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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:

    1. Richter, Andries & Dakos, Vasilis, 2015. "Profit fluctuations signal eroding resilience of natural resources," Ecological Economics, Elsevier, vol. 117(C), pages 12-21.
    2. 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.
    3. 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.
    4. repec:kap:enreec:v:67:y:2017:i:1:d:10.1007_s10640-015-9976-z is not listed on IDEAS
    5. Gars, Johan & Spiro, Daniel, 2014. "Uninsurance through Trade," Memorandum 13/2014, Oslo University, Department of Economics.

    More about this item

    Keywords

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

    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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