Stocks Of Non-renewable Resources Research Articles

Non-Renewable Resources, Extraction Technology, and Endogenous Growth

We add an extractive sector to an endogenous growth model of expanding varieties and directed technological change. Firms increase their economically extractable stocks of non-renewable resources through R&D investment in extraction technology and reduce their stocks through extraction. We show how the geological distribution of the non-renewable resource interacts with technological change. Our model accommodates long-term trends in non-renewable resource markets - namely stable prices and exponentially increasing extraction - for which we present data going back to 1792. The model suggests that over the long term, development of new extraction technologies neutralizes the increasing demand for non-renewable resources in industrializing countries such as China.

Toward a General Theory of Societal Collapse: A Biophysical Examination of Tainter’s Model of the Diminishing Returns of Complexity

The collapse of large social systems, often referred to as “civilizations” or “empires,” is a well-known historical phenomenon, but its origins are the object of an unresolved debate. In this paper, we present a simple biophysical model which we link to the concept that societies collapse because of the “diminishing returns of complexity” proposed by Tainter (The collapse of complex societies, Cambridge University Press, Cambridge, 1988). Our model is based on the description of a socio-economic system as a trophic chain of energy stocks which dissipate the energy potential of the available resources. The model is based on the idea that we observe that the exploitation of a non-renewable resource stock (“production”) has a strongly nonlinear relation with the complexity of the system, assumed to be proportional to the size of the stock termed “The Economy” (or “capital”), producing various trajectories of decline of the economy, in some cases rapid enough that they can be defined as “collapses.” The evolution of the relation of production and the economy produces a curve similar to the one proposed by Tainter, for the decline of a complex society.

The Transition to Renewable Energy

The existing economics literature neglects the important role of capacity in the production of renewable energy. To fiill this gap, we construct a model in which renewable energy production is tied to renewable energy capacity, which then becomes a form of capital. This capacity capital can be increased through investment, which we interpret as arising from the allocation of energy, and which therefore comes at the cost of reduced general production. Requiring societal well-being to never decline, we describe how society could optimally elect to split energy in this fashion, the use of non-renewable energy resources, the use of renewable energy resources, and the implied time path of societal well-being. Our model delivers an empirically satisfactory explanation for simultaneous use of non-renewable and renewable energy. We also discuss the optimality of ceasing use of non-renewable energy before the non-renewable resource stock is fully exhausted.

A Hotelling model for the circular economy including recycling, substitution and waste accumulation

Non-renewable resources include a large variety of deposits that have been formed by geological processes over millions of years. Although extraction of such resources provides benefits as employment and economic revenues, it also contributes to negative environmental externalities and it increases resource scarcity. An important policy question is how to optimally extract non-renewable resource stocks over time while taking possible substitutes and recycling into account. The present paper adds to the literature by developing a generic numerical optimisation model that can be used to simulate non-renewable resource management regimes and the effects of different policy instruments deployed at different stages of the resource’s life cycle. By including recycling and substitution, the model extends the seminal cake-eating Hotelling model that dominates the non-renewable resource economics literature. In addition to being generically designed, the model can accommodate for non-competitive market settings, interacting policy instruments and environmental externalities at different stages of the material’s life cycle. The model’s possibilities are illustrated by means of a numerical simulation example for the extraction of sand.

Habit formation and exhaustible resource risk-pricing

This paper studies the risk-pricing implications of introducing habit formation in consumption in a model that encompasses growth with nonrenewable resources and capital markets. It is shown that the expected return on nonrenewable resource stocks incorporates both short-run and long-run risk factors. The short-run risk factor is associated with shocks to current surplus consumption growth. The long-run risk factor reflects the investor's desire to hedge against long-run shocks to future surplus consumption prospects (long-run habit risk premium). The model is tested using energy commodities index and US aggregate real per capita consumption data, and the results confirm that habit enters significantly in the pricing equation by entertaining a long-run time-varying risk coefficient. Compared to results obtained with a no-habit formation model (time-separable preferences), we found that long-run future prospects of surplus consumption constitute a forward-looking risk factor to be taken into account in explaining the dynamics of energy prices under uncertainty.

An Economic Simulation of the Path to Sustainable Energy: A Dynamic Analysis

The existing economics literature neglects the important role of capacity in the production of renewable energy. To fill this gap, we construct a model in which renewable energy production is tied to renewable energy capacity, which then becomes a form of capital. This capacity capital can be increased through investment, which we interpret as arising from the allocation of energy, and which therefore comes at the cost of reduced general production. Requiring societal well-being to never decline—the notion of sustainability favored by economists—we describe how society could optimally elect to split energy in this fashion, the use of non-renewable energy resources, the use of renewable energy resources, and the implied time path of societal well-being. Our model delivers an empirically satisfactory explanation for simultaneous use of non-renewable and renewable energy. We also discuss the optimality of ceasing use of non-renewable energy before the non-renewable resource stock is fully exhausted.

Non-Renewable Resources, Extraction Technology, and Endogenous Growth

We add an extractive sector to an endogenous growth model of expanding varieties and directed technological change. Firms increase their economically extractable stocks of non-renewable resources through R&D investment in extraction technology and reduce their stocks through extraction. We show how the geological distribution of the non-renewable resource interacts with technological change. Our model accommodates long-term trends in non-renewable resource markets - namely stable prices and exponentially increasing extraction - for which we present data going back to 1792. The model suggests that over the long term, development of new extraction technologies neutralizes the increasing demand for non-renewable resources in industrializing countries such as China.

Substance flow analysis for nickel in mainland China in 2009

A comprehensive understanding of the flows and stocks of non-renewable resources plays an important role in the development of sustainable resource use policies. Substance flow analysis (SFA) is an established method to comprehensively analyze resource flows in the anthroposphere, and this paper conducts a quantitative SFA for nickel in mainland China for the year 2009. The analysis shows that total available primary nickel, total available nickel used in fabrication processes and in-use stock of nickel end-products during the year 2009 were 509.28 Gg, 647.25 Gg and 341.83 Gg respectively, and the net import reliance was about 73%. Some sustainability indicators can be derived from the SFA results, and these indicate that the sustainability of the Chinese nickel industry chain could be significantly improved. However, to conduct a comprehensive assessment of resource sustainability it would be necessary to derive systematic SFA indicators. The overall environmental burden exported from the Chinese nickel industry is greater than the imported burden, with the imported environmental burden resulting mainly from the smelting and refining of imported nickel ores. The results indicate that cradle-to-cradle management is important for Chinese nickel industry, including shrinking the milling and refining capacity, improvements to processing technology, and enlarging the capacity for domestic and imported waste management.

The optimal depletion of exhaustible resources: A complete characterization

Abstract We provide the closed form solution to the Dasgupta–Heal–Solow–Stiglitz (DHSS) model. The DHSS model is based on the seminal articles Dasgupta and Heal (1974); Solow (1974) and Stiglitz (1974) and describes an economy with two assets, man-made capital and a nonrenewable resource stock. We explicitly characterize, for such an economy, the dynamics along the optimal trajectory of all the variables in the model and from all possible initial values of the stocks. We use the analytical solution to prove several properties of the optimal consumption path. In particular, we show that the initial consumption under a utilitarian criterion starts below the maximin rate of consumption if and only the resource is abundant enough and that under a utilitarian criterion, it is not necessarily the present generation that benefits most from a windfall of resources.

Equilibrium Non-Oil Current Account Assessments for Oil Producing Countries

This paper introduces a methodology for assessing external balance in countries with large stocks of non-renewable resources based on oil stock data, and applies it to selected oil producing countries. The methodology uses a stock approach (instead of the more traditional flow approach) to estimate the equilibrium non-oil current account consistent with optimal consumption smoothing. One of the benefits of the stock approach is that geological data for oil reserves can be used to estimate oil wealth; however, the methodology makes the estimated non-oil current account norm very sensitive to oil price projections. Based on an oil price about US$70 per barrel prevailing in the summer of 2007, the baseline estimates indicate that the non-oil current accounts for most of the countries in the sample are broadly in equilibrium. By the same token, using oil price projections as of the summer of 2008 implies large disparities between the equilibrium non-oil current account position and the medium term forecast for all countries in the sample except for Malaysia.

Equilibrium Non-Oil Current Account Assessments for Oil Producing Countries

This paper introduces a methodology for assessing external balance in countries with large stocks of non-renewable resources based on oil stock data, and applies it to selected oil producing countries. The methodology uses a stock approach (instead of the more traditional flow approach) to estimate the equilibrium non-oil current account consistent with optimal consumption smoothing. One of the benefits of the stock approach is that geological data for oil reserves can be used to estimate oil wealth; however, the methodology makes the estimated non-oil current account norm very sensitive to oil price projections. Based on an oil price about US$70 per barrel prevailing in the summer of 2007, the baseline estimates indicate that the non-oil current accounts for most of the countries in the sample are broadly in equilibrium. By the same token, using oil price projections as of the summer of 2008 implies large disparities between the equilibrium non-oil current account position and the medium term forecast for all countries in the sample except for Malaysia.

LexisNexis U.S. Serial Set Digital Collection

A comprehensive understanding of the flows and stocks of non-renewable resources plays an important role in the development of sustainable resource use policies. Substance flow analysis (SFA) is an established method to comprehensively analyze resource flows in the anthroposphere, and this paper conducts a quantitative SFA for nickel in mainland China for the year 2009. The analysis shows that total available primary nickel, total available nickel used in fabrication processes and in-use stock of nickel end-products during the year 2009 were 509.28 Gg, 647.25 Gg and 341.83 Gg respectively, and the net import reliance was about 73%. Some sustainability indicators can be derived from the SFA results, and these indicate that the sustainability of the Chinese nickel industry chain could be significantly improved. However, to conduct a comprehensive assessment of resource sustainability it would be necessary to derive systematic SFA indicators. The overall environmental burden exported from the Chinese nickel industry is greater than the imported burden, with the imported environmental burden resulting mainly from the smelting and refining of imported nickel ores. The results indicate that cradle-to-cradle management is important for Chinese nickel industry, including shrinking the milling and refining capacity, improvements to processing technology, and enlarging the capacity for domestic and imported waste management.

Hydrogen as a transportation fuel produced from thermal gasification of municipal solid waste: an examination of two integrated technologies

Innovative technologies are required to offset increasing consumption and declining stocks of non-renewable resources. This study examines a possible enhancement of waste management and transportation by integrating two emerging technologies: municipal solid waste (MSW) gasification and fuel cell vehicles (FCVs), by fueling FCVs with hydrogen produced from gasified MSW. Material and energy flows were modeled in four MSW management scenarios (incineration, landfill, gasification, gasification with recycling) and four transportation scenarios (hybrid gasoline-electric, methanol FCVs, hydrogen FCVs using hydrogen from natural gas or municipal solid waste). Technological performance deemed feasible within 2010–2020 was assumed. Greenhouse gas emissions and non-renewable energy use were used to assess overall system performance. Gasification with hydrogen production performs as efficiently as incineration, but is advantageous compared to landfilling. Taking into account additional environmental criteria, the model suggests that hydrogen from MSW gasification for FCVs may provide benefits over conventional MSW treatment and transportation systems.

The Market Value of Water in the Ogallala Aquifer

The Ogallala Aquifer, also known as the Ogallala Formation or the High Plains aquifer, is a 174,000-square-mile body of water that underlies parts of Colorado, Kansas, Nebraska, New Mexico, Oklahoma, South Dakota, Texas, and Wyoming. The Ogallala contains about 3.5 billion acre-feet of water (Symposium II 1984), but in many areas the aquifer has been declining from continued deep well pumping (Sloggett and Dickason 1986). The aquifer receives little recharge, especially in the southern portion, and as such represents a finite nonrenewable resource stock. As a result of the concerns of residents of the High Plains States over declines in the Ogallala Aquifer, Congress authorized the Secretary of Commerce to conduct a Six-State Regional Resources Study of the Ogallala in 1976 (High Plains Associates 1982). The study indicated, even under the most effective water conservation program, more than a million acres of farmland then

On the behavior of optimal exploration and extraction rates for non-renewable resource stocks

Models are developed to examine the behavior of optimal exploration and production policies over time. The principal model is singular in the exploration control and possesses four phases of the exploitation cycle. Explicit sets of conditions are established that (i) give rise to a Ushaped price path, and (ii) determine when additions to reserves from exploration are greater than or less than extraction, and when exploration creases. Three alternative specifications of the principal model are considered, and with a separable benefit function it is shown that a higher discount rate lends to a lower level of cumulative exploration.

The Effect of Capital Intensity on the Optimal Rate of Extraction of a Mineral Deposit

In a recent paper Levhari and Liviatan (1977) present a refinement of the analysis of Hotelling's (1931) paper on the economics of exhaustible resources. While they examine various aspects of the problem of determining the optimal time-path for the rate of extraction of a mineral deposit, they do not develop an important point raised by Hotelling (1931, 163): that the 'capital investment in developing the mine ... is a source of a need for steady production.' A large initial capital investment is typically required before a mineral deposit can be exploited: investment in infrastructure, overburden removal, shaft-sinking, mining and milling plants, and housing for employees may be necessary. The traditional model tends to ignore these preproduction expenses and treats all extraction costs as variable costs. The present paper argues that when the capital investment which must be undertaken before mining can commence is introduced into the conventional analysis of Hotelling, the optimal rate of extraction is constant over much of the mine's life and does not decline over time as the traditional model prescribes. The results of the present paper are derived from a model of non-renewable resource extraction in which the firm uses physical capital to extract the resource from a fixed resource stock of uniform quality. The rate of extraction, or disinvestment in the resource stock, is constrained by the amount of physical capital owned by the firm. The rate of investment in physical capital is assumed to have no upper bound and disinvestment in physical capital is assumed to be impossible, reflecting the fact that much of the capital invested in exploiting a resource stock may not be transferable to another use once extraction terminates. Various elements of the problem addressed in the present paper have received attention in the recent natural resource economics literature. Heaps and Neher (1980) investigate the optimal harvesting policy for a forest when the harvest rate is constrained; Clark, Clarke, and Munro (1979) use a model of renewable resource extraction to analyse the implications of various assumptions about the degree of malleability of capital (its ability to be transferred to an alternative use) for the optimal exploitation of a commercial fishery; and Puu (1977) discusses models of the extraction process of renewable and non-renewable resource stocks in which the rate of extraction is constrained by the size of the physical capital stock. Puu's model of nonrenewable resource extraction differs from that of the present paper in that the resource stock is assumed to be of nonuniform quality, the rate of investment in physical capital has an upper bound, and disinvestment in

The case of tropical forests

The insensitivity of market mechanisms towards very long-term issues, external effects, and public rather than private costs, represents a threat to stocks of nonrenewable resources. In this discussion of the potential of two practical responses to the problem, the author examines the case of one such threatened resource, the world's tropical forests. As a means of limiting the effects of market discount rates upon such important assets, he puts forward the idea of a conservation rate of discount; as an alternative means of husbanding them, he proposes a tax on nonrenewable resources. He argues that, despite the obvious difficulties involved in this form of community action, the danger of depletion demands a broader response than the present fragmentary efforts. The costs of protecting the tropical forests and other such resources need not be exceptional in comparison with the benefits to present society and future generations.