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Green Accounting for Black Gold

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  • Robert D. Cairns

Abstract

In the petroleum industry, valid green economic accounting magnitudes are influenced by natural and other constraints on production, by non-convexity of technology and by non-optimality of output. The paper undertakes an economic analysis of oil extraction that explicitly represents the conditions and constraints that influence the decisions of a firm. This microeconomic analysis diverges from conventional, ÒHotellingÓ macroeconomic models of nonrenewable-resource extraction and has substantially different findings. Optimality conditions such as HotellingÕs rule or first-order conditions are not utilized in defining accounting statistics. Contrary to the findings of many studies, it is found that traditional (non-green) accounting practice for commercial natural resources such as petroleum sensibly balances the aims of economic accounting. Instead, adjustments to practice are most needed for non-commercial values such as pollution or amenities.

Suggested Citation

  • Robert D. Cairns, 2009. "Green Accounting for Black Gold," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 113-140.
    • Handle: RePEc:aen:journl:2009v30-04-a04
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    Citations

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    Cited by:

    1. Cairns, Robert D. & Calfucura, Enrique, 2012. "OPEC: Market failure or power failure?," Energy Policy, Elsevier, vol. 50(C), pages 570-580.
    2. Jakobsson, Kristofer & Bentley, Roger & Söderbergh, Bengt & Aleklett, Kjell, 2012. "The end of cheap oil: Bottom-up economic and geologic modeling of aggregate oil production curves," Energy Policy, Elsevier, vol. 41(C), pages 860-870.
    3. Candy Chamorro Gonzalez & Jesús Peña-Vinces, 2023. "A framework for a green accounting system-exploratory study in a developing country context, Colombia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(9), pages 9517-9541, September.
    4. Cairns, Robert D., 2014. "The green paradox of the economics of exhaustible resources," Energy Policy, Elsevier, vol. 65(C), pages 78-85.
    5. Bram Edens, 2013. "Depletion: Bridging the Gap Between Theory and Practice," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(3), pages 419-441, March.
    6. Cairns, Robert D., 2018. "Economic Accounting in the Simple Hotelling Model," Resource and Energy Economics, Elsevier, vol. 51(C), pages 18-27.
    7. Kakeu, Johnson & Nguimkeu, Pierre, 2017. "Habit formation and exhaustible resource risk-pricing," Energy Economics, Elsevier, vol. 64(C), pages 1-12.
    8. Yamaguchi, Rintaro, 2020. "Available capital, utilized capital, and shadow prices in inclusive wealth accounting," Ecological Economics, Elsevier, vol. 169(C).

    More about this item

    JEL classification:

    • F0 - International Economics - - General

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