Download Integrating Natural Resources and Undesirable Outputs into Multi

Productivity Measurement with
Natural Capital
Nicola Brandt , Paul Schreyer and Vera Zipperer
(OECD)
Society of Economic Measurement, Paris July 2015
Motivation
• Traditional measures of productivity
growth fail to account for natural capital
• Only labour and produced capital are
considered as inputs
• Incorporating natural capital can give a
better understanding of its role for
productivity and economic growth
Motivation (2)
• Significant interest in links between
economy and the environment
• This paper only considers natural
resources
• Links are more extensive: ecosystem
services such as sink functions
• SEEA 2012
Framework (1)
Productivity growth = difference between output
growth and input growth
Traditional MFP:
𝒅𝒍𝒏𝑴𝑭𝑷 𝒅𝒍𝒏𝒀 𝒅𝒍𝒏𝒁
=
−
𝒅𝒕
𝒅𝒕
𝒅𝒕
Index of labour and produced capital inputs:
𝒅𝒍𝒏𝒁
𝒘𝑳 𝒅𝒍𝒏𝑳 𝒖𝑲 𝑲 𝒅𝒍𝒏𝑲
≡
+
𝒅𝒕
𝜸′ 𝒅𝒕
𝜸′ 𝒅𝒕
𝛾 ′ ≡ 𝑤𝐿 + 𝑢𝐾 𝐾 : costs of labour and produced capital
(exogenous real rate of return)
Framework (2)
Introduce natural capital input S:
𝒅𝒍𝒏𝑮𝑴𝑭𝑷 𝒅𝒍𝒏𝒀
𝒘𝑳 𝒅𝒍𝒏𝑳 𝒖𝑲 𝑲 𝒅𝒍𝒏𝑲 𝒖𝑺 𝑺 𝒅𝒍𝒏𝑺
=
−(
+
+
)
𝒅𝒕
𝒅𝒕
𝜸 𝒅𝒕
𝜸
𝒅𝒕
𝜸 𝒅𝒕
S:
flow of natural resources (extraction)
𝑢𝑆 :
unit rent of extracted resources
Note: unlike for produced assets, capital service actually
observable
𝛾 ≡ 𝑤𝐿 + 𝑢𝐾 𝐾 + 𝑢𝑆 S: costs of labour, produced and
natural capital
γ≠pY: cost of natural capital not measured residually
Framework (3)
Link between MFP and GMFP:
𝒅𝒍𝒏𝑮𝑴𝑭𝑷 𝒅𝒍𝒏𝑴𝑭𝑷 𝒖𝑺 𝑺 𝒅𝒍𝒏𝒁 𝒅𝒍𝒏𝑺
=
+
(
−
)
𝒅𝒕
𝒅𝒕
𝜸
𝒅𝒕
𝒅𝒕
MFP underestimates GMFP when dlnZ/dt > dlnS/dt
MFP overestimates GMFP when dlnZ/dt < dlnS/dt
A key issue: Data
• 23 OECD countries, Russia, South Africa
• Total economy
• Time period: 1985 – 2008
• Output, labour and produced assets: OECD
Productivity Database plus Guillen (Mexico)
and Voskoboynikov (Russia)
• Natural assets (oil, gas, coal, metals,
minerals): World Bank
Particular problem: unit resource
rents
• us = marginal revenue – marginal extraction
costs = gross operating surplus attributable
to natural resource
• we (have to) approximate marginal ressource
rents by average ressource rent
• Measured as: market price of resource net of
extraction costs (source: World Bank)
•  strong assumption
•  low data quality
•  results illustrative rather than
authoritative
Results (1)
• Share of resource rent in total costs is
modest for many OECD countries
• But Australia, Canada, Norway, Chile,
Mexico, Russia between 4 and 17%
• Difference between MFP and GMFP
modest for many countries
GMFP – MFP: percentage point
difference in annual average growth,
1986-2008
But larger variations over time
Norway
Difference adjusted and traditional MFP growth
4
3
Difference in
percentage points
2
1
0
-1
-2
-3
1986
1991
1996
2001
2006
dlnGMFP < dlnMFP during times of relative abundance  dlnZ<dlnS
Results (2)
• Also:
• Set of natural inputs incomplete
(missing in particular: land)
• Difference between MFP and GMFP
more pronounced at industry level
(see ABS estimates on MFP of Australian
mining industry)
The role of natural capital for
growth
Norway
United Kingdom
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
-0.5
-0.5
GMFP
Labour
1985 - 1999
Capital
Natural
Capital
2000 - 2008
GDP
GMFP
Labour
Capital
1985 - 1999
UK: natural capital substituted by productivity growth
NOR: natural capital substituted by produced capital
Natural
Capital
2000 - 2008
GDP
Data issues: again
•
Major issues of data availablity and -quality
•
Key point: measuring unit resource rent
– Marginal extraction costs –
confidentiality issue
– Available estimates vary signficantly
•
OECD-World Bank project on measuring
natural capital
•
OECD Task Force for implementation of
common methodology
Conclusions
•
Adjustment to productivity is small – but this
partly hinges on incomplete data
•
Scope of natural capital can be extended as SEEA
data becomes available
•
In particular with industry-level data
•
Studying the role of natural capital over time
contributes to tracking sustainability of GDP
growth
•
Extension to study the effects of undesired outputs
(pollution) on measured productivity (Brandt,
Schreyer, Zipperer 2014)
Thank you!