Geology Reference
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indicative of the accounting system's nature with measurements in tonnes, cubic
meters, or barrels -there is simply no homogeneity in units or specificity in mineral
type. In fact, “a total for each class of deposit across different resource types cannot
be meaningfully estimated due to the use of different physical units for different
resources. For certain sub-sets of resources, for example energy resources, an aggre-
gate across certain resource types may [however] be possible using a common unit
such as joules
22
.”
Regarding the environmental impact of either mineral or energy resource extrac-
tion, the SEEA organises the associated costs into a framework that allows for its
annual evaluation. Such impacts can be in the form of air, water and soil pollution
or the degradation of environmental reservoirs. Mining activities in particular, have
a large effect on landscape aesthetics, ecosystems and local settlements. In theory,
the revenues generated by mining should overcome the temporal or permanent loss
of the environment. The only way to know whether this is actually the case, is
via the monitoring and accounting of all these impacts in a systematic and stan-
dardised manner which is in effect SEEA's greatest contribution. Unfortunately,
the loss of (i) landscapes, (ii) ecosystems supporting particular biotas or, (iii) local
communities, are not always captured by these impassive accounting systems.
Under SEEA, the valuation of the stocks is undertaken using a NPV approach
for each individual resource type. In the ideal case, this is done for each specific
deposit of every given resource. The total value of mineral and energy resources are
obtained via their combined sum.
Hence why in mining, the principal idea is to generate a time series of expected
returns due to extraction. This series is obtained from the expected rate of extrac-
tion together with projections of its expected price based on historic values. This
stream is then discounted to reflect the value a buyer would be prepared to pay for
the asset in the current period. “There are five key aspects of NPV that require
explanation”:
(1) The measurement of returns on environmental assets: “The returns on environ-
mental assets are considered as the surplus value accruing to the extractor or
user of an asset calculated after all costs and normal returns have been taken
into account”. It provides a gross measure of the return to environmental assets.
Yet it is also relevant to consider a net measure of expected return by deducting
depletion from resource rent. The surplus value of a resource extracting com-
pany should in the authors' opinion, not only include a financial investment
return but also a return for the environmental assets used in production with
any resource rent and net return to environmental assets derived within the
national accounts framework through a focus on the operating surplus.
(2) The determination of the expected pattern of resource rents based on expected
extraction profiles and prices: The most commonly applied method for estimat-
22
See http://unstats.un.org/unsd/envaccounting/seea.asp. Accessed June 2013.
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