Natural Resources as Capital

Natural Resources as Capital

by Larry Karp

Paperback

$55.00
View All Available Formats & Editions
Want it by Thursday, November 15 Order now and choose Expedited Shipping during checkout.

Product Details

ISBN-13: 9780262534055
Publisher: MIT Press
Publication date: 10/27/2017
Series: The MIT Press
Pages: 432
Sales rank: 1,150,201
Product dimensions: 6.90(w) x 8.90(h) x 0.90(d)
Age Range: 18 Years

About the Author

Larry Karp is Professor in the Department of Agricultural and Resource Economics at the University of California, Berkeley.

Table of Contents

Preface xv

Acknowledgments xix

1 Resource Economics in the Anthropocene 1

2 Preliminaries 11

2.1 Arbitrage 12

2.2 Comparative Statics 14

2.3 Elasticities 15

2.4 Competition and Monopoly 17

2.5 Examples: Competition and Monopoly* 21

2.6 Discounting 23

2.7 Applications of Discounting 26

2.8 Welfare 29

2.9 Summary 31

2.10 Terms and Concepts, Study Questions, Exercises, and Sources 32

3 Nonrenewable Resources 37

3.1 Competitive Equilibrium 37

3.2 Monopoly 41

3.3 Comparative Statics 44

3.4 Summary 44

3.5 Terms and Concepts, Study Questions, Exercises, and Sources 45

4 Additional Tools 47

4.1 A More General Cost Function 48

4.2 The Perturbation Method 50

4.2.1 It Is Optimal to Use All of the Resource 51

4.2.2 It Is Optimal to Leave Some of the Resource Behind 54

4.3 Rent 55

4.4 Solving for the Equilibrium 58

4.5 Examples* 58

4.6 Summary 64

4.7 Terms and Concepts, Study Questions, Exercises, and Sources 64

5 The Hotelling Model 69

5.1 The Euler Equation (Hotelling Rule.) 70

5.2 Rent and Hotelling 71

5.3 Shadow Prices 74

5.4 The Order of Extraction of Deposits 75

5.5 Resources and Asset Prices 76

5.6 Completing the Solution 78

5.7 Monopoly 82

5.8 Summary 83

5.9 Terms and Concepts, Study Questions, Exercises, and Sources 84

6 Empirics and the Hotelling Model 87

6.1 Models and Empirics in Economics 88

6.2 Hotelling and Prices 89

6.3 Nonconstant Costs 90

6.4 Testing Extensions of the Model 92

6.5 Summary 99

6.6 Terms and Concepts, Study Questions, Exercises, and Sources 100

7 Backstop Technology 103

7.1 The Backstop Model 104

7.2 A Two-Period Example 105

7.3 The T-period Problem 107

7.4 More General Cost Functions 110

7.4.1 Costs Depend on Extraction but Not on Stock 110

7.4.2 Stock-Dependent Costs 111

7.5 Summary 113

7.6 Terms and Concepts, Study Questions, Exercises, and Sources 113

8 The Green Paradox 117

8.1 The Approach 118

8.2 Cumulative Extraction and the Extraction Profile 120

8.3 Why Does the Extraction Profile Matter? 121

8.4 Discussion of the Paradox 124

8.5 Summary 127

8.6 Terms and Concepts, Study Questions, Exercises, and Sources 128

9 Policy in a Second-Best World 131

9.1 Welfare and Second-Best Policies 133

9.2 Monopoly + Pollution 134

9.3 Distortionary Taxes 137

9.4 Output and Input Subsidies 139

9.5 Policy Complements 143

9.6 Politics and Lobbying 146

9.7 Summary 148

9.8 Terms and Concepts, Study Questions, Exercises, and Sources 149

10 Taxes: An Introduction 153

10.1 Tax Incidence and Equivalence 154

10.2 A Graphical and Algebraic Perspective 156

10.3 Tax Incidence and Deadweight Loss 157

10.4 A Closer Look at Welfare 160

10.5 Taxes and Cap and Trade 163

10.6 Summary 167

10.7 Terms and Concepts, Study Questions, Exercises, and Sources 168

11 Taxes: Nonrenewable Resources 171

11.1 Current Fossil Fuel Policies 172

11.2 The Logic of Resource Taxes 174

11.3 Investment 176

11.4 An Example 178

11.4.1 The Price Trajectories 179

11.4.2 Tax Incidence 180

11.4.3 Welfare Changes 181

11.4.4 Anticipated versus Unanticipated Taxes 183

11.5 Summary 185

11.6 Terms and Concepts, Study Questions, Exercises, and Sources 186

12 Property Rights and Regulation 189

12.1 Overview of Property Rights 190

12.2 The Coase Theorem 193

12.3 Fisheries: The Basics 195

12.4 A Model of Overcapitalization* 197

12.5 Property Rights-Based Regulation 200

12.5.1 Reducing Industry Costs 200

12.5.2 Increasing Revenue 204

12.5.3 Protecting Fish Stocks 205

12.6 Subsidies to Fisheries 210

12.7 Summary 212

12.8 Terms and Concepts, Study Questions, Exercises, and Sources 212

13 Renewable Resources: Tools 217

13.1 Growth Dynamics 218

13.2 Harvest and Steady States 219

13.3 Stability 221

13.3.1 Discrete versus Continuous Time 221

13.3.2 Stability in Continuous Time 222

13.3.3 Stability in the Fishing Model 224

13.4 Maximum Sustainable Yield 226

13.5 Summary 227

13.6 Terms and Concepts, Study Questions, Exercises, and Sources 227

14 The Open Access Fishery 229

14.1 Harvest Rules 231

14.1.1 Stock-Independent Costs 231

14.1.2 Stock-Dependent Costs 231

14.2 Policy Application 234

14.3 Summary 237

14.4 Terms and Concepts, Study Questions, Exercises, and Sources 238

15 The Sole-Owner Fishery 241

15.1 The Euler Equation for the Sole Owner 242

15.1.1 Intuition for the Euler Equation 243

15.1.2 Rent 244

15.2 Policy 246

15.2.1 Optimal Policy under a Single Market Failure 247

15.2.2 Optimal Policy under Two Market Failures 247

15.2.3 Empirical Challenges 248

15.3 The Steady State 249

15.3.1 Harvest Costs Are Independent of Stock 250

15.3.2 Harvest Costs Depend on the Stock 253

15.3.3 Empirical Evidence 257

15.4 Summary 257

15.5 Terms and Concepts, Study Questions, Exercises, and Sources 258

16 Dynamic Analysis 261

16.1 The Continuous Time Limit 262

16.2 Harvest Rules for Stock-Independent Costs 263

16.2.1 Tax Policy Implications of Tables 16.1 and 16.2 265

16.2.2 Confirming Table 16.2* 266

16.3 Harvest Rules for Stock-Dependent Costs 268

16.3.1 Tax Policy 268

16.3.2 The Phase Portrait* 270

16.4 Summary 273

16.5 Terms and Concepts, Study Questions, Exercises, and Sources 274

Water Economics 275

17.1 The Policy Context 277

17.2 A Static Market Failure 281

17.3 The Rebound Effect 286

17.4 A Dynamic Market Failure 289

17.4.1 The Ogallala Aquifer 289

17.4.2 Stock Externalities for Groundwater 290

17.4.3 A Dynamic Model of Water Economics 292

17.5 Trade under Weak Property Rights 296

17.6 Summary 298

17.7 Terms and Concepts, Study Questions, Exercises, and Sources 299

18 Sustainability 305

18.1 Measuring Resource Value or Price 306

18.2 Weak and Strong Sustainability 309

18.2.1 Generalizations and Empirics 312

18.3 Welfare Measures 314

18.4 Summary 318

18.5 Terms and Concepts, Study Questions, Exercises, and Sources 319

19 Valuing the Future: Discounting 321

19.1 The Social Cost of Carbon 323

19.2 Discounting Utility or Consumption 324

19.2.1 The Tyranny of Discounting 325

19.2.2 Uncertain Timing 327

19.3 The Consumption Discount Rate 329

19.3.1 The Ramsey Formula 329

19.3.2 The Importance of the Growth Trajectory 331

19.3.3 Growth Uncertainty 332

19.4 Hyperbolic Discounting 335

19.4.1 Transfers Affecting a Single Person or Generation 336

19.4.2 Transfers across Generations 337

19.4.3 Individual versus Generational Discounting 339

19.4.4 The Policy Relevance of Hyperbolic Discounting 339

19.5 Summary 340

19.6 Terms and Concepts, Study Questions, Exercises, and Sources 341

Appendix A Math Review 345

A.1 Derivatives and Graphs 345

A.2 Derivatives of Exponents 346

A.3 The Sum, Product, and Quotient Rules 347

A.4 The Chain Rule 347

A.5 Partial Derivatives 348

A.6 Total Derivatives 349

A.7 Constrained Optimization 349

A.8 First and Second Order Effects 350

A.9 First Order Approximations 350

Appendix B The Hotelling Model 353

B.1 Derivation of the Hotelling Equation 353

B.2 Completing the Solution 354

B.3 Inductive Proofs 357

Appendix C Algebra of Taxes 359

C.1 The Open Economy 359

C.2 Algebraic Verification of Tax Equivalence 361

C.3 Approximating Tax Incidence 361

C.4 Approximating Deadweight Loss 363

C.5 Cap and Trade 364

Appendix D Continuous Time 367

Appendix E Bioeconomic Equilibrium 369

Appendix F The Euler Equation for the Sole-Owner Fishery 373

Appendix G Dynamics of the Sole-Owner Fishery 375

G.l Derivation of Equation 16.2 375

G.2 Differential Equation for Harvest 376

G.3 Finding the Full Solution 378

Appendix H The Common-Property Water Game 379

Appendix I Sustainability 381

I.1 Derivation of Equation 18.2 381

I.2 Confirming the Hartwick Rule 382

I.3 Feasibility of Constant Consumption 382

I.4 Derivation of Equation 18.6 384

Appendix J Discounting 385

J.1 The Ramsey Formula 385

J.2 Optimism versus Pessimism about Growth 386

References 389

Index 399

What People are Saying About This

Edward B. Barbier

Larry Karp shows how treating natural resources as economic assets can lead to important and far-reaching analytical insights for a wide range of natural resource problems and policy situations.This will be an essential text for students wishing to study natural resource economics for years to come.

From the Publisher

Larry Karp shows how treating natural resources as economic assets can lead to important and far-reaching analytical insights for a wide range of natural resource problems and policy situations.This will be an essential text for students wishing to study natural resource economics for years to come.

Edward B. Barbier, Professor, Department of Economics, Colorado State University; author of Capitalizing on Nature: Ecosystems as Natural Assets

The daily news communicates scientists' concerns about global climate change and about the advancing depletion of many fish stocks and water supplies. Coupling crisp mathematics to clear explanations, Larry Karp demonstrates how the need to manage resources for tomorrow should affect today's decisions and policies.

Derek Lemoine, Associate Professor of Economics, University of Arizona

Larry Karp's book is an excellent introduction to the important topic of natural resource economics. The book covers a wide range of issues, employing the same methodology throughout, and the math skills required of the readers are kept at a minimum.

Michael Hoel, Professor Emeritus, University of Oslo

Endorsement

Larry Karp's book is an excellent introduction to the important topic of natural resource economics. The book covers a wide range of issues, employing the same methodology throughout, and the math skills required of the readers are kept at a minimum.

Michael Hoel, Professor Emeritus, University of Oslo

Michael Hoel

Larry Karp's book is an excellent introduction to the important topic of natural resource economics. The book covers a wide range of issues, employing the same methodology throughout, and the math skills required of the readers are kept at a minimum.

Derek Lemoine

The daily news communicates scientists' concerns about global climate change and about the advancing depletion of many fish stocks and water supplies. Coupling crisp mathematics to clear explanations, Larry Karp demonstrates how the need to manage resources for tomorrow should affect today's decisions and policies.

Customer Reviews

Most Helpful Customer Reviews

See All Customer Reviews