Accounting for Environmental Activity: Measuring Public Environmental Expenditures and the Environmental Goods and Services Sector in the US

How much of the economy is focused on protecting, rehabilitating, or managing the environment? To answer this question, we develop a proof-of-concept environmental activity account to quantify the environmental goods and services sector (EGSS) in the United States. Methodologically, we employ a satellite account approach similar to the method used by the US Bureau of Economic Analysis (BEA) to quantify other sectors of the economy (e.g., Outdoor Recreation Account, Marine Economy Account) while following the accounting principles and methods outlined in the SEEA Central Framework (SEEA-CF). This approach draws on detailed internal supply-use data, drawn primarily from Census’s Industry and Product data along with other supplemental sources. Overall, we estimate gross output of the EGSS was $725 billion in 2019, or about 1.9% of the total gross output of the US economy. Government expenditures (across all levels) comprise a substantial portion of the EGSS in the US, as the public sector accounted for about 27% of total EGSS output ($197 billion) in 2019. Although these estimates are still preliminary and are not official statistics, the goals of this research are to provide new insights into classification and measurement challenges in producing environmental activity accounts more generally, while also documenting data gaps and accounting issues in the US context more specifically.