Green Accounting for Black Gold

Robert Cairns

The Energy Journal, 2009, vol. Volume 30, issue Number 4, 113-140

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.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (9)

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