Resource Accounting in Measures of Unsustainability: Challenging the World Bank's Conclusions

39 Pages Posted: 17 Apr 2000 Last revised: 13 Jul 2010

See all articles by Eric Neumayer

Eric Neumayer

London School of Economics and Political Science (LSE)

Date Written: July 13, 2010

Abstract

The World Bank has recently published a comprehensive study of environmental and resource accounting, covering 103 countries (World Bank 1997a). The study concludes that many Sub-Saharan, Northern African and Middle East countries have had negative 'genuine' saving rates over the last 20 years and therefore fail to pass the test of weak sustainability. This paper argues that the Bank's conclusions depend on a method for computing user costs from resource exploitation that is challenged by two competing ones (the 'El Serafy'-method and the method of Repetto et al.) and is inferior to one of its rivals. Resource rents are recomputed using the 'El Serafy'-method for 14 countries and the Sub-Saharan and Northern African and Middle East regions. The results are that both regions and almost all countries either stop exhibiting signs of unsustainability or their unsustainability can be explained without having recourse to resource accounting. However, for Congo, Ecuador, Gabon, Nigeria, Mauritania and Trinidad and Tobago there is a lesson: These countries did not adequately use the opportunities they were given through their natural resource endowments and should learn from their mistake for the future depletion of their remaining reserves of natural resources.

JEL Classification: E22, O13, Q32, Q43

Suggested Citation

Neumayer, Eric, Resource Accounting in Measures of Unsustainability: Challenging the World Bank's Conclusions (July 13, 2010). Environmental & Resource Economics, Vol. 15, No. 3, pp. 257-278, March 2000. Available at SSRN: https://ssrn.com/abstract=222492

Eric Neumayer (Contact Author)

London School of Economics and Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 207 955 7598 (Phone)
+44 207 955 7412 (Fax)

HOME PAGE: http://personal.lse.ac.uk/neumayer

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