Pareto optimality in the extraction of fossil fuels and the greenhouse effect
Subtitle: a note
By: Hans-Werner Sinn.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- no. 13453.; Working paper series (National Bureau of Economic Research) -- working paper no. 13453.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Subjects: Greenhouse effect, Atmospheric -- Economic aspects; Fossil fuels -- Environmental aspects; Environmental economics
Description: This note generalizes the Solow-Stiglitz efficiency condition for natural resources to the problem of fossil fuel extraction with a greenhouse effect. The generalized optimality condition suggests that the greenhouse effect implies overextraction in the sense of leaving future generations a wrongly composed wealth portfolio with too few natural resources relative to man-made capital. This judgment is independent of society's ethical preferences concerning the well-being of future generations.
Notes: "September 2007"

Includes bibliographical references.

Also available in PDF from the NBER world wide web site (www.nber.org).