Nature’s Numbers: Expanding the National Economic Accounts to Include the Environment.

Abstract

Review: Nature’s Numbers: Expanding the National Economic Accounts to Include the Environment. By William D. Nordhaus and Edward C. Kokkelenberg, editors Reviewed by Steve T. Schroeder San Diego State University, USA Nordhaus, William D. and Kokkelenberg, Edward C., Editors. Nature’s Numbers: Expanding the National Economic Accounts to Include the Environment. Washington, D.C.: National Academy Press, 1999.250 pp. US$44.95, hard cover. ISBN: 0-309-07151-8. The National Academy of Sciences undertakes a review of environmental accounting with the results presented in Nature’s Numbers: Expanding the National Economic Accounts to Include the Environment. Identifying and assessing value for nonmarket accounts such as air and water quality, biodiversity, health, enjoyment of the natural environment, and other environmentally related concepts is a difficult task at best. However, Nature’s Numbers takes on the challenge and does a respectable job dealing with somewhat abstract concepts of incorporating environmental value into the national balance sheet. In fact, this book is quite revolutionary, given that previously neglected or inaccurately identified nonmarket environmental resources and/or costs should and can be more clearly valued in a tangible economic form. The book begins with a fairly technical assessment of various accounting methods used for environmental resources. It compares and contrasts methods, targeting key strengths and weaknesses. For example, the Bureau of Economic Analysis (BEA) currently uses five valuation methods for assessing subsoil mineral resources, none of which is identified as a standardized or preferred method. Critical to correct valuation of any natural resources are accurate data, which in many cases has to be inferred or is lacking. It is recommended that the BEA maintain significant efforts to improve accounting techniques for domestic mineral assets. An improved accounting system of national resources would allow policy makers to better assess trends in resource scarcity, and thus more effectively manage these resources. Better policies could improve chances that future generations will not be lacking vital resources as a result of today’s mismanagement. Other countries’ techniques for accounting environmental resources are also examined. The chapter, Accounting for Renewable and Environmental Resources, deals with determining interactions between natural resources, the environment, and economic activity. A main point is that this interaction of environmental