ACCOUNTING FOR RESOURCE DEPLETION: A MICROECONOMIC APPROACH

Robert Cairns

Review of Income and Wealth, 2000, vol. 46, issue 1, 21-31

Abstract: The theoretical basis of a practical method of accounting for depletion of mineral resources is presented. Rent rises at the rate of interest, but depletion does not. Rent is equal to the sum of depletion and depreciation less any opportunity cost of present production as compared to waiting. Depletion follows a path which is dependent on the depreciation formula chosen by the accountant. The approach is compared to the methods proposed by the BEA in 1994.

Date: 2000
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