Depletion: Bridging the Gap Between Theory and Practice

Edens, B. (2012) Depletion: Bridging the Gap Between Theory and Practice. Environmental and Resource Economics . pp. 1-23.

[img] PDF (Online First) - Published Version
Restricted to ICRISAT researchers only


Adjusting national income for depletion is important in order to send correct signals to policy makers. This article reviews a number of depletion measures that have been recently brought forward in the context of environmental accounting (‘practice’) and green accounting (‘theory’): depletion as change in total wealth; depletion as ‘using up’ of the resource; depletion as net savings; or, depletion as net investment. The differences in assumptions between these measures are clarified by contrasting their approaches with the classic theory of a firm engaged in extraction. All measures are evaluated using a time series of data on Dutch natural gas reserves. Our main findings are that correcting for the cost of depletion would lead to significant adjustments of both level and growth rates of Dutch net national income, with a strong dependency on the chosen measure.We counter criticism that accounting in practice would necessarily underestimate depletion. The choice for a depletion measure should be determined by the context of use: measurement of social welfare or sustainable income. The physical measure put forward in the SEEA Central Framework can be justified by its consistency with the income concept that underlies the SNA

Item Type: Article
Uncontrolled Keywords: Capital gains – Depletion – Environmental accounting – Genuine saving – Green accounting – Hicksian income – Non-renewable resources – Social welfare
Author Affiliation: VU University Amsterdam, The Hague, The Netherlands,2.National Accounts Department, Statistics Netherlands,The Hague, The Netherlands
Subjects: Social Sciences > Agricultural Economics
Environmental Science
Divisions: General
Depositing User: Mr. SanatKumar Behera
Date Deposited: 25 Sep 2012 13:18
Last Modified: 25 Sep 2012 13:19
Official URL:

Actions (login required)

View Item View Item