Natural Resource and Energy Economics

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Carmella Carter
6 years ago
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1 15 Natural Resource and Energy Economics

2 Resource Supplies: Doom or Boom? Population increased from 1 to 6.8 billion Standard of living is 12 times higher Consumption of resources is much higher LO1 15-2

3 Population Growth Thomas Malthus (1798) predictions Replacement rate Total fertility Modernization Death rates fall Fertility rate falls below replacement rate LO1 15-3

4 Total Fertility Rates, 2009 Country Australia Canada China France Germany Hong Kong Italy Japan Russia South Korea Sweden United States Total Fertility Rate LO1 Source: The World Factbook, Data are 2009 estimates. 15-4

5 Resource Consumption Per Person Increasing commodity demand Population growth Rising consumption per person Commodity supply has risen faster than demand Commodity prices are falling LO1 15-5

6 Resource Consumption Per Person LO1 15-6

7 Resource Consumption Per Person Will resource supplies be sustainable in the future? Prospects are hopeful Demand for resources will reach a peak and decline with falling birthrates Resource consumption per capita leveled off or is decreasing LO1 15-7

8 Resource Consumption Per Person LO1 15-8

9 Resource Consumption Per Person Leveled off in the rich countries Demand will increase in poorer countries Challenge is to move resource supplies from their place of origin to places of need LO1 15-9

10 Resource Consumption Per Person LO

11 Resource Consumption Per Person LO

12 Energy Economics LO

13 Efficient Energy Use Achieve efficiency in business conditions with: Variations in fixed costs Daily variations in demand Different types of generation technology LO

14 Efficient Energy Use U.S. Energy Generated Nuclear, 19.20% Coal, 48.30% Hydroelectric, 6.50% Petroleum, 1.10% Natural gas, 21.40% Renewables, 2.90% Other, 0.60% Source: United States Energy Information Administration, LO

15 Running Out of Energy? Will run out of oil or cheap energy Lack of energy is not a concern Alternative sources Externalities LO

16 Running Out of Energy? Oil Price per Barrel at Which the Alternative Is Economically Viable Alternative Fuel $80 Biodiesel 60 U.S. corn-based ethanol 50 Shale Oil 40 Tar sands: Brazilian sugar-cane based ethanol: gas to liquids: liquids; coal-to-liquids 20 Conventional oil Sources: Cambridge Energy Research Associates, The Economist, April 22, 2006, LO

17 Natural Resource Economics Policies for extracting resources to maximize net benefits Present vs. future consumption Present value Renewable resources Nonrenewable resources LO

18 Natural Resource Economics Nonrenewable resources Oil, coal, and metals Extraction strategy to maximize stream of profits User cost Sell today, cannot sell in the future Higher expected demand encourages less extraction today LO4 Property rights 15-18

19 Natural Resource Economics TC = EC + UC EC Dollars P B A UC 0 Q2 Q1 Q0 First-year quantity extracted LO

20 Natural Resource Economics TC = EC + UC EC Dollars P B A UC 0 Q2 Q1 Q0 First-year quantity extracted LO

21 Natural Resource Economics TC = EC + UC EC Dollars P B A UC 0 Q2 Q1 Q0 First-year quantity extracted LO

22 Natural Resource Economics TC = EC + UC1 TC = EC + UC0 Dollars EC P UC1 UC 0 Q1 Q0 First-year quantity extracted LO

23 Natural Resource Economics TC = EC + UC1 TC = EC + UC0 Dollars EC P UC1 UC 0 Q1 Q0 First-year quantity extracted LO

24 Natural Resource Economics TC = EC + UC1 TC = EC + UC0 Dollars EC P UC1 UC 0 Q1 Q0 First-year quantity extracted LO

25 Renewable Resources Elephant preservation Strong property rights Forest management Optimal forest harvesting Differences in property rights Variation in growth rates LO

26 Global Perspective Percentage Change in the Amount of Land Covered by Forests LO

27 Optimal Forest Harvesting LO

28 Optimal Forest Harvesting LO

29 Renewable Resources Optimal fisheries management Difficult to assign property rights Policies to limit catch sizes Total allowable catch Individual transfer quota LO

30 Renewable Resources Fishery Sea scallop Lobster Walleye pollock Dungeness crab Pacific halibut Pacific cod Sockeye salmon White shrimp Brown shrimp Blue crab Market Value of Catch $385,922, ,389, ,460, ,197, ,120, ,300, ,363, ,132, ,378, ,181,534 LO

31 Renewable Resources LO

32 Economic Growth & the Environment A Growing Economy Richer countries: Produce and consume more Spend more to maintain the environment Earn higher scores on measures of environmental quality (EPIs) 15-27

Global Energy Production & Use 101

Global Energy Production & Use 101 Jean-Sébastien Rioux The School of Public Policy SPP-HEI Summer School on the Geopolitics of Energy & Natural Resources Calgary, AB May 15-20, 2017 Presentation highlights