Accounting Natural Capital in MENA Shifts Policies Towards Sustainable Growth

Nature provides valuable, practical and measurable functions. Most of human economic activity is underpinned by natural resources. Unfortunately, massive growth and technological progress has led to the degradation of natural systems. Environmental threats and climate change are forcing countries to take a hard look on what limited natural capital that’s left and employ sustainable approaches and policies to ensure natural assets are preserved for generations to come.

“Natural capital accounting” offers a way to take stock of a country’s natural assets with the purpose of placing value and measuring the condition of the environment, its contribution to the economy, as well as the impact of the economy on the environment -- providing a comprehensive picture of development progress than standard measures such as GDP. Natural capital accounts are also integrated with systems of national accounts employing consistent concepts, definitions, and classifications, thereby, facilitating policy and decision-making based on both environmental and economic analyses.

The World Bank through the WAVES (Wealth Accounting and the Valuation of Ecosystem Services) Partnership works with countries in providing technical advice and building capacity to institutionalize natural capital accounts for policy and investment decision making. In the Middle East and North Africa region, Morocco and Egypt are the first two countries to receive funding and support to develop environmental-economic accounts, opening the door for more effective policy design.

Morocco embraces natural capital accounting in fisheries

Morocco is considered one of the largest marine fish producers in Africa. The fisheries sector employs some 700,000 direct and indirect jobs but demographic pressures coupled with rising international demand place extreme burden on fish stocks, raising an urgent need to implement strategies that will help the country transition into a Blue Economy, one that builds coastal resilience and climate adaptation through sustainable economic growth while preserving marine and coastal ecosystems.

Morocco has taken an important first step in this endeavor by developing accounts that cover the supply and use of fisheries, both in primary and processed form. The fisheries accounts show the state of catch and harvest volume by species, processed fish and fish product volume and value, as well as household consumption of fish products, providing important insights into the average Moroccan’s diet and the national food and nutritional security. The accounts also include the summary of imports and exports of these products.

Results from fisheries accounts, for instance, indicate that most of the fresh fish supply in in the country originates from domestic capture fisheries. About two-thirds of the fresh fish supply is destined for processing and 89 percent of all processed fish is exported. Between 2010 and 2018, more than 5,500 new jobs were created in the fishing and aquaculture sectors, giving a total workforce of more than 115,000 workers in 2018. In the fish processing industry, the total workforce increased from 66,780 in 2010 to 97,365 in 2018. Information from these accounts help facilitate policymaking and investments, harnessing the full potential of Morocco’s Blue Economy. 

At a recent natural capital accounting workshop held in January, participants from Morocco’s Ministry of Finance expressed the importance of having a system of environmental and economic accounting particularly in the diagnostic phase of project development and in improving assessments and recommendations to ministers. A new phase of the work, through the Global Program for Sustainability (GPS) is doing exactly that – where a fisheries stock account will be developed and contribute to interventions in the new “Halieutis Plan 2030” – the country’s main strategy for the fisheries sector. There is also significant interest to continue developing the accounts for other sectors.

Egypt employs natural capital accounting to address waste treatment

Egypt produces over 90 million tons of solid waste and 22 million tons as municipal solid waste. An estimated 55.2 percent of household solid waste is collected by private companies, while 44.8 percent of households dispose of their waste by dumping or burning it in open areas. Solid waste burning is currently responsible for up to one-third of fine particulate matter air pollution in Greater Cairo – a pollutant with direct linkages to respiratory illness and premature mortality.

Egypt joined the WAVES Partnership in 2019 to adopt a System of Environmental-Economic Accounts and develop waste “residual” accounts to tackle systematic issues in waste management through improved private sector contracting, as well as proposing a new waste regulatory authority clearinghouse to address the market’s fragmentation. Pilot waste accounts were developed for the Governorates of Port Said and the Red Sea – selected based on their information of different waste streams for comparative and demonstration purposes.

Waste accounts show masonry waste as the top contributor to total waste volume in Red Sea Governorate, whereas mixed waste (residential/commercial, agriculture and animal wastes) are largest in the same areas in the Governorate of Port Said.  Port Said also exports up to 20 percent of waste created from agricultural production to other governorates for use as animal fodder and fertilizer. Metals, plastics, paper and cardboard and glass account for approximately 9-12 percent of total waste flows in both governorates (representing about 40,000 tonnes annually).

This information is instrumental in designing sorting and recycling facilities where a constant waste stock is needed to justify the economics of these facilities. The amount of waste in aggregate or the quantities of specific waste materials are also important indicators of environmental pressure and can help authorities set service fees, negotiate waste contracts with waste collection operators, and understand the contribution of the waste sector to the economy.

Waste accounts also feed into management information systems being built as part of a World Bank project that addresses air pollution and climate change in Greater Cairo.

Natural capital accounting serves as a fundamental step, using data to guide policymaking. It ensures a sustainable approach that links economic outcomes with environmental outputs. In the Middle East and North Africa region, Morocco and Egypt are paving the way on this front.