THE HOTELLING VALUATION OF NATURAL-RESOURCES - SOME FURTHER RESULTS

This paper tests the Hotelling Valuation Principle (HVP) for natural r esources using data from oil and gas (pure plays' such as royalty trus ts and master limited partnerships, The results support the HVP which specifies that the value of any mineral reserve may be predicted by th e market price of the resource, net of extraction costs, Regression re sults also indicate that a Box-Cox transformation of variables provide a better means of estimating the functional relationship between the value of an exhaustible natural resource and its market price. (C) 199 8 Elsevier Science Ltd. All rights reserved.