ABSTRACT
CALWORKARELIMITEDBYTHEAVAILABILITYOFRELIABLEDATAANDESTIMATIONMETHODS)N PARTICULARTODATETHE"ANKESTIMATESDONOTINCLUDESOCIALORINSTITUTIONALCAPITAL ANDTHEIRDATAONHUMANCAPITALINCLUDEONLYEDUCATION-OREOVERBECAUSETHE "ANKMEASURECANBECOMPAREDACROSSCOUNTRIESANDFORATIMESERIESFROM TOITCANINCLUDEONLYADJUSTMENTSFORWHICHCOMPARABLEDATAAREAVAILABLE
FORMANYCOUNTRIESOVERA YEARPERIOD3TILLTHEADVANTAGESOFSUCHBROADCOM PARISONSMAYOUTWEIGHTHERELATIVELYLIMITEDADJUSTMENTSINCALCULATINGGENUINE SAVINGS 4HERESULTSOFTHE(AMILTONAND#LEMENSCALCULATIONOFTHELIMITEDGENUINESAV
INGSMEASUREWHICHINCLUDESONLYTHEENVIRONMENTALADJUSTMENTSHOWANUM BEROFCOUNTRIESWITHPOSITIVECONVENTIONALNETSAVINGSBUTNEGATIVEGENUINESAV INGS4HISSUGGESTSTHATGENUINESAVINGSDOESPROVIDEINFORMATIONTHATCANNOTBE OBTAINEDFROMCONVENTIONALSAVINGSMEASURESANDISTHEREFOREANINTERESTINGINDI CATORTOINVESTIGATEFURTHER 4HECROSS COUNTRYANDTIMESERIESCOMPARISONSOFGENUINESAVINGSRATESASA
SHAREOF'.0AREBASEDONTHEBROADERMEASUREINCLUDINGEXPENDITURESONEDU CATION4HEAUTHORSPRESENTTIMELINESFORTHREEREGIONS%AST!SIAANDTHE0ACIlC ,ATIN!MERICAANDTHE#ARIBBEANANDSUB 3AHARAN!FRICA4HE!SIANREGIONCON SISTENTLYHASTHEHIGHESTGENUINESAVINGSRANGINGFROMTOALMOST!FRICA HASTHELOWESTWITHALOWOFABOUTnANDAHIGHOFABOUT,ATIN!MERICA ISCONSISTENTLYBETWEENTHETWO!LTHOUGHTHEIR LEVELSDIFFERMARKEDLYALLTHREE REGIONSHAVEFOLLOWEDSIMILARTRENDSRISINGGRADUALLYFROMTOPEAKIN THENDECLININGTHROUGHTHELATESANDEARLYSANDBEGINNINGTORISEAGAIN AFTERTHAT4HE!FRICANDECLINEISTHELONGESTANDITSSUBSEQUENTRISETHEWEAKEST THE!SIANDECLINEISSHORTESTANDITSSUBSEQUENTRISETHEHIGHEST4HETIMESERIES ENDSBEFORETHE!SIANCOLLAPSEOFTHES !FEWOTHEROBSERVATIONSAREALSOOFINTEREST(IGH INCOMEDEVELOPEDCOUN
TRIESHAVECONSISTENTLYPOSITIVEGENUINESAVINGSRATESALTHOUGHTHELEVELSRANGE FROMTOFOR*APANDOWNTORATESCONSISTENTLYBELOWFOR!USTRALIATHE 5NITED3TATESANDTHE5NITED+INGDOM-INERAL RICHCOUNTRIESSUCHAS3AUDI!RA BIAAND6ENEZUELASHOWCONSISTENTLYNEGATIVEGENUINESAVINGSRATESWITH3AUDI !RABIASRANGINGFROMAHIGHOFnTOALOWOFn4HISSUGGESTSTHATTHESE COUNTRIESARENOTREINVESTINGTHEIRMINERALREVENUESATARATETHATWOULDPERMIT THEMTOSUSTAINTHEIRCURRENTHIGHLEVELSOFINCOME!CCORDINGTO(AMILTONAND #LEMENSTHISISCONSISTENTWITHlNDINGSFORCONVENTIONALSAVINGSINMINERAL RICH ECONOMIES
GROSSDOMESTIC INVESTMENTFROM
CONVENTIONALACCOUNTS n NETFOREIGNBORROWING GROSSSAVING
n DEPRECIATIONOFPRODUCEDASSETS NETSAVING
n
SELECTEDENVIRONMENTALCOSTS INCLUDINGDEPLETIONOFCOMMERCIAL FORESTSANDSOMEMINERALSANDHARM IMPOSEDBYTHECOUNTRYSGREENHOUSE
GASEMISSIONS
LIMITEDMEASURE OFGENUINESAVING
EXPENDITUREONEDUCATIONINVESTMENT
INHUMANCAPITAL BROADERMEASURE OFGENUINESAVING
!PPROACHES"ASED3OLELYIN%CONOMICS !SMENTIONEDIN#HAPTERTHEECONOMICAPPROACHTOENVIRONMENTALACCOUNTING ISROOTEDINADESIRETODETERMINEINTHEORETICALTERMSWHETHERORHOWAMEASUREOF SUSTAINABLEINCOMEWOULDRELATETOTHEMACROECONOMICINDICATORSOFTHENATIONAL ACCOUNTS4HEKEYRESULTINTHISAREAWHICHHASSPAWNEDAGREATDEALOFMORESPE CIlCRESEARCHISTHElNDINGTHATIFALLFORMSOFCAPITALANDALLMARKETEDANDNON MARKETEDPRODUCTSWEREINCLUDEDINTHEACCOUNTSANDIFASETOFQUITERESTRICTIVE ASSUMPTIONSHOLDABOUTTHEOPERATIONSOFTHEMARKETPOPULATIONGROWTHAND TECHNOLOGICALCHANGETHENTHEEQUIVALENTOFNETNATIONALPRODUCTCALCULATEDFROM SUCHACCOUNTSCOULDACTUALLYMEASURESUSTAINABLEINCOME7EITZMANSEE ALSO!PPENDIX!OF.ORDHAUSAND+OKKELENBERGFORALESSTECHNICALEXPLANA TIONOFTHISWORK 4HISlNDINGHASLEDTOMUCHADDITIONALTHEORETICALWORKONITS IMPLICATIONSFORTHEINCLUSIONOFSPECIlCNATURALRESOURCESANDOTHERFORMSOFCAPI TALINTHEACCOUNTS&OLLOW ONWORKALSOHASCONCENTRATEDONDETERMININGHOWFAR ..0WOULDDIFFERFROMSUSTAINABLEINCOMEIFONLYSOMEOFTHEASSUMPTIONSWERE CORRECT!DDITIONALLYMUCHEMPIRICALWORKHASBEENDONETOBUILDONARESEARCH BASISSOMEORALLOFTHEACCOUNTSTHATWOULDRESULTIFTHESEPRINCIPLESWEREFOLLOWED SEE(ARRISAND&RASERFORASURVEYOFTHISWORK 4HE %.2!0 PROJECT IN THE 0HILIPPINES IMPLEMENTED A FULL ENVIRONMENTAL
ACCOUNTINGSYSTEMBASEDONTHESEPRINCIPLES4HEOVERALLSTRUCTUREOFTHEFRAME WORKSOMETIMESREFERREDTOASTHE0ESKINFRAMEWORKASECONOMIST(ENRY0ESKIN SHAPEDTHESTRUCTUREOFTHESEACCOUNTSISSHOWNIN4ABLE %.2!0 4HIS PRESENTATIONISBASEDONTHE53.ATIONAL)NCOMEAND0RODUCT!CCOUNTSWHICH DIFFERSLIGHTLYFROMTHE3.!HENCETHESOMEWHATUNFAMILIARSTRUCTUREOFTHETABLE 4HELEFTSIDEOFTHETABLESHOWSINPUTSINTOTHEECONOMYANDTHERIGHTSIDESHOWS OUTPUTSFROMTHEECONOMY)TEMSINTHESHADEDAREAAREFROMTHECONVENTIONAL ACCOUNTSUNSHADEDAREASSHOWTHEMODIlCATIONSSUGGESTEDBY0ESKIN 0ESKINBEGINSBYESTIMATINGTHEVALUEOFNONMARKETEDGOODS)NPUTAND/UT
PUT NOTADEQUATELYCOVEREDINTHE3.!ACCOUNTSINCLUDINGAGRICULTURALPRODUC TIONFOROWNCONSUMPTIONGATHEREDFUELWOODANDWATERCARRIEDFROMWELLSOR STREAMS4HEFRAMEWORKVALUESTHEMINTWODIFFERENTWAYSONTHETWOSIDESOFTHE ACCOUNTS/NTHEINPUTSIDETHEYARETREATEDASHOUSEHOLDPRODUCTIONANDVALUED BASEDONPREVAILINGLOCALWAGERATESANDESTIMATESOFTHETIMEDEVOTEDTOGATHER INGORCULTIVATION/NTHEOUTPUTSIDETHEPRODUCTSAREVALUEDBASEDONWHATTHEY WOULDCOSTINLOCALMARKETS4HEDIFFERENCEBETWEENTHETWOWOULDBETHEVALUE ADDEDFROMHOUSEHOLDPRODUCTION 4HE0ESKINAPPROACHADJUSTSINCOMEMEASURESFORINTERMEDIATECONSUMPTION
OFENVIRONMENTALSERVICES)NPUT/UTPUTSAND INCLUDINGSUCHTHINGSAS WATERSHEDPROTECTIONPROVIDEDBYFORESTSANDWASTEDISPOSALSERVICESORPOLLUTANT ASSIMILATION -OSTOFTHESESERVICESAREINTERMEDIATECONSUMPTIONBYOTHERPRO DUCTIVEACTIVITIESALTHOUGHHOUSEHOLDSALSOMAKEUSEOFWASTEDISPOSALSERVICES THROUGHTHEIRUSEOFSUCHITEMSASAUTOMOBILESORLAWNCHEMICALS )NTERMEDIATECONSUMPTIONOFWASTEDISPOSALSERVICES)NPUT ISSUBTRACTED
FROMCHARGESAGAINST'.0INTHEINPUTCOLUMNOFTHETABLE)TISSUBTRACTEDRATHER THANADDEDBECAUSEITISCONSIDEREDTOBEASUBSIDYFROMTHEENVIRONMENTWHICH DOESNOTAPPEARASAPRODUCTIVEhSECTORvINTHEACCOUNTS TOTHEINDUSTRIESUSING THESERVICES4HEVALUEADDEDOFINDUSTRIESUSINGTHOSESERVICESSHOULDBELOWERED
BYTHEAMOUNTTHEYWOULDHAVETOSPENDONWASTEDISPOSALIFTHEENVIRONMENTWERE NOTAVAILABLETHISISCAPTUREDBYSUBTRACTINGTHESUBSIDY )NCONSIDERINGSUCHSUBSIDIES THE0HILIPPINEACCOUNTS INCLUDEDONLYWASTE
DISPOSALSERVICESPROVIDEDBYWATERORAIR4HEYDIDNOTINCLUDESUBSIDIESRESULT INGFROMTHEPOSITIVEEXTERNALITIESOFOTHERECONOMICSECTORS&OREXAMPLEWATER SHEDPROTECTIONMAYBEUNDERSTOODASAPOSITIVEEXTERNALITYPROVIDEDBYTHEFOR ESTRYSECTORTODOWNSTREAMINDUSTRIESSUCHASlSHING)FTHElSHERYHADTOPAYFOR ITSWATERSHEDPROTECTIONITSVALUEADDEDWOULDDROPBUTTHEVALUEADDEDOFTHE FORESTRYSECTORWOULDRISE)NTHESHORTRUNTHISWOULDHAVENONETEFFECTON'.0 BUTWOULDSHIFTVALUEADDEDFROMONESECTORTOANOTHER)NTHELONGRUNOTHERPARTS OFTHEECONOMYMIGHTADJUSTTOTHESHIFTBETWEENFORESTRYANDlSHERIESCAUSING RIPPLEEFFECTSTHROUGHOUTTHEECONOMY &INALCONSUMPTIONOFENVIRONMENTALSERVICESSUCHASRECREATIONISADDEDON
THEOUTPUTSIDEOF4ABLE AS/UTPUT0ESKINLABELSTHIShDIRECTENVIRONMENTAL
.ONMARKETED
%NVIRONMENTAL3ERVICES "ASEDON0ESKIN &RAMEWORK
TIONIN/UTPUTTHEFRAMEWORKSUBTRACTSTHEDAMAGESCAUSEDBYENVIRONMENTAL EXTERNALITIESWHICHAREANEGATIVEPRODUCTOFTHEACTIVITIESOFENTERPRISESHOUSE HOLDSANDGOVERNMENT0ESKINTHENCREATESANEWBALANCINGITEMONTHEINPUT SIDEWHICHHECALLShNETENVIRONMENTALBENElTORDISBENElT v4HISISTHEDIFFER ENCEBETWEENTHEABSOLUTEVALUEOFINTERMEDIATECONSUMPTIONOFENVIRONMENTAL SERVICESONTHEINPUTSIDE ANDlNALCONSUMPTIONOFENVIRONMENTALSERVICESLESS ENVIRONMENTALDAMAGEONTHEOUTPUTSIDE %CONOMICTHEORYSUGGESTSTHATIFWASTEDISPOSALANDENVIRONMENTALQUALITYSER
VICESWEREPRICEDSOCIETYWOULDCONSUMETHEMATTHELEVELWHERENETENVIRONMEN TALBENElTISZERO!TTHATLEVELCONSUMPTIONOFONEMOREUNITOFWASTEDISPOSAL WOULDCAUSEMORELOSSOFENVIRONMENTALQUALITYTHANGAINFROMDISPOSALWHEREAS CONSUMPTIONOFONELESSUNITOFWASTEDISPOSALWOULDCOSTMORETHANTHEBENElT DERIVEDFROMTHEADDITIONALENVIRONMENTALQUALITYSERVICES4HUSNETENVIRONMEN TALBENElTSCANBEINTERPRETEDASASIMPLEAGGREGATECOSTnBENElTCOMPARISONOF THEUSEOFENVIRONMENTIFALLELEMENTSAREINCLUDEDANDVALUEDCORRECTLY 4HEEXTERNALITIESTRACKEDIN4ABLE ˆTHATIS/UTPUTˆCANREDUCETHEVALUEOF
THEASSETSTHEYAFFECTASWELLASCHANGETHEBOTTOMLINEOFTHECURRENTACCOUNTS&OR EXAMPLEACIDICAIRPOLLUTANTEMISSIONSRETURNTOTHELANDINTHEFORMOFACIDRAIN WHICHHARMSTHEFORESTSONWHICHITFALLS4HISWILLREDUCEBOTHFORESTOUTPUTTHISYEAR ANDTHEASSETVALUEOFTHEFORESTASAWHOLE&ORMARKETEDASSETSTHISWILLSHOWUPIN THECONVENTIONALASSETACCOUNTS)TCOULDALSOBETRANSFERREDTOTHECURRENTACCOUNT ASACOMPONENTOFDEPRECIATIONSINCEITISACHANGEASARESULTOFHUMANACTIVITY 7HERENEITHERTHEASSETNORTHESERVICESTHATmOWFROMITAREMARKETEDHOW
EVERTHECONVENTIONALACCOUNTSWILLNOTREmECTTHEDEPRECIATIONCAUSEDBYEXTER NALITIES4HUSFOREXAMPLEWHERECONSUMPTIONOFNONMARKETEDFORESTPRODUCTSIS NOTINCLUDEDINTHEACCOUNTSTHEIMPACTOFACIDRAINONGROWTHOFTHOSEPRODUCTSIS NOTCAPTUREDINTHEACCOUNTS4HE0HILIPPINEWORKDOESNOTINCLUDEASSETACCOUNTS ANDTHEREFOREDOESNOTVALUESTOCKS)TDOESHOWEVERUSETHEECONOMICCONCEPT OFDEPRECIATIONˆOVERALLCHANGEINVALUEOFTHEASSETFROMALLCAUSESˆTOESTIMATE CAPITALANDRESOURCEDEPRECIATIONSOTHISELEMENTSHOULDBECAPTUREDINTHERESULT INGmOWTABLES "ECAUSEITINCLUDESTHEVALUEOFNONMARKETEDENVIRONMENTALSERVICESINTHEmOW
ACCOUNTSTHE0ESKINFRAMEWORKGOESFURTHERTHANTHE3%%!INPROVIDINGDATATOOLS TOANALYZETHERELATIONSHIPBETWEENTHEECONOMYANDTHEENVIRONMENT4HEDATA USEDINTHE%.2!0AND03%%!PROJECTSINTHE0HILIPPINESHAVESIGNIlCANTOVERLAP HOWEVER!SEXPLAINEDIN#HAPTERTHE03%%!DATACANBEPRESENTEDINTHE0ES KINFRAMEWORKAND3%%!METHODSCANBEUSEDINSTEADOFAPPROACHESROOTEDONLY INECONOMICSANDNOTINNATIONALACCOUNTINGTOESTIMATEASSETVALUESORRESOURCE RENTS4HISSUGGESTSTHATACOUNTRYINTERESTEDINTHESTRENGTHSOFBOTHSYSTEMSCAN BUILDBOTHWITHONLYMODERATEADDITIONALEFFORTTOCAPTURETHEVALUATIONORANALYTI CALMETHODSPARTICULARTOONEORTHEOTHER .ATURES.UMBERSTHEREPORTOFTHE53.ATIONAL!CADEMYOF3CIENCESPANELON
ENVIRONMENTALACCOUNTING.ORDHAUSAND+OKKELENBERG RECOMMENDSAN ECONOMICAPPROACHLIKETHE0ESKINONEFORUSEINTHE5NITED3TATES!SDISCUSSED IN#HAPTERITCALLSONTHE5NITED3TATESTOBUILDASETOFCOMPREHENSIVEACCOUNTS TOTRACKENVIRONMENTALFUNCTIONSRECOGNIZINGTHEUTILITYOFSUCHINFORMATIONTO THEANALYSISOFENVIRONMENTALANDECONOMICPOLICY)TALSOCALLSFORINCLUDINGAFULL
THANONLYTHOSEATTRIBUTABLETOECONOMICACTIVITY!SIDEFROMTHEDEPLETIONALLOW ANCEWHICHTHEPANELWISHESTOINCLUDEINTHEMAIN3.!.ATURES.UMBERSRECOM MENDSTHATOTHERADJUSTMENTSBEINCLUDEDINSATELLITEACCOUNTS 4HE REPORTDOESNOTEXPLICITLYDISCUSS THEQUESTIONOFWHETHER TOCALCULATE
ADJUSTEDMACROECONOMICMEASURESBASEDONTHESATELLITEACCOUNTS)TSRECOM MENDATIONSAREROOTEDINTHETHEORETICALCONCEPTSTHATSUGGESTTHAT..0COULDBEA MEASUREOFSUSTAINABLEINCOMEIFCALCULATEDINTHERIGHTWAY)TDOESCALLFORDEVEL OPMENTOFCOMPREHENSIVEACCOUNTSTHATINCLUDEALLASPECTSOFTHEECONOMYRATHER THANFOCUSONONENATURALASSETORENVIRONMENTALISSUEATATIME3UCHACOMPRE HENSIVEAPPROACHISESSENTIALINORDERTOCALCULATETHEADJUSTEDMACROECONOMIC INDICATORS)TRECOGNIZESHOWEVERTHATTHEASSUMPTIONSUNDERWHICHSUSTAINABLE INCOMECOULDACTUALLYBECALCULATEDBASEDONTHEACCOUNTSAREEXTREMELYRESTRIC TIVEANDTHATAGREATDEALOFMETHODOLOGICALWORKREMAINSTOBEDONEBEFOREWECAN RELIABLYMEASUREALLOFTHENONMARKETEDPRODUCTSANDCORRECTLYVALUEALLFORMSOF CAPITAL4HISMAYEXPLAINWHYTHEREPORTMAKESNOEXPLICITRECOMMENDATIONSCON CERNINGTHECALCULATIONOFSUSTAINABLEINCOMEOROTHERADJUSTEDMACROECONOMIC INDICATORSINTHEPROPOSED53ACCOUNTS
!SDISCUSSEDIN#HAPTERTHEREVISED3%%!DOESNOTINCLUDEMEASURESOFNATIONAL WELFAREASTHEYWOULDNOTBECOMPATIBLEWITHTHE3.!ANDTHE3%%!ISDESIGNED TOEXTENDRATHERTHANREPLACETHE3.!4HISWILLNOTHOWEVERELIMINATETHESTRONG INTERESTINWELFAREMEASURESAMONGECONOMISTSANDENVIRONMENTALISTSALIKE4HIS SECTIONREVIEWSSOMEOFTHATWORKCONSIDERINGBOTHEARLYEFFORTSTHATPREDATECON CERNSABOUTTHEENVIRONMENTANDMORERECENTEFFORTSTOCREATEALTERNATEMEASURES TOTHOSEOFTHE3.!