Intertemporal Allocation of Natural Resources

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Intertemporal Allocation of Natural Resources

• Master CourseLecture and Exercises (6 ECTS)
• Gunter Stephan and Raphael Bucher
• Department of Economics and Oeschger Centre of
  Climate Research

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Organization

• LectureThursday 10.15 12.00 Room A022
• ExercisesFriday 08.15 10.00 Room A022
• ExamsThursday 18.12.2008 Room A022
• ContactPhone 031 / 631 45 06e-mail Raphael.Buc
  her_at_vwi.unibe.ch

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Literature

• Textbooks and Monographs
• Dasgupta and Heal (1979)
• Economic Theory and Exhaustible Resources.
  Cambridge University Press
• Faber, Niemes und Stephan (1997)
• Entropy, Environment and Resources.Springer-Verl
  ag
• Hartwick and Oleweiler (1998)
• The Economics of Natural Resource Use.
  Addison-Wesley

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Papers

• Papers from Journal of Economic Literature
• Krautkrämer, J.A. (1998)
• Nonrenewable Resource Scarcity. JEL 362065
• Brown, G.M. (2000)
• Renewable Natural Resource Management and Use
  without Markets. JEL 38875
• Konow, J. (2003)
• Which Is the Fairest One of All? A Positive
  Analysis of Justice Theories. JEL 411188

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Issues of the Analysis

• Objects
• Service and commodities supplied by nature
• Questions (among others)
• (1) How to allocate resources efficient over
  time(2) How do prices of non renewable such as
  crude oil develop(3) Was does sustainability
  mean and how to approach it

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Issues of the Analysis
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Issues of the Analysis

• What is a specific issue?
• the allocation of natural resources define a
  stock-flow problem
• Why does this define a problem?
• (1) Using resources today affects the stock of
  resources available tomorrow, i.e., creates
  intertemporal external effects
• (2) This can cause market failure, hence is both
  efficiency and equity problem

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Relationship to other Topics

• Uses methods and ideas developed in
• micro-economics, environmental economics, energy
  economics, public choice, public finance, capital
  and growth theory
• Is of relevance in (a.o.)
• Energy and environmental politics, analysis and
  politics of global climate change,
  sustainability, climate debate

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Environmental and Resource Economics

• History
• scientific analysis of Hot-Spot problems
• Questions
• What are the reasonsWhat might be solutions
• Answers
• given by environmental economics

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Environmental Economics

• Environmental degradation
• results from market failure due to external
  effects and public good issues
• Solutions
• (1) Taxes and tradable permits consistent to
  markets economies
• (2) legal regulations such as quota and
  standards

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Resource Economics

• Oil price shocks during late 1970th made obvious
• modern economies depend on resourcesStocks of
  resources are finite, hence exhaustible
• This implies the question
• How to use scare resources optimally over time

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Resource Economics
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Resource Economics

• A possible definition
• Resource economics is the scientific analysis of
  how to use resources over the long-term
• Closely related to
• environmental issuesfor using resources and
  polluting the environment are two sides of the
  same coin

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Resource Economics - Past

• Focus was on efficiency
• What are the conditions for Pareto-efficiency in
  the intertemporal allocation of resources
• Why this condition usually do not prevail in
  reality
• How to intervene and how change (Correct)
  existing structures of an economy in order to
  stipulate efficiency

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Resource Economics - Today

• Sustainability and equity
• Market failure results from missing property
  rights, hence if market should work right, then
  property right or substitutes must be specified
• This put the question of equity in the forefront
  of the analysis
• Sustainability is an of both efficiency and equity