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Natural resource wealth, 1990 to 2009

Kazi Islam and Patrick Adams, Environment Accounts and Statistics Division

Natural resource wealth in two decades
Componenets of natural resource wealth
Oil sands dominate energy wealth

Canada is rich in natural resources such as oil and gas, timber, and minerals. Like buildings and bridges, these resources are an important component of Canada’s wealth, generating income, employment and exports.1 In 2009, Canada’s natural resource wealth—the dollar value of selected2 natural resource stocks—stood at $1,107 billion (Chart 1).3 From 2005 to 2009, natural resource wealth per capita averaged about $39,000; over the same period produced wealth4 stood at $121,000 per capita.5

Chart 1 Various types of wealth, 1990 to 2009Chart 1 Various types of wealth, 1990 to 2009

Natural resource wealth tends to fluctuate more than produced wealth over time. This is due to a variety of factors such as the volatility of energy and mineral prices on world markets and changes in the amount of accessible reserves. For this reason, it can be more instructive to view the value of resources over the longer term, by focusing on the general trends rather than on the yearly ebb and flow. Using data from Canada’s Natural Resource Stock Accounts, this article provides a brief summary of natural resource wealth trends from 1990 to 2009

What you should know about this study

This study uses data from the Natural Resource Stock Accounts. These accounts measure the value of natural resource assets, for example, as reserves of metal ore in the ground or as accessible stands of timber in forests. For mineral and energy resources, reserves are defined by the amount of proven and probable stocks that are profitable to extract using available technology. For timber resources, only the stocks that are physically accessible and available for harvesting are accounted for.

The approach taken to value resources is similar to that of valuing annuities—a resource’s value is equated to the stream of income that can be generated from extracting it over its useful lifetime.

The first step to estimating the stream of income involves calculating the current year’s income from extraction. Income, also known as ‘resource rent,’ is equal to total revenue received from sales throughout the year minus all costs incurred during extraction. Costs include operating costs, like fuel and labour, as well as capital costs, such as wear-and-tear on machinery. Apart from these costs, businesses also pay fees, taxes and royalties to various levels of government. These payments implicitly represent rent and, hence, are not deducted from sales revenue. 

Next, for the sake of simplicity, it is assumed that the quantity extracted as well as the rent generated from extracting the resource will remain constant in each successive year until reserves are exhausted. A final step in valuation is to calculate the present value of this stream of income. Since any rent that will be received in the future is worth less than it would be if it were in hand today, all future rents must be discounted before being summed together.

Two limitations of this approach are the assumption that the quantity of extraction will remain constant over the life of a resource and the assumption that the difference between sales revenue and extraction costs will remain the same through time. Oftentimes, the price of a natural resource is more volatile than labour and capital costs. These limitations tend to be magnified during periods of extreme volatility in resource prices. Such was the case when record high prices were observed for much of 2008 and were then followed by sharp price declines. Despite these limitations, this method has been widely used by other countries given the difficulty in accurately forecasting commodity prices. Current estimates are based on 14 different resources for which data on reserves, revenues and extraction costs are available.

For more information, see: Definitions, data sources and methods: Natural Resource Stock Accounts.

Natural resource wealth in two decades

Natural resource prices are driven by global demand and supply, while the prices of produced assets are often affected by local economic conditions.6 As well, physical reserves of energy and mineral resources may change when their prices change. For example, when the price of a given resource increases, it often encourages greater exploration efforts which in turn can lead to more discoveries and ultimately an increase in reserves.7 Both of these factors make natural resource wealth highly volatile.

In 1990, natural resource wealth stood at $391 billion, or $14,000 per capita.8 For the next two decades, the average annual growth rate of natural resource wealth was 6%. Although there were substantial fluctuations over this period, the long-term trend for natural resource wealth was similar to that for produced assets (5%) and land (7%) (Chart 1).

Some bumps in the road:

During the two decades, 1990 to 2009, overall natural resource wealth declined several times: first, in the early 1990s as a result of a recession in North America; second, in 1998, in the wake of the East Asian financial crisis;9 and, third in the early 2000s, during the economic slowdown that followed the events of September 11, 2001.10 Most recently, in 2009, resource values declined sharply in the face of the global economic downturn.

In all other periods, the value of resources was buoyed by either increased reserves and/or increased prices fuelled by growing world demand.

For instance, from 1999 to 2000, natural resource wealth grew as a result of an increase in reserves of natural gas, crude oil and crude bitumen (oil sands). At the same time, higher prices for these resources added to growth in wealth.

From 2003 to 2008, natural resource wealth exhibited sustained growth, propelled by record growth in prices for energy and minerals due in large part to increased world demand, particularly from burgeoning economies such as China’s.11

Components of natural resource wealth

Resource wealth includes timber, mineral and energy wealth. Since 2000, energy resources have contributed the most to the overall value of natural resources, but they have also been subject to the most volatility (Chart 2).

Chart 2 Wealth from energy, timber and minerals, 1990 to 2009Chart 2 Wealth from energy, timber and minerals, 1990 to 2009

Until 2004, timber resource wealth grew steadily—on average 4% per year. However, in recent years its value has been declining on account of a number of factors, such as the softwood lumber dispute with the U.S., the recent U.S. housing market decline, and the mountain pine beetle infestation in British Columbia.12

Mineral resource wealth remained relatively constant from 1990 until 2002. From 2003 to 2008, the value of mineral assets grew significantly as a result of increased world prices of minerals resources. These high prices have led to increased exploration and development and the discovery of new deposits.13 In 2008, mineral resource wealth was $327 billion; in 2009, this wealth dropped to $183 billion. A similar drop was also recorded for energy resources, which accounted for two-thirds of total resource wealth in 2009.

Oil sands dominate energy wealth

Until 2005, natural gas had the highest value among energy resources, which also include coal, crude oil, and crude bitumen.  Since 2006, the wealth from oil sands has exceeded that from other energy resources, mainly on account of increased reserves (Chart 3).14

Chart 3 Value of energy resource stocks, 1990 to 2009Chart 3 Value of energy resource stocks, 1990 to 2009

Canada’s oil sands in Northern Alberta contain vast quantities of crude bitumen; they are one of the largest hydrocarbon deposits in the world. In 1990, the value of crude bitumen from oil sands represented $19 billion or 13% of energy resource wealth. In 2009, the value of crude bitumen reserves was $441 billion—more than the combined value of coal, crude oil and natural gas.


From 1990 to 2009, Canada’s natural resource wealth, on average, grew by 6% per year. Our abundance of natural resources—such as timber, potash, uranium, oil and gas and gold—as well as increasing demand for natural resource commodities worldwide are among the factors that have contributed to this growth.

Like produced wealth, natural resource wealth is an important indicator of economic performance; it generates income and employment. Therefore, monitoring our natural resource wealth is important because this information allows individuals and institutions alike to make informed decisions.


  1. For more information, see: P. Cross, 2008, “The role of natural resources in Canada’s economy,” Canadian Economic Observer, Statistics Canada Catalogue no. 11-010-X011086300167, Vol. 21, no. 11.
  2. The selected natural resources consist of energy, minerals and timber. Energy resources include natural gas, crude oil, crude bitumen (oil sands) and coal. Mineral resources include gold, nickel, copper, zinc, lead, iron, molybdenum, uranium, potash and diamonds.  A number of natural resource stocks such as water and ecosystems, are not currently valued by Statistics Canada, owing to data limitations.
  3. All the values mentioned in this article are in current dollars as opposed to constant dollars.
  4. Produced wealth includes residential and non-residential structures, machinery and equipment, consumer durables and inventories.
  5. Statistics Canada, CANSIM tables 378-0005 and 051-0001 (accessed June 29, 2010).
  6. Extraction costs of natural resources are relatively stable as they depend mostly on local markets of various factors of production, such as labour and capital.
  7. For details, see: Statistics Canada, 1997, Econnections: Linking the Environment and the Economy, Catalogue no. 16-505-G.
  8. Statistics Canada, CANSIM tables 378-0005 and 051-0001 (accessed June 29, 2010).
  9. International Monetary Fund, 1998, “Global Repercussions of the Asian Crisis and Other Issues in the Current Conjuncture,” World Economic Outlook (accessed March 22, 2010).
  10. International Monetary Fund, 2001, “The Global economy after September 11,” World Economic Outlook (accessed March 22, 2010).
  11. Statistics Canada, 2007, International Merchandise Trade Annual Review, 2006, Catalogue no. 65-208-X.
  12. In 2003, the beetle infested around 4.2 million hectares in  British Columbia. British Columbia Ministry of Forests, 2003, Timber Supply and Mountain Pine Beetle Infestation in British Columbia (accessed September 10, 2009).
  13. A. Reed, 2007, “Canadian Reserves of Selected Major Metals, and Recent Production Decisions,” Canadian Minerals Yearbook, 2006, Natural Resources Canada Catalogue no. M38-5/55E-PDF (accessed December 10, 2009).
  14. In 2006, estimates of oil sands reserves under active development doubled as compared to 2005. See Alberta Energy and Utilities Board, 2007, Alberta’s Energy Reserves 2006  and Supply/Demand Outlook 2007-2016, Report no. ST 98-2007, table 2.1 (accessed September 14, 2009).