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Macroeconomics and the Environment

Essays on Green Accounting

Salah El Serafy

Though scientists and environmentalists have long expressed concern over the rapid deterioration of the global environment, economists have largely failed to recognize the issue’s relevance to their field. Salah El Serafy argues for an increased focus on the economic aspects of environmental degradation, calling for a fundamental shift in how economists measure and discuss national income.
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Chapter 20: Sovereign funds

Essays on Green Accounting

Salah El Serafy


I do not want to end before I put in a word about what has become known as ‘sovereign funds’. Many sovereign funds have been created by or on behalf of economies fortunate enough to have been endowed with marketable natural resources. At least four reasons justify covering this topic here: (1) the funds constitute a policy option for savings during periods of apparent prosperity; (2) they contribute to curbing certain symptoms of the Dutch disease; and (3) critics such as in the United Kingdom, lamenting the projected disappearance of the country’s North Sea petroleum resources, have begun to ask: ‘Where are our Sovereign Funds?’; and (4) the user-cost method has been described by some commentators as essentially a ‘sinking fund’ method – a description to which I did not take exception as I stated in Chapter 10 on ’Misunderstandings’. Fund owners have not always been nations. They have included states within nations, corporations and institutions of many types. In general these funds serve as receptors of financial inflows viewed as temporary.

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