Growth in both population and the intensity of economic activity, in the face of limited capacity of the environment to assimilate wastes and supply resources necessary to the production process and its essential life-support services, raises concern about sustainable development.
Papua New Guinea has suffered from some serious environmental problems since the start of its economic development. Some of the most pressing issues include unsustainable logging operations, dumping of tailings into rivers by mining companies, dynamite fishing and so on. One way of addressing the issues related to environmental management is the establishment of an environmental accounting system. This study discusses a methodology for the development of environmental accounting in PNG, which is based on the United Nations 1993 System of National Accounts (SNA) and the System of Environinental and Economic Accounting (SEEA) framework.
Various approaches and methodologies for environmental accounting are reviewed in this paper. None of them is perfect, but all represent a step in the right direction. PNG may fall in the category, where population density and growth rate are low, large land area and a high level of dependence on natural capital, combined with some serious environmental problems, reinforce the need for sound management and monitoring of environmental impacts. Environmental accounting may provide the answer to such problems and is also a matter of national interest.
The study makes an empirical contribution to the debate about an environmental accounting framework for PNG by calculating user cost and net price estimates for the OK Tedi gold mine for the period 1984 to 1997. These estimates are then used to compute sustainable income for the gold mine. The results show wide variation in the estimates. A comparison of the two methods is made and the net price is judged to be more appropriate to the PNG situation. The thesis advocates natural resource database as the first step in establishing Environmental Accounting in PNG.