Environmental-Cost Adjusted National Accounts for Coal Mining in India

Abstract

Judicious use of exhaustible mineral resources is essential for sustainable development. Mining has both positive and negative effects on the economy. It generates revenue, employment and foreign exchange. The negative consequences of mining are the resources depletion, deforestation, air pollution, soil erosion, etc. Considering both positive and negative results from mining, national accounts should be constructed. The prevailing national accounting system does not account the negative effect of mining on environment. In this paper, we try to measure the value of depletion of coal in India using User’s Cost approach. We estimate the environmental cost by calculating the value of carbon dioxide emitted to the environment due to coal mining. Depletion cost has been zero for all the years taken in consideration because of high reserve of coal in India. Environmental cost varies from 41. 37 rupees to 58 rupees per ton of coal production. We adjust the Gross Value Added (GVA) from mining and quarrying by the environmental cost to get the environmentally adjusted national account.

Keywords: National Account, Depletion, Environmental cost, Mineral resources, Sustainable development.

JEL Classification: E01, Q56, Q50