Towards Mineral Accounts for Botswana

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Towards Mineral Accounts for Botswana


Botswana’s economy relies heavily on minerals, which account for the period 1980-2005 for on average 37.7% of GDP, 82.5% of exports and 4.5 % of formal employment. Although mining is a critical sector of the economy and mineral assets a major source of Botswana’s wealth, the value of this wealth is not included in the asset accounts of the national economic accounts. Consequently, the economic accounts provide a distorted picture of Botswana’s economic health because they report the contribution of mining to GDP and income, but not the simultaneous loss of mineral wealth. Natural Resource Accounts (NRA) correct this omission by estimating the economic value of the mineral assets and the cost of depleting minerals, thus, providing policy-makers with a more accurate picture of whether Botswana is “living off its natural capital.” The economic value of minerals is measured as the “resource rent” they earn, i.e. the profit above the normal return on investment, which is due to the scarcity of minerals. Values are estimated for the entire mining sector and for the three major minerals (diamonds. copper/nickel and coal). The mineral accounts can be used to derive several valuable indicators of sustainability for policy-makers. These include a more accurate measure of Net Domestic Product, which has been adjusted for mineral depletion, the value of total wealth in the economy, the extent to which the depletion of mineral wealth is offset by investment of other forms of wealth, and the extent to which mineral rent is being recovered through taxes.


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Botswana_TowardsMineralAcc_2007.pdf Botswana_TowardsMineralAcc_2007.pdf (220.78 KB, 2,054 views)

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Details
Created:Thursday, October 30, 2008
Created By: Focal Person EEA
Last Modified:Wednesday, June 17, 2009
Last Modified By: Focal Person EEA
Type: INFO
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