Valuation of Subsoil Minerals: Application of SEEA for Bangladesh

Working Paper no. 124-17

The quality of the Gross Domestic Product in developing countries is as important as its sizegiven environmental degradation due to the aggressive extraction of subsoil minerals fromthe geo-sphere to accommodate production processes as well as emissions into the biosphere.Green national accounting is one way to come up with more durable environmentalpolicymaking, which does not compromise ongoing economic expansion in developing andemerging economies. The present paper is an attempt to conduct a valuation of the threemost important exhaustible natural resources, viz., natural gas, coal and hard rock, viathe System of Environmental-Economic Accounting, which has not yet been carried out inBangladesh. The study applies the net present value method for natural resources for thispurpose. We prepare physical and monetary balance sheets for each of the three resourcesfor the most recent accounting years. We test the sensitivity of the opening balance by usingdifferent discount rates for the selected minerals. The results reveal that the stock value ofcoal is about eight times higher than that of natural gas even though the latter is regardedas the most important subsoil mineral among the top three resources in Bangladesh. Thefindings of this study will be of use to policy makers to work on a more environmentallysensitive national accounting system.