The purpose of this paper is to come upwith an estimate for the value of human capital with theWorld Bank wealth accounting framework for the LatinAmerican and Caribbean Region. The proposed approach drawsconnections between wealth accounting and the developmentaccounting literature that explores the effects of educationand health on human capital, building on previous work byArrow and coauthors (2012), UNU-IHDP and UNEP (2012),Farreira and Hamilton (2010), Weil (2007), and others. Theapproach is extended to value the loss of human capital dueto air pollution and lack of access to clean water andsanitation. The wealth accounting framework is underpinnedby the notion that total wealth is equal to the presentvalue of current and future consumption in a competitiveeconomy with constant returns to scale. The author uses aseries of calculations representing the framework for andmethodology of his framework. Later in this paper the authorbreaks down the variables in determining the value of humancapital into the following categories: schooling, wages,returns to education, returns to health, survival rate, timeperiod, social discount rate, and volatility. Each variableis accompanied by an explanation of its relevance to theequation. The results are quantified in a series of tablespaying attention to each individual variable includingcomparisons to like studies over different time periods withpreviously collected data to show emphasis.
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