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CHAPTER 14: FINANCIAL ACCOUNTING METHODS TO FURTHER DEVELOP AND COMMUNICATE ENVIRONMENTAL ACCOUNTING USING EMERGY
Citation:
CAMPBELL, D. E. CHAPTER 14: FINANCIAL ACCOUNTING METHODS TO FURTHER DEVELOP AND COMMUNICATE ENVIRONMENTAL ACCOUNTING USING EMERGY. Emergy Synthesis 3: Theory and Applications of the Emergy Methodology: Proceedings of the 3rd Biennial Emergy Analysis Research Conference, Gainesville, FL, January 29 - 31, 2004. Brown, et al (ed.), The Center for Environmental Policy, Dept. Env. Engin. Sciences, U. Florida, Gainsville, FL, 185-198, (2005).
Impact/Purpose:
To describe financial accounting methods that can be used to communicate environmental accounting
Description:
Development of the concepts of emergy and transformity established a medium (emergy) for accounting that made it possible to express economic and environmental work of all kinds on a common basis as solar emjoules. Environmental accounting using emdollars, a combined emergy-monetary unit, can be used to produce a single income statement and balance sheet giving comprehensive accounts for the economy, society, and the environment. At present, emergy accounting is in its inchoate stages and this paper uses well-known methods from financial accounting and bookkeeping to guide the further development of emergy accounting methods. The important concept of environmental liability is defined and a conceptual basis for its operation is presented in the form of an energy systems model. Four categories of environmental debt are recognized and a scheme for payment is proposed based on the criterion that economic production be sustainable. Also, a system of double entry emergy and monetary bookkeeping is proposed, which uses a combined emergy-monetary journal, separate emergy and money ledgers and an emergy-emdollar balance sheet to keep one set of books for the environment and the economy. Further development, testing, and adoption of environmental accounting tools like these will allow managers to finally determine the true solvency (the ability to pay both economic and environmental debts) of the firms and economic systems for which they are responsible.