HICKSIAN INCOME FROM RESOURCE EXTRACTION IN AN OPEN-ECONOMY

We derive a measure of national income, defined in terms of maximum su stainable per capita consumption. If population and interest rates are constant, the income generated by natural resource extraction is the return on resource wealth, defined as the present value of future reso urce rents. With a growing population or declining interest rate, sust ainability requires net increases in wealth over time. The income fi o m extraction of nonrenewable resources can exceed resource rents, cont rary to the conclusions of El Serafy (1989) and Repetto et al. (1989). Finally, we present an example illustrating the hazard of consuming t he full increment of Hicksian income.