Green Net Regional Product for the San Luis Basin, Colorado: An economic measure of regional sustainability

Abstract

This paper presents the data sources and methodology used to estimate Green Net Regional Product (GNRP), a green accounting approach, for the San Luis Basin (SLB). We measured the movement away from sustainability by examining the change in GNRP over time. Any attempt at green accounting requires both economic and natural capital data. However, limited data for the Basin requires a number of simplifying assumptions and requires transforming economic data at the national, state, and county levels to the level of the SLB. Given the contribution of agribusiness to the SLB, we included the depletion of both groundwater and soil as components in the depreciation of natural capital. We also captured the effect of the consumption of energy on climate change for future generations through carbon dioxide (CO2) emissions. In order to estimate the depreciation of natural capital, the shadow price of water for agriculture, the economic damages from soil erosion due to wind, and the social cost of carbon emissions were obtained from the literature and applied to the SLB using benefit transfer. We used Colorado's total factor productivity for agriculture to estimate the value of time (i.e., to include the effects of exogenous technological progress). We aggregated the economic data and the depreciation of natural capital for the SLB from 1980 to 2005. The results suggest that GNRP had a slight upward trend through most of this time period, despite temporary negative trends, the longest of which occurred during the period 1985–86 to 1987–88. However, given the upward trend in GNRP and the possibility of business cycles causing the temporary declines, there is no definitive evidence of moving away from sustainability.