Coastal Infrastructure Accounting

1. Outcome

This Circular provides technical guidance for accounting for coastal infrastructure assets within the ocean accounting framework. It establishes methods for recording and valuing physical structures that protect, modify, or interact with coastal and marine environments, including both traditional engineered ("grey") infrastructure and nature-based ("green" or "blue") solutions. Grey infrastructure refers to conventional engineered structures such as seawalls, breakwaters, and port facilities. Green infrastructure refers to terrestrial nature-based solutions such as dune restoration and riparian planting. Blue infrastructure refers to marine and coastal nature-based solutions such as mangrove forests, coral reefs, and living shorelines. Some literature uses "blue-green" interchangeably to describe nature-based approaches; this Circular distinguishes the two where the distinction matters for accounting treatment.

Upon completing this guidance, practitioners will be able to:

• Classify coastal infrastructure assets according to their function and characteristics, applying the asset classification framework from TG-3.1 Asset Accounts^[1]
• Apply appropriate valuation methods to produced coastal assets including capital stock measurement and depreciation, drawing on valuation principles from TG-1.9 Valuation^[2]
• Account for nature-based solutions as ecosystem enhancement investments, linking to ecosystem accounting approaches in TG-2.9 Disaster Risk
• Integrate hybrid infrastructure systems that combine engineered and natural components
• Link infrastructure accounting to climate adaptation investment tracking, supporting indicators documented in TG-2.8 Climate Indicators
• Compile coastal infrastructure asset accounts from construction records, asset registers, and spatial data sources

Coastal infrastructure encompasses a diverse range of assets from major port facilities and seawalls to living shorelines and restored mangrove forests. The System of National Accounts (SNA) classifies many of these as "other structures" under produced non-financial assets, including "the construction of sea walls, dykes, flood barriers etc. intended to improve the quality and quantity of land adjacent to them."^[3] This Circular extends that framework to comprehensively address the full spectrum of coastal protection and marine infrastructure within an integrated ocean accounting approach.

The accounting treatment must recognize the fundamental distinction between produced assets created through human activity and natural capital assets that provide similar services. A concrete seawall represents produced capital subject to depreciation, while a mangrove forest providing equivalent coastal protection constitutes an ecosystem asset valued through the net present value of expected ecosystem service flows^[4]. Hybrid infrastructure combining both elements requires careful attribution of values to each component.

1.1 Decision Use Cases

Coastal infrastructure accounts support three critical categories of policy decisions:

Coastal resilience investment allocation: Finance and planning ministries use asset accounts to evaluate competing coastal protection options. When comparing a proposed seawall investment (USD 8 million capital cost, 50-year life) against mangrove restoration (USD 1.2 million establishment cost, 30-year accretion to full protection capacity), asset accounts provide the analytical framework. The seawall appears as gross fixed capital formation in year one with annual depreciation of USD 160,000 (straight-line basis), while mangrove restoration appears as environmental protection expenditure with ecosystem asset enhancement recorded over the accretion period. The accounts enable calculation of annualized equivalent costs accounting for different service lives and maintenance requirements, supporting rational allocation of limited public funds.

Climate adaptation planning and monitoring: The 2025 SNA now treats climate change as "a major risk affecting current and future wellbeing"^[5], requiring systematic measurement of adaptation responses. Coastal infrastructure accounts quantify adaptation investment flows (seawall raising, drainage improvement, mangrove restoration) and track the resulting changes in asset stocks. Where adaptation retrofits extend the useful life of existing infrastructure under changed climate conditions, the accounts distinguish between consumption of fixed capital under original design assumptions and revised depreciation schedules reflecting enhanced capacity. This information feeds directly into the national climate adaptation monitoring frameworks described in TG-2.8 Climate Indicators, enabling countries to track progress toward SDG target 13.1 (strengthen resilience to climate-related hazards) and report adaptation finance flows to UNFCCC processes.

Infrastructure maintenance scheduling and budget prioritization: Port authorities, coastal zone management agencies, and public works departments use asset registers and condition assessments from infrastructure accounts to prioritize maintenance investments. When competing claims arise for limited maintenance budgets--repair of aging breakwater structures, dredging of navigation channels, rehabilitation of degraded mangrove buffers--asset condition data inform the trade-offs. A breakwater showing accelerated degradation relative to its expected service life may warrant emergency intervention, recorded as gross fixed capital formation where the intervention materially extends asset life. Routine maintenance appears as intermediate consumption in the production accounts of port operations. The accounts ensure transparent classification of these flows, supporting both operational efficiency and fiscal reporting.

1.2 Upward Connections

Coastal infrastructure accounts provide the evidence base for several policy and indicator circulars:

TG-1.1 National Ocean Budgets: Asset accounts demonstrate the scale of public capital formation in coastal infrastructure, informing medium-term expenditure frameworks and capital budget allocations. When infrastructure assets show accelerated depreciation or catastrophic losses from storm events, the accounts signal the fiscal costs of deferred maintenance or inadequate climate adaptation. The depletion-adjusted income measures now central to the 2025 SNA depend on accurate measurement of consumption of fixed capital for infrastructure assets--a direct output of the accounts compiled under this Circular.

TG-2.9 Disaster Risk: Coastal infrastructure provides the first line of defense against coastal hazards. Infrastructure extent and condition accounts compiled here feed directly into the exposure and vulnerability assessments in TG-2.9. The monetary value of seawalls, breakwaters, and engineered drainage systems represents exposed produced capital in hazard zones; simultaneous degradation of protective infrastructure and coastal ecosystems compounds disaster risk. The integration point is the combined presentation of produced infrastructure assets and ecosystem assets providing equivalent protection services, enabling calculation of total protective capacity and identification of protection gaps.

TG-3.1 Asset Accounts: This Circular applies the general asset accounting framework from TG-3.1 to the specific case of coastal infrastructure, demonstrating how to populate physical and monetary asset accounts for structures classified under AN1122 (Other structures) in the SNA asset classification. The worked examples in Section 3.7 illustrate the full compilation chain from source data (construction permits, port authority financial statements, remote sensing of land reclamation) through to balanced asset accounts with opening stocks, capital formation, depreciation, and closing stocks.

2. Requirements

This Circular requires familiarity with:

• TG-0.1 General Introduction to Ocean Accounts -- provides foundational concepts of ocean accounting including spatial boundaries, institutional arrangements, and integration with national accounts. This Circular assumes familiarity with ocean accounting boundaries including territorial seas and exclusive economic zones as defined in UNCLOS^[6].

• TG-3.1 Asset Accounts -- for core principles of asset classification, balance sheet construction, and the distinction between produced and non-produced assets in environmental-economic accounting^[7].

Related circulars for reference:

• TG-6.2 Mangrove and Wetland Accounts -- detailed guidance on mangrove extent, condition, and service accounting relevant to Section 3.3.2 of this Circular. Given the significant mangrove content in this Circular, practitioners are strongly encouraged to consult TG-6.2 as a co-requisite.

• TG-1.9 Valuation -- valuation methods for ecosystem services and assets, including discount rate selection and the net present value approach used in Section 3.2 of this Circular.

• TG-2.9 Disaster Risk -- ecosystem extent, condition, and service accounting that complements the produced asset accounting in this Circular.

• TG-2.8 Climate Indicators -- climate-related indicators relevant to the adaptation investment tracking in Section 3.5.

2.1 Data Requirements

Coastal infrastructure accounting requires access to:

Physical infrastructure data:

• Asset registers for ports, harbours, and marine terminals
• Coastal protection structure inventories (seawalls, breakwaters, groynes, revetments)
• Reclaimed land area and construction records
• Dredging and channel maintenance records^[8]

Ecosystem asset data:

• Mangrove extent and condition assessments (see TG-6.2 Mangrove and Wetland Accounts)
• Coral reef coverage and health indicators
• Seagrass meadow extent
• Salt marsh and coastal wetland boundaries^[9]

Remote sensing platforms provide essential data for consistent time-series monitoring of ecosystem extent. Landsat (30 m resolution, records from 1972) and Sentinel-2 (10 m resolution, from 2015) offer freely available multispectral imagery suitable for detecting changes in mangrove, seagrass, and salt marsh coverage. The Global Mangrove Watch initiative demonstrates how satellite-derived extent data can be integrated into accounting frameworks^[10].

Financial data:

• Capital expenditure on coastal construction
• Maintenance and rehabilitation costs
• Insurance valuations and damage assessments
• Market transactions for coastal land and facilities^[11]

2.2 Classification Frameworks

This guidance aligns with:

• SEEA Central Framework asset classification (AN1122 Other structures)^[12]
• Central Product Classification (CPC) for construction services including harbour facilities and coastal works^[13]
• Classification of the Functions of Government (COFOG) for coastal protection expenditure^[14]
• IUCN Global Ecosystem Typology for coastal ecosystem types^[15]

3. Guidance Material

3.1 Coastal Infrastructure Types

3.1.1 Port and Harbour Infrastructure

Ports and harbours represent major produced assets within the coastal zone, comprising multiple infrastructure elements that facilitate maritime transport and commerce.

The 2025 SNA classifies harbour facilities under "other structures" (AN1122), including:

"harbour bottoms and harbour channels, breakwaters, quays, piers, jetties, docks, wharves and similar structures"^[16]

Key infrastructure categories include:

Structural facilities:

• Quay walls and wharves
• Piers and jetties
• Breakwaters and wave barriers
• Dry docks and slipways
• Cargo handling facilities^[17]

Navigation infrastructure:

• Dredged channels and basins
• Navigation aids (lighthouses, buoys, beacons)
• Vessel traffic management systems

Supporting facilities:

• Storage and warehousing
• Road and rail connections
• Utilities and services^[18]

Port infrastructure valuation should apply the perpetual inventory method (PIM) using acquisition costs, service lives, and appropriate depreciation profiles. The SEEA Central Framework notes that "consumption of fixed capital (commonly known as depreciation) should be deducted from income and recognized as a cost of production."^[19]

To illustrate the PIM approach, consider a concrete quay wall constructed in 2010 at a cost of US$50 million with an assumed service life of 60 years and geometric depreciation at a rate of 3.3 per cent per year. By 2025, the gross capital stock in current prices would be obtained by revaluing the original investment using a construction cost index, while the net capital stock would reflect accumulated depreciation of approximately 40 per cent, yielding a net value of roughly US$30 million in constant 2010 prices. Where multiple port assets of different vintages and types coexist, the PIM aggregates each investment cohort separately and sums the net values to produce total port capital stock^[20].

3.1.2 Coastal Protection Structures

Coastal protection infrastructure comprises engineered structures designed to defend shorelines from erosion, flooding, and storm damage. These structures modify natural coastal processes to protect landward areas and assets.

Seawalls and Revetments

Seawalls are vertical or near-vertical structures that provide a hard barrier between land and sea. Revetments are sloped structures that armour the shoreline, typically using rock, concrete blocks, or similar materials^[21]. Both types are classified as produced assets under AN1122 and should be recorded at construction cost less accumulated depreciation.

Typical service lives range from 25 to 75 years depending on materials, design, and environmental exposure. Asset condition should be monitored through regular inspection programmes, with major rehabilitation recorded as gross fixed capital formation extending the asset's useful life^[22].

Breakwaters and Groynes

Breakwaters are offshore or nearshore structures that reduce wave energy reaching protected areas. Groynes extend perpendicular to the shoreline to trap sediment and control longshore drift. These structures may protect harbour entrances, beaches, or coastal settlements^[23].

CPC classification 53262 covers "dredging services, rock and silt removal and other water-associated construction services" relevant to breakwater construction and maintenance^[24].

Flood Barriers and Tidal Gates

Movable flood barriers and tidal gates represent specialized infrastructure for managing water levels in estuaries and tidal zones. These assets combine structural elements with mechanical and electrical systems, requiring separate depreciation schedules for each component category^[25]. Notable examples include the Thames Barrier in London (operational since 1984, protecting 125 km^2^ of floodplain), the Maeslantkering in the Netherlands (one of the largest moving structures in the world, part of the Delta Works programme), and the MOSE barrier system in Venice (completed 2020, comprising 78 mobile gates across three lagoon inlets). These systems illustrate how movable barrier assets can involve capital values in the billions of dollars and design lives spanning 50--100 years, with significant ongoing maintenance requirements that must be carefully classified between intermediate consumption and capital formation^[26].

3.1.3 Reclaimed Land

Land reclamation creates new terrestrial area within the marine environment through the deposition of fill material, construction of containment structures, and conversion of seabed or intertidal zones to dry land.

The SEEA Central Framework recognizes that land area may increase "owing to reclamation of land through the construction of dykes and other barriers."^[27] Reclaimed land represents a produced asset distinct from the underlying natural seabed.

Accounting treatment should record:

• Initial construction costs as gross fixed capital formation
• The resulting land area as an addition to produced assets
• Ongoing maintenance costs (pumping, drainage, structural repairs)
• Any ecosystem service losses from converted marine or intertidal areas^[28]

The SEEA EA notes that "land reclamation work in coastal areas" constitutes a "managed expansion" that should be recorded as a change in ecosystem extent accounts, recognizing the conversion from marine to terrestrial ecosystem types^[29].

When coastal ecosystems such as mangroves or seagrass meadows are converted to reclaimed land, the accounting framework should capture both sides of the transaction. The gain from the new produced land asset should be recorded as gross fixed capital formation, while the loss of the ecosystem asset should be recorded as ecosystem degradation and conversion in the ecosystem extent and condition accounts. The net asset change is the difference between the value of the new produced asset and the net present value of the foregone ecosystem service flows from the converted area. This trade-off calculation provides decision-makers with a comprehensive picture of the costs and benefits of land reclamation. The SEEA EA provides that "the value of losses in ecosystem services that result from ecosystem degradation should be recorded as an ecosystem degradation cost"^[30], enabling a structured comparison between the produced asset gain and the ecosystem capital loss.

3.2 Asset Valuation

3.2.1 Capital Stock Measurement

Coastal infrastructure assets should be valued following SNA principles for produced non-financial assets. The preferred approach is market-equivalent valuation using the perpetual inventory method (PIM).

The PIM requires:

1. Historical investment series -- gross fixed capital formation in coastal infrastructure over the expected asset life
2. Price indices -- construction cost indices to express investments in current prices
3. Service life assumptions -- expected useful life by asset type
4. Depreciation functions -- geometric, linear, or other profiles reflecting loss of productive capacity^[31]

The 2025 SNA specifies that "consumption of fixed capital in the SNA is calculated on the basis of the estimated opportunity costs of using the assets at the time they are used, as distinct from the prices at which the assets were acquired."^[32]

3.2.2 Depreciation and Service Lives

Consumption of fixed capital for coastal infrastructure should reflect the physical wearing out, normal obsolescence, and expected terminal costs associated with these assets.

Indicative service lives for coastal infrastructure categories:

^[33]

The maintenance cost column assists compilers in distinguishing routine maintenance expenditure (intermediate consumption) from major rehabilitation (capital formation). Where annual maintenance expenditure significantly exceeds the indicative percentages, the excess may indicate capital improvements that should be classified as gross fixed capital formation rather than intermediate consumption.

Service life estimates should be adjusted based on local environmental conditions including wave climate, storm frequency, sediment dynamics, and water quality factors that affect structural integrity^[34].

3.2.3 Asset Classification for Coastal Protection

The following table summarizes the asset classification treatment for the principal coastal protection infrastructure types, distinguishing produced assets recorded under SNA conventions from ecosystem assets recorded under SEEA EA conventions.

Table 3.2.1: Coastal protection asset classification

This classification determines the accounting treatment: produced assets are valued at construction cost less accumulated depreciation; ecosystem assets are valued through the net present value of expected ecosystem service flows; and hybrid assets require attribution between their produced and ecosystem components^[35].

3.2.4 Maintenance and Rehabilitation

Routine maintenance expenditure that sustains the current productive capacity of infrastructure assets should be recorded as intermediate consumption, not capital formation. Major rehabilitation that extends asset life or significantly improves capacity constitutes gross fixed capital formation^[36].

Dredging presents particular accounting challenges. Maintenance dredging to restore design depths in channels and harbours is typically treated as intermediate consumption since it restores rather than enhances capacity. Capital dredging that creates new or expanded facilities represents gross fixed capital formation^[37].

The SEEA Central Framework includes "dredgings" and "unused excavated soil" within the physical flow accounts for material resources, while "emissions due to activities undertaken in water resources or seas (e.g., dredging of waterways and ports) are included and recorded against the relevant industry."^[38]

3.3 Nature-Based Solutions

3.3.1 Living Shorelines

Living shorelines use natural materials and ecosystem features to provide coastal protection while maintaining ecological function. These approaches integrate with rather than replace natural coastal processes^[39].

Components may include:

• Planted vegetation (salt marsh grasses, mangroves, dune vegetation)
• Oyster reef structures
• Submerged aquatic vegetation
• Natural or placed rock features
• Biodegradable erosion control materials^[40]

Accounting treatment depends on the primary purpose and ownership structure:

Ecosystem restoration expenditure -- where the primary objective is habitat restoration, costs should be recorded as environmental protection expenditure following CEPA classification and tracked through ecosystem extent and condition accounts^[41].

Coastal protection investment -- where the primary objective is shore protection with ecological co-benefits, engineered components may be capitalized as produced assets while ecosystem elements are tracked through ecosystem accounts^[42].

3.3.2 Mangrove and Wetland Systems

Mangroves, salt marshes, and coastal wetlands provide significant coastal protection services through wave attenuation, sediment stabilization, and storm surge reduction. The SEEA Valuation guidance notes:

"Coastal protection services are the ecosystem contributions of linear elements in the seascape--coral reefs, sand banks, dunes or mangrove ecosystems along the shore--in protecting the shore and thus mitigating the impacts of tidal surges or storms on local communities."^[43]

These ecosystem assets are not produced assets in the SNA sense but provide services equivalent to engineered infrastructure. Valuation approaches include:

Replacement cost method -- estimating the cost of constructing engineered infrastructure that would provide equivalent protection. The World Bank (2016) provides specific guidance on measuring coastal protection by mangroves and coral reefs^[44].

Avoided damage cost method -- valuing protection based on flood and storm damages prevented, using expected damage functions that combine hazard probabilities with exposure and vulnerability assessments^[45].

Global studies estimate mangrove flood protection benefits exceed US$65 billion annually, based on avoided residential and industrial property damage^[46].

To prevent double counting, the coastal protection service provided by a given mangrove area should be recorded in one place only. Where TG-6.2 Mangrove and Wetland Accounts records the full suite of ecosystem services from mangrove assets (including protection, carbon sequestration, fisheries nursery, and recreation), this Circular should reference those values rather than independently estimate protection service values for the same mangrove areas. Conversely, where this Circular provides the primary infrastructure-oriented valuation of protection services, TG-6.2 should cross-reference to avoid duplication. The recommended approach is for one circular to serve as the primary recording point and the other to include a cross-reference note, with the choice depending on the national accounting context and data availability^[47].

3.3.3 Coral Reef Protection

Coral reefs function as natural breakwaters, dissipating wave energy before it reaches shorelines. This coastal protection represents a final ecosystem service distinct from other reef-associated services such as fisheries nursery habitat or recreation^[48].

Reef protection services should be recorded in ecosystem service supply and use tables with attribution to relevant beneficiary industries and households. Valuation should follow SEEA EA guidance using exchange value concepts where possible.

The coastal protection capacity of a reef depends on several measurable condition indicators. Reef crest depth relative to sea level determines the degree of wave breaking; structural complexity (rugosity) affects energy dissipation through friction and turbulence; and reef width determines the distance over which wave energy is progressively absorbed. Monitoring programmes should track these indicators alongside biological condition metrics such as live coral cover and species diversity, since declines in biological condition eventually translate into reduced structural complexity and diminished protection capacity. The reef condition typology developed by the Allen Coral Atlas and the GCRMN Status of Coral Reefs of the World reports provide standardized approaches for assessing these condition variables at national and regional scales^[49].

Changes in reef condition that affect protection capacity should be recorded as ecosystem degradation (declining condition) or enhancement (improving condition) in ecosystem asset accounts. Reef restoration investments should be tracked as environmental protection expenditure with corresponding entries in ecosystem extent and condition accounts^[50].

3.4 Blue-Grey Integration

3.4.1 Hybrid Infrastructure Systems

Hybrid infrastructure combines engineered structures with natural ecosystem elements to achieve coastal protection objectives. These systems seek to capture benefits of both approaches: the predictable performance of engineered solutions and the adaptive capacity, co-benefits, and potential cost advantages of nature-based approaches^[51].

Examples include:

• Breakwaters designed to support coral growth
• Seawalls with integrated mangrove planting
• Groyne fields with saltmarsh restoration
• Artificial reefs for wave attenuation and habitat

Accounting for hybrid systems requires clear attribution between:

1. Produced asset components (engineered structures) -- valued at construction cost less depreciation
2. Ecosystem asset components (natural or restored ecosystems) -- valued through NPV of expected ecosystem service flows
3. Land area changes resulting from infrastructure or restoration^[52]

The classification of hybrid infrastructure components follows a sequence of decision points. First, identify whether each component is engineered (produced) or natural (ecosystem). Second, determine the primary service provided by each component--coastal protection, habitat provision, navigation, or other functions. Third, establish the ownership and management arrangements for each component, since institutional boundaries may differ between the engineered structure (typically government or port authority) and the ecosystem element (which may fall under environmental management agencies). Components that are clearly engineered should be recorded as produced assets; components that are clearly natural should be recorded as ecosystem assets; and where a single component has genuinely inseparable engineered and natural elements (for example, an artificial reef structure that derives its wave attenuation capacity jointly from the placed substrate and the biological growth), the produced share should be estimated based on the proportion of capital expenditure attributable to the engineered structure, with the residual protection value attributed to the ecosystem component^[53].

3.4.2 Ecosystem Enhancement Investment

Where infrastructure investments improve ecosystem condition, the SEEA EA framework provides for recording ecosystem enhancement:

"Ecosystem enhancement is the increase in the value of an ecosystem asset over an accounting period that is associated with an improvement in the condition of the asset during that accounting period."^[54]

Enhancement activities in coastal zones include:

• Rehabilitation of degraded mangroves and wetlands
• Reef restoration and transplantation
• Seagrass meadow replanting
• Sediment management improving habitat quality
• Water quality improvements benefiting coastal ecosystems^[55]

Restoration, rehabilitation, and reclamation activities have different implications:

• Restoration aims to re-establish pre-existing structure and function including biotic integrity
• Rehabilitation aims to reinstate ecosystem functionality with a focus on supplying ecosystem services
• Reclamation aims to return degraded land to a useful state^[56]

The value of ecosystem enhancement should be measured through changes in the NPV of expected ecosystem service flows, not simply as the expenditure incurred. There should be "no prior expectations regarding the results of such a comparison" between enhancement value and expenditure levels^[57]. This principle is particularly relevant for coastal restoration projects, where restoration costs may exceed, equal, or fall short of the resulting ecosystem asset value depending on ecological success and service demand.

3.5 Climate Adaptation

3.5.1 Sea Level Rise Resilience

Climate change, particularly sea level rise, fundamentally affects the required performance and expected service life of coastal infrastructure. The SEEA EA recognizes that:

"changes at the edges of the realms and associated transition areas, particularly between the marine and terrestrial realms, are likely to occur, for example, through coastal erosion, sediment deposition and aggradation and sea level rise"^[58]

Infrastructure accounting should address:

Design standard adjustments -- new infrastructure designed for higher sea levels or increased storm intensity may have higher capital costs but provide enhanced service capacity. These costs should be fully capitalized as gross fixed capital formation^[59].

Asset life reappraisal -- existing infrastructure may face shortened useful lives if design standards are exceeded by changed conditions. Downward reappraisal of remaining service potential should be recorded in the other changes in volume account^[60].

Adaptation retrofits -- modifications to existing infrastructure to maintain function under changed conditions should be recorded as gross fixed capital formation where they extend useful life or maintain capacity under new conditions^[61].

Stranded asset recognition -- coastal infrastructure that becomes functionally obsolete due to sea level rise or permanent inundation of the protected area may require accelerated depreciation or full write-off. The 2025 SNA provides for recording "catastrophic losses" and "other changes in the volume of assets" that capture unforeseen events reducing asset values. Where sea level rise projections indicate that specific infrastructure will be rendered obsolete before the end of its originally estimated service life, compilers should revise the depreciation schedule to write off the remaining value over the shortened horizon. Where infrastructure is abandoned due to managed retreat, the residual book value should be written off through the other changes in volume account. This treatment is consistent with the broader approach to climate-related asset impairment, though international guidance on the accounting specifics continues to develop^[62].

3.5.2 Adaptation Investment Tracking

Coastal climate adaptation investment spans multiple asset categories and requires consistent tracking across:

Grey infrastructure:

• Raised seawall heights
• Strengthened flood defences
• Upgraded drainage systems
• Relocated facilities^[63]

Green infrastructure:

• Mangrove restoration and expansion
• Coastal wetland creation
• Beach nourishment programmes
• Dune restoration^[64]

Hybrid solutions:

• Integrated defence systems combining structural and natural elements
• Managed realignment creating new intertidal habitat
• Building with nature approaches^[65]

The Framework for the Development of Environment Statistics (FDES) identifies relevant indicators including "sea level" and "flood/storm surge, sea level rise, coastal storm risk (vulnerability, occurrence)" for tracking climate-related changes affecting coastal infrastructure requirements^[66].

Investment tracking should link to:

• Government expenditure accounts (COFOG 05.6 protection of biodiversity and landscape including coastal protection)^[67]
• Environmental protection expenditure accounts (CEPA/CREMA classifications)^[68]
• Infrastructure asset accounts showing capital stock and changes
• Ecosystem accounts showing condition and extent changes from nature-based interventions^[69]

Climate adaptation investment tracking should also align with emerging international frameworks. The G20 Data Gaps Initiative has identified climate finance statistics as a priority area, and the Taskforce on Nature-related Financial Disclosures (TNFD) provides a framework for reporting nature-related risks and opportunities that is directly relevant to coastal infrastructure investment decisions. National compilers should monitor developments in both initiatives and ensure that adaptation expenditure classifications remain compatible with evolving international reporting requirements^[70].

3.6 Compilation Procedure

This section outlines the step-by-step procedure for compiling coastal infrastructure asset accounts, from data collection through to balanced accounts suitable for integration into national balance sheets.

Step 1: Identify and classify infrastructure assets

Begin by assembling an inventory of coastal infrastructure assets within the accounting area. Sources include:

• Port authority asset registers: Detailed inventories of quays, breakwaters, dredged channels, cargo handling equipment, and warehouses, typically maintained for operational management and financial reporting
• Coastal zone management databases: Spatial datasets maintained by environmental agencies documenting seawalls, groynes, revetments, and tidal barriers, often linked to permit records and inspection programmes
• Public works departments: Construction and maintenance records for coastal roads, drainage systems, and shore protection works funded through government capital budgets
• Spatial data repositories: National geographic databases and cadastral systems documenting reclaimed land, port boundaries, and infrastructure footprints

For each identified asset, record:

1. Physical characteristics: Type (seawall, breakwater, quay, etc.), dimensions, materials, location coordinates
2. Ownership and institutional unit: Government agency, port authority, private enterprise, or mixed ownership
3. Construction date and original cost: Historical investment data for PIM application
4. Current condition: Inspection reports, condition ratings, structural assessments
5. Functional status: Operational, partially operational, decommissioned, or planned

Map each asset to the SNA asset classification (AN1122 Other structures) and relevant sub-categories consistent with national chart of accounts.

Step 2: Assemble financial data

Collect historical and current financial data for each asset or asset category:

Historical investment series (for PIM application):

• Annual gross fixed capital formation in coastal infrastructure over the maximum service life of any infrastructure category (typically 100 years for long-lived breakwaters)
• Source data from government finance statistics, port authority financial statements, and construction industry surveys
• Express historical investment in current prices using construction cost indices (Producer Price Index for construction, or sector-specific infrastructure cost indices)

Current-period expenditure:

• Capital formation: New construction and major rehabilitation projects completed during the accounting period
• Maintenance expenditure: Routine repair and maintenance costs, classified as intermediate consumption
• Disposals and retirements: Infrastructure removed from service, with any scrap value recorded

Valuation data:

• Insurance valuations for major infrastructure assets
• Market transactions: Sales of port facilities, coastal land, or concession rights where available
• Replacement cost estimates from engineering studies

Where financial data for individual assets are unavailable, apply average cost factors by asset type and size category, calibrated to available benchmark observations.

Step 3: Apply perpetual inventory method

For each asset category, estimate opening and closing net capital stock using the PIM:

Opening stock calculation:

1. Identify all investment cohorts (annual GFCF by vintage year) within the asset's maximum service life
2. Revalue each vintage to current-period prices using construction cost indices
3. Apply accumulated depreciation to each vintage based on assumed depreciation profile (geometric or linear) and age
4. Sum across all vintages to obtain total opening net capital stock

Current-period changes:

1. Add current-period GFCF (new construction and major rehabilitation)
2. Subtract current-period depreciation (sum of depreciation for all cohorts)
3. Subtract retirements and disposals (write off residual net value)
4. Record other changes in volume: catastrophic losses from storms, reappraisals of service life based on updated condition assessments

Closing stock:

• Closing stock = Opening stock + GFCF - Depreciation - Retirements ± Other volume changes

Apply appropriate depreciation profiles by asset type following the indicative service lives in Table 3.2.2. Use geometric depreciation (constant percentage decline) for most structural assets; use straight-line (linear) depreciation for components with predictable wear patterns.

Step 4: Record ecosystem asset changes

Where hybrid or blue-grey infrastructure systems involve ecosystem components, compile parallel ecosystem extent and condition accounts:

Extent changes (from mangrove restoration, coral transplantation, living shoreline establishment):

• Opening extent (hectares) at start of accounting period
• Managed expansion: Area of ecosystem established or restored through deliberate investment
• Natural expansion: Area of natural colonization or accretion
• Closing extent (hectares) at end of period

Condition changes:

• Select condition variables relevant to coastal protection function: mangrove canopy density, coral structural complexity, seagrass shoot density (see TG-3.1 Asset Accounts, Section 3.5.2 for condition variable selection guidance)
• Record opening and closing values for each variable
• Where monetary asset accounts exist, record ecosystem enhancement as the change in NPV of expected future ecosystem service flows

Expenditure attribution:

• Environmental protection expenditure: Costs of restoration, rehabilitation, and ongoing management
• Ecosystem enhancement: Value change in ecosystem assets due to improved condition
• Cross-reference produced asset investment (engineered components) and ecosystem investment to avoid double counting

Step 5: Integrate with balance sheets

Incorporate coastal infrastructure asset accounts into institutional sector balance sheets:

Balance sheet position:

• Opening balance sheet: Non-financial assets = Produced assets + Environmental assets
• Coastal infrastructure (produced) appears under AN1122 Other structures
• Coastal ecosystem assets appear under SEEA EA ecosystem asset classification

Accumulation accounts:

• Capital account: GFCF in coastal infrastructure and environmental protection expenditure
• Other changes in volume: Catastrophic losses, reappraisals, ecosystem conversions
• Revaluation account: Holding gains/losses due to price changes (construction cost inflation)

Cross-account consistency:

• Depreciation in capital account equals consumption of fixed capital in production account
• GFCF recorded in capital formation agrees with construction output in supply-use tables
• Ecosystem enhancement expenditure appears in environmental protection accounts (CEPA)

Step 6: Quality assurance and documentation

Validate compiled accounts through internal consistency checks and external benchmarking:

Internal consistency:

• Asset account identity: Closing stock = Opening stock + Additions - Reductions ± Revaluations
• Cross-check depreciation rates against observed asset lifetimes
• Compare maintenance expenditure percentages (Table 3.2.2) against actual port authority accounts

External benchmarking:

• Compare total infrastructure capital stock to international port statistics and infrastructure benchmarks
• Validate ecosystem asset values against comparable restoration cost or avoided damage studies
• Cross-reference climate adaptation investment totals with government climate finance reporting to UNFCCC

Documentation:

• Record all classification decisions, service life assumptions, and depreciation profiles
• Document data sources and estimation methods for each asset category
• Prepare metadata describing coverage, quality, and limitations of the compiled accounts

The compiled coastal infrastructure asset accounts are now ready for use in national balance sheets, fiscal analysis, climate adaptation monitoring, and the decision use cases described in Section 1.1.

3.7 Worked Example

This section presents a worked example demonstrating the compilation of coastal infrastructure asset accounts for a hypothetical coastal city with port facilities, seawalls, and mangrove restoration projects. The example uses synthetic data structured to illustrate the key compilation steps from Section 3.6.

Scenario description

The accounting area is Coastal City, population 250,000, with a container port, 12 km of urban seawall, and a 150-hectare mangrove restoration project. The accounting period is calendar year 2025. Key infrastructure includes:

1. Port infrastructure: Quay walls and cargo handling equipment (original construction 2005--2015)
2. Seawall: Concrete barrier protecting low-lying urban areas (constructed 1980--1990, with major rehabilitation in 2010)
3. Mangrove restoration: 150 hectares established 2018--2022, now providing measurable coastal protection

Asset inventory and classification

Table 3.7.1: Coastal City infrastructure asset inventory

Physical asset account (quay walls)

To demonstrate the PIM approach, we calculate the 2025 asset account for port quay walls constructed progressively from 2005--2015.

Step 1: Revalue historical investment to 2025 prices

Assume construction cost inflation of 3% per annum. Investment in constant 2025 prices:

Step 2: Calculate accumulated depreciation by vintage

Geometric depreciation at 3% per annum. Accumulated depreciation = 1 - (1 - 0.03)^age:

Step 3: Record current-period changes

During 2025:

• GFCF: No new quay construction (USD 0)
• Depreciation: 3% of opening stock = USD 2.5 million
• Catastrophic losses: Cyclone damage requiring USD 1.2 million write-off (recorded as other changes in volume)
• Revaluation: 3% construction cost inflation = USD 2.5 million holding gain

Physical asset account for port quay walls (USD million, 2025)

Interpretation: The net capital stock of quay walls declined by USD 1.2 million during 2025 despite a holding gain of USD 2.5 million, because depreciation and cyclone damage exceeded the revaluation. In constant 2025 prices (removing the holding gain), the real decline was USD 3.7 million, signaling capital consumption and storm damage.

Ecosystem asset account (mangrove restoration)

The 150-hectare mangrove restoration provides coastal protection, carbon sequestration, and fisheries nursery services. We compile extent and condition accounts, then estimate monetary value.

Extent account (hectares)

Condition assessment

The condition improvements reflect the maturing of the restored forest. By 2025, the restoration is 7 years old (established 2018) and approaching functional equivalence with natural mangroves.

Monetary valuation

Ecosystem service valuation (annual flow):

• Coastal protection: Replacement cost of equivalent seawall = USD 8,000 per hectare per year
• Carbon sequestration: 10 tonnes CO₂ per hectare per year × USD 50 per tonne = USD 500 per hectare per year
• Fisheries nursery: Productivity contribution = USD 400 per hectare per year
• Total annual service flow: USD 8,900 per hectare per year

Adjusted for current condition:

• Condition index = (68% + 52/70 + 9/10) / 3 = 74% of reference condition
• Adjusted service flow = USD 8,900 × 0.74 = USD 6,586 per hectare per year

Asset value (NPV at 4% discount rate, perpetual):

• Asset value = Annual service flow / discount rate = USD 6,586 / 0.04 = USD 164,650 per hectare
• Total asset value (151 ha) = USD 24.9 million

Monetary ecosystem asset account (USD million)

Interpretation: The mangrove asset value increased by USD 2.2 million during 2025, driven by both extent expansion (6 hectares net) and condition improvement (canopy density increased from 62% to 68%). This ecosystem enhancement represents a real increase in protective capacity and should be reported alongside produced infrastructure investment when assessing total coastal resilience investment.

Integrated infrastructure and ecosystem account

Table 3.7.2: Coastal City total coastal protection asset value (USD million, 2025)

Note: Values shown at constant 2025 prices (revaluation effects removed for clarity).

Policy implications:

This integrated account reveals three findings relevant to the decision use cases in Section 1.1:

1. Capital maintenance gap: Produced infrastructure depreciation (USD 4.3 million) exceeded new investment (USD 3.2 million), indicating net capital consumption. The cyclone damage compounded this gap. Unless investment increases, total protective capacity of produced infrastructure will decline.

2. Ecosystem asset performance: The mangrove restoration generated USD 2.2 million in asset value increase through a combination of extent growth and condition improvement. At an establishment cost of USD 2.5 million over 2018--2022 (amortized to USD 500,000 per year assuming 5-year establishment period), the ecosystem enhancement significantly exceeds annual expenditure, demonstrating positive return on nature-based infrastructure investment.

3. Portfolio diversification: The combined portfolio of grey infrastructure (seawalls, quays) and blue infrastructure (mangroves) maintained nearly constant total value despite the cyclone impact. The mangrove asset was unaffected by the storm that damaged the quay (mangroves are inherently storm-resilient), illustrating the risk-spreading benefit of hybrid protection systems.

Budget implications

Using the compiled asset accounts, Coastal City's finance ministry can construct the following budget case for 2026:

Infrastructure maintenance and adaptation budget request (2026)

The asset accounts provide the evidence base: produced infrastructure is depreciating faster than it is being replaced; cyclone damage demonstrates exposure to climate hazards; and mangrove investment has delivered measurable returns. The requested budget allocation of USD 7.1 million exceeds 2025 levels (USD 3.8 million including mangrove expenditure) but is justified by demonstrated capital consumption and the need to maintain total protective capacity as sea levels rise.

This worked example demonstrates how coastal infrastructure asset accounts--integrating produced assets, ecosystem assets, and hybrid systems--provide the analytical foundation for the decision use cases, upward connections to policy circulars, and budget applications described in Sections 1.1 and 1.2.

4. Summary

Coastal infrastructure accounting integrates traditional produced asset measurement with ecosystem accounting approaches to provide comprehensive coverage of assets that protect and modify coastal zones.

Key principles:

1. Classification -- clearly distinguish produced assets (ports, seawalls, reclaimed land) from ecosystem assets (mangroves, coral reefs, wetlands) while recognizing functional equivalence in service provision, as summarized in Table 3.2.1

2. Valuation -- apply perpetual inventory methods to produced assets and net present value of ecosystem services to natural assets, with appropriate depreciation and discount rates following guidance in TG-1.9 Valuation

3. Integration -- account for hybrid systems through clear attribution of produced and ecosystem components, avoiding double counting while capturing full asset values

4. Adaptation -- track climate adaptation investments across grey, green, and hybrid infrastructure with linkages to climate risk indicators in TG-2.8 Climate Indicators and resilience metrics

5. Cross-references -- maintain consistency with related ocean accounting circulars, particularly TG-6.2 Mangrove and Wetland Accounts and TG-2.9 Disaster Risk

Cross-Reference Summary

5. Acknowledgements

This Circular has been approved for public circulation and comment by the GOAP Technical Experts Group in accordance with the Circular Publication Procedure.

Authors: GOAP Technical Guidance team

Reviewers: To be confirmed

Footnotes