ABSTRACT
In April 2005 The Economist devoted its leading article (and its cover) to the idea that market forces could be the environment’s ‘best friend’. The cover pictured what is most probably a rainforest seen from the sky with a tropical river meandering in the middle. Somewhere on the right-hand side of the picture, part of the river was represented as a giant dollar sign. In particular, the article reported that advances in environmental science are contributing to more accurate valuations of previously taken-for-granted-services such as water filtration and flood prevention. It suggested that if these new values were fed into market mechanisms and included in the cost-benefit analysis of organizations a lot of environmental problems would be addressed through the use of better prices for environmental resources. This chapter explores two questions: (1) should the suggestions contained in this article be a source of inspiration for accountants? And (2) can environmental accounting benefit from advances in environmental science and economics to incorporate better-informed costs and benefits?
