Transcript Land and subsoil assets in the ABS

Agenda item 3
Accounting for Natural Resources: Land
and subsoil assets in the ABS
Andrew Cadogan-Cowper
Australian Bureau of Statistics
Overview
1. Environmental assets on the balance
sheet
2. Land asset valuation and degradation
3. Subsoil asset valuation and depletion
4. Production adjusted for depletion
and degradation
Non-Financial assets on the
Australian balance sheet (chain volume
measure, $ billion)
2002
2004
2006
2008
Produced
2586
2777
3008
3288
Non-produced
3118
3199
3272
3345
3100
3190
3258
3335
Land
2806
2872
2933
2994
Subsoil assets
292
306
323
339
Native standing timber
2
2
2
2
5704
5972
6279
6633
Environmental
Total
Source: Australian System of National Accounts 2007-08 (ABS Cat. no. 5204.0)
Valuing residential land
ABS Census of Population
and Households
Dwelling
count
RBA
Contractor (Australian
Property Monitors)
Elemental sales data
Valuers-General
Mean sales data
Residental land and dwelling
stock ($)
92% to Household sector
(published by RBA)
8% to Other sectors
Minus ABS estimate of
household capital stock
of dwellings
ABS
Residental land + dwelling stock ($)
for all sectors
Scaled back up to 100%
Minus ABS estimate of
capital stock of dwellings
for all sectors
Total residential land ($)
Minus Household
Residential land
Household residental land
($)
Residual assigned to NFC and
GG *
* NFC and GG split using data from the
Valuers-General and Public Finance
Measuring the volume of land
• Balance sheets in the ASNA are compiled on the
basis that land volumes do change over time
• Volume change may result from both changes in
physical quantity and quality
• Although physical land area of a country changes
little over time, "It is generally assumed in economic
analysis that whenever a difference in price is found
between two goods and services that appear to be
physically identical there must be some other factor,
such as location, timing or conditions of sale, that is
introducing a difference in quality". (2008 SNA, para 15.67)
• Effects include land degradation, deforestation,
reforestation, land improvement and rezoning
Land degradation: experimental
estimates for Australia
• Kemp and Connell (2001) combined data from a
farm survey with land value data to estimate the
difference in the capital value of farms with and
without degradation at $14.2 billion in 1999
• A second study, the National Land and Water
Resources Audit (2002), used models to estimate
the lost profit at full equity (PFE) due to soil
degradation at $2.6 billion in 1996–97
Subsoil assets
Included in the ASNA balance sheet when..
1.
2.
3.
•
•
they have a high geological assurance
extraction is expected to be profitable at the
prevailing price and technology, and
they are owned by an economic entity (usually the
government).
In the ASNA, economic demonstrated resources
(EDR) include both proven and probable reserves
There are 27 minerals included on the Australian
balance sheet, including coal, oil and natural gas
reserves
Valuing subsoil assets
•
ASNA uses the net present value (NPV) approach
n RRt
Vt = Σ
t=1 (1+r)t
V = net present value, RR = resource rent, r = discount rate, n = asset life
•
•
Asset life equals EDR at the end of the year divided by the five year
moving average of production.
The discount rate used is the "large business borrowing rate", as
published by the Reserve Bank of Australia, converted to a real rate.
This rate represents the opportunity cost of the mining companies
funds invested in extraction.
Resource rent (RR)
• The value of capital service flows or the share of
gross operating surplus, rendered by the subsoil
assets being exploited.
• RR = (p - c) * Q
p = average price received per unit,
c = average cost per unit (including a normal return to
produced capital)
Q = quantity extracted
• Costs per unit volume have been provided by AME,
while prices per unit volume are from publicly
available information sources such as ABARE,
London Metal Exchange, and London Bullion Market
Association.
Valuing subsoil asset depletion
• Economic depletion (not physical) arises when the value of a
resource stock has been lowered through its use in a
productive activity, and the use has reduced the asset's ability
to produce an income stream in the future.
• The depletion in any one year is the change in the value of
the
asset
betweenofthe
beginning
end
ofnon-renewable
the year resources
arising
Diagram
1. Decomposition
operating
surplus for and
an entity
using
purely from the extraction of minerals.
Capital services produced capital
Consumption of fixed capital
Consumption of fixed capital
Return to owner of produced assets
Gross operating surplus
Net operating surplus
Return to owner of non-produced
assets
Resource depletion
Capital services
-non-produced capital
(resource rent)
Production Adjusted for depletion and
degradation, Current Prices
2002–03
$m
2003–04
$m
2004–05
$m
2005–06
$m
GDP
781,675
841,351
897,642
967,454
1,045,674
less
Consumption of fixed capital
121,521
128,350
134,927
146,126
159,102
equals
NDP
660,154
713,001
762,715
821,328
886,572
less
Subsoil depletion
3,686
4,146
4,067
4,253
4,157
less
Land degradation
322
331
345
360
377
equals
Depletion adjusted NDP
656,146
708,524
758,303
816,715
882,038
ABS data available on request, Australian National Accounts
2006–07
$m