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Valuing external costs - from theory to practice: implications for full cost environmental accounting

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  • Nicolas Antheaume

Abstract

This article presents an experiment in full cost accounting applied to the case of an industrial process. It aims at exploring the difficulties of putting full cost accounting into practice. Its specific contribution to the growing body of experiments in full cost accounting is that it attempts to compare exactly what impacts can be translated into financial information with the impacts that are being left out. Amongst other things, we provide a quantitative figure of what is monetized in the experiment, expressed as a percentage of what should be monetized if all negative external effects were to be taken into account. The experiment uses three different external cost evaluation methods. The most comprehensive method monetizes less than 10% of the flows of the industrial process studied. According to the method used and the assumptions made, external costs vary by a factor of more than 1 to 12,000 per unit of product. The paper then discusses what can be learnt by comparing the range of results obtained with each method and suggests directions for future research.

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  • Nicolas Antheaume, 2004. "Valuing external costs - from theory to practice: implications for full cost environmental accounting," European Accounting Review, Taylor & Francis Journals, vol. 13(3), pages 443-464.
    • Handle: RePEc:taf:euract:v:13:y:2004:i:3:p:443-464
    DOI: 10.1080/0963818042000216802
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    Cited by:

    1. Ciprian Ionescu & Hélène Leriche & Michel Trommetter, 2016. "Biodiversity and economy: new management and accounting approaches, tools and practices," Working Papers hal-01340449, HAL.
    2. Nicolas Antheaume, 2012. "Essai Sur La Specificite Du Controle De Gestion Environnemental," Post-Print hal-00691066, HAL.
    3. McHenry, Mark, 2009. "Policy options when giving negative externalities market value: Clean energy policymaking and restructuring the Western Australian energy sector," Energy Policy, Elsevier, vol. 37(4), pages 1423-1431, April.
    4. Henri, Jean-François & Journeault, Marc, 2010. "Eco-control: The influence of management control systems on environmental and economic performance," Accounting, Organizations and Society, Elsevier, vol. 35(1), pages 63-80, January.
    5. Nicolas Antheaume, 2014. "Quelle Place Pour L'Environnement Dans Le Controle De Gestion ? De L'Eco-Efficacite A L'Exploration De Nouvelles Frontieres," Post-Print hal-01899742, HAL.
    6. Ciprian Ionescu & Hélène Leriche & Michel Trommetter, 2016. "Biodiversité et Économie : nouvelles approches, outils et démarches de gestion et de comptabilité," Working Papers hal-01340214, HAL.
    7. Xing, Yangang & Horner, R. Malcolm W. & El-Haram, Mohamed A. & Bebbington, Jan, 2009. "A framework model for assessing sustainability impacts of urban development," Accounting forum, Elsevier, vol. 33(3), pages 209-224.
    8. Agnieszka Kozera & Aldona Standar & Natalia Genstwa, 2023. "Are Most Polluted Regions Most Active in Energy Transition Processes? A Case Study of Polish Regions Acquiring EU Funds for Local Investments in Renewable Energy Sources," Energies, MDPI, vol. 16(22), pages 1-27, November.
    9. Jones, Michael John, 2010. "Accounting for the environment: Towards a theoretical perspective for environmental accounting and reporting," Accounting forum, Elsevier, vol. 34(2), pages 123-138.
    10. Dianne McGrath, 2011. "Accounting for the Environment: Towards a Theoretical Perspective for Environmental Accounting and Reporting," Social and Environmental Accountability Journal, Taylor & Francis Journals, vol. 31(2), pages 169-170, September.
    11. Ciprian Ionescu & Hélène Leriche & Michel Trommetter, 2016. "Biodiversity and economy: new management and accounting approaches, tools and practices," Post-Print hal-01340449, HAL.
    12. Giuseppe T. Cirella & Anatoliy G. Goncharuk & Corrado lo Storto & Alessio Russo, 2020. "Exploring Social Sustainability and Economic Practices: Multi-Journal Compendium," Sustainability, MDPI, vol. 12(5), pages 1-7, February.
    13. María Luisa Pajuelo Moreno, 2013. "Assessment of the Impact of Business Activity in Sustainability Terms. Empirical Confirmation of Its Determination in Spanish Companies," Sustainability, MDPI, vol. 5(6), pages 1-32, May.
    14. Teresa Eugénio & Isabel Costa Lourenço & Ana Isabel Morais, 2010. "Recent developments in social and environmental accounting research," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 6(2), pages 286-305, June.
    15. Jeffrey Unerman & Jan Bebbington & Brendan O’dwyer, 2018. "Corporate reporting and accounting for externalities," Accounting and Business Research, Taylor & Francis Journals, vol. 48(5), pages 497-522, July.
    16. Bebbington, Jan & Larrinaga, Carlos, 2014. "Accounting and sustainable development: An exploration," Accounting, Organizations and Society, Elsevier, vol. 39(6), pages 395-413.
    17. Ciprian Ionescu & Hélène Leriche & Michel Trommetter, 2016. "Biodiversité et Économie : nouvelles approches, outils et démarches de gestion et de comptabilité," Post-Print hal-01340214, HAL.
    18. Ciprian Ionescu & Hélène Leriche & Michel Trommetter, 2016. "Biodiversité et Économie : nouvelles approches, outils et démarches de gestion et de comptabilité," Post-Print hal-02794826, HAL.
    19. Ciprian Ionescu & Hélène Leriche & Michel Trommetter, 2016. "Biodiversity and economy: new management and accounting approaches, tools and practices," Post-Print hal-02799247, HAL.
    20. Martin K. Patel & Jean-Sébastien Broc & Haein Cho & Daniel Cabrera & Armin Eberle & Alessandro Federici & Alisa Freyre & Cédric Jeanneret & Kapil Narula & Vlasios Oikonomou & Selin Yilmaz, 2021. "Why We Continue to Need Energy Efficiency Programmes—A Critical Review Based on Experiences in Switzerland and Elsewhere," Energies, MDPI, vol. 14(6), pages 1-28, March.
    21. Bebbington, Jan & Brown, Judy & Frame, Bob, 2007. "Accounting technologies and sustainability assessment models," Ecological Economics, Elsevier, vol. 61(2-3), pages 224-236, March.
    22. Marie-Andrée Caron & Hugues Boisvert & Alexander Mersereau, 2007. "La Comptabilité De Management Environnementale Ou L'Écocontrôle : Utilité Des Outils De Contrôle De Gestion," Post-Print halshs-00543104, HAL.
    23. Debnath, Somnath & Bose, S.K., 2014. "Exploring full cost accounting approach to evaluate cost of MSW services in India," Resources, Conservation & Recycling, Elsevier, vol. 83(C), pages 87-95.
    24. Noor-E-Sabiha & Sanzidur Rahman, 2018. "Environment-Smart Agriculture and Mapping of Interactions among Environmental Factors at the Farm Level: A Directed Graph Approach," Sustainability, MDPI, vol. 10(5), pages 1-17, May.

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