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CHAPTER 7 NATURAL CAPITAL
Human and social capital estimates are not part of the SEEA Central Framework. At present they are constructed using experimental frameworks. For example, the Fraumeni-Jorgensen lifetime income approach is adopted by the Working Group on Statistics for Sustainable Development. The ABS produced experimental estimates of human capital in 2008(footnote 1) using this general approach.
The ABS has not attempted a comprehensive monetary estimate of social capital. Instead the ABS has developed an estimate of "low social capital" which may be an indicator for the total stock of social capital(footnote 2) . The low social capital estimate is derived from combining aspects of social capital (i.e. network type; support; trust; community involvement; and feelings of safety).
Figure 7.1 shows the value using chain volume measures of the different types of capital in Australia between 2000-01 and 2011-12. The economic value of the Australia’s natural capital increased 14% over the period 2000-01 to 2011-12 to $4,718 billion. The value of produced capital increased to a greater degree (50%), although its economic value remains less than natural capital at $4,628 billion as at 30 June 2012.
Net financial assets with the rest of the world reflects the asset balance between Australia’s overseas interests and non-residents’ interests in Australian assets, and covers such financial instruments as equity and gold stocks. Since 2000-01, investment in Australian assets has exceeded Australian investment abroad with the difference continuing to increase.
Figure 7.2 presents per capita estimates of Australia’s capital base on a chain volume measures basis. This approach provides the value of Australia’s capital base available for each Australian resident. The value of produced capital on a per capita basis has increased in approximate terms from $160,000 in 2000-01 to $204,000 in 2011-12. In contrast, the total economic value of Australia’s stock of natural resources increased over the same period, but fell by 3.3% on a per capita basis over the same period. This equates to a loss in the natural resource stock value per capita of approximately $7,000. This in part reflects that the value of Australia’s natural resources rose at a slower rate than that of the resident population (14% compared 16% respectively).
Natural capital estimates should comprise all the economic and social value of natural resources in Australia, and are generally recognised as being composed of: land (including soil and landscape features such as hills and mountains); subsoil assets (e.g. minerals and fossil fuels); water (fresh water and groundwater); oceans; atmosphere; and biological resources (e.g. forests, fish, other species and habitats).
The ASNA and the SEEA Central Framework include the value of environmental assets that have direct economic values. For example land, timber, minerals and fossil fuels are included in the National Balance Sheet(footnote 3) . Valuation is based on market transactions or, where these are unavailable, the net present value of future expected income resulting from the use of these assets is recommended.
Some environmental assets and many ecosystem services are, however, not transacted in markets, although the value of some services may be included in the value of goods and services traded in markets. For example, the value of pollination is embedded in the value of agricultural crop production, while tourism operators derive income from the people visiting natural attractions such as Uluru and the Great Barrier Reef. The development of standardised methods for identifying and separately distinguishing the value of environmental assets and ecosystem services is an on-going area of work.
Work on valuing the social value of the environment, is highly experimental and is not included in this ABS publication. Techniques for valuing social aspects of the environment are based on the concepts of welfare economics and include the methods on willingness to pay, contingent valuation and revealed preferences(footnote 4) .
Figure 7.3 presents the measurement in chain volume terms of the value of Australia’s natural capital base, which continues to be dominated by land (86% of total value in 2011-12), followed by subsoil (14% of total value in 2011-12). Both forms of timber (plantation and native) largely unchanged in value over the same period.
Economically demonstrated resources
Australia is a leading producer of minerals for the world and produces some 22 minerals in significant amounts from more than 300 operating mines(footnote 5) . Minerals are produced in all six states and the Northern Territory. Australia is also in the global top five of mineral producers and has a large resource stock for most of the world’s key minerals products.
Minerals are also an important part of the Australian economy, accounting for a significant portion of GDP; by value they represent Australia’s largest group of export products.
Subsoil asset accounts provide physical information on the expected life of particular mineral assets for Australia (Figure 7.5), to give a broad indication of how long presently identified resources will last, given current conditions (i.e. prices, technology, production levels, etc.). Increases in the expected resource life of a given mineral resource come from new discoveries and extraction methods, which make deposits economically viable that previously were not.
The resource life of Australia’s stock of iron ore has experienced the greatest change over the last 20 years, falling from 177 years in 1991-92 to 88 years in 2011-12. Depletion has been driven by increasing demand for iron ore from overseas, particularly the developing world, which is outstripping new discoveries. In contrast, new discoveries of tin within Australia have increased its expected resource life from 18 years to 75 years over the period 1991-2 to 2011-12.
Australia has about 0.3 per cent of the world’s petroleum reserves. These encompass crude oil, condensate (a liquid mixture of pentane and heavier hydrocarbons that is recoverable from a gas well through a separation system), naturally occurring liquefied petroleum gas (LPG) and natural gas.
In 2011-12, Australia's identified petroleum resources consisted of 153 GL of crude oil, 310 GL of condensate, 138 GL of LPG and 2,878 billion m3 of natural gas. Western Australia contains the majority of Australia’s reserves: 92% of conventional gas reserves, 62% of economic demonstrated resources of crude oil and 76% of condensate resources.
Australia has significant natural gas resources, and it represents the country's third largest energy resource, in terms of energy content, after coal and uranium(footnote 6) . Most estimated recoverable reserves of natural gas and conventional gas are located off the west and north-west coast of Australia. (footnote 7) of natural gas have increased more than threefold (306%) over the past 20 years. At June 2012, the EDR of natural gas totalled 2,878 billion m3. At current production rates, existing gas reserves are projected to last 64 years (Figure 7.7).
Australia's stock of crude oil represents less than 5% of world resources and Australia’s economy relies increasingly on imports to meet demand. Imports increased by 8% between 2009-10 and 2010-11. This was driven by crude oil and refinery feedstock, which accounted for 61% of imports and increased 16% over the period. Despite having relatively smalls stocks, Australian crude oil is typically low in sulphur and of the light variety of liquid fuels, which have a higher value due to their lower wax content.
After peaking at $116bn in 1995-96, the value of Australia’s crude oil resources has steadily declined to $66bn in 2011-12. This is in line with the physical stock of crude oil, which fell from 287 GL in 1995-96 to 154 GL in 2011-12.
Figure 7.10 shows that Australian condensate resources were around 310 GL in 2011-12. The economic value of condensate stocks increased from $24bn in 1991-92 to approximately $62bn in 2011-12.
New EDR discoveries of condensate during 2006-07 to 2008-09 have resulted in an increase in its resource life. At current production levels, Australia’s stocks of condensate have an approximate lifespan of 36 years (Figure 7.11).
Naturally occurring liquefied petroleum gas
LPG is a mixture of lighter hydrocarbons, such as propane and butane, and is normally a gas at the surface. It is usually stored and transported as a liquid under pressure. LPG has lower energy content per volume than condensate and crude oil.
As figure 7.13 shows, at current production rates, naturally occurring LPG has a resource life of 28 years.
Black coal is primarily used for electricity generation and the production of coke, which is integral to the production of iron and steel. Black coal is also used as a source of heat in the manufacture of cement and food products.
Approximately 10% of the world’s black coal resources are located in Australia(footnote 8) . A large proportion of these resources are high-quality bituminous coal, characterised by low sulphur and low ash content. Most states in Australia have black coal resources, with significant quantities of high-quality black coal in New South Wales and Queensland.
With 33 per cent of the world’s uranium resources, Australia has the world's largest economically demonstrated stocks of this resource and is the third largest producer of uranium internationally. Major uses for uranium are as fuel in nuclear power reactors to generate electricity, in the manufacture of radioisotopes for medical applications and in nuclear science research using neutrons from reactors.
Between 1994-95 and 2004-05 the value of Australia's proven uranium deposits increased from $362m to over $800m (Figure 7.16), driven by new EDR discoveries. Since then the economic value of the stock has fallen against a backdrop of falling market prices.
Native vegetation refers to all indigenous terrestrial or aquatic plants in an area, incorporating all living and non-living components. This includes Australia’s diverse natural vegetation and permanent native plantings for biodiversity and sustainable land management purposes. In the context of native vegetation, indigenous refers to vegetation that is within its natural geographical area.
Native vegetation in many parts of Australia has been cleared or has become degraded and fragmented due to human activity, with 13% of the estimated original extent of Australia’s native vegetation completely converted to other land uses (predominantly agriculture). A further 62 per cent has been subject to varying degrees of disturbance and modification(footnote 9) . The remaining 25% of the estimated original extent of native vegetation remains intact. Figure 7.18 presents information on the native vegetation remaining currently in Australia.
The total area covered by broadleafed (hardwood) and coniferous (softwood) plantations almost doubled to reach 2 million hectares between 1994 and 2010. As Figure 7.19 shows, the majority of this change was due to the expansion in the area of broadleafed plantations.
1 ABS, 2008. Research Paper: Measuring Human Capital Flows for Australia: A lifetime Labour Income Approach (ABS cat. no. 1351.0.55.023) <back
2 ABS, 2009. Research Paper: Exploring Measures of Low Social Capital (ABS cat. no. 1351.0.55.024) <back
3 Australian System of National Accounts, 2011–12 (ABS cat. no. 5204.0) <back
4 See SEEA Experimental Ecosystem Accounting. Online: https://unstats.un.org/unsd/envaccounting/seea.asp <back
5 http://www.ga.gov.au/minerals/basics.html; http://www.ga.gov.au/minerals/mineral-resources/aimr.html <back
6 Geoscience Australia, 2010, http://www.ga.gov.au/minerals/basics.html http://www.ga.gov.au/minerals/mineral-resources/aimr.html <back
7 EDR is a measure of the resources that are established, analytically demonstrated or assumed with reasonable certainty to be profitable for extraction or production under defined investment assumptions. Classifying a mineral resource as EDR reflects a high degree of certainty as to the size and quality of the resource and its economic viability. <back
8 BREE, Energy in Australia 2012, p.9 <back
9 State of the Environment 2011 Committee, Australia state of the environment 2011, Independent report to the Australian Government Minister for Sustainability, Environment, Water, Population and Communities, Department of Sustainability, Environment, Water, Population and Communities, Australian Government, Canberra <back
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