Assigning Economic Value to Natural Resources (1994) / Chapter Skim
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4 Sustainable Resource Accounting
4 Sustainable Resource Accounting
Pages 59-66
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From page 59... ...
Indeed, the belief that conventional national economic accounting provi(les a misleading "score"misleading because of a failure to account for the depletion of natural resources ant! the quality of the environment-is one of the principal motivations behind some of the more pioneering 59
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From page 60... ...
Some, when they use the word "sustainability," focus on sustaining resources and the environment; others focus on sustaining the economy. iRobert Repetto, William Magrath, Michael Wells, Christine Beer, and Fabrizio Rossini, Wasting Assets: Natural Resources in the National Income Accounts, Washington, D.C.: World Resources Institute, 1989.
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From page 61... ...
A popular term for physical depreciation is "the wearing out of capital." When applied to the environment and to natural resources, physical depreciation means a physical decline in the ability of these forms of natural wealth to provide services services ranging from the provision of energy and minerals to the provision of clean air and water. Economic depreciation, in contrast, refers to the decline in the ability of capital to provide services of value.
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From page 62... ...
A more permanent-a more sustainable-definition of income would be the level of potential consumption after incurring such expenses necessary to maintain the incomegenerating services of your wealth or capital. This definition of income corresponds to the national accounting definition of net income: gross income less depreciation.
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From page 63... ...
An important implication of this finding is that the physical sustainability of certain kinds of capital such as natural resource capital-does not, in itself, say very much about economic sustainability. Environmental and natural resource capital has not been "sustained" in a physical sense in the United States nor has it ever been in the nation's history.
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From page 64... ...
Yet while this economic tragedy was unfol(iing en cl In(lonesia was racing toward the precipice, the official economic reports all showed a rosy picture of steady progress.4 What the Repetto results ctid show is that Indonesian GDP, if adjusted for the decline in natural resources, would be lower by an average of about 4 percent over the period investigated. Suppose these estimates were perfectly correct in that the adjusted figure presented a true picture of net domestic product.
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From page 65... ...
Past implementations of resource and environmental accounting systems in the United States have supported comprehensive analyses of such policy issues as how the costs of environmental policies differentially affect the rich and poor, the relative effects on water quality of agricultural en c} industrial pollution-control policies, and whether the social benefits of various air and water pollution controls are commensurate with their social costs. While all these analyses could have been done without the comprehensive accounting framework, because of the accounts, they were done at very low cost.
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From page 66... ...
conservation of the natural environment, the contribution of resource and environmental accounts will be only of peripheral interest. On the other hand, if policymakers have a broacler humanistic focus a focus wherein environmental wealth has an important but not exclusive role to play in the production of human well-being then T believe that resource and environmental accounting can make a key contribution to the process of policy formation.
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