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15. WEB. Natural Resource and Energy Economics. Chapter Objectives. Resource Supplies: Doom or Boom? Can Governments Raise Birthrates? Are We Running Out of Energy? Turning Entrails (and Nearly Anything Else) Into Oil Natural Resource Economics

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15

WEB

Natural Resource and Energy Economics


Chapter objectives
Chapter Objectives

  • Resource Supplies: Doom or Boom?

  • Can Governments Raise Birthrates?

  • Are We Running Out of Energy?

  • Turning Entrails (and Nearly Anything Else) Into Oil

  • Natural Resource Economics

  • Using Present Values to Evaluate Future Possibilities

  • Nonrenewable Resources

  • Renewable Resources


Resource supplies doom or boom
Resource Supplies:Doom or Boom

  • Population Growth

    • Replacement Rate

    • Total Fertility Rate

    • Demographers

  • Resource Consumption Per Person

    • British Thermal Unit (BTU)

  • Energy Economics

    • Efficient Energy Use


Resource supplies doom or boom1
Resource Supplies:Doom or Boom

  • U.S. Electricity Generation Sources

    • 50% Coal

    • 20% Nuclear

    • 18% Natural Gas

    • 6.5% Hydroelectric

    • 3.0% Petroleum

    • 2.3% Renewables

    • 0.2% Other


Resource supplies doom or boom2

Barrel Oil Price

Viability

Alternative Fuel

$80

Biodiesel

60

U.S. Corn-Based Ethanol

50

Shale Oil

40

Tar Sands; Brazilian Sugar-Cane-Based Ethanol; Gas-to-Liquids; Coal-to-Liquids

20

Conventional Oil

Resource Supplies:Doom or Boom

Oil Prices at Which Alternative Sources Become Economically Viable


Natural resource economics
Natural Resource Economics

  • Net Benefits

  • Renewable Natural Resources

  • Nonrenewable Natural Resources

  • Present Value to Evaluate Future Possibilities

  • User Cost

  • Present Use Versus Future Use


Extraction costs
Extraction Costs

Choosing the Optimal Extraction Level

TC = EC + UC

EC

B

A

Dollars

P

UC

0

Q2

Q1

Q0

First Year Quantity Extracted


Market failures lead to excessive present use
Market Failures Lead to Excessive Present Use

  • Applications

    • Conflict Diamonds

    • Elephant Preservation

  • Renewable Resources

    • Forest Management

    • Forest Growth Rates

      • Early Slow Growth

      • Maturing Rapid Growth

      • Mature Slow to Zero Growth


Market failures lead to excessive present use1
Market Failures Lead to Excessive Present Use

  • Optimal Fisheries Management

    • Fishery

    • Fishery Collapse

  • Status of World Fisheries in 2003

    • 3% Underexploited

    • 21% Moderately Exploited

    • 52% Fully Exploited

    • 16% Overexploited

    • 7% Depleted

    • 1% Recovering From Depletion


Market failures lead to excessive present use2
Market Failures Lead to Excessive Present Use

  • Policies to Limit Catch Sizes

  • Total Allowable Catch (TAC)

  • Individual Transferable Quotas (ITQ)


Is economic growth bad for the environment
Is Economic Growth Bad For the Environment

Last

Word

  • Environmental Quality Higher in Richer Countries

  • Positive Nature of Growth

  • Improved Standard of Living

  • Greater Environmental Spending

  • Yale EPI Environmental Score

  • Data Supports Positive Aspects of Growth for the Environment


Key terms

replacement rate

total fertility rate

demographer

British thermal unit (BTU)

net benefits

renewable natural resources

nonrenewable natural resources

present value

user cost

extraction cost

conflict diamonds

fishery

fishery collapse

total allowable catch (TAC)

individual transferable quota (ITQ)

Key Terms


Next chapter preview
Next Chapter Preview…

Government and Market Failure

Chapter 16


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