Value and Depreciation of Mineral Resources Over the Very Long Run: An Empirical Contrast of Different Methods

Posted: 29 Feb 2012 Last revised: 22 Feb 2016

See all articles by Mar Rubio

Mar Rubio

Public University of Navarre - Department of Economics

Date Written: February 29, 2012

Abstract

The paper contrasts empirically the results of alternative methods for estimating the value and the depreciation of mineral resources. The historical data of Mexico and Venezuela, covering the period 1920s-1980s, is used to contrast the results of several methods. These are the present value, the net price method, the user cost method and the imputed income method. The paper establishes that the net price and the user cost are not competing methods as such, but alternative adjustments to different scenarios of closed and open economies. The results prove that the biases of the methods, as commonly described in the theoretical literature, only hold under the most restricted scenario of constant rents over time. It is argued that the difference between what is expected to happen and what actually did happen is for the most part due to a missing variable, namely technological change. This is an important caveat to the recommendations made based on these models.

Keywords: value, depreciation, mineral assets, net price, user costs, imputed income, environmental accounts

JEL Classification: Q51, F18, N56

Suggested Citation

Rubio Varas, Maria del Mar, Value and Depreciation of Mineral Resources Over the Very Long Run: An Empirical Contrast of Different Methods (February 29, 2012). Available at SSRN: https://ssrn.com/abstract=2013072

Maria del Mar Rubio Varas (Contact Author)

Public University of Navarre - Department of Economics ( email )

Universidad Publica de Navarra
Campus Universitario
Pamplona, 31006
Spain

HOME PAGE: http://www.econ.unavarra.es/mar_rubio/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
489
PlumX Metrics