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Hicksian Income from Resource Extraction in an Open Economy

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  • Kjell Arne Brekke

Abstract

We derive a measure of national income, defined in terms of maximum sustainable per capita consumption. If population and interest rates are constant, the income generated by natural resource extraction is the return on resource wealth, defined as the present value of future resource rents. With a growing population or declining interest rate, sustainability requires net increases in wealth over time. The income from extraction of nonrenewable resources can exceed resource rents, contrary to the conclusions of El Serafy (1989) and Repetto et al. (1989). Finally, we present an example illustrating the hazard of consuming the full increment of Hicksian income.

Suggested Citation

  • Kjell Arne Brekke, 1997. "Hicksian Income from Resource Extraction in an Open Economy," Land Economics, University of Wisconsin Press, vol. 73(4), pages 516-527.
    • Handle: RePEc:uwp:landec:v:73:y:1997:i:4:p:516-527
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    Cited by:

    1. Gowdy, John, 2005. "Toward a new welfare economics for sustainability," Ecological Economics, Elsevier, vol. 53(2), pages 211-222, April.
    2. Michael Harris, 2001. "Revaluations and Capital Gains in the Context of Natural Resource Accounting," Working Papers 2001.08, School of Economics, La Trobe University.
    3. Geir Asheim & Taoyuan Wei, 2009. "Sectoral Income," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(1), pages 65-87, January.
    4. Harris, Michael & Fraser, Iain, 2002. "Natural resource accounting in theory and practice: A critical assessment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(2), pages 1-54.
    5. Harris, M., 2000. "Some Unpleasant Natural Resource Accounting Arithmetic: The Welfare Inconsitency of," Department of Economics - Working Papers Series 765, The University of Melbourne.
    6. Salvati, Luca & Carlucci, Margherita, 2010. "Estimating land degradation risk for agriculture in Italy using an indirect approach," Ecological Economics, Elsevier, vol. 69(3), pages 511-518, January.
    7. Haener, Michel K. & Adamowicz, Victor L., 2000. "Incorporation of risk in regional forest resource accounts," Ecological Economics, Elsevier, vol. 33(3), pages 439-455, June.
    8. Omri, Emna & Chtourou, Nouri & Bazin, Damien, 2015. "Solar thermal energy for sustainable development in Tunisia: The case of the PROSOL project," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 1312-1323.
    9. Eric Neumayer, 2000. "Resource Accounting in Measures of Unsustainability: Challenging the World Bank's Conclusions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(3), pages 257-278, March.
    10. Gren, Ing-Marie & Isacs, Lina, 2009. "Ecosystem services and regional development: An application to Sweden," Ecological Economics, Elsevier, vol. 68(10), pages 2549-2559, August.

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