land, air, and water—BEA found either data of questionable quality or no appropriate data on price or quantity.
Under BEA's phased work plan, assets such as forests that produce timber and vineyards that produce wine-grapes would be added. "Developed natural assets" such as oil, orchards, agricultural land, and forests would then be treated symmetrically with "made assets" such as houses, computers, and steel mills.
The panel agrees that improvements in valuing subsoil assets would be useful elements in a phased approach to environmental accounting. With respect to BEA's initial estimates for subsoil assets, the reported findings on the value of reserves—stocks, depletions, and additions—should be considered preliminary and tentative at this time. Improved accounts will require a better understanding of the value of mineral resources that are not now counted as known reserves, the impact of ore-reserve heterogeneity on valuation calculations, distortions introduced by the constraints imposed on mineral production by existing capital and other factors, and differences between the market and social value of subsoil mineral assets.
In the panel's view, the next priority under the phased approach should be sectors that include a significant aspect of market or near-market activity. Developing accounts for the commodity-producing value of forests is the obvious next step in developing the IEESA. Estimating the volume and value of forest timber appears to be relatively straightforward at this time, and the issues involved in the valuation are similar to those for subsoil assets. Another useful extension would be agricultural assets, particularly those involving livestock, vineyards, and land values and quantities. Beyond these sectors, the data become more problematic. Currently, data on fish stocks are unreliable because wild fish are fugitive assets, and there is no reliable census of the fishes. The panel did not investigate the water-resource sector in detail, but it determined that there are inadequate data on water stocks and water quality, and valuation of these resources remains a thorny issue because water value is highly variable depending on time, location, quality, and priority of right to usage.5
While recognizing the value of these phased incremental extensions, the panel reiterates that extending the accounts to include nonmarket activities is of the greatest substantive importance for augmented accounts. The panel's review indicates that accounting for environmental assets such as air quality is likely to have a major impact on consumption and investment. Developing environmental accounts is part of the even