Is a Green Paradox Spectre Haunting International Climate Change Laws and Conventions?

Abstract

V. ECONOMIC MODELS OF EXHAUSTIBLE RESOURCES level of reliance that so many green paradox models have on either Hotelling or Dasgupta Heal models has been demonstrated by the discussion above in [section] 0. This section of the analysis attempts to determine if that reliance on the Hotelling and Dasgupta Heal models is well founded. First, the background to the origin of Hotelling's model is provided to yield insight into the function and purpose of the model. Next, the study will explain the working of the model. focus will then turn to the assumptions of the model, the caveats that Hotelling provided against those assumptions, and to other concerns related to those assumptions. it will be demonstrated that reliance on a Hotelling model for green paradox studies might not be well founded. Second, this section will provide a brief introduction to the origins of the Dasgupta Heal backstop models. reliance of the Dasgupta Heal models on the original Hotelling models will be demonstrated. similar to the previous discussion, this analysis will demonstrate that reliance on Dasgupta Heal models for green paradox studies might not be well founded. This conclusion will be equally valid for both dirty backstop models and green energy backstop models. After Hotelling's model of exhaustible resources, backstop technology models are probably the second most common set of models discussed in green paradox research. backstop models analyze the optimal production path of an exhaustible resource when there is a substitutable alternative energy technology available, known as a backstop. There are two basic sets of models: those with green energy technologies, and those with carbon-emitting technologies. Partha Dasgupta and Geoffrey Heal created these models in the 1970s; (217) the models were developed in response to concerns that exhaustion of fossil fuels could limit economic growth. (218) One model evaluated then-unconventional fossil fuels as a backstop technology while another model evaluated nuclear energy as a backstop technology choice. (219) Both models are generalizations of Hotelling's model of exhaustible resources. (220) Thus, many of the concerns on Hotelling's model apply equally to Dasgupta Heal models. (221) Both models make the same mathematical assumptions as in Hotelling's original model: that forced full depletion will occur within the time of the models. (222) Thus, while the models are well regarded for other applications within resource economics, the following analysis will demonstrate that the use of Dasgupta Heal models within green paradox settings might be less than optimal for resolving critical research questions. A. Background of Hotelling's Models Harold Hotelling wrote The Economics of Exhaustible Resources in 1931 due to calls for the regulation of minerals, forests, and other exhaustible assets. (223) At that time, there were concerns that some actors were rushing to harvest exhaustible resources and causing a surplus of supply, a collapse of pricing, and great resource waste in many cases. (224) These particular concerns gave cause to the nascent conservation movement and led to calls for the government to protect exhaustible natural resources by limiting the periods and quantities of extraction. (225) On the other hand, Hotelling also published his article in response to concerns that other actors were colluding to prevent production and to force high prices onto the public. (226) In previous years this collusion had led to the development of anti-monopoly laws, as famously applied to Standard Oil. In his article, however, Hotelling made reference to a more contemporary case from California wherein several post-break-up Standard Oil affiliates allegedly conspired to limit production and protect prices. (227) There was clamor for laws to limit production, to encourage production, to impose taxes and royalties, and to provide legal guidance on mineral ownership. …