1 THE ENVIRONMENTAL KUZNETS CURVE EFFECT AND THE SCARCITY OF NATURAL RESOURCES: A SIMPLE CASE STUDY OF AUSTRALIA ℘ DODO J. THAMPAPILLAI ψ Lee Kuan Yew School of Public Policy National University of Singapore Singapore 119570 CLAUS-HENNIG HANF Department of Agricultural and Resource Economics Christian Albrechts University of Kiel Kiel Germany D241890 SHANDRE M. THANGAVELU and EUSTON T QUAH Department of Economics, National University of Singapore, Singapore 119260 ABSTRACT The paper presents a simple method for the elicitation of the price and quantity of environmental capital (KN), as point estimates, from the Income Approach to National Accounts. The stock of KN considered here is confined to the air-shed of an economy that gets utilized in the formation of aggregate output (Y). The price and quantity estimates of KN are defined on the same scale as that of manufactured capital (KM). That is, price as a composite measure of an interest rate and a depreciation rate, and quantity as an aggregate measure at constant prices. The trends of the estimates are used towards validating the existence of an Environmental Kuznets Curve as exposited by Grossman and Krueger (1995) and specific hypotheses concerning the scarcity of natural resources. The empirical illustrations are made with reference to Australia. KEY WORDS: Environmental Capital (KN), Price of Environmental Capital (P KN ), Income Approach to National Accounts (IANA) ℘ With the usual disclaimers we remain grateful to Professor Basant Kapur for comments on an earlier draft ψ On Leave from Macquarie University NSW, Australia 2109