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Recording of natural resource depletion for a non-renewable resource

Outcome paper:English
Cover note:English
Comment template:English
Global consultation status:Open
Deadline for comments:28/10/2010
Number of comments:20
Comments from the global consultation
Posted onProvided byComments
23/12/2010Central Bureau of Statistics Israel1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Yes
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Yes. Guidelines for this kind of valuation should be very explicit, to ensure comparability.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Yes
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Yes
08/11/2010France/ MEEDDM/CGDD/SOeS1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
We have some disagreements about this option and the underlying assumptions. It is difficult to understand why it would be preferable to treat the extraction of a certain amount of natural resources as a consumption of fixed assets rather than the sale of a slice of the resource itself, more or less analogously to a withdrawal from inventories. As a matter of fact the depreciation patterns differ a lot between a stock of natural resources and fixed assets. On the one hand there is a removal of a certain quantity from a deposit which will be consumed later on in the production process. On the other hand (CFC) there is a repeated use of an equipment in the production activity and its depreciation is not due to the loss of material flows released by the equipment. It comes from physical deterioration, obsolescence and accidental damage. This debate has significant implications. Unlike option A2, options A3 would let GDP unchanged giving implicitly the wrong impression that the extracted natural resource itself results from economic production while it pre-exists before any human activity (something the SNA recognizes when recording discoveries as “other changes in volume of assets”. The extraction process has just changed its location. Secondly we don''t agree with the argument presented in §10 that option A2 would lead to an unbalanced system and adjustments would be needed. The non equivalence between "the price received by the extractor and the price paid by the purchaser" is wrongly stated in this §. s d. However in accordance with solution A2 the scheme of accounts must be completed. In solution A2, two different goods have to be distinguished : - the natural resource in the ground before extraction - the product after extraction. A supply and use account is introduced for the resource before extraction with two entries : - the resource portion extracted during the period is recorded as a negative change in inventories ( or an equivalent term if so preferred) ; it is thus a supply ( formally a negative use) - on the use side, an intermediate consumption of the same amount ( by the extractor) balances the account The supply and use account for the product after extraction is the same as in the present SNA. The value of the output is unchanged. However , in the industry accounts, the value added of the extractor is reduced by the amount of its new intermediate consumption of the natural resource in the ground before extraction In §12, the practical difficulties which are pointed on option A2 (difficulties to distinguish in an income tax paid by a mining company the part attributable to depletion and the other part attributable to other activity.) are not really convincing. Indeed, SNA recognises royalties as rent payments made by the extractor to the owner of the resource (cf. § 7.110;7.160;17.342;17.343). The distinction between these payments and income tax would not be more complicated if option A2 would be adopted. §13 : "[Option A2] therefore widens the gap between income measures in business reporting and in the national accounts and distorts the financial reality of extractive industries as an often significant base for government revenues, among other things." We could discuss the point to know if production and income accounts should strictly follow financial reality which is in itself a relative notion (cf. changes in international norms related to business accounting). Here we like to stress that with option A2, revenues (to be distinguished from income) coming from the sale of natural resources are not dropped out of the accounts but are recorded in the capital accounts which allows any required financial analysis. The fact that economic accounts and financial measures can in certain circumstances deviate is not an issue. On the contrary, it can be an interesting indication.
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Agree as a general rule. Disagree with the specific assumption identifying the re-evaluation term (rVt) as a natural capital income. On which arguments is this based ? With option A2, the total rent would be excluded from income (including rVt).
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Agree
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Agree but this option should be consistent with the one chosen for topic 1. The asymmetry in question in §54 doesn''t seem to be justified. The role of this "charge against production" would be to exclude a non produced value from production accounts and that would be consistent with the present SNA treatment for new appearances (in accordance with option C1) which are not part of the output (no need to consider an original treatment for additions and subtractions because of this additional charge for depletion).
04/11/2010Switzerland/Federal Statistical Office1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Yes
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Yes
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Yes
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Yes
02/11/2010New Zealand/Statistics New Zealand5. Any other comments?
Statistics New Zealand does not currently have sufficient subject matter expertise to comment on the questions raised for issue13: Recording of Depletion for Non-renewable Resources. Relevant agencies were contacted but did not feel in a position to comment on the specific questions raised
29/10/2010Malaysia/Department of Statistics5. Any other comments?
1. The Department of Statistics Malaysia (DOSM) has no experience in developing any environmental account using the SEEA framework. However, DOSM is currently trying to develop one of the SEEA account (eg Water account) with the experience and knowledge gain while visiting Australia Bureau Statistics (ABS), and also with the guide of the SEEA 2003. However DOSM, experience constrains in developing this account with lack of expertise in this field, human resources and budget. 2. DOSM also wants to learn in detail how to develop the SEEA account. Please inform and include us if there is any training/workshop to be conducted in future. 3. Therefore DOSM is unable to contribute fruitful comments for the revision of the SEEA. However, DOSM would like to be involved in further development of this matter.
28/10/2010United Nations Statistics Division1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Yes, resource rent should be treated comprising income and decline in the value of the natural resources.
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Yes
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Yes
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Yes Consequently the fixed assets capital services should be treated in the same way as suggested in the 2008 SNA, namely as a supplementary item (see table 20.11, 2008 SNA)
  5. Any other comments?
No
28/10/2010United Kingdom/Office for National Statistics1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Broadly agree. As stated, depletion reflects the change in value of the natural resource due to the physical removal of the resource. One point raised was whether the change in value should be measured only where it has an opportunity cost, recognising that extraction now may not be at the expense of later production. The example given is late-life production of oil and gas fields where it would be uneconomic to redevelop the field to extract the remaining resource if existing infrastructure had been removed.
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Broadly agree, but with the caveat that the NPV can be applied with some bold assumptions which must be tested. For example, examining the impact of changes in price and extraction costs, examining the credibility of patterns of extraction solely based on the ‘smooth’ continuation of past trends.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Yes to both.
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Yes.
  5. Any other comments?
No.
28/10/2010Canada/Statistics Canada1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Agree. Option A3 (paragraph 14: Under this option revenue produced from the use of a natural resource in an accounting period is split into two elements: a return to the owner of the natural resource; and an element representing the change in value of the natural resource. As a resource becomes scarcer, the share of income diminishes and the value of the natural resource withdrawn increases).
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Agree. In the absence of market transactions for resources in-situ, NPV is the best alternative for valuing natural resources. However care must be taken in the following cases: a) where extraction is very small or zero, b) when the rent and thereby NPV becomes zero or negative - mainly due to a sudden drop of the resource price, and c) when the rent becomes extremely high due to a sudden increase in price. The SEEA 2003 (7.316) has briefly pointed out these issues; the revised SEEA could provide more detailed guidance on them.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Agree. Mineral exploration should be valued on the basis of market prices when carried out by a contractor and on costs when it is on own account. Also, as noted in 2. NPV is the best alternative for valuing natural resources in the absence of market transactions for resources in-situ. The value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration. Since exploration creates knowledge, even if no deposit is found, mineral exploration assets should be separated from mineral deposits. Whether exploration efforts are successful or not, exploration expenditures are needed to acquire new reserves and are all classified as gross fixed capital formation. (SNA 2008, 6.231). If a deposit is found, then the value of exploration can be excluded from the NPV of the resource rent stream by deducting the cost of capital associated with the exploration; i.e. the return to capital and capital depreciation, which are deducted from gross output in the calculation of rent, should ideally include capital costs associated with exploration and drilling activities.
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Agree. To the extent that an extended generation of income account is undertaken, treating subtractions from (and additions to) non-renewable resources as noted above seems reasonable.
28/10/2010Botswana/Central Statistics Office1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Yes. Resource rent should be treated partly as depletion and partly as income. It takes into account the costs the resource owner incurred and initial value of the resource. All the years with no extraction should be deleted or the underlying assumptions can be adjusted.
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Yes. This is because the NPV takes account of assumptions and provides for discounting of mineral resources over time due to depletion.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Yes. This is because the resource rent should be total returns less the exploration and production costs. In addition, exploration of minerals is not seen as production of mineral assets and its value should therefore be excluded from value of minerals.
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Yes. The crux of SEEA is to account for depletion of natural resources during production process.
28/10/2010Mexico/INEGI1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Yes, we can address the premise that while natural resources are depleted throughout asset life, decreases the value added in the economy; this idea is lined with the perspective of quadruple entry accounting embodied in the SNA. That is, all transfer from natural resources to the economy is a net loss for the environment. Finally, the costs incurred by the extraction of natural resources, should have an equivalent in the environment, in terms of the reduction of the productivity of the asset due to its depletion.
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Although the involved assumptions among the VPN approach, the experience has shown satisfactory results in terms of consistency between the behaviour of the NPV and the rate of extraction of natural resources - change in the volume of the active -. This implies the adoption of an appropriate discount rate. Remember Consider different market rates are important, identifying the government discount rates as being the most suitable in function of their stability. It is necessary to support the changes to the NPV with some related statistics to the natural resource which is being measured (with extractive activity in general and disasters), strengthening the consistency and the proper choice of the asset life and the discount rate.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Yes, we agree with the B2 option, in terms that we share the idea of associating the produced asset of the mineral exploration with the process of extracting, instead of to do it with the new discoveries of mineral and energy resources. I.e., to distinguish cases where an extraction or exploration activity has been contracted. In terms of valuation, we are in line with the NPV approach as the best tool, since it lacks the observed market value, or the asset stock estimates. Recall that the product obtained from the exploration is the natural asset prior to the economic activity of extraction.
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Yes we agree with C1 option, in terms that allow us to move onto the accounting record, due to mineral exploration efforts are not random.
  5. Any other comments?
Not at the moment
28/10/2010Denmark/Statistics Denmark1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Yes, in principle, as long as income is defined as Hicksian income (not necessarily the same as income from current extraction activities, cf. comments to Question 4)
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Yes, in the absense of market valuation. However we have reservations with regard to the definition and interpretation of depletion, cf. our comments to question 4. It should be underlined that market values should be used if data are available. There is a need to describe how income and depletion is determined in such cases.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Yes
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
No, we do not support the introduction of an extended generation of income account in volume 1. - Generally, the introduction of the depletion adjusted aggregates in SEEA-volume 1 is a step towards so-called “Green domestic products”. It is well-known and well-described that in a statistical/accounting context such measures are problematic due to their hypothetical and partial nature. The exact interpretation of the results are uncertain. - The split between depletion and income is non-observable and can only be based on strong assumptions. - The very strong assumption that the income arising from the application of the NPV method is purely related to the current extraction activities are questionable, and do not take into account the intertemporal nature of the use of the resource and the development of the value of the resource. -assuming that the whole natural resource is used in every period as an input into the production process (and thus requires a production based return to capital) seems strange. - Implementing the full accounting sequence in which also asset accounts allocated to extractor and owner of the asset are included leads to inconsistent accounts, which can only be mended by counterintuitive ad-hoc procedures. - The problem of occurrence of negative depletion mentioned in the outcome shows that the procedure is unhealthy. Assuming that there is only a problem when the extraction is negative in one period (and that the depletion then becomes negative) is very simplistic. It can easily be shown that the problem exists also in situations with longer periods with planned small extraction, and more generally that it is inherent in any calculation of the depletion. - There is not much evidence on the interpretation and usefulness of such measures. Very few statistical offices have experience with publishing such numbers. We suggest that the decription of this split (including the problems of interpretation) and the introduction of the adjusted aggregates are removed from volume 1 of SEEA. We agree that the change in value due to dicoveries are shown in the other changes in asset accounts.
28/10/2010Latvia/Central Statistical Bureau1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Yes we agree that resource rent represents partly income and decline in vlaue of natural resources.
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
We agree that NPV can be best valuation method when market valuation is not available.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Yes. Value of mineral and energy resources should be based on market prices, and exploration costs have to be excluded.
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Yes we agree with Option C1,
28/10/2010Lithuania/Statistics Lithuania1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Yes, we consider that the Option A3 is the correct approach when the resource rent is treated partly as income and partly as depletions. Under this option revenue produced from the use of a natural resource in an accounting period is split into two elements: a return to the owner of the natural resource; and an element representing the change in value of the natural resource. As a natural resource becomes scarcer, the share of income diminishes until, in the period in which the natural resource is finally exhausted, all the revenue represents the value of withdrawal of natural capital (Harrison, 1999).
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Yes. Net Present Value (NPV) model is an accounting tool used to estimate various accounting concepts. We consider that the use of Net Present Value (NPV) techniques allows a coherent estimation of the value of natural resource, the depletion and the income elements and is the best solution in the absence of market valuation.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
We support the recommendation above, i.e. a combination of Options B1 and B2. It minimises the risk of double counting of the value of mineral exploration with the associated mineral and energy resource.
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
We support the recommended treatment (additions and subtractions) of flows of non-renewable natural resources, i.e. Option C1.
28/10/2010Australia/Bureau of Statistics1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Agree
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Agree
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Agree
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Agree
28/10/2010China1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
The resource rent is the value of the natural resources.
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
NPV is d best way.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
The value of mineral exploration is part of the value of mineral and energy resources.
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
yes
27/10/2010Pakistan/Federal Bureau of Statistics5. Any other comments?
Same “Reply” as given under Issue # 4
27/10/2010Lebanon/Central Administration of Statistics1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
Yes
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
Yes
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
Yes
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Yes
25/10/2010Czech Republic/CZSO1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
CZSO agrees that rent should contain both income part and part connected with declining value of the asset itself described in A3 option.
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
NPV is a first best valuation technique in case no market data is available. NPV is however heavily dependent on assumption made by the observer. Consensus should be made concerning the issues of determining asset lives, depreciation patterns, rate of return to assets and discount rate.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
CZSO agrees that exploration should be based on either market prices (or eventually costs) and that the value non-renewable resources should be based on observed market value (or eventually NPV). Value of resource excludes the costs of mineral exploration, since the former is a tangible non-produced asset and the later is an intangible asset (i.e. a knowledge about existence of the tangible one) that is not subject to depletion.
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
CZSO agrees to use C1 option for non-renewable resources with increases accounted for in the other changes in assets accounts not exaggerating the income level.
20/10/2010Jordan/Department of Statistics1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
We agree that Part of the resource rent represents a decline on the value of the asset and part is income. That because extraction of non-renewable resources is not a sustain process, therefore the owner of the resources must be aware of the risk when he want to account the income. Based on that, any income should equal or more than the rent + decline in the stock.
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
We agree to use the NPV in measuring the income and the depletion of the natural resources to avoid the underestimation of the asset value with time.
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
We agree that value of mineral exploration be based on costs, to facilitate the calculations as an initial cost. The value of energy and mineral resources could be estimated based on the net present value of the resource rent and we should exclude the value of mineral exploration.
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
Ok
  5. Any other comments?
No
20/09/2010Ecuador/INEC1. Do you agree that the income and depletion elements of resource rent be treated in line with SEEA-2003 Option A3 whereby part of the resource rent represents a decline in the value of the natural resources and part is income?
You need a deeper analysis and specify that revenues are talking about and which ones will be included.
  2. Do you agree that, in the absence of market valuation, NPV approaches be considered the best way to measure the value of natural resources and the associated income and depletion; noting that care should be taken in the application of NPV approaches such that the estimates that emerge from the model reflect the underlying observed extraction patterns?
In this respect we fully agree, the NPV will help us to calculate the present value / present to future values
  3. Do you agree that the value of mineral exploration be based on either market prices or costs depending on whether it is carried out by a contractor or on own account and that the value of mineral and energy resources should be based on observed market value or, where this is unavailable, on the net present value of the resource rent. Further, the value of mineral and energy resources should be calculated to exclude the value of any associated mineral exploration?
The value of mining will always be reflected at market value, and that''s the way of calculation. And if they should be counted as minerals, energy, resource itself is part of the farm.
  4. Do you agree that the additions to and subtractions from non-renewable natural resources be treated in line with SEEA-2003 Option C1 whereby the depletion of natural resources is recorded in an extended generation of income account leading to a depletion-adjusted operating surplus, and the increases in non-renewable natural resources due to discoveries are shown in the other changes in assets account?
The depletion of natural resources generated in this income but not being a sustainable development for the future means that there is no exploitation therefore have no economic resources and no longer be regarded as an asset.
 

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