Estimating depletion cost for coal extraction in India
Student name: Mr Chandan Jain
Guide: Prof M.N. Murty
Year of completion: 2012
Host Organisation: Institute of Economic Growth, Delhi University
Abstract: The traditional estimates of national income have come under criticisms for not meeting the
sustainability criteria by failing to account for the depletion of natural resources. The growing
interest in sustainability has thus led to development if various methods that can be used to
estimate the depletion value of natural resources and these estimates can then be used to
estimate the sustainable measures of national income. These methods include the Net Price
Method, Net Present Value Method and the User Cost Method. The present study discusses
these methods in detail and then uses the User Cost Method to estimate the depletion value
for the case of coal resources in India. Given the conflicting views about the appropriate rate
of discount in the environmental economics literature, the depletion value has been calculated
at various rates of discount which are 2%, 6% and 8%; the use of various discount rates have
also helped in comparing the change in depletion value with the change in the discount rate.
