Assigning Economic Value to Natural Resources (1994) / Chapter Skim
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2 What Can Policymakers Learn From Natural Resource Accounting?
2 What Can Policymakers Learn From Natural Resource Accounting?
Pages 30-46
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From page 30... ...
The current system of national accounts reflects the Keynesian macroeconomic mode} that was dominant when the system was developed, largely through the work of Richard Stone, Simon Kuznets and other economists writing in the English tradition. The great aggregates of Keynesian analysis-Consumption, Savings, Tnvest iPaper originally presented at the Conference on Natural Resource Accounting held by the Organization of American States in Washington, D.C.
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From page 31... ...
Unfortunately, as Keynesian analysis largely ignored the productive role of natural resources, so does the current system of national accounts. In fact, natural resource scarcity was of little concern to 19th-century neo-cIassical economics, from which tradition Keynesian and most contemporary economic theories are derived.
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From page 32... ...
On the income side, for example, the total value added from resource extraction is included in wages and salaries, in ~ ~J -I- r-~~~~~ ~ ~-J ~~ ~-~~~ ~~~~ in- -~''~ 2It is sometimes maintained that natural resources should not be subject to depreciation because they are free gifts of nature, and consequently there are no costs to be written off. This mistakes the basis of asset value, which is not cost but the present value of future income streams, and the basis of depreciation, which is the loss of potential income.
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From page 33... ...
While the mines ran, gross domestic product was high and rising, but the mining proceeds were treated as current income rather than as capital consumption. When the deposits were mined out in the 1970s, income and government revenues declined drastically, because far too little had been set aside for investment in other assets that would replace the lost revenues.
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From page 34... ...
In industrial countries where pollution and congestion are mounting while economies are becoming less dependent on agriculture, mining, and other forms of primary production, the focus has been on "environmental accounting" rather than natural resource accounting. Several approaches to developing more comprehensive systems of national income accounting go well beyond the scope of natural resource accounting.
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From page 35... ...
SETTING UP NATURAL RESOURCE ACCOUNTS Physical Accounts Natural resource physical stocks at any time, anti changes in those stocks during an accounting period, can be recorcled in physical units appropriate to the particular resource. The basic accounting identity is that opening stocks plus all growth, increase, or addition less all extraction, destruction, or diminution equals closing stocks.
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From page 36... ...
The accounting framework for timber resources in physical units could be expressed in hectares, in tons of biomass, or in cubic meters of available wood, although the last is probably the most important economic measure. As in the case of minerals, the total resource is larger than the economic reserve, since a substantial part of the total stock of standing timber in any country cannot be profitably harvested and marketed with current technologies and market conditions.
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From page 37... ...
Asset transactions in natural resources, such as competitive auction sales of rights to extract timber or minerals, closely follow estimated stumpage values or rents, with allowance for risk. Because homers of those rights can usually hoist the resources in stock or bring them to market immecliately, the current rent or stumpage value tends to reflect the present value of expected future net income that can be derived from them.
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From page 38... ...
The net price method applies the prevailing average net price per unit of the resource (current revenues less current production costs) to the physical quantities of proved reserves and changes in the levels of proved reserves.
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From page 40... ...
It is relevant, therefore, to compare gross domestic investment with the value of natural resource depletion. Should gross investment be less than resource depletion, then, on balance, the country is drawing ([own, rather than building up, its asset base, and using its natural resource endowment to finance current consumption.
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From page 42... ...
For example, the resource accounts drawn up for the Indonesian timber sector estimated the stumpage value or resource rents available from harvest of that
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From page 43... ...
The government captures some of the resource rents from concessionaires through a variety of license fees, property taxes, royalties, and fees. In theory, since the calculation of stumpage values makes allowance for a normal return on capital invested in the logging operation, the government of Indonesia could have captured a large fraction of the available rents.
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From page 44... ...
ROBERT REPE~ITO PHYSICAL UNITS (million cu. meter)
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From page 45... ...
45 PHYSICAL UNITS (million cu. meter)
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From page 46... ...
46 TABLE 2-1 Forest Resource Accounts - Indonesia (1983-1984) ROBERT REPEITO PHYSICAL UNITS (million cu.
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