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

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  • Quaas, Martin F.
  • van Soest, Daan
  • Baumgärtner, Stefan

Abstract

We study how society's preferences affect the resilience of economies that depend on more than one type of natural resource. In particular, we analyze whether the degree of complementarity of natural resources in consumer preferences may give rise to multiple steady states and path dependence even when resources are managed optimally. We find that, for a given social discount rate, society tends to be less willing to buffer exogenous shocks if resource good are complements in consumption than if they are substitutes. The stronger the complementarity between the various types of natural resources, the less resilient the economy is, and even more so the higher is the social discount rate.

Suggested Citation

  • Quaas, Martin F. & van Soest, Daan & Baumgärtner, Stefan, 2013. "Complementarity, impatience, and the resilience of natural-resource-dependent economies," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 15-32.
    • Handle: RePEc:eee:jeeman:v:66:y:2013:i:1:p:15-32
    DOI: 10.1016/j.jeem.2013.02.001
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    Cited by:

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    2. Gustav Engström & Johan Gars, 2016. "Climatic Tipping Points and Optimal Fossil-Fuel Use," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(3), pages 541-571, November.
    3. Richter, Andries & Dakos, Vasilis, 2015. "Profit fluctuations signal eroding resilience of natural resources," Ecological Economics, Elsevier, vol. 117(C), pages 12-21.
    4. Martinet, Vincent & Del Campo, Stellio & Cairns, Robert D., 2022. "Intragenerational inequality aversion and intergenerational equity," European Economic Review, Elsevier, vol. 144(C).
    5. Can Askan Mavi & Nicolas Quérou, 2020. "Common pool resource management and risk perceptions," DEM Discussion Paper Series 20-25, Department of Economics at the University of Luxembourg.
    6. Shao, Shuai & Yang, Lili, 2014. "Natural resource dependence, human capital accumulation, and economic growth: A combined explanation for the resource curse and the resource blessing," Energy Policy, Elsevier, vol. 74(C), pages 632-642.
    7. Stefan Baumgärtner & Moritz A. Drupp & Martin F. Quaas, 2017. "Subsistence, Substitutability and Sustainability in Consumption," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(1), pages 47-66, May.
    8. Kira Lancker & Julia Bronnmann, 2022. "Substitution Preferences for Fish in Senegal," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(4), pages 1015-1045, August.
    9. Lancker, Kira & Bronmann, Julia, 2020. "Quantifying consumers’ love for marine biodiversity," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304214, Agricultural and Applied Economics Association.
    10. Eli P Fenichel & Yukiko Hashida, 2019. "Choices and the value of natural capital," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 35(1), pages 120-137.
    11. Can Askan Mavi & Nicolas Quérou, 2020. "Common pool resource management and risk perceptions," CEE-M Working Papers hal-03052114, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    12. Gars, Johan & Spiro, Daniel, 2014. "Uninsurance through Trade," Memorandum 13/2014, Oslo University, Department of Economics.
    13. Stein Ivar Steinshamn, 2017. "Predators in the market: implications of market interaction on optimal resource management," Journal of Bioeconomics, Springer, vol. 19(3), pages 327-341, October.

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    More about this item

    Keywords

    Resilience; Substitutes and complements; Discounting; Multiple steady states; Natural resources; Path dependence; Regime shifts; Tipping points;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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