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Environmental protection (EP) includes all purposeful activities directly aimed at the prevention, reduction and elimination of pollution or any other degradation of the environment resulting from production or consumption processes. The scope of Environmental Protection is defined according to the Classification of Environmental Protection Activities (CEPA), which distinguishes nine different environmental domains. Activities such as energy and material saving are only included to the extent that they mainly aim at environmental protection. An important example is recycling which is included only to the extent that it constitutes a substitute for waste management.
Excluded are: (i) activities that, while beneficial to the environment, primarily satisfy technical needs or health and safety requirements for the protection of the workplace. (ii) expenditure linked to mobilisation of natural resources (e.g., water supply). (iii) calculated cost items such as depreciation (consumption of fixed capital) or the cost of capital as this questionnaire only records actual outlays. (iv) payments of interest, fines and penalties for non-compliance with environmental regulations or compensations to third parties etc., as they are not directly linked with an environmental protection activity.
Environmental Protection Expenditure can be evaluated both according to the abater principle and the financing principle. This distinction makes it possible to aggregate different sectors and industries without double counting.
Expenditure according to the abater principle (EXP I), includes all expenditure that the sector has for measures they themselves execute. Any economic benefits directly linked with the environmental protection activities (Receipts from by-products) are deducted in order to calculate the net amount of money spent by the sector for their own activities.
The financing principle (EXP II) measures how much money a particular sector (directly) contributes to overall environmental protection activities, wherever they are executed. This means that the part of EXP I that was directly financed by others (through subsidies or revenues received) should be deducted, while the part of EXP I in other sectors that this sector finances directly (through subsidies or fees paid) should be added.
The framework is based on double entry bookkeeping, where each activity and expenditure item has an abater (producer) and a financing side. This means that much expenditure by specialised producers is financed by the users of their services, mainly business sector and households. This will be recorded as Revenues for the Specialised producers (Table 4), and fees/purchases in Business and Households (Tables 2 and 3).
Specialised producers include the production of environmental protection services by public and private corporations or quasi-corporations for the use of other units, mainly financed by the users of these services. These are mainly activities within ISIC Rev. 4/NACE Rev. 2 division and classes 37, 38.1, 38.2 and 39 such as: 37 Sewerage, 38.1 Waste collection, 38.2 Waste treatment and disposal, 39 Remediation activities and other waste management services. This sector is the sum of two components:
a) Public specialised producers: All corporations and quasi-corporations that are subject to control by government units. Control is defined as the ability to determine general corporate policy by choosing appropriate directors, if necessary (Table 4A).
b) Private specialised producers: All corporations and quasi-corporations that are not subject to control by government units (Table 4B).
Specialised producers could also include for example the activities of e.g. volunteer environmental organisations or secondary environmental activities. These should be entered along with a footnote describing the coverage.
CEPA domains: a column "pollution abatement and control" (PAC) has been kept in the questionnaire to ensure continuity with earlier data series.