Bijdrage van True Cost Accounting aan overheidsbeleid om te verduurzamen : Hoe kan True Cost Accounting bijdragen aan effectief overheidsbeleid?
This report focuses on the question: “How can True Cost Accounting contribute to effective public policy for sustainability?” True Cost Accounting is a way of calculating – at product level – the unpriced impacts of production and consumption (either here and now, or in the future, for other people and anywhere) and expressing those impacts as financial costs. In a sense it’s supplementary to the determination of those costs that do get internalised, and it can be a basis for setting a market price that accounts for both those internalised costs and other, externalised costs. True Cost Accounting still maintains the functions of internalised costs and market prices: it provides an insight into external impacts (transparency effect), it can trigger behavioural change (incentive), it can help in determining payments for mitigating or preventing a particular negative impact (reward, or distribution and redistribution of resources), and it can be used to achieve sustainable social balance (allocation). Where external impacts arise, the government can use policies as a market correction tool. This often requires a mix of policy incentives, as sustainability is a complex social issue. True Cost Accounting can supplement existing policy instruments as part of the search for new methods and applications that can be used in the policy domain. The development of True Cost Accounting is still ongoing and the first measurement results are now becoming available. These results can play a role in different policy phases: 1. In policy development, as an indicative representation of negative impacts and a comparison of those impacts, as a benchmark for higher targets, or as a guideline for sustainability gains and private and social costs and benefits; when choosing where to intervene. 2. In policy evaluation, as a way of understanding the impact of sustainability policy (effectiveness and efficiency). Potential policy instruments and policy costs are not inherent to True Cost Accounting, and the development of policy instruments should take place outside the true cost domain. However, True Cost Accounting can contribute to the development of financial instruments such as taxes. True Cost Accounting can be used as a guide to total social costs and pathways to sustainability. The calculation of true costs and the fact that at present some aspects of the science of True Cost Accounting haven’t yet been developed means that a strict interpretation of the results cannot be recommended. This currently has to do with: • the stage of development of the underlying methods and the availability of accurate data • a specific choice of a particular starting point, such as a particular functional unit and assumptions made when determining impacts and their monetary values • failure to express system dynamics, and different choices that society can make regarding the permissible negative impacts. Method and approach A literature review was conducted for this study, and interim results were tested within a focus group of policymakers employed at the Ministry of Agriculture, Nature and Food Quality. We used case studies to help assess the applicability of True Cost Accounting.
| Main Authors: | , |
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| Format: | External research report biblioteca |
| Language: | Dutch |
| Published: |
Wageningen Economic Research
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| Subjects: | Life Science, |
| Online Access: | https://research.wur.nl/en/publications/bijdrage-van-true-cost-accounting-aan-overheidsbeleid-om-te-verdu |
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| Summary: | This report focuses on the question: “How can True Cost Accounting contribute to effective public policy for sustainability?” True Cost Accounting is a way of calculating – at product level – the unpriced impacts of production and consumption (either here and now, or in the future, for other people and anywhere) and expressing those impacts as financial costs. In a sense it’s supplementary to the determination of those costs that do get internalised, and it can be a basis for setting a market price that accounts for both those internalised costs and other, externalised costs. True Cost Accounting still maintains the functions of internalised costs and market prices: it provides an insight into external impacts (transparency effect), it can trigger behavioural change (incentive), it can help in determining payments for mitigating or preventing a particular negative impact (reward, or distribution and redistribution of resources), and it can be used to achieve sustainable social balance (allocation). Where external impacts arise, the government can use policies as a market correction tool. This often requires a mix of policy incentives, as sustainability is a complex social issue. True Cost Accounting can supplement existing policy instruments as part of the search for new methods and applications that can be used in the policy domain. The development of True Cost Accounting is still ongoing and the first measurement results are now becoming available. These results can play a role in different policy phases: 1. In policy development, as an indicative representation of negative impacts and a comparison of those impacts, as a benchmark for higher targets, or as a guideline for sustainability gains and private and social costs and benefits; when choosing where to intervene. 2. In policy evaluation, as a way of understanding the impact of sustainability policy (effectiveness and efficiency). Potential policy instruments and policy costs are not inherent to True Cost Accounting, and the development of policy instruments should take place outside the true cost domain. However, True Cost Accounting can contribute to the development of financial instruments such as taxes. True Cost Accounting can be used as a guide to total social costs and pathways to sustainability. The calculation of true costs and the fact that at present some aspects of the science of True Cost Accounting haven’t yet been developed means that a strict interpretation of the results cannot be recommended. This currently has to do with: • the stage of development of the underlying methods and the availability of accurate data • a specific choice of a particular starting point, such as a particular functional unit and assumptions made when determining impacts and their monetary values • failure to express system dynamics, and different choices that society can make regarding the permissible negative impacts. Method and approach A literature review was conducted for this study, and interim results were tested within a focus group of policymakers employed at the Ministry of Agriculture, Nature and Food Quality. We used case studies to help assess the applicability of True Cost Accounting. |
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