Abstract
The Bureau of Economic Analysis (BEA), U.S. Department of Commerce, in keeping with broad international efforts to “green” national gross domestic product (GDP) accounts, has attempted to create satellite accounts for mineral depletion. The present paper criticizes the BEA's unit rent measure of resource depletion, which is based upon Hotelling's pure theory of exhaustion. Following a thorough criticism of Hotelling's theory as a real-world model of mineral prices, practical issues related to the treatment of recycling, exploration, definition of reserves/resources, and their valuation/exploitation are introduced. For crude oil and natural gas and the nonfuel minerals, specific application problems of joint products and residuals complicate BEA's assumptions and efforts.
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