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Economists have developed a number of techniques for costing environmental externalities and many calculations have been made, particularly in the areas of energy and transport (for example, European Commission, 1995; Oak Ridge and Resources for the Future, 1992-96). However, the figures generated tend to be controversial, for three reasons: • the calculations are based on data which at times is, by its nature, uncertain and subjective; • business managers may question whether it is appropriate to consider costs which by definition do not currently have to be met by the company; • others may question the implications of'putting a value on the environment'.

It has been defined by the UK Chartered Institute of Management Accountants as 'the classification and recording of monetary transactions; the presentation and interpretation of the results of those transactions in order to assess performance over a period and the financial position at a given date; and the monetary projection of future activities arising from alternative planned courses of action'. It is closely associated with, but distinct from, the financial management of business: this is the setting of financial objectives, planning and acquiring the optimum finance to meet them, and seeing that fixed and working capital are effectively managed.

The Ecomac studies confirmed their initial analysis that, on the MEC definition, environmental costs account for around 2% of the costs of an average Dutch company. e. the costs of purchasing and processing materials and energy which end up as waste. Several studies have found that these costs of inefficiency can outweigh other environmental costs, especially in Europe where the liability costs associated with accidents or contamination are less onerous than in the USA. The German textile producer Kunert, for example, has calculated that its costs of inefficiency amount to around 1d% of turnover.

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