Towards Distributional Ecosystem Accounts

Natural capital is an important source of wealth and income, but these assets and corresponding benefits of ecosystem services are not necessarily equally distributed within countries. This paper develops a framework to systematically record the distribution of ecosystem service benefits and nature dependencies in the population by integrating the UN system for ecosystem accounting with distributional national accounts, creating distributional ecosystem accounts. I apply the framework to forest ecosystem assets in Finland, combining high-resolution geospatial forest data and micro level income data from administrative registries, linking all privately and publicly owned forests to individuals. To demonstrate how ecosystems contribute to incomes and inequality, four forest-based ecosystem services – timber provisioning, global climate regulation, habitat maintenance, and outdoor recreation – are quantified and the beneficiaries are identified in the income distribution. I then consider the distributional impacts of natural capital depreciation by allocating the social costs of forest harvests to individual households. When applying policy instruments to incentivise socially optimal levels of ecosystem services, taxing degradation tends to come with the additional advantage of progressive incidence. Conversely, subsidising providers of ecosystem services tends to disproportionally favour high-income households.