The Size of an Air Shed – A Macroeconomic Stock Estimate
17 Pages Posted: 7 Jun 2017
Date Written: June 7, 2017
This paper presents a simple method for estimating the size of environmental capital (KN) assets that are otherwise mistaken as infinite. An illustration is provided for Australia’s air shed. The method draws on the perpetual inventory method (PIM) used in macroeconomics for measuring the size of manufactured capital (KM) stock. Whilst the application of the PIM for measuring KM is based on net accumulation over time, with KN it involves net depreciation over time. The depreciation, however, can be negated by the resilience capabilities of KN assets based on their biophysical characteristics. Owing to sparse data, two proxy methods for estimating the resilience coefficient are developed. These proxies rely on emission targets and standards that have been discussed in Australia’s policy context.
Keywords: Environmental Capital Stock, Perpetual Inventory Method, National Income Accounts, Depreciation, Resilience
Suggested Citation: Suggested Citation