The System of Environmental Economic Accounting (SEEA) framework is increasingly used to inform the management of natural resources and environmental policy. However, it does not account for spatial and temporal variability of externalities, which arise when economic activities unintentionally affect other parties and even themselves. My research aims to examine how externalities can be integrated in the SEEA framework. To do that I will consider as a case study the soil and water degradation issue in Santa Lucia’s catchment in Uruguay. I will conduct a biophysical and economic analysis and an evaluation of specific degradation control measures and agro-environmental policies.