accounts that fail to include mineral assets may seriously misrepresent trends in national income and wealth over time.
Omission of minerals is just one of the issues addressed in the construction of environmental accounts. Still, extending the NIPA to include minerals is a natural starting point for the project of environmental accounting. These assets—which include notably petroleum, natural gas, coal, and nonfuel minerals—are already part of the market economy and have important links to environmental policy. Indeed, production from these assets is already included in the nation's gross domestic product (GDP). Mining is a significant segment of the nation's output; gross output originating in mining totaled $90 billion, or 1.3 percent of GDP, in 1994. This figure masks the importance of production of subsoil minerals in certain respects, however, for they are intimately linked to many serious environmental problems. Much air pollution and the preponderance of emissions of greenhouse gases are derived directly or indirectly from the combustion of fossil fuels—a linkage that is explored further in the next chapter. Moreover, while the value of mineral assets may be a small fraction of the nation's total assets, subsoil assets account for a large proportion of the assets of certain regions of the country.
Current treatment of subsoil assets in the U.S. national economic accounts has three major limitations. First, there is no entry for additions to the stock of subsoil assets in the production or asset accounts. This omission is anomalous because businesses expend significant amounts of resources on discovering or proving reserves for future use. Second, there is no entry for the using up of the stock of subsoil assets in the production or asset accounts. When the stock of a valuable resource declines over time through intensive exploitation, this trend should be recognized in the economic accounts: if it is becoming increasingly expensive to extract the subsoil minerals necessary for economic production, the nation's sustainable production will be lowered. Third, there is no entry for the contribution of subsoil assets to current production in the production accounts. The contribution of subsoil assets is currently recorded as a return to other assets, primarily as a return to capital.
There is a well-developed literature in economics and accounting with regard to the appropriate treatment of mineral resources. The major difficulty for the national accounts has been the lack of adequate data on the quantities and transaction prices of mineral resources. Unlike new capital goods such as houses or computers, additions to mineral reserves are not generally reflected in market transactions, but are determined from internal and often proprietary data on mineral resources. Moreover, there are insufficient data on the transactions of mineral resources, and because these resources are quite heterogenous, extrapolating from existing transactions to the universe of reserves or resources is questionable.