Accounting theory and compilation practice of natural resource balance sheet incorporating environmental capacity resources: Taking the water balance sheet of Shanxi Province as an example

Abstract

[Objective] To address the shortcomings of existing accounting that only focuses on traditional natural resources, and to further enrich and develop China’s unique natural resource balance sheet accounting theory, this study explored the compilation of a natural resource balance sheet that incorporates environmental capacity resources. [Methods] This study closely integrates China’s pollutant emission control practices to analyze the theory of natural resource balance sheet accounting by incorporating environmental capacity resources. Considering that water can serve as both a resource carrier and an environmental capacity carrier, this study took water in Shanxi Province as an example to compile a balance sheet for water resources in the province from 2018 to 2020. [Results] (1) China’s practice of pollutant emission control provides practical feasibility for incorporating environmental capacity resources into accounting. (2) After incorporating environmental capacity resources into the natural resource balance sheet, natural resource asset accounting is comprised of two major categories: traditional natural resource assets and environmental capacity resource assets. Natural resource liability accounting encompasses two categories: resource overuse liabilities and ecological damage liabilities. Environmental damage liabilities are classified as environmental capacity resource overuse liabilities. （3） From 2018 to 2020, Shanxi Province used an accumulated excess of water environmental capacity resources assets of 4.225 billion yuan, with a closing (cumulative) value of the water asset liability balance of 7.973 billion yuan. During the study period, Shanxi Province utilized water environmental capacity resources assets totaling 54.750 billion yuan, accounting for 53% of the water asset value used during the same period. [Conclusion] It is possible to compile a natural resource balance sheet that includes environmental capacity resources. The accounting theory of natural resource balance sheets should be closely linked to China’s natural resource management practices. Integrating with the total natural resource use control system represents a feasible breakthrough for the accounting theory of natural resource balance sheets.

Keywords

• environmental capacity resources|natural resources|balance sheet|water resource assets|shanxi province