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T H E C H A N G I N G W E A LTH O F N ATIO N S 2021
studies that have been undertaken have been hampered by data and methodological shortcomings. Furthermore, the measurement of renewable energy resources as assets has not been systematically addressed in the System of National Accounts 2008 (SNA) (EC et al. 2009), the accompanying System of Environmental-Economic Accounting–Central Framework (SEEA-CF) (UN et al. 2014), or the recent SEEA-Energy (UN 2019). The lack of attention paid to the valuation of renewable energy assets is a concern. These assets—especially hydroelectric assets—are likely worth trillions of dollars worldwide today based on the estimates presented here and in the supporting technical report (Smith et al. 2021). Canada’s hydroelectric resources alone may have been worth something on the order of US$456 billion (2018 US dollars) in 2017.1 This would have made them more valuable than any other natural resource asset in Canada in that year (other than land), including the country’s large fossil fuel reserves. Therefore, the failure to account for renewable energy assets as part of national wealth sends flawed signals to policy makers in many countries about the total national wealth and the contribution of natural capital to that wealth. This chapter proposes a practical approach to valuation of renewable energy assets and compares it with the approaches recommended in the SNA and SEEA. It then tests this approach in an experimental effort to value selected renewable energy assets using data for several important renewable energy–producing countries. Based on the results, the chapter goes on to discuss how the experimental asset values presented here might be improved and expanded so that renewable energy assets might eventually be formally incorporated into the core natural capital accounts of the CWON and the revised SNA and SEEA standards.
Renewable Energy Resources as Assets in the SNA and SEEA-CF In keeping with the general definitions of assets, the SNA and SEEA-CF recognize natural resources as assets only when ownership rights can be enforced over them. Ownership need not be private; natural resources owned collectively (for example, by a national government on behalf of its citizens) may also qualify as assets. Only those resources that generate economic benefits for their owners under (1) existing conditions of technology, knowledge, economic infrastructure, and prices or (2) conditions that can be reasonably expected to prevail in the immediate future (again, as revealed by market activity) are recognized as assets. Resources known to exist but, for whatever reason, not suitable for commercial exploitation do not qualify as assets in the SNA or the SEEA-CF. The SNA says little on the treatment of renewable energy resources as assets. It simply notes that entities “over which no property rights can be exercised” do not qualify as assets, using the high seas and atmosphere as examples (EC et al. 2009, para 1.46; hereafter SNA and para. no.). This suggests that solar and wind resources would not be recognized as assets
