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Correction of Chilean GDP for natural capital depreciation and environmental degradation caused by copper mining

Cristian Mardones () and Ricardo del Rio

Resources Policy, 2019, vol. 60, issue C, 143-152

Abstract: Sustainable development requires that natural resources be exploited optimally, especially in developing countries like Chile that depend heavily on the export of non-renewable resources (ex. 55% of Chilean exports are products of copper mining). Therefore, this paper estimates a corrected version of the Gross Domestic Product (GDP) of Chile that accounts for the depreciation of natural capital, the environmental degradation due to the emission of atmospheric pollutants and the exploration expenses of copper mining during the period between the years 1995 and 2015. The results obtained show that, on average, GDP and mining GDP are overestimated by 11.34% and 98.04%, respectively. The high magnitude of the adjustment reflects the importance of incorporating the depreciation of natural resources and environmental degradation into the traditional indicators used to measure the country's economic activity, especially for those sectors that are based on the extraction of non-renewable resources and produce strong negative externalities.

Keywords: Environmental accounts; Natural capital depreciation; Green GDP (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:jrpoli:v:60:y:2019:i:c:p:143-152