nueu Si He-,
Environment il Protection
OUiceot Pollution PreM.nnon
in J Toxics
Wellington DC ZCMoO
EP \ "42 R >>n 00-1
Fehru.m IWf>
vvEPA Environmental Accounting
Project Update #4
February 1995 - February 1996
Project Vision:
The goal of the
Project is to
encourage and
businesses to
understand the
full spectrum of
costs and
integrate these
costs into
EPA initiated the Environmental Accounting Project in 1992 to
encourage businesses to incorporate environmental costs into managerial
accounting and capital budgeting practices. This document is the fourth in a
series of updates designed to inform the public of project activities and recent
Project History
To help build momentum for the project, EPA convened a senes of
meetings with experts from diverse fields related to environmental accounting.
The focus group established a vision and objective for the project. The focus
group planned*a national workshop attended by nearly 100 experts interested in
environmental accounting. Workshop participants developed an Action Agenda
that incorporates recommendations from the business community, accounting and
professional societies, the academic and research community, small businesses,
and government on what needs to be done by the various stakeholder groups to
increase the use of environmental accounting. The group identified these four
areas as critical areas for action:
•	Clarification of terms and concepts;
•	Development of management incentives;
•	Development of forums and materials for the purposes of
education, guidance, and outreach; and
•	Development of tools, methods, and systems for implementation.
The Action Agenda also lists what the stakeholders in environmental accounting
think the Federal government should do to encourage the use of environmental
accounting. This Project Update summarizes the Accounting Project's activities
undertaken in response to these recommendations. It also highlights
environmental accounting related activities being undertaken by other EPA
programs and government agencies. Previous-project updates, the Stakeholder's
Action Agenda, and other project documents, fact sheets, and reports discussed in
this Project Update are available through the Pollution Prevention Information
Clearinghouse (PPIC) at (202) 260-1023. Many of these documents are also
available via Internet (see page 3 for address information).

EPA Environmental \ccointinc, Project Activities
Environmental Liability Estimation Techniques
Estimating environmental liabilities remains a very difficult issue for businesses. As a step
towards helping companies assess and manage their existing and potential environmental
liabilities, EPA is conducting a study of approaches and tools for monetizing
environmental liabilities for use in internal business management decisions The final
report will identify and describe existing techniques, provide availability information, and
discuss advantages and disadvantages of each model.
A final report should be available in late Spnng 1996.
Susan McLaughlin, EPA, (202) 260-3844 or
World Resources Institute Study of Corporate Management Accounting Practices
Description. Through a series of case studies, the book Green Ledgers: Case Studies in Corporate
Environmental Accounting (partially funded by the EPA) examines how environmental
costs are accounted for within five major corporations (Amoco Oil Company, Ciba-Geigy,
Dow Chemical, DuPont, and S.C. Johnson) and four smaller companies. The report
proposes recommendations for better environmental accounting by business and offers
helpful implementation advice in its section entitled, "A Practical Guide to Getting
The final report is complete and bailable. To obtain this publication, send S 19.95 plus
S3.50 postage and handling to WRI Productions, P.O. Box 4852, Hampden Station,
Baltimore, MD, 21211, or order by phone (800) 822-0504.
Daryl Ditz, World Resources Institute, (202) 662-2507 or
Survey of Corporate Accounting Practices
Through a cooperative agreement with the EPA and in collaboration with the Institute of
Management Accountants, the Tellus Institute surveyed U.S. manufacturing firms to study
the manner and extent to which those firms consider environmental costs in their routine
capital budgeting processes, especially in the context of evaluating potential environmental
investments. The final report, entitled Environmental Cost Accounting for Capital
Budgeting: A Benchmark Survey of Management Accountants (EPA742-R-95-005), directs
environmental accounting stakeholders' attention to areas that require concentrated effort
and establishes a baseline for continued measurement of progress on the environmental
accounting issue.
Completed and available through the Pollution Prevention Information Clearinghouse,
(202) 260-1023, fax (202) 260-1078, or
Susan McLaughlin, EPA, (202) 260-3844 or
' New Activity Since Last Update (February 1995)
February 19%
Page 2

Internet Access
Dmnption The Environmental Accounting
Project now has a web site on
the Internet This site contains
general project information and
otlers access to many of our
documents -- some of which
may not be available in paper
EPA is committed to collecting-ard distributing
information on environmental accounting
resources. If you have information to share on
training opportunities, success stones, or other
resources please contact Holly Elwood at (202)
Status	The web site can now be
Contact.	The Environmental Accounting Project web site is located on the EnviroSenSe server. To
access EnviroSenSe, type At the main menu, select the EPA's New
Partnership Programs listing. From the sub-menu, select Environmental Accounting
Network Development and Mailings
Description: The Directory of EPA's Environmental Accounting Project 's Network for Managerial
Accounting and Capital Budgeting, (EPA/742-B-96-006), is a resource directory of
professionals interested in environmental accounting. The Network Directory supplies
contact information and areas of expertise for the individuals listed. Organized according
to sector (e.g., academic, industry, file.), the Network Directory may be used as a phone
directory, for networking,'or for identifying members in particular sectors, organizations,
or countries.
Status.	EPA routinely updates the Network Directory. To join the Network or correct or add
information to an existing listing, complete and return the "Membership Form foe U.S.
EPA's Environmental Accounting Project's Network for Managerial Accounting and
Capital Budgeting'. Both the Network Directory and membership form are available
through the Pollution Prevention Information Clearinghouse, (202) 260-1023, fax (202)
260-1078, or
Contact¦	Susan McLaughlin, EPA, (202) 260-3844 or
Environmental Accounting Resource Listing
Description: EPA has developed and regularly updates an Environmental Accounting Resource Lisnng
that identifies non-EPA publications or information sources on environmental accounting
Status.	The latest resource listing was completed in March 1995. An updated resource listing
should be available in the Spring of 19%. The resource listing is available through the
Pollution Prevention Information Clearinghouse, (202) 260-1023, fax (202) 260-1078, or
Contact:	To include additional materials in future listings please contact Holly Elwood, EPA, (202)
260-4362 or elwood.holly@epamail.epa gov
' New Activity Since bast Update (February 1995)	February 1996	Page 3

Education and Training
\n Introduction to Environmental Accounting as a Business Management Tool: Kev Concepts and Terms
Description This primer presents an overview of environmental accounting for those unfamiliar with
environmental accounting. It describes what environmental accounting is, why it is
important, outlines some application options, and presents key concepts, definitions, and
issues. The primer is being used by a number of companies to teach their employees
about environmental accounting, and is also being reprinted and distributed to members
by Great Britain's Chartered Association of Certified Accountants.
Status•	The primer is complete and available through the Pollution Prevention Information
Clearinghouse, (202) 260-1023, fax (202) 260-1078, or
Contact:	Holly Elwood, EPA, (202) 260-4362 or
Environmental Cost Accounting Training in the Regions
Description: EPA has a cooperative agreement with the Waste Reduction Institute for Training and
Applications Research (WRITAR) and the Northeast Waste Management Official's
Association (NEWMOA) to deliver environmental cost accounting training in the EPA
Regions. Pnor to the partnership, NEWMOA held training courses in Region 1 and 2.
As part of the new cooperative agreement, NEWMOA and WRITAR have held an
environmental cost accounting training session in Region 4 and a joint session in Region
8 and Region 9. A second session in Region 4 is planned for the Spnng of 1996.
Contact:	Mark Haveman, WRITAR, (612) 379-5995 or
Environmental Cost Accounting and the Metal Finishing Industry
Description. EPA and WRITAR are testing the application of environmental cost accounting
methodologies in the metal finishing industry. This study will yield a guidance document
on the development and application of environmental cost accounting methodologies and
cost values for key operations in metal finishing for use in pollution prevention project
reviews. This guidance document will be useful for both assistance providers and industry
facility managers.
Status.	The work will be completed in the Spnng of 1996.
Contact.	Mark Haveman, WRITAR, (612) 379-5995 or
Training for Small Business Development Center Staff
Description: EPA is supporting the Vermont Small Business Development Center (SBDC) in a multi-
media pollution prevention pilot project. Among other things, the pilot project will train
SBDC staff on the use of environmental cost accounting pnnciples and practices in capital
budgeting and project feasibility analysis. In addition, the project will develop a pollution
prevention module embodying environmental accounting techniques for incorporation into
the standard business plan, a key element in the loan application process.
Contact.	Ed Weiler, EPA, (202) 260-2996 or
" New Activity Since Last Update (February 1995)
February 19%
Page 4

International Untuning Conference
Description EPA the Institute ot Management Accountants (IMA), and the .American Institute of
Certified Public Accountants (AICPA) are assessing the demand for an international
conference on environmental accounting targeted towards management accountants, cost
engineers, and others
Contact	Tom Deacon, IMA. (800) 638-4427
University Curricula and Resources
Description. EPA is supporting the National
Pollution Prevention Center
(NPPC) for Higher Education at
the University of Michigan in
developing educational materials
for university instructors. The
Center has published a complete
compendium on pollution
prevention in accounting. This-
compendium provides an introduction to the role of pollution prevention in business
accounting, and includes resource lists with bibliographic information and annotations,
student assignments such as case studies and homework problems that may be used in
accounting and finance curricula, sample course syllabi, and some key contacts in the
academic community.
Status	The compendium is available for a small fee (to cover photocopying and postage). As
with other NPPC compendia, this compendium will continue to be revised and expanded
Contact:	NPPC, University of Michigan School of Natural Resources and Environment, 430 E.
University, Ann Arbor, MI 48109-1115, (313) 764-1412 or
EPA's Resource Listing (available through
PPIC) describes additional curricula materials.
If you are aware of relevant professional or
academic curricula, contact EPA's Holly
Elwood (202) 260-4362.
Methods for Environmental Accounting and Total• Cost Assessment
Case Studies on Innovative Environmental Accounting Practices
Description: EPA is developing case studies that exemplify how companies are addressing and/or
implementing environmental accounting. The firsj completed case study highlights
environmental accounting efforts in a large U.S. business (AT&T), and another will
describe environmental accounting practices at a privately-Owned public utility located in
Canada (Ontario Hydro).
Status:	The AT&T case study is completed and available through the Pollution Prevention
Information Clearinghouse, (202) 260-1023, fax (202) 260-1078, or
The Ontario Hydro case study will be available in the Spnng of 1996.
Contact:	Holly Elwood, EPA, (202) 260-4362 or
Pollution Prevention Case Studies and Savings from Pollution Prevention
Description: Finding case studies on pollution prevention in industry that include financial savings
from pollution prevention can sometimes be difficult. To help interested parties find this
information, EPA published two documents: A Summary of Pollution Prevention Case
New Activity Since Last Update (February 1995)
February 1996
Page 5

Studies win Economic Data ib\ SIC Codesi (EP\~42-S-94-001). which contains more
ihan 200 examples of case studies that include economic information, and a companion
document. Abstracts of Pollution Prevention Case Study Sources (EPA/742-B-94-001), which
is an annotated bibliography of sources of case studies.
Status	Completed and available through the Pollution Prevention Information Clearinghouse,
(202) 260-1023, fax (202) 260-1078, or ppic@epamail
Contact	Holly Elwood, EPA, (202) 260-4362 or elwood.holly@epamail.epa gov
Total Cost Assessment Software
Description: The Tellus Institute developed P2/FINANCE, a total cost assessment spreadsheet software
system designed to guide organizations in the data collection and analysis essential to a
more complete financial evaluation of pollution prevention and other environmental
projects. The software application is accompanied by a User's Manual with step by step
instructions on data entry. The Manual also includes a copy of the blank spreadsheet, a
list of potential costs, a glossary of financial terms, and a detailed factual case study
containing a project description, costing and financial analysis documentation, and
completed spreadsheets. Under EPA's current license agreement with Tellus, federal,
state, and local government employees can obtain P2IFINANCE £ree-of-charge from EPA.
Additionally, EPA is funding the development of an upgraded version of P2/FINANCE
that EPA will have license to distribute free-of-charge to all interested parties, both on
diskette and via the Internet.
Status:	Version 2.0 is completed and available for Excel (4.0 for Windows) or for Lotus 1-2-3
(3.4a for DOS). Government employees contact the Pollution Prevention Information
Clearinghouse, (202) 260-1023, five (202) 260-1078, or Others
please contact the Tellus Institute (see contact information below). Version 3.0 will be
available in Summer 19% and will be for Excel (5.0 for Windows) and for Lotus 1-2-3
(3.4a for DOS).
Contact: Angela Dierks or Deborah Savage, Tellus Institute (617) 266-5400, or
or For distribution information on Version 3.0, contact Susan
McLaughlin, EPA, (202) 260-3844 or
Total Cost Assessment Software Tailored to Specific Industries
Description: EPA worked with the Tellus Institute and the Screen Printing Association International to
develop a decision support tool to help screen printers perform financial assessments
using a total cost assessment framework. The tool is an upgrade of Tellus's P2IFJNANCE
software system described above, tailored to the needs of the screen printing industry.
The menu-driven software demonstrates to screen printers how lower risk pollution
prevention alternatives may save money. The National Institute of Standards and
Technology and the Tellus Institute are developing similar tools tailored to the
lithography and flexography sectors of the printing industry, the electromcs/winng board
industry, and the metal finishing industry.
Status:	P2/FINANCE for Screenprutters is complete and available. To order P2IFINANCE for
Screenpnnters contact the Screenpnnting and Graphic Imaging Association, 1001 S. Main
Street, Fairfax, VA 22031, (703) 385-1335. The software for the lithography and
flexography sectors of the pnnting industry, the electronics/pnnted wiring board industry,
and the metal finishing industry will be completed over the next two years.
' New Activity Since Last Update (February 1995)
February 19%
Page 6

F r -ai .ntorrrution on all voituare. u)ntau Skphanie Bergman EPA ij'Ii >'¦
1S21 or hergman itephanicMaepamail epa gov or Karen Shapiro. Tellus institute <6I7|
266-54<)(J. or kihapirofatellui com
Total Cost Assessment Worksheets for Drv Cleaners
Description EPA funded the Tellus Institute, in collaboration with the Center for Neighborhood
Technologies, to develop a pollution prevention/waste minimization manual for dry
cleaners This manual will provide dry cleaners with technical information on
opportunities ranging from better housekeeping practices, to equipment upgrades, to
actual process changes. As a part of this effort, Tellus is developing financial analysis
worksheets to assist dry cleaners in conducting project financial analyses using a TCA
framework. The worksheets will consist of user-friendly forms for easy recording of the
cost information relevant to a given project, and will contain comprehensive, detailed
cost/savings lists specific to dry cleaning and wet cleaning processes and equipment. Three
factual case studies will accompany the manual and the financial analysis worksheets.
These case studies will describe several project options undertaken by dry cleaners,
including information on equipment/process selection and the accompanying financial
analyses. The case studies will also discuss cost data availability and collection and
illustrate the use of the financial analysis worksheets.
Status.	The worksheets are under development and should be completed by the end of June,
Contact:	Richard Kinsman, EPA, (202) 260-6911, or Deborah
Savage, Tellus Institute, (617) 266-5400,
Resource Guide on Tools and Software that Accouqt for Environmental Costa
Description: EPA, in cooperation with AACE International, the Environment, Health, and Safety
Software Development Group, and the Institute of Management Accountants, has
completed a resource guide that informs practitioners on over 100 existing accounting and
costing methods and waste management and project management software systems that
are being used by the private and/or the public sector. The guide evaluates these tools
and software against a set of life-cycle costing (LCC) criteria, which can include all private
and societal costs associated with a product or process from raw materia! acquisition to
final disposal of waste. Each method profile offers a summary of the purpose of the tool,
assesses the tool against LCC criteria, and provides information on tool availability and
Status:	The resource guide is completed. Due to budget constraints, limited paper copies are
available from the Pollution Prevention Information Clearinghouse, (202) 260-1023, fax
(202) 260-1078, or The guide will also be available via Internet
this spnng.
Contact:	For additional information, contact Holly Elwood, EPA, (202) 260-4362 or To access the 300-page guide via the Internet, see
instructions on "Internet Access" in the Outreach section (page 3 of this document).
' New Activity Since Last Update (February 1995)
February 1996
Page 7

Other Federal Government Environmental Accounting Activities
This section describes other activities supported bv EPA and other federal government agencies
related to environmental accounting
Training Technical Assistance Providers and Screen Printers
Description EPA is supporting efforts to train pollution prevention technical assistance providers and
small to mid-sized manufacturers in environmental cost accounting. Two different
satellite training seminars geared to two different audiences took place in 1995. Both
seminars are available on videotape. The first satellite seminar targeted technical
assistance providers and provided a review of basic project profitability analysis and the
elements of total cost accounting (TCA). The goal of the seminar was to enable technical
assistance providers and National Institutes for Standards and Technology Manufacturing
Extension Partnership (MEP) Centers to better help their customers incorporate TCA
techniques into their businesses. (Both the states and the MEP centers provide technical
services to businesses and manufacturers on how to incorporate pollution prevention into
daily operations.) The second seminar targeted small to mid-sized manufacturers and
focused on the application of TCA concepts by manufacturers. It highlighted two firms
that have incorporated TCA concepts into their business decision-making: a screen
printing facility and a pnnted wiring board manufacturer.
Status:	Satellite seminars were held in July and December 199S and are available on videotape.
Copies of one or both videotapes are available from the Pollution Prevention Information
Clearinghouse, (202) 260-1023, fax (202) 260-1078, or
Contact:	Stephanie Bergman, (202) 260-1821 or
National Performance Review
Description: Environmental accounting in the federal government has been identified as an important
issue in the National Performance Review's assessment of ways to reinvent government.
A major recommendation of the report Creating a Government that Works Better and Costs
Less: Reinventing Environmental Management accompanying the National Performance
Review (September, 1993) is to "Improve Federal Decision making Through
Environmental Cost Accounting." The report calls for EPA and the Department of
Defense (DoD) to develop pilot projects, report on those projects, and make
recommendations for government-wide implementation.
Status:	Report completed and distributed to EPA and DoD.
Contact:	Copies of the report may be obtained from the U.S. Government Printing Office,
Superintendent of Documents. Mail Stop: SSOP, Washington, DC 20402-9328. For
additional information on the development of recommendations, contact Will Garvey at
(202) 564-2458 or
" New Activity Since Last Update (February 1995)
February 19%
Page 8

Implementing Kull-C.O'.i xccounting at DOE
DcsLnpuon In response to recommendations trom the National Performance Review. DOE plans to
implement rull-cost accounting at one of its nuclear lacilmes
Status	DOE is currently assessing full-cost accounting issues. Implementation at a test site is
targeted for the second quarter of 1996.
Contact	Pat Hoxie, GRAM Consultants, (202) 822-9556
EPA's Federal Facility Pollution Prevention Project Analysis: A Primer for Applying Life Cycle and Total
Cost Assessment Concepts
Description. Under Federal Executive Order No. 12856, Federal Compliance ui Right-to-Know Laws and
Pollution Prevention Requirements, all Federal facilities should apply life-cycle analysis and
total cost accounting principles to the greatest extent practicable, when evaluating
pollution prevention opportunities under the order. To help Federal facilities staff
implement the order, EPA's Federal Facilities Enforcement Office (FFEO) has, among
other things, developed a practical user's guide. The guide is designed to help facility
managers and environmental management staff become familiar with the application of
total cost assessment principles as they continue compliance with the Executive Order.
Specifically, it defines pollution prevention, life cycle analysis, life cycle costing, and total
cost assessment (TCA); identifies the advantages of TCA principles; and provides a how-
to approach to TCA, with emphasis on using TCA and LCA to justify pollution
prevention projects.
Status:	The primer is complete and available through the Pollution Prevention Information
Clearinghouse, (202) 260-1023, fa$ (202) 260-1078, or
Contact:	For additional information, contact Will Garvey at (202) 564-2458 or
EPA Waste Minimization National Plan
Description: An integral part of the RCRA Waste Minimization National Plan is to encourage
hazardous waste generators to examine potential cross-media transfer of pollutants as they
minimize the amount and toxicity of hazardous waste generated. Implicit in this holistic
approach is the incorporation of life-cycle cost analysis and total cost accounting. As part
of the National Plan, EPA has published Interim Final Guidance to Hazardous Waste
Generators on the Elements of a Waste Minimization Program (58 FR 31114, May 28, 1993)
to encourage hazardous waste generators to make multimedia pollution prevention
decisions based on total cost accounting. One of the objectives of the Plan is to provide
tools to stakeholders to assist them in identifying their source reduction and recycling
priorities. EPA has created a team of EPA and state staff that is working to assess
stakeholders' needs for risk-based prioritization tools and evaluate tools currently
available. The team is also exploring ways that this type of risk screening tool could be
integrated with existing business decision-making processes/tools.
Status.	EPA released the National Plan on November 16, 1994. EPA plans to complete its
assessment of stakeholder needs for prioritization tools and evaluation of available tools
in Spnng 19%.
" New Activity Since Last Update (February. 1995)
February 19%
Page 9

CiTac National Plan is available through the RCRASuperfund Docket at 1 •¦S(J0-424-tJ">4ft
For more intormation contact Donna Perla (703) 308-8402. Jim Lounsburv. EPA-OSW,
(703) 308-8463. or Mark Ralston, (703) 308-8595
EPA Full Cost Accounting for Municipal Solid Waste Management
Description Full Cost Accounting for Municipal Solid Waste Management: A Handbook (EPA530-R-95-
041) describes the key concepts and benefits of full cost accounting for this audience. The
handbook discusses the use of full cost accounting as a planning tool that can help
communities assess the actual costs of solid waste management. The handbook can help
communities become famiJiar with full cost accounting and learn how other communities
have used it. It also explains many of the financial terms used in full cost accounting and
the specific costs that are considered. While the handbook is not a step-by-step "how-to"
document, it does describe the steps involved with implementing full cost accounting for
solid waste management. It is a comprehensive overview and a valuable resource for local
Status:	Completed and available through the RCRA Hotline, (800) 424-9346.
Contact:	Angle Leith, EPA Office of Solid Waste, (703) 308-7253.
The documents, fact sheets, and reports discussed throughout this project update can be obtained from
the Pollution Prevention Information Clearinghouse (PPIC), unless otherwise noted.
U.S. EPA Headquarters Library (3404)
401 M Street*SW
Washington, DC 20460
Phone (202) 269-1023
Fax: (202) 260-0178
" New Activity Since Last Update (February 1995)
February 1996
Page 10