factors - Communication 145 Evaluation of the Success and Limitations of the Pilot Project 145 Criteria for Evaluating the Success of the Project 145 Administrative Process 146 Administrative Structure 146 Composition of Policy Advising Committee 147 Interdepartmental Rivalry 147 Insiders' Opinion: The Other Side of the Evaluation 148 Criteria for Evaluating the Limitations of the Project 149 Summary i 150 Chapter Seven - The Status of Green Accounting in the United States 151 History of Green Accounting Initiatives During the 1980s 153 Green Accounting Plan by the Bureau of Economic Analysis 154 The Economic Cost of the Project 155 The Justifications Surrounding the United States Project 156 Environmental Change 157 Inadequacies in the Conventional System 158

5 Green Accounting As a Measurement Device to Gauge Economy and Environment 159 The Green Accounting Program Activities 160 Review of the Program 160 Major Actors 160 Data Needs for Implementing Green Accounting and Regional Relevance 162 The Essence of Data Infrastructure 162 Requirements for Intergovernmental Collaboration on Information Compilation 163 Data Requirements Pertaining to Non-Renewable Resources 164 Regional Relevance of the Project Regarding Oil and Gas 164 Critical Evaluation of the BEA Green Project and Initiatives 165 Summary 169 Chapter Eight - Results of Descriptive Statistics for Canada's Oil and Gas Accounts 171 Results of the Analysis of Monetary Equivalent of Depletion for Canada 173 The Distribution of the Ratios Over the Years 175 The Percentages of Change in Canada's Monetary Equivalent of Depletion 175 The Environmental Protection Costs of Oil and Gas Activities 176 Comparisons of the Combined Estimates to GDP and Adjustment of the GDP and Linking the Analysis to the Model 178 Adjustment of the GDP 180 Linking the Analysis to the Model 180 Summary 182 Chapter Nine - Results of Data Analysis On Southeast United States 185 Temporal Portrait and Analysis of Depletion Trends 186 Natural Gas Trends: The Proven Reserves of Natural Gas 186 Depletion Analysis For Crude Oil: Proven Reserves of Oil 188 The Differences in Oil and Gas Reserves 188 Differences in the Value of Natural Gas 188 The Differences in Crude Oil Reserves 189 The Percentages of Change 190 Percentages of Change for Natural Gas 190 Percentages of Change for Oil 192 The Adjustment of GSP for Environmental Externalities Linking the Environmental Accounting Model to Data Analysis 198 Summary 199

6 Chapter Ten - The Results of The Principal Components Analysis 203 Summary and Distribution of Component Scores 204 The Total Variances Explained 206 Temporal Profile of The PCA 210 The Distribution of the Scores 210 Component 1: Intense Energy Use, Economy and Impacts 211 Component 2: Environmental Change and Depletion 214 Component 3: Technology and Fuel Consumption Factors 215 Summary "..".". 218 Chapter Eleven - Interpretations and Findings 221 Changes in the Value of Oil and Gas and Evidence of Depletion on the Rise 222 Depletion of Oil and Gas More Pronounced in Some Years 228 Indicators of Environmental Damages and Costs on the Increase 230 The Conventional Systems of Accounting Less Robust When Adjusted for Depletion and Ecological Costs 235 Government Response Evidenced by Think Tank Groups and Pilot Projects 237 Rising Consumption Patterns Threatening Future Use 241 Economic and Other Factors Rising with Impacts on Environmental Resources 248 Growth and Productivity 251 Investment and Government Policy 252 Technology and Intense Use of Capital 255 Summary 257 Chapter Twelve - Benefits of the Research for a Green Accounting Information System 259 Practical Benefits of the Study 260 Helps With the Development of Methodological Techniques 260 Ushered In a Gateway Exploring Alternative Energy Options 262 Contributes to the Debate On Sustainable Planning and Policy 264 Provides Tools for Natural Valuation and Conservation 265 Conceptual Benefits 266 Strengthens Green Accounting Education 267 Reinforces the Essence of Equity in Resource Planning 268 Re-echoes the State of Green Accounting in North America 269 The Implications of the Study 271 Implications for Practice 271 Implications for Research 273 Summary 274

7 Chapter Thirteen - Recommendation: Future Lines of Action and Closure Internalize the Costs of Depletion and Environmental Damages 278 Adopt Efficient Conservation Strategies 279 Design Coherent Policy Framework 280 Encourage Regular Study of Theory in Green Accounting 282 Appraise Resource Extraction Activities with Green Accounting Techniques 283 Adopt a North American Integrated Energy Management Information Systems '.'. 284 Support Research and Development in Environment and Energy Technology 286 Promote Geothermal Energy 288 Conclusion., 289 Appendices 295 Appendix One - The Environmentalist View on Green Accounting Appendix Two - The Case for Depletion Analysis and Other Methods Appendix Three - The Steps in the Design of Environmental Expenditure Accounts 301 Appendix four - Areas with Cases of Gas Flaring 303 Appendix Five - Spatial Distribution of Abandoned Wells 304 Appendix Six - Areas with Cases of Air and Water Pollution 305 Appendix Seven - Areas With Soil and Land Contamination 306 Appendix Eight - Loss of Wetlands and Land Disturbance 307 Appendix Nine - Miscellaneous List of Oil and Gas Indicators 308 AppendixTen - Changes in Miscellaneous Lists of Oil and Gas Indicators (Percentages of Change) 309 Appendix Eleven - Miscellaneous: Lists of Oil and Gas Indicators 310 Appendix Twelve - Percentages of Change for Some of the Variables..311 Appendix Thirteen - Interstate Movement of Natural Gas 312 Appendix Fourteen - Percent of Change in Interstate Movement of Gas.313 Acronyms and Glossary of Terms 315 Bibliography 317 Index 347