optimal supply of a depletable resource with a backstop technology heal s theorem revisited heal s theorem states that if the extraction cost of a depletable resource increases with cumulative extraction and if a backstop technology exists the user cost of the depletable resource declines to zero at the date of exhaustion in this paper we first present a simple method for proving this proposition using a social planning model that determines the optimal rates both of extraction of the depletable resource and of production of the backstop technology we then present two examples that show how this method can be used to solve more difficult problems in the theory of resource economics the first example involves learning by doing in the backstop sector that is backstop costs decline with cumulative production the second example involves uncertainty of backstop costs

the effect of human capital on countries economic efficiency the paper applies time dependent conditional frontier estimators in order to examine the effect of human capital on countries economic efficiency levels specifically time dependent conditional full and partial efficiency measures are applied to a sample of 123 countries for the period of 1970 2011 the results from the nonparametric analysis reveal a nonlinear relationship between countries human capital technological change and efficiency levels

the induced innovation hypothesis and energy saving technological change we develop a methodology for testing hicks s induced innovation hypothesis by estimating a product characteristics model of energy using consumer durables augmenting the hypothesis to allow for the ine uence of government regulations for the products we explored the evidence suggests that i the rate of overall innovation was independent of energy prices and regulations ii the direction of innovation was responsive to energy price changes for some products but not for others iii energy price changes induced changes in the subset of technically feasible models that were offered for sale iv this responsiveness increased substantially during the period after energy efficiency product labeling was required and v nonetheless a sizable portion of efficiency improvements were autonomous

renewable energy consumption in eu 28 countries policy toward pollution mitigation and economic sustainability abstract a major challenge facing humans in the 21st century is how to strike a balance between the mitigation of environmental degradation and the achievement of sustainable economic growth on this note this investigation applies an autoregressive distributed lag ardl methodology to a panel data of 28 european union eu 28 countries over the period 1995 2015 the study confirms the existence of positive and significant long run nexus among environmental sustainability renewable energy consumption and economic growth in the eu 28 countries in addition empirical results indicate that real gross fixed capital formation carbon emissions and other environmental factors are principal determinants of long run growth in the eu using dumitrescu and hurlin 2012 granger non causality in heterogeneous panel results show long run bidirectional causal relationships among renewable energy consumption economic growth and other growth determinants based on these results we infer that the exploitation of renewable energy sources in the eu 28 countries is a reliable pathway toward environmental pollution mitigation consequently achieving sustainable development goals sdgs by the year 2030 through renewable energy consumption and carbon emission mitigation is very much achievable in the eu 28 countries and should also be adopted by all countries as an effective global policy

unilateral climate policy and the green paradox extraction costs matter i analyze the effect of unilateral climate policies in a two country model where fossil fuel extraction costs depend on both current extraction and remaining stock and where a constant marginal cost clean substitute is available an intensification of climate policy in the country with an initially stricter policy does not increase early fossil fuel extraction i e there is no weak green paradox or the present value of pollution costs i e there is no strong green paradox if energy demand in that country is initially met with a mix of fossil fuel and a substitute whether a stricter climate policy in the country with an initially laxer policy causes a weak green paradox depends on the price elasticity of energy demand and the strength of the flow and stock dependence of extraction costs if the reduction of total extraction is sufficiently strong it overcompensates for a weak green paradox with respect to pollution costs thus a weak green paradox does not necessarily imply a strong green paradox due to stock dependence politique climatique unilaterale et paradoxe vert l incidence des couts d extraction l article analyse l effet des politiques climatiques unilaterales dans un modele a deux pays ou les couts d extraction de combustibles fossiles dependent a la fois de l extraction actuelle et du stock residuel et ou la disponibilite d un substitut energetique propre et constant a cout marginal demeure une intensification des politiques climatiques dans le pays de pair avec une politique initialement plus stricte n augmente ni l extraction precoce des combustibles fossiles c est a dire qu il n y a pas de paradoxe vert faible ni la valeur actuelles des couts de pollution c est a dire qu il n y a pas de paradoxe vert accru x00ab pour autant que la demande en energie dans ce pays est initialement satisfaite par une combinaison d un combustible fossile et d un substitut qu une politique climatique plus stricte dans ce pays dote d une politique initialement plus laxiste entrane un paradoxe vert moins prononce depend de l elasticite par rapport au prix de la demande d energie de l importance du flux et de la dependance en matiere de stock relativement aux couts d extraction si une reduction de l extraction totale est suffisamment forte elle surcompensera un paradoxe vert limite relativement aux couts de pollution ainsi un faible paradoxe vert n engendre pas necessairement un fort paradoxe vert en raison de la dependance au stock

cycles in nonrenewable resource prices with pollution and learning by doing we study how environmental regulation in the form of a cap on aggregate emissions from a fossil fuel e g coal interacts with the arrival of a clean substitute e g solar energy the cost of the substitute is assumed to decrease with cumulative use because of learning by doing we show that optimal energy prices may initially increase because of pollution regulation but fall due to learning and rise again because of scarcity of the resource finally falling after transition to the clean substitute thus nonrenewable resource prices may exhibit cyclical behavior even in a purely deterministic setting

carbon taxation opec and the end of oil abstract i develop a differential game between an oil cartel and an importer investing in research and development r d to reduce the cost of a green substitute to oil in equilibrium the cartel is forced to deter the substitute which thus imposes a price ceiling falling over time credible carbon taxes are below the pigovian level implying the importer cannot internalise the full pollution externality much less capture resource rents without carbon pricing the importer curtails long run pollution using a costly r d programme normatively climate policy will be more expensive if relying on green r d programmes only

does human capital matter for growth in oecd countries a pooled mean group approach abstract unlike previous panel data studies using an improved dataset and pmg estimators we find a significant impact of human capital on growth the estimated long run elasticity of output to human capital is consistent with the microeconomic evidence on returns to schooling

economic growth fossil fuel and non fossil consumption a pooled mean group analysis using proxies for capital this study employs a pooled mean group estimator to examine the nexus between economic growth and fossil and non fossil fuel consumption for 53 countries between 1990 and 2012 the global sample was divided into four categories developed exporters developed importers developing exporters and developing importers the purpose of these categories was to observe whether factors unique to these countries influence the relationship between energy consumption and economic growth with the exception of developing importers evidence of bi directional causality between fossil fuel consumption and real gdp across all subsamples is observed this leads to the conclusion that efforts to directly conserve fossil fuels may harm economic growth in terms of non fossil fuel use the results are more diverse bi directional causality between non fossil fuel use and real gdp is found in the long and short run for developed importers bi directional causality only in the long run for developed exporters negative long run causality from real gdp to non fossil fuels for developing exporters and long run causality from non fossil fuel use to real gdp for developing importers these results lead to the conclusion that other factors have been responsible for the progress seen in non fossil fuel use thus it is concluded that economic growth on its own is insufficient to promote clean energy development there is a need for policy makers to create an environment conducive to renewable energy investment

abatement r d and growth with a pollution ceiling abstract the consequences of the 2 c climate target and the implicitly imposed ceiling on co2 have been analyzed in several studies we use an endogenous growth model with a ceiling and an abatement option to study the effect of the ceiling on the allocation of limited funds for r d abatement and capital accumulation it is found that the advantagenousness of abatement rises with the cost advantage of fossil fuel versus backstop if the cost advantage is sufficiently large at some point in time it outweighs the costs of abatement and the gains of r d and capital accumulation the reallocation of production towards abatement may cause an increase or decrease in long run consumption in the latter case abatement allows an intertemporal consumption trade off which may even justify the disregard of everlasting growth in case of stock dependent fossil fuel costs an abatement induced speed up of technology development may cause an increase in fossil fuel stock left in situ

scarcity growth and r d abstract the limits to economic growth due to resource scarcity can be alleviated only by the development of backstop substitutes this paper combines resource based economic growth with r d to reduce the cost of backstop technologies characterizing the entire dynamics of optimal growth and r d processes we find that an economy s growth prospects depend on its type as determined by its production technology and learning ability and by its knowledge capital endowment a wide variety of growth patterns emerges ranging from cases in which an economy that without r d eventually stagnates converges to a steady state is diverted by r d onto a path of sustained growth to cases in which r d is not warranted resource scarcity is shown to encourage r d due to the increased reliance on the backstop technology

basic applied and experimental knowledge and productivity further evidence analyzing a novel dataset we find significantly positive effects of basic and applied and experimental knowledge stocks on domestic output and productivity for a panel of 10 oecd countries this letter updates the work of among others mansfield 1980 griliches 1986 and adams 1990 at an international setting

allocation of pollution abatement under learning by doing abstract this paper examines how learning by doing affects the allocation of pollution abatement between heterogeneous technologies over time the optimal policy balances current abatement costs against reductions in future costs and infant technologies may be preferred to mature technologies despite greater initial costs we characterize when a technological winner might emerge and we identify conditions under which optimal abatement is shared across all technologies pigouvian taxes can implement the first best but may need to be differentiated across technologies when technical change is induced an important role of environmental policies is to put abatement on the right technological trajectories

climate policy and the optimal extraction of high and low carbon fossil fuels we study how restricting co2 emissions affcts resource prices and depletion over time we use a hotelling style model with two nonrenewable fossil fuels that differ in their carbon content e g coal and natural gas and that are imperfect substitutes in final good production we study both an unexpected constraint and an anticipated constraint both shocks induce intertemporal substitution of resource use when emissions are unexpectedly restricted it is cost effective to use high carbon resources relatively more less intensively on impact if this resource is relatively scarce abundant if the emission constraint is anticipated it is cost effective to use relatively more less of the low carbon input before the constraint becomes binding in order to conserve relatively more less of the high carbon input for the period when climate policy is active in case the high carbon resource is relatively scarce abundant

invention and innovation under alternative market structures the case of natural resources this paper examines the interactions between market structure and resource allocation over time when there is endogenous technical progress the structures considered are a planned economy pure monopoly and competition with patent rights in an efficient allocation the date of invention coincides with the date of innovation the date at which technology is used this is also true with a pure monopoly but monopoly retards technical progress relative to the efficient level competition for patents rights to a new technology results in excessively rapid technical progress if the resource endowment of the economy is sufficiently large also competition may lead to sleeping patents where invention strictly precedes the date of innovation

the private and public economics of renewable electricity generation generating electricity from renewable sources is more expensive than conventional approaches but reduces pollution externalities analyzing the tradeoff is much more challenging than often presumed because the value of electricity is extremely dependent on the time and location at which it is produced which is not very controllable with some renewables such as wind and solar likewise the pollution benefits from renewable generation depend on what type of generation it displaces which also depends on time and location without incorporating these factors cost benefit analyses of alternatives are likely to be misleading other common arguments for subsidizing renewable power green jobs energy security and driving down fossil energy prices are unlikely to substantially alter the analysis the role of intellectual property spillovers is a strong argument for subsidizing energy science research but less persuasive as an enhancement to the value of installing current renewable energy technologies

fossil fuels stock externalities and backstop technology the hotelling exhaustible resource model is extended to include stock pollution and nonpolluting backstop technology it is shown that an optimal energy consumption strategy typically includes a regime in which the two energy sources are consumed simultaneously along this regime fossil fuel consumption decreases and backstop consumption increases together fossil fuel and backstop consumption may form eleven optimal regime combinations a decrease in the backstop price decreases the initial level of optimal emission tax

strategic pigouvian taxation stock externalities and polluting non renewable resources este trabajo propone una extension del modelo de wirl y dockner 1995 disenado para analizar la interdependencia bilateral a largo plazo entre un cartel exportador de un recurso y una coalicion de paises importadores en primer lugar se incorporan los efectos agotamiento al analisis de las propiedades intertemporales de un impuesto pigouviano en segundo lugar se calculan los equilibrios feedback de stackelberg los resultados muestran que la dinamica del impuesto depende criticamente del nivel del dano medioambiental marginal ademas tambien demuestran que el impuesto definido por el equilibrio de nash perfecto de markov es un impuesto pigouviano neutral en el sentido que solo corrige la ineficiencia causada por la externalidad del stock sin embargo para el equilibrio feedback de stackelberg el impuesto es ventajoso para los paises importadores ya que la imposicion pigouviana estrategica reduce el poder de mercado del cartel

trends in natural resource commodity prices an analysis of the time domain abstract this paper attempts to reconcile the theoretical predictions of increasing real prices for nonrenewable natural resource commodities obtained from hotelling style models with the empirical findings of falling prices for these commodities a theoretical model for relative price movements is derived for the case of exogenous technical change and endogenous change in the grade of ores mined the model suggests a u shaped time path for relative prices the implied price movements are tested for all the major metals and fuels and the model parameters are found to be statistically significant for 11 out of the 12 commodities tested

is trust the missing root of institutions education and development we report evidence that trust is the missing root relating education institutions and economic development we observe that more trust both increases education and improves legal and bureaucratic institutions which in turn spurs economic development we substantiate this intuition with a series of regressions that provide evidence that trust determines both education and the quality of institutions and that education and institutions in turn affect gdp per capita

a hotelling model with a ceiling on the stock of pollution abstract environmental agreements such as the kyoto protocol aim to stabilize the amount of carbon in the atmosphere which is mainly caused by the burning of nonrenewable resources such as coal we characterize the solution to the textbook hotelling model when there is a ceiling on the stock of emissions we consider both increasing and decreasing demand for energy we show that when the ceiling is binding both the low cost nonrenewable resource and the high cost renewable resource may be used jointly a key implication is that if energy demand were to decline in the long run we may supplement energy supply through clean renewables to meet the environmental standard but then revert back to using only dirty fossil fuels in the future when the ceiling has become non binding that is the much heralded societal transition to clean energy resources may be short lived

energy transition under irreversibility a two sector approach in this paper we analyze the optimal energy transition of a two sector economy energy and final goods with exhaustible oil reserves a renewable source of energy and a pollution threat the latter corresponds to a pollution threshold above which a part of the capital is lost following flooding for instance we show that the optimal energy transition path may correspond to a corner regime in which the economy starts using both resources then crosses the pollution threshold and therefore loses a part of its capital at the end the sole adoption of the renewable energy is optimal only in the long run this result is in line with the asymptotic energy transition arguments stating that the transition to clean energy may happen only in the long run we also show that economy reduces the use of energy resource as long as the productivity of capital and energy services is high therefore public policies should promote investments in energy innovation that targets productive sector home appliances and buildings and helps to save both money and energy we extend the present model to allow for additional investment in energy saving technologies our main results show that this additional investment favours the energy transition in the sense that it increases the time within which the economy may experience the catastrophe and the welfare of the society for policy implications economic instruments such as taxes on dirty energy subsidies on clean energy or incentives for energy saving technologies need to be implemented in order to promote the energy transition this is particularly important for developing countries that mostly rely on polluting energy resources and are the most vulnerable to climate change but those economic instruments should be carefully designed in line with the asymptotic energy transition result

energy backstop endogeneity and the optimal use of groundwater to meet the growing demand for freshwater many regions have increased groundwater pumping in recent years resulting in declining groundwater levels worldwide a promising development to address these declines is technical change regarding groundwater substitutes such as desalination and wastewater recycling however because these technologies are energy intensive optimal implementation also depends on future energy price trends we provide an operational model for the case of reverse osmosis seawater desalination in an application to the pearl harbor aquifer in hawaii we find that allowing the cost of desalination to increase at an average annual rate of 2 4 over the next century results in a substantially steeper efficiency price path for water the higher prices decrease optimal groundwater extraction and induce a slower head drawdown over a longer period of time thereby delaying the transition to desalination by over 30 years because the rise in energy costs exacerbates efficiency losses from under pricing any delay in implementing efficiency pricing will cause either a greater future increase in prices or the need for rationing reforming prices sooner rather than later may be more politically feasible given that consumers may be more amenable to a gradual rise in prices today than a sudden doubling or tripling of prices ten years from now using this as a foundation we outline a research agenda for extending the framework to other groundwater substitutes and for adapting to climate change

should students be used as subjects in experimental auctions abstract we examine the bidding behavior of students and non students in experimental auctions by comparing their willingness to pay wtp values for a good our results suggest that there is no significant difference between the wtp bids of the two groups

endogenous growth with a ceiling on the stock of pollution the effects of an agreement such as the kyoto protocol which implicitly imposes a ceiling on the stock of pollution have recently been studied in hotelling models we add pollution and a ceiling to the endogenous growth model of tsur and zemel j environ econ manag 49 3 484 499 2005 to study the effects of the ceiling and pollution on capital and research investments in the short run the ceiling adds an additional scarcity to the one induced by the limited fossil fuel stock ceteris paribus the extraction rate of cheap fossil fuel is reduced and backstop utilization boosted this increases energy costs energy cost effect and makes r d more beneficial compared with capital accumulation research effect r d investments may increase depending on capital endowment and the strength of the two effects the sum of r d and capital investments is affected as both effects change disposable production in the long run i e after the exhaustion of limited resources the shape of the evolution path can be only affected by the ceiling if the capital endowment is sufficiently large

the human capital and economic growth nexus in east and south asia abstractthis study adopts a disaggregated regional focus to test for the human capital hc growth nexus in selected nine asian countries it utilizes the empirical bayesian methodology which addresses not only the heterogeneity issue but it also utilizes the common structural priors of regional countries to yield informationally efficient estimates of the impact of hc on the stock and levels of gdp various measures of hc are utilized to determine which of these produces a better explanation of economic growth in the two asian regions the study finds that primary and secondary education was more prominent in explaining the fluctuations of economic growth in east asia whereas tertiary and vocational education showed positive effects on economic growth in south asia government expenditures on education were also found to positively affect economic growth in both regions the results shed new evidence to establish that the differences in growth rates within east and south asia are associated with diffe

economic growth and transitions between renewable and nonrenewable energy resources abstract we study transitions between nonrenewable and renewable energy forms at different development stages of an economy it is shown that in the historical context the emphasis on energy production may evolve from renewables to nonrenewables and back to renewables typically both energy forms are used simultaneously along the equilibrium path nonrenewable resource consumption may increase and their price decrease an inverted u relation between carbon emissions and income level may follow even without environmental policy

natural resources a curse on education spending abstract in line with the rising interest in harnessing natural resource revenues for economic and human development through productive government investments this paper aims to address an important blind spot in our understanding of the resource curse by contributing innovative insights on how natural resource wealth impacts government priorities and expenditure practices using a large panel dataset of 140 countries covering the period from 1995 to 2009 we find an adverse effect of resource dependence on public education expenditures relative to gdp that is robust to controlling for a range of additional covariates furthermore our findings indicate that this resource curse effect on the government prioritization of education mainly stems from point source natural resources these results are of particular importance for the sustainable management of natural resource wealth in developing countries as they could achieve especially high returns by investing resource revenues in public goods such as education while this paper underlines the importance of institutions and government accountability our findings also raise questions on the role of the private sector as a partner in development as the extractives industry could consider increasing funding for education through corporate social responsibility csr initiatives

optimal timing of carbon capture policies under learning by doing abstract using a standard hotelling model of resource exploitation we determine the optimal energy consumption paths from three options dirty coal which is non renewable and carbon emitting clean coal which is also non renewable but carbon free thanks to carbon capture and storage ccs and solar energy which is renewable and carbon free we assume that the atmospheric carbon stock cannot exceed an exogenously given ceiling taking into account learning by doing in ccs technology we show the following results i clean coal exploitation cannot begin before the outset of the carbon constrained phase and must stop strictly before the end of this phase ii the energy price path can evolve non monotonically over time and iii when the solar cost is low enough an unusual energy consumption sequence along with solar energy is interrupted for some time and replacement by clean coal may exist