User Cost Approach and Its Application for Measuring Depletion of Coal in China

Non-renewable resource is a very important part of natural resource, and is different from the other resources in that its characteristics are limited and rareness. The value depletion coming from the exploitation of the non-renewable resources must be calculated. And only by this way can we get the real GDP reflecting the true level of the economic development in China. It is of more importance that this real GDP is the very one that satisfies the sustainable development completely. With the deepening of the concept of Green GDP, the ways to measure the value depletion of resources have been widely applied in many fields. In this paper, the cost in literature that is widely used to calculate the value depletion of resources in the world has been reviewed. Furthermore, the user cost approach is applied to evaluate the exploitation of coal resource from 1981 to 2000 in China at 0%, 2%, 5% discount rate respectively and the diagrams of the user costs have been drawn. By analyzing the empirical results of these calculations and diagrams, the trend of the value depletion of the coal resource is discussed. It shows that the very large value depletion of the coal resource from the exploitation in China has not been completely compensated. Therefore, it argues that the sustainable development of energy resource must be speeded up. Finally, suggestions relating to the user cost approach application are put forward based on the results of our empirical analysis.