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Accounting for the distributional impacts of policy in the green accounts

Published online by Cambridge University Press:  01 February 2000

RICHARD D. HORAN ,
JAMES HRUBOVCAK ,
JAMES S. SHORTLE  and
ERWIN H. BULTE
RICHARD D. HORAN
Affiliation:
Agricultural Economist, RED/ERS/USDA, Room 4015, 1800 M St., Washington, D.C. 20036–5831, email: rhoran@econ.ag.gov
JAMES HRUBOVCAK
Affiliation:
Agricultural Economist, RED/ERS/USDA, Room 4010, 1800 M St., Washington, D.C. 20036–5831
JAMES S. SHORTLE
Affiliation:
Professor, Department of Agricultural Economics, 112 Armsby Building, The Pennsylvania State University, University Park, PA 16802
ERWIN H. BULTE
Affiliation:
Assistant Professor, Department of Economics, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, The Netherlands
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Abstract

Green income accounting models are designed to appropriately value changes in a country's natural resource (natural capital) base. However, green NNP is useful as a guide for domestic and international policy only to the extent that it accurately reflects the economic goals and policy options of policy makers. For example, international policy designed to slow natural capital depletion in a developing country is more effective if policy makers recognize the developing country's perceived income effects of the policy. Traditional green accounting models do not satisfy this criterion because they are based on the assumption that policy makers are either not concerned with the distributional consequences of policies, and/or are not limited in the instruments available to them. We present an alternative green NNP measure that reflects distributional goals and policy implementation. Using this measure, the depletion (accumulation) of natural capital stocks in excess of economically efficient rates may increase income.

Type
Research Article
Information
Environment and Development Economics , Volume 5 , Issue 1 , February 2000 , pp. 95 - 108
Copyright
© 2000 Cambridge University Press

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Footnotes

Thanks to two anonymous reviewers, the managing editor, and the editor for helpful comments. All remaining errors are our own. The views expressed in this paper are those of the authors and do not necessarily reflect those of the Economic Research Service or the USDA.