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ACCOUNTING FOR RESOURCE DEPLETION: A MICROECONOMIC APPROACH
Author(s) -
Cairns Robert D.
Publication year - 2000
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.2000.tb00389.x
Subject(s) - depreciation (economics) , economics , resource depletion , production (economics) , resource (disambiguation) , natural resource economics , monetary economics , microeconomics , capital formation , profit (economics) , ecology , computer network , financial capital , computer science , biology
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.