Irreversible Deveolpment of a Natural Resource: Management rules and policy issues when direct use values and environmental values are uncertain
AbstractThe paper analyzes resource management that entails the irreversible development of an exhaustible resource when the values of services generated by the resource in either the developed or the undeveloped state are uncertain. An exercise barrier approach is used to derive the privately - optimal and the socially - optimal free boundaries. The two boundaries are used to compare the pace of development under profit maximization and social optimization. Regulatory schemes on resource development that will induce the profit - maximizing decision maker to behave as the social planner, with regard to development choices under uncertainty and irreversibility, are also presented.
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Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 0111.
Length: 28 pages
Date of creation: 22 Sep 2001
Date of revision:
Natural resource; irreversible development; uncertainty ; exercise boundary; private optimum; social;
Find related papers by JEL classification:
- Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
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"The implications of heterogeneous resource intensities on technical change and growth,"
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Canadian Economics Association, vol. 43(4), pages 1173-1197, November.
- Karen Pittel & Lucas Bretschger, 2009. "The Implications of Heterogeneous Resource Intensities on Technical Change and Growth," CER-ETH Economics working paper series 09/120, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
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- Karen Pittel & Lucas Bretschger, 2008. "Sectoral Heterogeneity, Resource Depletion, and Directed Technical Change: Theory and Policy," CER-ETH Economics working paper series 08/96, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
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