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When is it Optimal to Exhaust a Resource in a Finite Time?

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Author Info
Y. Hossein Farzin (University of California)
Ken-Ichi Akao (Waseda University)
Abstract

Exhaustion of a natural resource stock may be a rational choice for an individual and/or a community, even if a sustainable use for the resource is feasible and the resource users are farsighted and well informed on the ecosystem. We identify conditions under which it is optimal not to sustain resource use. These conditions concern the discounting of future benefits, instability of social system or ecosystem, nonconvexity of natural growth function, socio-psychological value of employment, and strategic interaction among resource users. The identification of these conditions can help design policies to prevent unsustainable patterns of resource use.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.23.

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Date of creation: Feb 2006
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Handle: RePEc:fem:femwpa:2006.23

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Related research
Keywords: Renewable resource management; Sustainability; Finite-time exhaustion; Optimal path; Policy implications;

Find related papers by JEL classification:
Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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    Other versions:
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  7. Tjalling C. Koopmans, 1959. "Stationary Ordinal Utility and Impatience," Cowles Foundation Discussion Papers 81, Cowles Foundation, Yale University. [Downloadable!]
  8. Romer, Paul M, 1986. "Cake Eating, Chattering, and Jumps: Existence Results for Variational Problems," Econometrica, Econometric Society, vol. 54(4), pages 897-908, July. [Downloadable!] (restricted)
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  12. Christophe Deissenberg, Gustav Feichtinger, Willi Semmler and Franz Wirl, 2001. "History Dependence and Global Dynamics in Models with Multiple Equilibria," Computing in Economics and Finance 2001 257, Society for Computational Economics.
  13. Magill, Michael J P, 1981. "Infinite Horizon Programs," Econometrica, Econometric Society, vol. 49(3), pages 679-711, May. [Downloadable!] (restricted)
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