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Accounting Price of an Exhaustible Resource: A Comment

Author:
Wei, Taoyuan
Source:
Environmental and resource economics 2015 v.60 no.4 pp. 579-581
ISSN:
0924-6460
Subject:
accounting, shadow prices, social welfare, sustainable development
Abstract:
In a paper titled “Wealth Accounting, Exhaustible Resources and Social Welfare”, Hamilton and Ruta (Environ Resour Econ 42(1):53–64, 2009) derived accounting price for an exhaustible resource in Eq. (18), in the so-called “El Serafy economy” (El Serafy in Environmental accounting for sustainable development. The World Bank, Washington, 1989). However, the result is not plausible since they improperly replace constant extraction in the value of the resource stock (Eq. 17) with current resource stock divided by reserve life in their derivation. In the short comment, I show that the accounting price should be the same as the unit “user cost” defined by El Serafy (Environmental accounting for sustainable development. The World Bank, Washington, 1989).
Agid:
1237533