IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_2083.html
   My bibliography  Save this paper

Pareto Optimality in the Extraction of Fossil Fuels and the Greenhouse Effect: A Note

Author

Listed:
  • Hans-Werner Sinn

Abstract

This note generalizes the Solow-Stiglitz efficiency condition for natural resources to the problem of fossil fuel extraction with a greenhouse effect. The generalized optimality condition suggests that the greenhouse effect implies overextraction in the sense of leaving future generations a wrongly composed wealth portfolio with too few natural resources relative to man-made capital. This judgment is independent of society’s ethical preferences concerning the well-being of future generations.

Suggested Citation

  • Hans-Werner Sinn, 2007. "Pareto Optimality in the Extraction of Fossil Fuels and the Greenhouse Effect: A Note," CESifo Working Paper Series 2083, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_2083
    as

    Download full text from publisher

    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp2083.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. John Quiggin & John Horowitz, 2003. "Costs of adjustment to climate change," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(4), pages 429-446, December.
    2. Kolstad, Charles D. & Krautkraemer, Jeffrey A., 1993. "Natural resource use and the environment," Handbook of Natural Resource and Energy Economics,in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 26, pages 1219-1265 Elsevier.
    3. Cees Withagen, 1995. "Pollution, abatement and balanced growth," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(1), pages 1-8, January.
    4. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
    5. Robert T. Deacon & Henning Bohn, 2000. "Ownership Risk, Investment, and the Use of Natural Resources," American Economic Review, American Economic Association, vol. 90(3), pages 526-549, June.
    6. Konrad Kai A. & Olsen Trond E. & Schob Ronnie, 1994. "Resource Extraction and the Threat of Possible Expropriation: The Role of Swiss Bank Accounts," Journal of Environmental Economics and Management, Elsevier, vol. 26(2), pages 149-162, March.
    7. Long, Ngo Van, 1975. "Resource extraction under the uncertainty about possible nationalization," Journal of Economic Theory, Elsevier, vol. 10(1), pages 42-53, February.
    8. Anthony C. Fisher & John V. Krutilla, 1975. "Resource Conservation, Environmental Preservation, and the Rate of Discount," The Quarterly Journal of Economics, Oxford University Press, vol. 89(3), pages 358-370.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hans-Werner Sinn, 2008. "Das grüne Paradoxon: Warum man das Angebot bei der Klimapolitik nicht vergessen darf," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(s1), pages 109-142, May.
    2. Hans-Werner Sinn, 2015. "The Green Paradox: A Supply-side View of the Climate Problem," CESifo Working Paper Series 5385, CESifo Group Munich.
    3. Hans-Werner Sinn, 2008. "Public policies against global warming: a supply side approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(4), pages 360-394, August.
    4. Duncan Foley & Lance Taylor, 2013. "The Social Cost of Carbon Emissions," SCEPA policy note series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2013-2, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    5. Kögel, Tomas, 2011. "The social cost of carbon on an optimal balanced growth path," Economics Discussion Papers 2011-35, Kiel Institute for the World Economy (IfW).
    6. Foley, Duncan K. & Rezai, Armon & Taylor, Lance, 2013. "The social cost of carbon emissions: Seven propositions," Economics Letters, Elsevier, vol. 121(1), pages 90-97.
    7. Hans-Werner Sinn, 2007. "Public Policies against Global Warming," CESifo Working Paper Series 2087, CESifo Group Munich.
    8. Alfred Endres, 2008. "Ein Unmöglichkeitstheorem für die Klimapolitik?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(3), pages 350-382, August.
    9. Strand, Jon, 2010. "Optimal fossil-fuel taxation with backstop technologies and tenure risk," Energy Economics, Elsevier, vol. 32(2), pages 418-422, March.
    10. Adolfo Maza & José Villaverde & María Hierro, 2015. "Non- $$\hbox {CO}_2$$ CO 2 Generating Energy Shares in the World: Cross-Country Differences and Polarization," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(3), pages 319-343, July.
    11. Laurence J. Kotlikoff & Andrey Polbin & Andrey Zubarev, 2016. "Will the Paris Accord Accelerate Climate Change?," NBER Working Papers 22731, National Bureau of Economic Research, Inc.
    12. Armon Rezai, 2011. "The Opportunity Cost of Climate Policy: A Question of Reference," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(4), pages 885-903, December.

    More about this item

    Keywords

    global warming; resource extraction; Pareto optimality;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_2083. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe). General contact details of provider: http://edirc.repec.org/data/cesifde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.