Resource accounting in measures of unsustainability: Challenging the WorldBank's conclusions

The World Bank has recently published a comprehensive study of environmenta l and resource accounting, covering 103 countries (World Bank 1997a). The s tudy concludes that many Sub-Saharan, Northern African and Middle East coun tries have had negative 'genuine' saving rates over the last 20 years and t herefore fail to pass the test of weak sustainability. This paper argues th at the Bank's conclusions depend on a method for computing user costs from resource exploitation that is challenged by two competing ones (the 'El Ser afy'-method and the method of Repetto et al.) and is inferior to one of its rivals. Resource rents are re-computed using the 'El Serafy'-method for 14 countries and the Sub-Saharan and Northern African and Middle East regions . The results are that both regions and almost all countries either stop ex hibiting signs of unsustainability or their unsustainability can be explain ed without having recourse to resource accounting. However, for Congo, Ecua dor, Gabon, Nigeria, Mauritania and Trinidad and Tobago there is a lesson: These countries did not adequately use the opportunities they were given th rough their natural resource endowments and should learn from their mistake for the future depletion of their remaining reserves of natural resources.