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Biological Capital Estimation for the United States
Abstract
The Perpetual Inventory Method (PIM) with a geometrically-declining depreciation pattern, which is the standard approach to measuring capital in U.S. national accounts, is not appropriate for biological capital. Biological capital categories are such things as orchards and cows. They often produce little if anything in the first year, and may not reach maximum services until age 5 or 6. Because of this discrepancy, the standard PIM provides a poor measure of biological capital and its services. The objective of the present study is to provide methods to estimate wealth stocks and capital services for dairy cows, beef breeding cows, hogs, orange and apple orchards, vineyards, and pastureland at the national and state level for the U.S. over the period between 1960 and 2022, and present preliminary estimates for their capital stocks and services. Our approach to measuring biological capital is primarily biophysical, with foundations in capital pricing theory. The methodology proposed for animals differs from the methodology proposed for crops, and together they are representative of two common situations faced when estimating biological capital stocks: the one in which there is data on the price of new assets (i.e. the price of dairy cows sold for herd replacement); and the case where the asset is produced by the firm, with no price data on new assets (i.e. orange orchards). The estimation is performed using data from NASS (2022) and industry-relevant papers. Biophysical parameters are obtained from a series of papers, and budget sheets for crops are obtained from a variety of institutions. Our results suggest the relevance of incorporating biological capital into the national accounts. In the U.S., the average services from dairy cows have been equivalent to 1.82% of total farm sales. In Florida, the average services from orange orchards were equivalent to 5.29% of the total farm sales. The results from this dissertation contribute to the literature by proposing theoretically sound and feasible methods for U.S. biological capital estimation to be incorporated in national accounts as well as in productivity measurement of the sector.
Subject Area
Agricultural economics|American studies|Economics|Finance
Recommended Citation
Rocha Junior, Adauto B, "Biological Capital Estimation for the United States" (2023). ETD collection for University of Nebraska-Lincoln. AAI30488224.
https://digitalcommons.unl.edu/dissertations/AAI30488224