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Complementarity, impatience, and the resilience of natural-resource-dependent economies

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  • Martin F. Quaas

    ()
    (Department of Economics, University of Kiel, Germany)

  • Daan van Soest

    (VU University Amsterdam and Tilburg University, The Netherlands)

  • Stefan Baumgaertner

    (Department of Sustainability Sciences and Department of Economics, Leuphana University of Lueneburg, Germany)

Abstract

We study how human preferences a ect the resilience of economies that depend on more than one type of natural resources. In particular, we analyze whether the degree of substitutability of natural resources in consumer needs may give rise to multiple steady states and path dependence even when resources are managed optimally. This is a major shift in the interpretation and analysis of resilience, from viewing (limited) resilience as an objective property of the economy-environment system to acknowledging its partially subjective, preference-based character. We nd that society tends to be less willing to bu er exogenous shocks if resource goods are complements in consumption than if they are substitutes. Hence, the stronger the complementarity between the various types of resource goods, the less resilient the economy is.

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Bibliographic Info

Paper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 220.

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Length: 43 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:lue:wpaper:220

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Web page: http://leuphana.de/institute/ivwl.html

Related research

Keywords: Resilience; substitutes and complements; discounting; multiple steady states; natural resources; path dependence; regime shifts; tipping points;

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