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Measuring Sustainability in the UN System of Environmental-Economic Accounting

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  • Kirk Hamilton

    (London School of Economics)

Abstract

The adoption of the System of Environmental-Economic Accounting 2012: Central Framework as a UN statistical standard is a landmark in environmental accounting. The SEEA has the same authority and weight as the System of National Accounts in the pantheon of official statistics. The SEEA defines the unit value of depletion of an exhaustible resource to equal the average unit value of the asset (the total asset value divided by the physical stock of resource). By applying this definition to a non-optimal Dasgupta–Heal–Solow model of an extractive economy, we show that ‘depletion-adjusted net saving’ as defined in the SEEA supports a generalized version of the Hartwick Rule. This measure of saving can guide policies for sustainable development in extractive economies, in particular fiscal policies concerning consumption and investment expenditures funded by resource rents. The conditions required to support this finding are (i) that extraction declines over time at a constant rate, and (ii) that the marginal cost of resource extraction is constant. A less general result holds in the case of increasing marginal extraction costs.

Suggested Citation

  • Kirk Hamilton, 2016. "Measuring Sustainability in the UN System of Environmental-Economic Accounting," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(1), pages 25-36, May.
    • Handle: RePEc:kap:enreec:v:64:y:2016:i:1:d:10.1007_s10640-015-9924-y
    DOI: 10.1007/s10640-015-9924-y
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    References listed on IDEAS

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    Cited by:

    1. Bazhanov, Andrei V., 2022. "Extraction path and sustainability," Resources Policy, Elsevier, vol. 76(C).
    2. Mardones, Cristian & del Rio, Ricardo, 2019. "Correction of Chilean GDP for natural capital depreciation and environmental degradation caused by copper mining," Resources Policy, Elsevier, vol. 60(C), pages 143-152.
    3. Atkinson, Giles & Hamilton, Kirk, 2020. "Sustaining wealth: Simulating a sovereign wealth fund for the UK's oil and gas resources, past and future," Energy Policy, Elsevier, vol. 139(C).
    4. Kirk Hamilton & Giovanni Ruta, 2017. "Accounting Price of an Exhaustible Resource: Response and Extensions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(3), pages 527-536, November.
    5. Lin Meng & Wentao Si, 2022. "Pro-Environmental Behavior: Examining the Role of Ecological Value Cognition, Environmental Attitude, and Place Attachment among Rural Farmers in China," IJERPH, MDPI, vol. 19(24), pages 1-24, December.
    6. Atkinson, Giles & Hamilton, Kirk, 2020. "Sustaining wealth: simulating a sovereign wealth fund for the UK’s oil and gas resources, past and future," LSE Research Online Documents on Economics 103564, London School of Economics and Political Science, LSE Library.
    7. Bazhanov, Andrei V., 2022. "A comment on Hamilton (2016) “Measuring sustainability in the UN System of Environmental-Economic Accounting”," Resources Policy, Elsevier, vol. 76(C).
    8. Moriah Bostian & Tommy Lundgren, 2022. "Valuing Ecosystem Services for Agricultural TFP: A Review of Best Practices, Challenges, and Recommendations," Sustainability, MDPI, vol. 14(5), pages 1-19, March.
    9. Yamaguchi, Rintaro, 2020. "Available capital, utilized capital, and shadow prices in inclusive wealth accounting," Ecological Economics, Elsevier, vol. 169(C).
    10. Comte, Adrien & Sylvie Campagne, C. & Lange, Sabine & Bruzón, Adrián García & Hein, Lars & Santos-Martín, Fernando & Levrel, Harold, 2022. "Ecosystem accounting: Past scientific developments and future challenges," Ecosystem Services, Elsevier, vol. 58(C).
    11. Edward B. Barbier & Joanne C. Burgess, 2019. "Scarcity and Safe Operating Spaces: The Example of Natural Forests," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 1077-1099, November.

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    More about this item

    Keywords

    Sustainable development; Exhaustible resources; Depletion; Environmental accounting; Hartwick Rule;
    All these keywords.

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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