ALTERNATIVE METHODS FOR ESTIMATING RESOURCE RENT AND DEPLETION COST -THE CASE OF ARGENTINA YPF

The quantification of the depreciation of natural capital is fundament al to the evaluation of the sustainability of economic development. Se veral methods for calculating the depletion cost of natural resource s tocks have been proposed and used, including net price, El-Serafy's de pletion cost, sustainability price, transaction value and replacement cost. Miller and Upton have also shown how resource rent can be estima ted using the market value of a firm's liabilities. The relation of re source rent to depletion cost is discussed. These alternative approach es and techniques are described and critiqued, The alternative methods are used to obtain estimates for the resource rent and depletion cost of Argentina's petroleum reserves with data derived from the privatiz ation of Argentina's state-owned oil enterprise, YPF, The results are used to argue that two methods, net price and transactions, overvalue the resource rent of petroleum reserves and to support the derivation of rent from the value of a firm's stock. (C) 1998 Elsevier Science Lt d. All rights reserved.