Environmental Accounting Test Results: "Total Cost Accounting course and Test" located at http://teexcit.tamu.edu/tca / (Total Cost Accounting online course and test).

Bakshi, B.R., Landers, E.F., Singh, S., Merugula, L.A., Mishchenko, O., and Fiskel, J. (2012, November 2). Accounting for ecosystem services in life cycle assessment by Eco-LCA: Advances in methodology and software. Paper to be presented at the Annual Conference of the 11th Global Congress of Process Safety on April 2015 in Austin, Texas.

The authors explain the role of ecosystem goods and services in the support of economic activities, and the relation of the use of ecosystem goods and services to sustainability. The variety of ecosystem goods and services is broad, however, most sustainability methods have not considered their contribution well. Consider that these are all ecosystem goods or services that play a role in sustainability: 1) The provisioning of water, food, and biomass; 2) the regulation of pests and rules to influence flooding and climate; 3) the supporting of biogeochemical cycles and photosynthesis through various practices; and, 4) the encouragement of tourism, spiritual development, and aesthetics.

A model that enables accounting for a number of ecosystem service is presented by the authors. The model uses the United States economy as a basis, but extends the input-output (EEIO) aspect so that it is characterized by environmental components. The modified and extended model permits the economic sectors to be checked according to ecological life cycle assessment, or Eco-LCA. Several different versions of this model are mentioned briefly by the authors. One version is a model that uses thermodynamic methods, which are based on the analysis of emergy and exergy, further enabling the aggregation of a range of ecosystem services. Another model version is a hybrid Eco-LCA that was developed by combining the input-output (IO) model with data from the detailed process.

The narrative describes a work around for addressing the difficulty of quantifying many ecosystems, particularly regulating services. Qualitative EEIO modeling and LCA are used to gather information about the extent to which economical sectors are dependent on the ecosystem service of interest. The approach uses a dependency rating of high, medium, and low, which is transmitted through the IO model in order to generate qualitative information about the dependency of the economic product on the economic service. Fundamentally, the algebra of the EEIO models provides the intermediate flow from the relevant sectors in order for them to be quantified in Eco-LCA. This means that data about the physical products, such as biomass, fish, grains, legumes, and medicinal plants -- and even the phosphorous cycle -- are included in the Eco-LCA by incorporating the flows into the relevant economic sectors.

Using new Eco-LCA software, the authors have been able to implement these approaches, basically utilizing three types of frameworks for the analyses: 1) Ecosystem services; 2) footprints; and, 3) thermodynamic analysis. Cumulative energy consumption is analyzed with and without ecosystems in the thermodynamic analyses. The authors point out that the ecosystems analysis is analogous to the analysis of energy, in that, the tools use renewability index metrics and thermodynamic return on investment. Using classification systems based on the ecosystem contributions to sustainability, the authors explain that the data can be hierarchically aggregated or presented as multiple, individual units. The footprint methods include univariate indicators, such as carbon, land use, nitrogen, and water.

Article #2

Assamoi, B. And Lawryshun, Y. (2011). The environmental comparison of landfilling vs. incineration of MSW accounting for waste diversion. Waste Management, 32, 1019-1030.

The authors lead the article with the pertinent statements about the seriousness of the challenges associated with municipal solid waste (MSW) disposal. Reasons for concern have to do primarily with the staggering production and consumption of products that are less biodegradable, in part due to lifestyle changes adopted by society, and also with increasing population growth.

Using data from the city of Toronto, the authors describe and evaluate two scenarios for treating the wastewater that remains after a diversion. A comparison is make of the environmental performance...

Existing waste diversion initiatives are accounted for, as well as diversion rates, changing waste generation quantities, and waste composition. The evaluation is accomplished through the use of life cycle assessment (LCA).
Life cycle assessment can be described in terms of four structural and distinct phases: 1) Goal and scope definition, which includes consideration of the various options that can be compared; 2) Inventory analysis of the quantification of mass and energy changes; 3) Impact assessment, or LCIA, which the magnitude and significance of environmental impacts; and, 4) Interpretation, which enables evaluation of results across the phases and with regard to goal and scope.

The status quo scenario described by the authors was landfilling in which the entire residual solid waste was placed in a landfill. The comparison scenario entailed roughly 50% of the residual solid waste being incinerated and the other 50% of the residual solid waste was landfilled. The two processes both produced electricity, but the outcomes were sufficiently different to be an important aspect of the comparison.

The waste diversion method more effectively reduced the organic portion of the solid waste, such that it reduced the net electricity that was produced by the landfill, and increased the net electricity production of the incinerator. Thus, the authors observed that the method using the incinerator was preferred over straight landfilling according to these relevant facts: 1) The environmental performance of the method using incineration was superior as it contributed to a substantive reduction in generation of greenhouse gas emissions; 2) the reduction in greenhouse gas emissions was a result of the displacement of the power plant emissions; and, 3) the cost of the model employing incineration was notably higher than the straight landfilling approach. The financial analysis included figures related to operations and maintenance costs, handling of waste, revenue from selling electricity and materials recovery, and waste-drop off fees. The cost of haulage was particularly relevant since the location of landfill sites and incinerators must be located a distance from cities -- a factor which invariably increases costs.

The authors concluded that landfilling is a better financial option, as it costs less overall than a combined landfilling and incineration with waste diversion components. However, the cost is not less in absolute terms over time since landfill do fill up, reaching a point where they are no longer usable. This means that some costs are deferred rather than being eliminated since landfill replacement is an inevitable cost.

Article #3

Lanen, W.N. (1994). Pollution Prevention and Accounting. Ann Arbor, MI: National Pollution Prevention Center for Higher Education, University of Michigan.

Assessing environmental impacts is currently an accepted aspect of doing business, a position that has been a long time in development. Environmental impacts are regulated by the government and expected by the general public. The author forecast that additional future demands can be expected of accounting systems in order to conform to societal norms in developed countries. The purpose of this article is to explain how environmental activities, such as pollution prevention and comparative cost analyses, are recorded and evaluated in accounting systems, and to identify resources that can be used by accountants and students of accounting.

The author establishes early on that he uses a categorical distinction between internal and external reporting, while cognizant of the fact that the demarcations are neat and tidy. Four different types of external reports are discussed by the author: 1) Accounting for environmental liabilities and pollution prevention; 2) Pollution prevention and taxes; 3) environmental audits; and, 4) environmental accounting. As the author points out, these reports all share a common objective: to report the mutuality of the impacts of environmental activities on the firm and the firm on the environment. An important issue is that environmental impacts represent issues of social concerns, as well as actual liabilities that corporations may face as a result of non-compliance with environmental impact regulations, and as a result of private lawsuits directed toward negligent, non-compliant corporations. Moreover, the authors remind readers that the financial markets attend to and respond to information about environmental impacts.

Ecological accounting is a particular version of external reporting that focuses on the conversion of monetary environmental costs to physical flows. The practicality of this approach to accounting is that environmental impacts are expressed in terms of measures of emissions and discharges. The value-add of products and services is countered by using ecological accounting, which attempts to measure the ways in which products or processes generate pollution.

The author discusses three areas related to internal reporting: 1) Pollution prevention and product costing; 2) pollution prevention and planning; and, 3) pollution prevention and performance assessment. A substantive issue for an increasing number of industries -- particularly in the European Union where environmental regulations are stricter than they are in the United States -- is the life cycle recycling requirements in which manufacturers are responsible for the end product when the useful -- original intended -- life ends. Many companies now must attend to the life cycle costing and life cycle analysis…