The Economics of Natural Resources
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1 The Economics of Natural Resources
2 By the same author Economic Growth versus the Environment
3 The Economics of Natural Resources RICHARD LECOMBER M
4 Richard Lecomber 1979 Softcover reprint ofthe hardcover 1 st edition All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission. First published 1979 by THE MACMILLAN PRESS LTD London and Basingstoke Associated companies in Delhi Dublin Hong Kong Johannesburg Lagos Melboume New York Singapore and Tokyo British library Cataloguing in Publication Data Lecomber, Richard The economics of natural resources. 1. Natural resources I. Title 333 HC55 ISBN ISBN (ebook) DOI / This book is sold subject to the standard conditions of the Net Book Agreement. The paperback edition of this book is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, resold, hired out, or otherwise circulated without the publisher's prior consent in any form of binding or cover other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser.
5 CONTENTS List of Tables vii List of Figures viii 1 INTRODUCTION 1.1 Natural resources and economics 1.2 Coverage and approach 1.3 Some terminology Plan of the book 5 2 THE ADEQUACY OF NATURAL RESOURCES The basic Pessimist position Alleviations of resource scarcity Evidence from the past Critique of the empirical studies Adapting to limits Concluding comments 32 Appendix: a formal treatment of factor substitution and technical progress 34 3 FISHERY and MINE The fishery The mine Summary and conclusions 58 Appendix: an optimal control formulation 58 4 THE SOCIALLY OPTIMAL USE OF RESOURCES 64 4.l A simple model Investment Other complications Conclusion 72 Appendix: mathematical models of optimal resource use 72 5 RESOURCE DEPLETION AND THE MARKET MECHANISM The theory of the perfect-market mechanism A critique of the perfect-market paradigm Market failures Summary 110
6 vi The Economics of Natural Resources 6 RESOURCE POLICIES Common access and externalities Private resources Z.E.G., Z.E.D., and the stationary state Pervasive distortions Policies to reduce resource depletion Conclusions PROBLEMS OF REDUCING RESOURCE USE Images of a low-resource society Problems of a low-resource society Problems of transition Policies Concluding comments ENERGY, A CASE STUDY: (I) SUPPLY Supply and demand - a preliminary view An optimisation model Alternative sources of supply Conclusions ENERGY, A CASE STUDY: (II) DEMAND The scope for conservation: concepts Past trends A modelling approach Simple leak-plugging Measures claimed to involve little or no sacrifice An assessment A note on less-developed countries GOVERNMENT POLICY AND THE PUBLIC 214 Notes 217 References 225 Name Index 236 Subject Index 239 ACKNOWLEDGEMENTS Warm thanks are due to Esra Bennathan for constant encouragement and to Marjorie Lunt for her great patience in preparing the typescript.
7 LIST OF TABLES 2.1 Global availability of selected resources Proven reserves and resource base, selected resources Growth in output and selected inputs, U.K. agriculture Time series of catch, selected species Resource rentals, extraction costs and prices The effect of discounting World energy resources (10 21 J) and exhaustion dates on various assumptions Crude petroleum production costs ($/bl) Energy prices in the Nordhaus model Typical energy losses in domestic heating uses Alternative equivalence ratios for conventional energy sources U.K. energy consumption, Primary energy saving from leak-plugging and belt-tightening, by sector (EJ) 205
8 LIST OF FIGURES 2.1 Exponential growth in the face of a limit Production from renewable and non-renewable resources Malthusian and Ricardian scarcity The theory of the fishery The optimal culling age Road congestion The mine: a simplified cost function User cost, total extraction and resource stocks The effect of the interest rate on the extraction path Resource rentals of two grades of ore Phase diagrams The conflict between consumption and longevity The choice between present and future consumption The interaction between resources and population Phase diagrams Phase diagram Inter-temporal choice Decentralisation of work-places in a city The sacrifice curve 186
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