Extraction path and sustainability

Bazhanov, Andrei (2021): Extraction path and sustainability.

Abstract

This paper offers an approach to construct a family of extraction paths for nonrenewables that guarantee long-run sustainability of an imperfect economy. A path from this family leads to a monotonic growth of output with a decreasing rate of growth if a sustainability condition holds. Otherwise, the path leads either to a bounded decline or U-shaped path of output. In this sense, the paper extends neoclassical results and provides a bridge between neoclassical and degrowth theories because neoclassical tools are used to quantify degrowth scenarios. The offered path can be incentive-compatible for climate change problems because it reduces the extraction of polluting minerals consistently with the IPCC goals. That is, the climate-benefiting emission cuts by the parties of climate agreements may be guided by purely "egoistic" motives - to make own economies long-run sustainable.

• Item Type: MPRA Paper
• Language: English
• Keywords: natural nonrenewable resource; extraction policy; long-run sustainability; optimal degrowth
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q0 - General > Q01 - Sustainable Development; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q32 - Exhaustible Resources and Economic Development; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q35 - Hydrocarbon Resources; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q38 - Government Policy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming

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