An Integrated Economic and Environmental Assessment with An Extended Social Accounting Matrix: A Case Study in Cambodia

Abstract

The increasing evidence on climate change effects and loss of biodiversity highlights the need to integrate economic decision-making with environmental accounting. Using integrated economic modelling allows gathering evidence of the consequences of those economic choices that exploit natural resources and degrade the environment. We developed a ‘social accounting matrix including environmental accounts’ (SAMEA) for Cambodia. In our framework, we express national economic accounts in monetary units and environmental accounts in physical units. The SAMEA comprises 94 accounts, 27 of which relate to the environment and report on: a) emissions of 16 main pollutants; b) waste produced or absorbed in the economic system; c) use of five natural resources; and d) the changes on five environmental themes. In our study, we disentangle the impacts of production and consumption activities on environmental variables and income distribution on a national scale. Our simulations show that sectoral economic growth and gas emissions are not linked by a one-way linear transmission. Instead, these are much determined by the strength of both backward and forward linkages between sectors. Finally, we notice that the multiplier coefficients tying the economic and environmental sectors are responsible for the direct-indirect shifts in both the economy and the environment.

Keywords: quantitative policy modelling, social accounting matrix, valuation of environmental effects, environmental accounts and accounting

JEL Classification: C54, E16, Q51, Q56