Accounts overdue : natural resource depreciation in Costa Rica

The national income accounting framework assesses overall economic performance. It depreciates man-made capital but does not consider depletion of natural resources. This framework is especially faulty in countries like Costa Rica where natural resources constitute the main economic assets. An accounting framework which incorporates natural resources reveals that between 1970-1989 Costa Rica lost natural resources equalling more than one years gross domestic product (184 billion colones = US $4.1 billion). These natural resources included forests soils and fisheries. Yet this is only a small percentage of what actually was lost because the economists had no value to use for estimates of other natural resource losses such as wildlife habitat. During 1983-1989 the mean annual depreciation of forests soils and fisheries was 70% greater than the mean annual depreciation for 1970-1982 (11.2 billion colones vs. 6.5 billion colones). Since timber became more rare and thus more expensive rising costs of deforestation made up much of the increased annual depreciation rate. Mean soil depreciation costs were approximately the same from 1970-1989 (2.6 billion colones). Yet in 1984 soil depreciation costs constituted 9% of value added in agriculture. There were no restrictions on overfishing during the study period which resulted in complete destruction of the economic value of fisheries. During 1970-1989 natural resource depreciation rose a mean 6.4%/year. Since the traditional accounting system disregarded the loss of Costa Ricas natural resources it inflated actual net capital formation by >41%. Economic development programs in Costa Rica have abandoned its land forests and seas which are three of the countrys sources of wealth. Yet national policymakers still do not understand the relationship between economic development and natural resources.