Wealth Accounting, Exhaustible Resources and Social Welfare

Abstract

Environmental accounting, Exhaustible resources, Genuine saving, Social welfare, Q01, Q03,

Accounting Price of an Exhaustible Resource: Response and Extensions

“…Wei (2015) presents a novel derivation of the accounting price for an exhaustible resource in a non-optimal economy subject to an allocation mechanism. We show that Wei (2015) and Hamilton and Ruta (2009) are in fact employing different and mutually exclusive allocation mechanisms for the economy, and this explains the differences between the respective accounting prices. Because accounting prices must be defined subject to the allocation mechanism for the economy, the prices derived in the two papers are equally valid within their respective allocation domains.…”

“…The purpose of this note is to show that Hamilton and Ruta (2009) and Wei (2015) are employing different and mutually exclusive allocation mechanisms, which explains why the accounting prices differ between the two papers. More importantly, this note extends the two papers to establish whether the alternative accounting prices can support a version of the Hartwick Rule (Hartwick 1977) in the non-optimal extractive economy.…”

“…Section 4 relates Hamilton's (2015) analysis of the SEEA (2012) to the measurement of sustainability in Hamilton and Ruta (2009), and extends the analysis to include a pollution externality. The final section concludes.…”

Capital Gains and Income Arising from Nonrenewable Resources

“…Only in a theoretical case where time value is excluded can the present value price equal to the shadow price of the resource stock as capital. In empirical studies, it is a misinterpretation to associate the present value price ( ) directly with the shadow price of the resource alone as done by Hamilton and Ruta (2009).…”

“…Constant real interest rate and resource price If both real interest rate and resource price are assumed to be constant, then the capital gains from the resource become zero and can be ignored from estimation of resource income. This case is widely adopted in empirical resource accounting (e.g., Atkinson and Hamilton 2007;Hamilton and Ruta 2009).…”