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Green national accounting: the case of Chile's mining sector

Published online by Cambridge University Press:  25 April 2002

Eugenio Figueroa ,
Enrique Calfucura  and
Javier Nuñez
Eugenio Figueroa
Affiliation:
University of Chile, Department of Economics; University of Alberta School of Business University of Chile, Department of Marketing Business Economics and Law. E-mail: [email protected]
Enrique Calfucura
Affiliation:
National Commission of the Environment-Chile. E-mail: [email protected]
Javier Nuñez
Affiliation:
University of Chile, Department of Economics. E-mail: [email protected]
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Abstract

This article uses the welfare foundations for the usual net domestic product (NDP) income measure of the traditional National Accounts System (NAS) provided by Weitzman (1976, 2000), and the propositions of Hartwick (1993) and Hamilton (1994a) to correct this measure in order to obtain a green (sustainable) measure of economic income. It estimates green measures of the economic income of Chile's mining sector for the period 1977–1996. Different methodologies regarding the valuation of mining resources are employed, and exploration expenditures in the mining sector are included to empirically estimate the green measures of income. The results clearly show that the usual income measures of the traditional NAS overestimated the economic income generated by the Chilean mining sector during the period by 20–40 per cent, and its rate of growth by 3–20 per cent. Moreover, this overestimation has increased in recent years. These empirical results are remarkably similar when different methodologies are used to calculate green measures of the mining sector's economic income. The empirical evidence produced in this work, together with the one provided by other studies, leads to the conclusion that Chile's outstanding recent economic growth has not delivered the amount of economic income recorded by its NAS, since a significant part of it corresponded to depreciation of the country's natural capital.

Type
Theory and Applications
Information
Environment and Development Economics , Volume 7 , Issue 2 , May 2002 , pp. 215 - 239
Copyright
© 2002 Cambridge University Press

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Footnotes

Comments made to previous versions by Rod Eggert, Ramón López, Karl-Gorän Maler, Patricio Meller and Kirit Parikh were very useful. Suggestions from four anonymous referees as well as from different people attending seminars at the University of Chile, Colorado School of Mines, Beijer International Institute of Ecological Economics and Indira Gandhi Institute of Development Research are also gratefully acknowledged. Any mistakes are the authors' sole responsibility.