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Reconciling Hotelling Resource Models with Hotelling’s Accounting Method

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  • Robert D. Cairns
  • John M. Hartwick

Abstract

In green accounting, it is seldom checked that depreciation must sum to original value. A re-examination of green accounting under this condition finds that, in a non-autonomous program, income should include capital gains. Subtle questions respecting the role and treatment of capital gains are brought to light through six models in exhaustible-resource economics. It is likely that there are sources of non-autonomy when a problem is not optimal or when there are non-priced assets—in practice, always. Accordingly, the questions raised strongly influence accounting method.

Suggested Citation

  • Robert D. Cairns & John M. Hartwick, 2022. "Reconciling Hotelling Resource Models with Hotelling’s Accounting Method," The Energy Journal, , vol. 43(5), pages 117-138, September.
    • Handle: RePEc:sae:enejou:v:43:y:2022:i:5:p:117-138
    DOI: 10.5547/01956574.43.5.rcai
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    References listed on IDEAS

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    1. Ferreira, Susana & Vincent, Jeffrey R, 2005. "Genuine Savings: Leading Indicator of Sustainable Development?," Economic Development and Cultural Change, University of Chicago Press, vol. 53(3), pages 737-754, April.
    2. World Bank, 2011. "The Changing Wealth of Nations : Measuring Sustainable Development in the New Millennium," World Bank Publications - Books, The World Bank Group, number 2252.
    3. John M. Hartwick, 2000. "National Accounting and Capital," Books, Edward Elgar Publishing, number 1885.
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    Cited by:

    1. Robert D. Cairns, 2023. "Measurement of diverse, irreversible capital," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(4), pages 931-951, December.

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