Natural Resource Economics
EconS 581
| Professor: Gregmar I. Galinato | Office: Hulbert Hall 203C |
| Office: Hulbert Hall 203C | Hours: 1:25 – 2:35pm T, Th or by Appointment |
| Phone: 335-6382 |
Course Overview
This course applies economic principles to natural resource issues. Economic theory will provide a framework to analyze questions of natural resource use and misuse, natural resource policy and law, scarcity and sustainability. Each topical section is chosen to allow application of a modeling approach distinct from other sections.
Syllabus
Midterm
Mathematica files
Topic Outline
( “*” indicates required reading. They will be covered in class and part of the exams.)
1. Introduction and Tools for Analysis.
*Leonard. D. and N.V. Long. 1992. Optimal control theory and static optimization in economics, Cambridge, Cambridge University Press, ch 2- 4.
*Neher, P. 1990. Natural Resource Economics: Conservation and Exploitation. Cambridge University Press. Ch 9.
Perman, R., Y. Ma, J. McGilvray and M. Common. 2002. Natural Resource and Environmental Economics. Pearson Addison Wesley. 3rd ed. Ch 1-4.
Chiang, A. 1999. Elements of Dynamic Optimization. Waveland Pr Inc.
2. Nonrenewable Resources; Scarcity and depletion
2.1 Theory of the mine
2.2 Comparative dynamics
2.3 Market structure
2.4 Backstop technology
2.5 Regulation
2.6 Defining and measuring Scarcity
2.7 Evidence relating to resource scarcity
*Perman, R., Y. Ma, J. McGilvray and M. Common. 2002. Natural Resource and Environmental Economics. Pearson Addison Wesley. 3rd ed. Ch 15.
*Eswaran, M., T.R. Lewis, and T. Heaps. 1983. On the non-existence of market equilibria in exhaustible resources with decreasing costs, Journal of Political Economy 91, 154-167.
*Neher, P. 1990. Natural Resource Economics: Conservation and Exploitation. Cambridge University Press. Ch 4, 17-20.
* Jeffrey A. Krautkraemer. 1998. “Nonrenewable Resource Scarcity.” Journal of Economic Literature, Vol. 36, No. 4. (Dec., 1998), pp. 2065-2107.
Oren, S. and S. Powell. 1984. “Optimal Supply of a Depletable Resource with a Backstop Technology: Heal’s Theorem Revisited.” Operations Research. 33(2): 277-292.
Dasgupta. P.S. and G.M. Heal. 1979. Economic theory and exhaustible resources, Cambridge, Cambridge University Press, Chapter 6.
Solow, R.M. and F.Y. Wan. 1976. Extraction costs in the theory of exhaustible resources. Bell Journal of Economics 7, 359-370.
Chakravorty, U. and D.L. Krulce. 1994. Heterogeneous demand and the order of resource extraction. Econometrica 62, 1445-1452.
Chakravorty, U., M. Moreaux and M. Tidball. 2008. Ordering the extraction of polluting nonrenewable resources. American Economic Review 98, 1128-1144.
Lozada, G.A. 1996. Existence of equilibria in exhaustible resource industries: Nonconvexities and discrete vs. continuous time. Journal of Economic Dynamics and Control 20, 433-444.
Holland, S.P. 2003. Set-up costs and the existence of competitive equilibrium when extraction capacity is limited. Journal of Environmental Economics and Management 46, 539-556.
3. Renewable Resources
3.1 Static Model of Open Access
3.2 Dynamic Model of Open Access
3.3 Market structure
3.4 Comparative Dynamics
3.5 Fishery Regulation
*Neher, P. 1990. Natural Resource Economics: Conservation and Exploitation. Cambridge University Press. Ch 4, 10-11.
*Perman, R., Y. Ma, J. McGilvray and M. Common. 2002. Natural Resource and Environmental Economics. Pearson Addison Wesley. 3rd ed. Ch 17.
Wilen, J.E. 2000. Renewable resource economists and policy: what difference have we made?, Journal of Environmental Economics and Management 39, 306-327.
Homans, F.R. and J.E. Wilen. 1997. A model of regulated open access resource use. Journal of Environmental Economics and Management 32, 1-21.
Homans, F.R. and J.E. Wilen. Markets and rent dissipation in regulated open access fisheries. Journal of Environmental Economics and Management 49, 381-404.
Heaps, T. 2003. The effects on welfare of the imposition of individual transferable quotas on a heterogeneous fishing fleet, Journal of Environmental Economics and Management 46, 557-576.
Boyce, J.R. Instrument choice in a fishery. Journal of Environmental Economics and Management 47, 181-206.
Weitzman, M.L. 2002. Landing fees vs harvest quotas with uncertain fish stocks. Journal of Environmental Economics and Management 43, 325-338.
Turner, M. and Q. Weninger. 2005. Meetings with costly participation: An empirical analysis. Review of Economic Studies 72, 247-268.
4. Forestry Economics
4.1 Single Rotation
4.2 Multiple Rotation
4.3 Regulation of Forests
*Perman, R., Y. Ma, J. McGilvray and M. Common. 2002. Natural Resource and Environmental Economics. Pearson Addison Wesley. 3rd ed. Ch 18.
Montgomery, C.A. and D.M. Adams. 1995. Optimal timber management policies, Handbook of Environmental Economics, (D. Bromley, ed.), Oxford, Blackwell, pp. 379-404.
Reed, W.J. 1986. Optimal harvesting models in forestry management − a survey, Natural Resource Modeling, 1 (1), 55-80.
Galinato, G.I. and S. Uchida. 2011. “The Effect of Temporary Certified Emission Reductions on Forest Rotations and Carbon Supply.” Canadian Journal of Agricultural Economics. 59(1): 145-164.
Galinato, G.I. and S. Uchida. 2010. “Evaluating Temporary Certified Emission Reductions in Reforestation and Afforestation Programs.” Environmental and Resource Economics. 46(1): 111-133.
Galinato, G.I., A. Olanie, S. Uchida and J.K. Yoder. 2011. “Long Term Versus Temporary Certified Emission Reductions in Forest Carbon-Sequestration Programs.” Australian Journal of Agricultural and Resource Economics. 55(4): 537-559.
5. Trade, Natural Resources and the Environment
*Brander, J. & M. Scott Taylor, 1997. “International Trade and Open-Access Renewable Resources: The Small Open Economy Case,” Canadian Journal of Economics. 30(3): 526-52,
*Grossman, Gene M.; Krueger, Alan B. “Environmental Impacts of a North American Free Trade Agreement” ; The Mexico-U.S. free trade agreement, 1993, pp. 13-56, Cambridge and London: MIT Press
Chilchilnisky, G. (1994). “North-South Trade and the Global Environment,” American Economic Review 84: 851-874.
Antweiler, W.; B.R. Copeland; T.M. Scott. (2001). Is Free Trade Good for the Environment? American Economic Review, 91(4): 877-908.
Alpay, S. (2001). How Can Trade liberalization be Conducive to a Better Environment? A Survey of the Literature. Available at: http://www.gtap.agecon.purdue.edu/resources/download/1443.pdf
Brander, J. and M. Taylor (1997), “International Trade between Consumer and Conservationist Countries,” Resource and Energy Economics, 19, pp. 267-97.
Copeland, B. and M. Taylor (1994). “North-South Trade and the Environment,” Quarterly Journal of Economics, (109): 755-787.
López, R. (1994). “The Environment as a Factor of Production: The Effects of Economic Growth and Trade Liberalization,” Journal of Environmental Economics and Management, 27(2): 163-84.
López, R. and Niklitschek (1991). “Dual Economic Growth in Poor Tropical Areas,” Journal of Development Economics, pp. 189-211.
Jinji, N. (2006). “International trade and terrestrial open-access renewable resources in a small open economy”, Canadian Journal of Economics, pp. 790-808.
6. Economic growth and natural resources
*Lopez Ramon, 1994. “The Environment as a Factor of Production: The Effects of Economic Growth and Trade Liberalization,” Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 163-184, September.
*Kijimaa, M., K. Nishideb, and A. Ohyamac. 2010. “Economic models for the environmental Kuznets curve: A survey.” Journal of Economic Dynamics and Control. Volume 34, Issue 7, July 2010, Pages 1187–1201
* Frankel, J. 2010. The Natural Resource Curse: A Survey. Harvard Working Paper Series.
*Grossman, G. and E. Helpman (1994). “Protection for Sale,” American Economic Review, pp. 833-50.
*Damania, R., & Bulte, E.H. (2008). Resources for sale: Corruption, democracy and the natural resource curse. The B.E. Journal of Economic Analysis and Policy, 8(1).
Brunnschweiler, C. and E.H. Bulte. 2008. “The resource curse revisited and revised: A tale of paradoxes and red herrings.” Journal of Environmental Economics and Management. Volume 55, Issue 3, May 2008, Pages 248–264.
Fredriksson, Per G. & Svensson, Jakob, 2003. “Political instability, corruption and policy formation: the case of environmental policy,” Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1383-1405, August.
7. Natural Resources and the Economics of National Income Accounts
*Vellinga, N. and C. Withagen. 1996. On the concept of green national income. Oxford Economic Papers. 48: 499-514.
Aronsson, T. and K-G Lofgren. 1998. Green Accounting in Imperfect Market Economies: A summary of recent research. Environmental and Resource Economics. 11(3-4) 273-287.
8. Noncooperative Resource allocation
*Karp, L. 1992. Social Welfare in a Common Property Oligopoly. International Economic Review. 33: 353-372.
Reinganum, J. and N. Stokey. 1985. Oligopoly extraction of a common property resource: the importance of the period of commitment in dynamic games. International Economic Review 26: 161-173.
Kaitala, V., M. Pohjola and O. Tahvonen. 1992. Transboundary air pollution and soil acidification: a dynamic analysis of an acid rain game between Finland and the USSR. Environmental and Resource Economics. 2: 161-181.
Maler, K-G. and A. De Zeeuw. 1998. The acid rain differential game. Environmental and Resource Economics. 12(2): 167-184.
Fischer, R.D. and L.J. Mirman. 1996. The complete fish wars: biological and dynamic interactions. Journal of Environmental Economics and Management 30(1): 34-42.
Datta, M. and L.J. Mirman. 1999. Externalities, market power, and resource extraction. Journal of Environmental Economics and Management 37(3): 233-255.
Fudenberg, D. and D. K. Levine. 1988. “Open-Loop and Closed-Loop Equilibria in Dynamic Games with Many Players.” Journal of Economic Theory. 44(1): 1-18.