Asset Accounts:
Overview
UNSD SEEA Training of Trainers Seminar
7-10 July 2015, Santiago
Joe St. Lawrence
Statistics Canada
Outline
 Background
 The accounting structure
 Physical accounts
 Valuation
 Data sources
 Land, water, and ecosystem assets
2
Statistics Canada • Statistique Canada
2016-07-23
Policy relevance
“Conventional economic aggregates generated through national
accounting, such as GDP, do not reflect the extent to which
production and consumption activities may be using up
environmental assets and limiting the capacity for these assets to
generate ecosystem services in the future.”
-TEEB Guidance Manual for Countries (2013)
OECD: indicators and reports: Green Growth and Material Flows and
Resource Productivity
World Bank: Wealth Accounting and the Valuation of Ecosystem Services
(WAVES)
3
Statistics Canada • Statistique Canada
2016-07-23
Asset Accounts: Applications
 Monitoring and management of natural wealth
• What is the contribution of natural assets to national
wealth?
• Are we maintaining total wealth (produced and
natural) over time, both in total and per capita?
• To what extent are we substituting produced assets
for natural assets?
• Is resource rent recovered successfully by
governments?
4
Statistics Canada • Statistique Canada
2016-07-23
5
Statistics Canada •5Statistique Canada
2016-07-23
SNA framework
Final demand
Sectors
Industries
Assets
Financial and
produced assets,
opening balance
Industrial intermediate
demand
Final demand
Gross fixed capital
formation
Wastes
Commodities
Industrial output of
goods and services
Sectors
Other changes in volume
& holding gains/losses on
financial & produced
assets
6
Statistics Canada •
Financial and
produced assets,
closing balance
Statistique
Canada
2016-07-23
SEEA framework
Final demand
Sectors
Industries
Assets
Financial and
produced assets,
opening balance
Natural resource
assets, opening
balance
Natural resource
assets, opening
balance
Industrial intermediate
demand
Final demand
Gross fixed capital
formation
Environmental protection
expenditures
Environmental protection
expenditures
Capital expenditures for
environmental protection
Resource production
by industries
Resource production
by households/gov’t
Resource use by
industries
Resource use by
households/gov’t
Waste consumption by
industries
Waste consumption by
households/gov’t
Waste output by
industries
Waste output by
households/gov’t
Other changes in volume
& holding gains/losses on
financial & produced
assets
Sectors
Wastes
Commodities
Industrial output of
goods and services
7
Statistics Canada •
Financial and
produced assets,
closing balance
Statistique
Canada
Changes in and holding
gains/losses on natural
resource assets
Changes in natural
resource assets
Natural resource
assets, closing balance
Natural resource
assets, closing balance
2016-07-23
Asset Accounting
Final demand
Sectors
Industries
Assets
Financial and
produced assets,
opening balance
Natural resource
assets, opening
balance
Natural resource
assets, opening
balance
Industrial intermediate
demand
Final demand
Gross fixed capital
formation
Environmental protection
expenditures
Environmental protection
expenditures
Capital expenditures for
environmental protection
Resource production
by industries
Resource production
by households/gov’t
Resource use by
industries
Resource use by
households/gov’t
Waste consumption by
industries
Waste consumption by
households/gov’t
Waste output by
industries
Waste output by
households/gov’t
Other changes in volume
& holding gains/losses on
financial & produced
assets
Sectors
Wastes
Commodities
Industrial output of
goods and services
8
Statistics Canada •
Financial and
produced assets,
closing balance
Statistique
Canada
Changes in and holding
gains/losses on natural
resource assets
Changes in natural
resource assets
Natural resource
assets, closing balance
Natural resource
assets, closing balance
2016-07-23
Accounting structure
 conforms with a balance sheet structure opening stocks, closing stocks and annual
variations
United Nations, 2012, System of Environmental-Economic Accounting: Central Framework (white cover draft), New York. http://unstats.un.org/unsd/envaccounting/White_cover.pdf
9
Statistics Canada • Statistique Canada
2016-07-23
Physical stock accounts: an example for
crude bitumen
10
Statistics Canada • Statistique Canada
2016-07-23
Accounting structure
 Question: what factors could lead to the large
jump in stocks in 2006?
11
Statistics Canada • Statistique Canada
2016-07-23
Accounting structure
 Question: what factors could lead to the large
jump in stocks in 2006?
• Prices increase making existing deposits
profitable to extract.
• New technology making extraction more profitable
or opening formerly unrecoverable stocks to
exploitation.
12
Statistics Canada • Statistique Canada
2016-07-23
Monetary stock accounts: an example
for crude bitumen
13
Statistics Canada • Statistique Canada
2016-07-23
Accounting structure
 Question: what factors could lead to the large
revaluation in 2009?
14
Statistics Canada • Statistique Canada
2016-07-23
Accounting structure
 Question: what factors could lead to the large
revaluation in 2009?
• The economic crisis leading to a drop in prices.
15
Statistics Canada • Statistique Canada
2016-07-23
Links to the SNA
 The monetary accounts are integrated with the National
Wealth Account of the CSNA
• The addition of the monetary values of key natural
resource assets (energy, minerals, timber and land)
recognizes that these resources, although provided by
nature, contribute significantly to Canada’s national wealth
16
Statistics Canada • Statistique Canada
2016-07-23
Natural resource assets in context
Non-financial assets
9,000,000
8,000,000
7,000,000
million dollars
6,000,000
5,000,000
Non-produced non-financial assets
4,000,000
Produced non-financial assets
3,000,000
2,000,000
1,000,000
0
2009
17
2010
2011
2012
2013
Statistics Canada • Statistique Canada
2016-07-23
Natural resource assets in context
Non-produced non-financial assets
4,000,000
3,500,000
million dollars
3,000,000
2,500,000
Selected mineral resources2
Selected energy resources1
2,000,000
Timber
1,500,000
Land
1,000,000
500,000
0
2009
18
2010
2011
2012
Statistics Canada • Statistique Canada
2013
2016-07-23
Accounting structure
 Is wealth really going up like this all the time?
19
Statistics Canada • Statistique Canada
2016-07-23
Accounting structure
 Is wealth really going up like this all the time?
• Not really, since the stock is valued in current
prices and includes inflation.
20
Statistics Canada • Statistique Canada
2016-07-23
Accounting structure
 Why value assets in current prices?
21
Statistics Canada • Statistique Canada
2016-07-23
Accounting structure
 Why value assets in current prices?
• The assumptions on resource rent, stocks,
extraction, etc. are all based on current prices.
22
Statistics Canada • Statistique Canada
2016-07-23
Natural Resource Stock Accounts:
Applications
 Physical indicators that relate to the management of
natural resource stocks and their use in the economy
• Are resource stocks growing / declining over time?




Stocks of mineral and energy assets
Remaining reserve life of energy and mineral assets
Annual depletion of mineral and energy reserves
Total natural resource base
 Monetary indicators that tell us if our resource base
(natural wealth) is being maintained or at least replaced
by adequate produced capital.
23
Statistics Canada • Statistique Canada
2016-07-23
Physical stocks of selected assets
24
Statistics Canada • Statistique Canada
2016-07-23
Reserve life for selected resources, 1990
to 2012 (Closing stock)/(extraction)
25
Statistics Canada • Statistique Canada
2016-07-23
Physical stocks of selected minerals
 How can we have 10 years of crude oil for the
last 17 years?
26
Statistics Canada • Statistique Canada
2016-07-23
Physical stocks of selected minerals
 How can we have 10 years of crude oil for the
last 17 years?
• Extraction is balanced by discoveries and other
additions to stock.
27
Statistics Canada • Statistique Canada
2016-07-23
How are natural resources valued?
 In order to be included within the balance sheet
accounts, natural resource assets must fit into the
asset boundary of the SNA – i.e. they must be
economic assets
“Economic assets are entities over which ownership rights are
enforced by institutional units, individually or collectively, and
from which economic benefits may be derived by their owners
by holding them, or using them, over a period of time”
 They also must be recoverable under current
technological and economic conditions
• E.g., for oil sands (crude bitumen) we only value “known
deposits under active development”
28
Statistics Canada • Statistique Canada
2016-07-23
Valuation of energy and mineral
stocks
 Valuation: indirect estimation of market values of
natural assets
• Valuation of natural resource asset stocks would ideally be
based on observed market value for transactions in these
assets
• Such values are not available for most resource assets
however, since there are few transactions in resource
assets in their “natural” state
• Estimates of market value must be derived indirectly
(economic or resource rent)
• The total value, or wealth, associated with the stock is
calculated as the present value of all future annual rent that
the stock is expected to yield
29
Statistics Canada • Statistique Canada
2016-07-23
The concept of resource rent
Resource rent is the part of the revenue from the
sale of the resource which remains after having
deducted all costs associated with extraction –
including fuel, labour and capital costs.
30
Statistics Canada • Statistique Canada
2016-07-23
Calculation of resource rent
RRI = TR - C - (rcK + )
where:
RR = resource rent (annual)
TR = total annual revenue
C = annual non-capital extraction cost (excluding
taxes)
 = annual depreciation
rcK = return to produced capital
31
Statistics Canada • Statistique Canada
2016-07-23
Valuation ― Net present value
 Net present value (NPV) is the discounted value
of future economic benefits from a given asset
• Follows conventions adopted in the System of
National Accounts to value capital assets
T
RR1
NPV  
t
t 1 1  ri 
where:
RR=resource rent
T= reserve life, i.e. Closing stock ÷ extraction
ri= discount rate
32
Statistics Canada • Statistique Canada
2016-07-23
Valuation ― Estimate the stock
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Crude
Bitumen 211114
Reserves under active development
Physical accounts
4.00%
= Discount rate
GEOMETRIC
Total revenues
Total production
costs
Depreciation
Net capital stock
$ '000
$ '000
$ '000
$ '000
CAPP1
CAPP2
Year
1 10,000.00
33
4,000.00
CANSIM 031-00023
100.00
10,000.00
Rate of return
Rate of return
folder
0.02
Return to capital
Total extraction
costs
Resource rent
Opening Stock
Additions /
Revisions
Reserve life
Discount factor
Net Present Value
$ '000
$ '000
$ '000
'000 m³
'000 m³
'000 m³
'000 m³
years
%
$'000 000
(E*F)
(C+D+G)
(B-H)
(Mt-1)
(M-J+L)
AER ST984
AER ST984
(M/L)
(PV(N$2,N##,-1/N##))
(I*N*O)/1000
200.00
4,300.00
5,700.00
..
100,000
Statistics Canada • Statistique Canada
Depletion / Quantity
Closing Stock
of production
1,000
99,900
99.90
0.25
139.67
2016-07-23
Valuation ― Estimate the rent
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Crude
Bitumen 211114
Reserves under active development
Physical accounts
4.00%
= Discount rate
GEOMETRIC
Total revenues
Total production
costs
Depreciation
Net capital stock
$ '000
$ '000
$ '000
$ '000
CAPP1
CAPP2
Year
1 10,000.00
4,000.00
CANSIM 031-00023
100.00
10,000.00
Rate of return
Rate of return
folder
0.02
Return to capital
Total extraction
costs
Resource rent
Opening Stock
Additions /
Revisions
Reserve life
Discount factor
Net Present Value
$ '000
$ '000
$ '000
'000 m³
'000 m³
'000 m³
'000 m³
years
%
$'000 000
(E*F)
(C+D+G)
(B-H)
(Mt-1)
(M-J+L)
AER ST984
AER ST984
(M/L)
(PV(N$2,N##,-1/N##))
(I*N*O)/1000
200.00
4,300.00
5,700.00
..
100,000
Depletion / Quantity
Closing Stock
of production
1,000
99,900
99.90
0.25
RRI = TR - C - (rcK + )
139.67
where:
RR = resource rent (annual)
TR = total annual revenue
C = annual non-capital extraction cost (excluding taxes)
 = annual depreciation
rcK = return to produced capital
34
Statistics Canada • Statistique Canada
2016-07-23
Valuation ― Net Present Value
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Crude
Bitumen 211114
Reserves under active development
Physical accounts
4.00%
= Discount rate
GEOMETRIC
Total revenues
Total production
costs
Depreciation
Net capital stock
$ '000
$ '000
$ '000
$ '000
CAPP1
CAPP2
Year
1 10,000.00
4,000.00
CANSIM 031-00023
100.00
10,000.00
Rate of return
Rate of return
folder
0.02
Return to capital
Total extraction
costs
Resource rent
Opening Stock
Additions /
Revisions
Reserve life
Discount factor
Net Present Value
$ '000
$ '000
$ '000
'000 m³
'000 m³
'000 m³
'000 m³
years
%
$'000 000
(E*F)
(C+D+G)
(B-H)
(Mt-1)
(M-J+L)
AER ST984
AER ST984
(M/L)
(PV(N$2,N##,-1/N##))
(I*N*O)/1000
200.00
4,300.00
5,700.00
..
100,000
Depletion / Quantity
Closing Stock
of production
1,000
99,900
99.90
0.25
139.67
T
RR1
NPV  
t
t 1 1  ri 
35
Statistics Canada • Statistique Canada
2016-07-23
Data sources: Monetary data
 Generally, the data in monetary terms come from
Statistics Canada. Those data include (but not
exclusively):
• Value and quantity of production
• Capital expenditures
• Operating costs (materials and supplies, fuel and
electricity, and wages and salaries)
• Value of the produced capital stock and the value of
the annual depreciation of that stock
36
Statistics Canada • Statistique Canada
2016-07-23
Data sources: Physical data
 Generally, the data in physical terms (mainly reserve
estimates) come from Federal and Provincial natural
resource departments. Data suppliers include:
•
•
•
•
Natural Resources Canada
Canadian Association of Petroleum Producers
Alberta Energy Regulator
British Columbia Ministry of Energy, Mines and
Petroleum Resources
• Manitoba Energy and Mines, Petroleum and Energy
Branch
• Saskatchewan Department of Energy and Mines
37
Statistics Canada • Statistique Canada
2016-07-23
Land Assets
 The Land Accounts provide information on the cover and
the use of Canada’s land
 Respond to questions like:
•
•
•
•
What is the distribution and quality of the land?
How is land used and what are the trends in this use?
How quickly is rural land being converted to urban land?
What share of urban land is occupying prime agricultural
land?
 At the moment, only agricultural and built-up land are
valued and included in the country’s National Wealth
Account
• In future we hope to develop methods and estimates for
other land types, such as parkland and recreational land
38
Statistics Canada • Statistique Canada
2016-07-23
Land use change
39
Statistics Canada • Statistique Canada
2016-07-23
Land characteristics
40
Statistics Canada • Statistique Canada
2016-07-23
Water stocks
41
Statistics Canada • Statistique Canada
2016-07-23
Questions?
Questions?
Joe St. Lawrence
Statistics Canada | 170 Tunney's Pasture Driveway, Ottawa ON K1A 0T6
Statistique Canada | 170, promenade Tunney's Pasture, Ottawa ON K1A 0T6
Joe.St.Lawrence@statcan.gc.ca
Telephone | Téléphone 613-882-8598
Facsimile | Télécopieur 613-951-0634
Government of Canada | Gouvernement du Canada
42
Statistics Canada • Statistique Canada
2016-07-23