Valuing mineral stocks and depletion in green national income accounts

Davis, Graham A.; Moore, David J.

doi:10.1017/s1355770x00000085

Cited by 16 publications

(13 citation statements)

References 26 publications

(40 reference statements)

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“…This implies that if the marginal cost of exploitation is increasing, then marginal cost will be greater than average cost which will result in an overestimation of the true depreciation of natural capital (Hartwick 1990). This problem is solved using the methodology proposed by Davis and Moore (2000) for non-renewable resources. They estimate correcting factors using their 'unrestricted valuation principle' (UVP) 3 instead of employing the simple straight average cost-based valuation principle (Hotelling's valuation principle, HVP), which is conceptually equivalent to assume a correcting factor of 1.…”

Section: Estimation Of True Economic Income and Genuine Saving For Chilementioning

confidence: 99%

Sustainable development in a natural resource rich economy: the case of Chile in 1985–2004

2009

Environ Dev Sustain

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Searching for practical means to assessing economic growth's sustainability, we extend a standard theoretical model to calculate ''true'' income measures for Chile, during the 1985-2004 period, and use estimates of natural capital depreciation to obtain genuine national saving measures. We found that, for the period, Chile's economic growth was sustainable, even when approximately 2.5% of the income recorded by national accounts corresponded to depreciation of natural resources plus costs of atmospheric pollution. This performance can be partially explained by policies implemented to force fiscal responsibility and to assure wise public investment and expending during a natural resource driven growth. This evidence reinforces recent findings contradicting the natural resource curse, and the indirect negative effect of resource abundance over growth that would operate through the quality of institutions.

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Section: Estimation Of True Economic Income and Genuine Saving For Chilementioning

confidence: 99%

Sustainable development in a natural resource rich economy: the case of Chile in 1985–2004

2009

Environ Dev Sustain

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“…Other practical methods, not considered in this paper, include an interesting contribution byDavis and Moore (2000).…”

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confidence: 99%

Progress along the path: evolving issues in the measurement of genuine saving

Atkinson

Hamilton

2007

Environ Resource Econ

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More than 10 years since a practical linkage between sustainable development and a measure of national wealth—expanded to include natural and environmental resources—was first posited, the empirical estimation of adjusted net savings, dubbed ‘genuine’ saving, has evolved considerably. In this paper we take stock of both progress achieved and the challenges that remain. We begin by recalling the key points made in Pearce and Atkinson (1993, Ecol Econ 8, 103), which presented the first cross-country estimates of savings rates adjusted to reflect depletion and degradation of the environment. We then briefly summarise the evolution of the theoretical argument linking savings and sustainability. However, the main focus of this paper is an aspect that concerned David Pearce greatly, namely the evolution of the measurement of genuine savings. We identify and consider the empirical evidence with regard to two particular measurement issues: the valuation of exhaustible resources and environmental degradation. Common to the both issues are concerns about measuring changes in national wealth in real world economies. Copyright Springer Science+Business Media, Inc. 2007Genuine saving, Sustainability, Subsoil assets, User cost, Environmental degradation, Q01, Q32, Q53, Q56,

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“…There are additional arguments supporting the use of the approach proposed by Davis and Moore (2000). First, there is no similar empirical result estimated yet for the specific case of the copper sector in Chile due basically to lack of reliable data.…”

Section: Estimation Of the Exhaustible Resource Rent (Net Price)mentioning

confidence: 99%

“…In a recent article, Davis and Moore (2000) reviewed the 'Hotelling valuation principle' (HVP) and derived an 'unrestricted valuation principle' (UVP) for valuing mineral resources on the ground (in situ). They derived the UVP under alternative, more general, assumptions than the restrictive assumptions of homogenous mineral reserves and constant return to scale in resource extraction that justify invoking the HVP and using average cost instead of marginal cost in equation (2.9).…”

Section: Estimation Of the Exhaustible Resource Rent (Net Price)mentioning

confidence: 99%

Green national accounting: the case of Chile's mining sector

Figueroa

Calfucura²,

Núñez

2002

Envir. Dev. Econ.

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This article uses the welfare foundations for the usual net domestic product (NDP) income measure of the traditional National Accounts System (NAS) provided by Weitzman (1976Weitzman ( , 2000, and the propositions of Hartwick (1993) andHamilton (1994a) to correct this measure in order to obtain a green (sustainable) measure of economic income. It estimates green measures of the economic income of Chile's mining sector for the period 1977-1996. Different methodologies regarding the valuation of mining resources are employed, and exploration expenditures in the mining sector are included to empirically estimate the green measures of income. The results clearly show that the usual income measures of the traditional NAS overestimated the economic income generated by the Chilean mining sector during the period by 20-40 per cent, and its rate of growth by 3-20 per cent. Moreover, this overestimation has increased in recent years. These empirical results are remarkably similar when different methodologies are used to calculate green measures of the mining sector's economic income. The empirical evidence produced in this work, together with the one provided by other studies, leads to the conclusion that Chile's outstanding recent economic growth has not delivered the amount of economic income recorded by its NAS, since a significant part of it corresponded to depreciation of the country's natural capital.

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Valuing mineral stocks and depletion in green national income accounts

Cited by 16 publications

References 26 publications

Sustainable development in a natural resource rich economy: the case of Chile in 1985–2004

Sustainable development in a natural resource rich economy: the case of Chile in 1985–2004

Progress along the path: evolving issues in the measurement of genuine saving

Green national accounting: the case of Chile's mining sector

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