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Sustainable development and natural resource accounting in a small open economy: a methodological clarification

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  • Andrés Gómez-Lobo E.

Abstract

The effort to correct the national accounts in order calculate NNP or related ‘Green GDP’ concepts, known as natural resources accounting, has been a lively research area in the last decade. Two basic methodologies have been proposed in the literature to value the loss of natural assets, the net price or depreciation method and the user cost approach. This paper aims to show that the user cost approach is incorrect and misleading.In arguing for its use, its original proponent implicitly had the context of a small open economy in mind. However, in this context, the depreciation method is somewhat different from its closed economy counterpart. In a small open economy, to arrive at a sustainable NNP figure changes in foreign assets must also be accounted for. Once this is done, the main criticism to the depreciation method –that resource rich countries would not have a consumption advantage over resource poor countries – can be shown to be wrong. For this and other reasons it is recommended that only tClassification-JEL: O13, Q32.

Suggested Citation

  • Andrés Gómez-Lobo E., 2001. "Sustainable development and natural resource accounting in a small open economy: a methodological clarification," Estudios de Economia, University of Chile, Department of Economics, vol. 28(2 Year 20), pages 203-216, December.
    • Handle: RePEc:udc:esteco:v:28:y:2001:i:2:p:203-216
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    Cited by:

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    2. Olfa JABALLI & Sebnem SAHIN, 2010. "Green Accounting and Climate Change Problem: A New Evidence from the Turkish Economy," EcoMod2004 330600071, EcoMod.
    3. Bekmez, Selahattin & Gokalp, M. Faysal, 2004. "Trade Liberalization and Pollution in Turkey: An Empirical Re-evaluation of Pollution Heavens Hypothesis," Conference papers 331273, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    Keywords

    Natural Resource Accounting; Sustainable Development.;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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