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• International borrowing is introduced in an optimal exogenous growth model, with exhaustible natural resources. • Access to international financial markets does not enable economic growth to be sustainable, with a constant interest rate. • With a debt-elastic interest rate, consumption can grow for a while before decreasing in the long run. This paper studies the optimal growth path of a natural resource-rich country, which can borrow from international financial markets. I explore to what extent international borrowing can overcome resource scarcity in a small open economy, in order to have sustainable growth. First, a benchmark model with a constant interest rate and technical progress is set up to see if the economy's growth can be sustainable in the long run. Secondly, the case of a debt elastic interest rate is analysed. The main finding of this paper is that borrowing on international capital markets does not permit sustainable growth for a country with exhaustible natural resources, when the interest rate is constant. Nevertheless, when the interest rate is endogenized, the consumption growth rate can be positive before declining. [ABSTRACT FROM AUTHOR]

Many studies have been focusing on the impact of the shale gas boom on our society, but the reverse relationship is not well documented. The objective of this paper is to examine the impact of oil and gas prices on shale gas drilling activities. We analyze the well-level production data from all major producing shale gas plays in the United States (US) and identify a major productivity shock in 2009. We then estimate the price elasticity of shale gas drilling using the econometric methods. Our results show that the oil price elasticity increases from insignificant in the pilot stage (2000–2008) to 1.1 (significant) in the expansion stage (2009–2016), and the gas price elasticity increases from insignificant in the pilot stage to 0.6 (significant) in the expansion stage. This is the first quantitative estimation of shale gas drilling responsiveness to oil and gas prices based on near-full-sample well-level drilling data while taking account the structural break. The change in price elasticities indicates that the shale gas drilling becomes more responsive to oil and gas prices after the major productivity shock around 2009. The high oil-price elasticity after 2009 shows the importance of natural gas condensate in supporting shale gas drilling. The estimated oil and gas elasticities are important to forecasting shale gas supply and economic impacts in the new normal. • Examine the influence of energy prices on shale gas drilling and production. • Define two phases in shale gas development: the pilot stage and expansion stage. • Estimate the price elasticities using play-level fixed effects model for the first time. • Oil price elasticity increases from insignificant to 1.1 after the productivity shock. • Gas prices elasticity increases from insignificant to 0.6 across the structural break. [ABSTRACT FROM AUTHOR]

Abstract This paper aims at extending the concept of conditional natural resource curse and examining the quantity as well as the quality of public spending as the main drivers of the oil curse in oil exporting countries. Using nonlinear threshold models, there is evidence in favor of non-linear relationship between oil incomes and economic performances. We show that highly oil dependent countries are more likely to experience inefficiencies in government decision and, by extension, oil revenues misallocation leading to underdevelopment. Relying on human capital as the mirror of the quantity as well as the quality of government spending in education, we find a similar pattern. The alteration in government efficiency is the main mechanism through which oil incomes lead to poor economic performances. Indeed, the direct contribution of oil incomes to total output is rather positive, even if the magnitude of this effect is likely to decrease with the relative level of oil dependence. The estimates indicate that the non-linear model is the better for explaining economic growth divergences across oil exporting countries as well as for reconciling the conflicting results from the empirical literature of the oil curse. [ABSTRACT FROM AUTHOR]

Romania has recently begun the exploration of shale gas reserves and, it is expected that these unconventional resources to be exploited by hydraulic fracturing. The use of this technology is controversial in high-populated areas, where the economic, social and especially the environmental impact is practically unknown. However, for the public opinion, the shale gas exploitation is presented as an operation triggering no major risks. Therefore, several agreements were concluded between the Romanian authorities and the major players in the exploitation field. Against this background, our paper shows that the shale gas exploitation has no real benefits for the Romanian citizens. More precisely, we conduct an exhaustive cost-benefit analysis, considering the economic, social and environmental consequences of the shale gas exploitation, and we show that in the long run, the costs considerably overlap the benefits. The use of hydraulic fracturing procedure, which implies huge costs with the water consumption and wastewater treatment, influences the outcome of our investigation. These findings are sustained by the sensitivity analysis we have performed. [ABSTRACT FROM AUTHOR]

The prospects for long-term sustainability depend on whether, and how much, we can absolutely decouple economic output from total energy and material throughput. While relative decoupling has occurred – that is, resource use has grown less quickly than the economy – absolute decoupling has not, raising the question whether it is possible. This paper proposes a novel explanation for why decoupling has not happened historically, drawing on a recent theory of cost-share induced productivity change and an extension of post-Keynesian pricing theory to natural resources. Cost-share induced productivity change and pricing behavior set up two halves of a dynamic, which we explore from a post-Keynesian perspective. In this dynamic, resource costs as a share of GDP move toward a stable level, at which the growth rate of resource productivity is typically less than the growth rate of GDP. This provides a parsimonious explanation of the prevalence of relative over absolute decoupling. The paper then presents some illustrative applications of the theory. [ABSTRACT FROM AUTHOR]

In this paper we consider some of the economic implications of climate change scenarios as described in the Shared Socioeconomic Pathways (SSPs). By comparing potential water demand with estimates of (sustainable) water availability in different regions, we identify regions that are likely to be constrained in their future economic growth potential by the scarcity of water resources. We assess the macroeconomic impact of water scarcity under alternative allocation rules finding that, by assigning more water to sectors in which it has a higher value, shifting production to less water intensive sectors, and importing more water intensive goods, constrained regions can effectively neutralize these water related climate risks and adapt to a changing water environment. However, this adaptation effort is likely to imply some radical changes in water management policies. [ABSTRACT FROM AUTHOR]

Many resource-rich developing countries are in the process of harnessing immense mining resources towards inclusive growth and prosperity. The often-large infrastructure gap in developing countries calls for public investment to unlock the long-term growth potential. This paper utilizes a structural model-based approach to analyze the macroeconomic impacts of different public investment strategies on key fiscal and growth variables. We apply the model to one of the resource-rich developing countries -- Mongolia. We find that, although scaling up public investment could provide a boost to growth, too rapid fiscal outlays will push the economy to its limit of absorptive capacity and increase macroeconomic vulnerabilities. Prudent fiscal policy, particularly moderating infrastructure investment and optimizing investment efficiency, is essential to maintain economic stability, as well as to boost the long-term sustainable growth for developing countries like Mongolia. [ABSTRACT FROM AUTHOR]

This paper produces a normative evaluation of fiscal rules for a resource-rich economy. Ad hoc fiscal rules might imply substantial welfare costs; the goal is to analyze the magnitude of these costs by quantitatively evaluating the relative welfare sub-optimality of these rules. I posit a closed form solution for the infinite horizon consumption problem of the planner of a resource-rich economy with resource price uncertainty and precautionary saving. The model is subsequently calibrated and simulated to provide a welfare-based comparison between the fiscal rules based on the Permanent Income Hypothesis and on the ad hoc Bird-in-Hand policy. The results of the simulation indicate the presence of a positive and substantial welfare loss suffered from switching to the Bird-in-Hand rule. This result is shown to be robust under different parameterizations. [ABSTRACT FROM AUTHOR]

Interaction between environmental degradation and economic growth is a growing matter of interest among policymakers. Here we have estimated Environmental Kuznets Curve (EKC) for 139 Indian cities considering SO 2 emissions. Study has been done for 2001–2013, and the data have been segregated by residential and industrial areas, and as well as low, medium, and high income areas. By virtue of different forms of EKC being found, policy level decisions have been designed. Moreover, non-rejection of EKC hypothesis reemphasized the impact of growth catalyzing economic policy decisions on environment. [ABSTRACT FROM AUTHOR]

This paper examines financial sector characteristics in resource-dependent economies. Using an extensive data set covering 128 countries for the period 1995 to 2009, we present empirical evidence that the banking sector tends to be smaller in resource-dependent economies. Moreover, we locate a low threshold level at which the higher resource-dependence begins to be harmful for domestic banking sector. We also find evidence that the use of market-based financing is more common in resource-dependent economies. Further, our results suggest that a financial sector formed according to the needs of the resource sector might be unfavorable for emerging businesses, thereby hampering economic diversification and reinforcing the resource curse. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to empirically examine whether economic dependence on various natural resources is associated with lower investment in health, after controlling for countries׳ geographical and historical fixed effects, corruption, autocratic regimes, income levels, and initial health status. Employing panel data for 118 countries for the period 1990–2008, we find no compelling evidence in support of a negative effect of resources on healthcare spending and outcomes. On the contrary, higher dependence on agricultural exports is associated with higher healthcare spending, higher life expectancy, and lower diabetes rates. Similarly, healthcare spending increases with higher mineral intensity. Finally, more hydrocarbon resource rents are associated with less diabetes and obesity rates. There is however evidence that public health provision relative to the size of the economy declines with greater hydrocarbon resource-intensity; the magnitude of this effect is less severe in non-democratic countries. [ABSTRACT FROM AUTHOR]

Abstract: This paper aims to explore the relationship between the economic growth and the pressure on nature from the environmental sustainability perspective. The pressure on nature is measured by the natural disinvestment component of the Adjusted Net Savings data of the World Bank; which is the sum of energy, mineral, net forest depletions and carbon dioxide damage, all measured in US dollars. Our panel consists of 213 countries and spans the period between 1970 and 2008. We employ a panel Fixed-Effects Instrumental Variable (IV) methodology. Regression analysis reveals that there is a positive relationship between income and pressure on nature, yet the effect is much stronger in middle-income than in low and high-income countries, and also differs across subcomponents. While increase in income decreases the pressure on forests, CO2 damage and mineral extraction increase. We found that increasing trade, all else equal, increases the pressure on nature, hence our findings support Race-to-the-bottom hypothesis. [Copyright &y& Elsevier]

Abstract: We introduce endogenous directed technical change into numerical integrated climate and development policy assessment. We distinguish expenditures on innovation (R&D) and imitation (international technology spillovers) and consider the role of capital investment in creating and implementing new technologies. Our main contribution is to calibrate and numerically solve the model and to examine the model''s sensitivity. As an application, we assess a carbon budget-based climate policy and vary the beginning of energy-saving technology transfer. Accordingly, China is a main beneficiary of early technology transfer. Herein, our results highlight the importance of timely international technology transfer for efficiently meeting global emission targets. Most of the consumption gains from endogenous growth are captured in the baseline. Moreover, mitigation costs turn out to be insensitive to changes in most of the parameters of endogenous growth. A higher effectivity of energy-specific relative to labor-specific expenditures on innovation and imitation reduces mitigation costs, though. [Copyright &y& Elsevier]

Abstract: When designing a new management strategy, it is widely acknowledged that different stakeholders'' objectives are important, though their identification and satisfaction is often difficult to achieve. In this paper, a win–win fishery management strategy is outlined for the Marine Protected Area of the Asinara Island, in Sardinia, one of the oldest MPA in Italy. To this aim, a discrete choice experiment approach to elicit preferences is implemented. A graphical variant questionnaire, that is a block chart, is also presented in order to facilitate stakeholders'' responses. The empirical findings show, that, overall the Asinara stakeholders would prefer to increase sustainable yields of commercial species, reduce inner conflicts and increase profits from the fishery. [Copyright &y& Elsevier]

We assess the impact of being able to substitute an unlimited but costly energy substitute (like wind, solar) for a non-renewable resource (like oil, coal) in a model of sustainable growth. The prospects for sustainability on the optimal path depend crucially on the costs of this substitute. Furthermore, the poorer a country, measured in terms of capital stock at a given point in time, the later it should switch to the renewable substitute, and the more likely it will be unsustainable. Taking learning-by-doing in account, we find that this leads to an earlier switching time but does not guarantee sustainability. [Copyright &y& Elsevier]

Abstract: It is argued that the fact that economic systems are dissipative structures must be taken fully into account in economics if we are to understand the nature of the economic–ecological interface and how to deal with emergent environmental problems, such as global warming. Such problems are a product of economic growth, which is widely accepted to be the outcome of the acquisition and application of knowledge. Drawing upon disparate literatures within and outside economics, it is argued that economic growth should be more properly viewed as the outcome of a co-evolutionary process that involves the autocatalytic interaction of new knowledge and access of increasing amounts of free energy to do increasingly specialized forms of work. Specifically, the relevance of the ‘energy hypothesis,’ associated with Erwin Schrödinger and, more recently, revived by Eric Schneider and his collaborators, is assessed. This hypothesis states that all dissipative structures have, as their primary objective, the reduction of accessible free energy gradients. It is concluded that such a hypothesis cannot be rejected in the context of economic behaviour and that this opens up an important research agenda for economists. [Copyright &y& Elsevier]

This study reports results from a new series of experiments that examine the robustness of face-to-face communication as a cooperation-facilitating institution in common-pool resource settings. Results are reported from nine experiment sessions, initially designed for pedagogical purposes. The sessions were conducted between 1998 and 2007 as part of a series of summer institutes on institutional analysis and environmental change. Subjects were graduate students and professionals from diverse disciplines, representing 41 countries of residence. The participants in this study stand in sharp contrast to most previous studies, which used undergraduates who self-select into experiments by volunteering to participate. Results from these experiments substantiate earlier findings that non-binding communication can serve as an effective mechanism for solving social dilemma problems, with subjects achieving near socially efficient outcomes. [Copyright &y& Elsevier]

This study reports results from a new series of experiments that examine the robustness of face-to-face communication as a cooperation-facilitating institution in common-pool resource settings. Results are reported from nine experiment sessions, initially designed for pedagogical purposes. The sessions were conducted between 1998 and 2007 as part of a series of summer institutes on institutional analysis and environmental change. Subjects were graduate students and professionals from diverse disciplines, representing 41 countries of residence. The participants in this study stand in sharp contrast to most previous studies, which used undergraduates who self-select into experiments by volunteering to participate. Results from these experiments substantiate earlier findings that non-binding communication can serve as an effective mechanism for solving social dilemma problems, with subjects achieving near socially efficient outcomes. [Copyright &y& Elsevier]

Abstract: This paper focuses on growth feasibility in an era of increasing scarcity of fossil fuels. A stylised dynamic model illustrates the implications of investing in smooth technological progress in the field of renewable energy. Positive rates of GDP growth sustained by fossil fuels entail, on the one hand, more income available for R&D in renewable energy sources, and on the other, an acceleration of the exhaustible resource depletion time. Our model explores such a trade-off and highlights the danger of high growth rates. Policies should target low growth rates, stimulate investment in alternative energy sources and discourage consumption growth. [Copyright &y& Elsevier]

Abstract: In this article, overlapping generations are extracting a natural resource over an infinite future. We examine the fair allocation of resource and compensations among generations. Fairness is defined by core lower bounds and aspiration upper bounds. The core lower bounds require that every coalition of generations obtains at least what it could achieve by itself. The aspiration upper bounds require that no coalition of generations enjoys a higher welfare than it would achieve if nobody else extracted the resource. We show that, upon existence, the allocation that satisfies the two fairness criteria is unique and assigns to each generation its marginal contribution to the preceding generation. Finally, we describe the dynamics of such an allocation. [Copyright &y& Elsevier]

Abstract: Following , we extend the Solow–Dasgupta–Heal model to analyze the effects of global warming. The rise in temperature is caused by the use of fossil resources so that the temperature level can be linked to the remaining stock of these resources. The rise in temperature affects both productivity and utility. We characterize optimal solutions for the maximin and zero discounting cases and present closed-form solutions for the case where the production and utility functions are Cobb–Douglas, and the temperature level is an exponential function of the remaining stock of resources. We show that a greater weight on temperature in intratemporal preferences and a larger intertemporal elasticity of substitution both lead to postponing resource use. [Copyright &y& Elsevier]

We introduce decay in produced capital and exogenous technical progress to the recent “Solow Model” of Asheim et al. with population growth and observe the possible collapse of the economy given too high a rate of decay. “Enough” technical progress can restore sustainable per capita consumption. [Copyright &y& Elsevier]

Phosphorus (P) is an essential input into agriculture with no substitute. Thus international and intertemporal P allocations greatly impact food security which requires increased food production for a growing world population. As high quality phosphorus mines are being depleted, recycling gains importance and developed countries explore new technologies for P recycling. We analyse the effects of P recycling in developed countries on global extraction of rock phosphates and the imports of developing countries. We build a resource extraction model for a competitive fertilizer market that reflects the fact that most developed countries have P-saturated soils while soils in many developing countries are P-deficient. Our model extends a simple cake eating problem. We consider two types of countries that differ in demand and recycling options. We find that P recycling in developed countries does not only prolong the resource life-time, but it also increases the developing counties'' share of the resource. [Copyright &y& Elsevier]

Abstract: A normative analysis of the problem of optimal extraction of a nonrenewable resource is considered. The economy depends on the essential nonrenewable resource and the rate of the resource extraction is increasing over time. At some point the government gradually switches to a sustainable (in sense of non-decreasing consumption over time) pattern of the resource extraction. Different approaches are offered for the construction of the paths of switching to decreasing resource use. Some seemingly attractive short-run policies of switching to decreasing extraction can run counter to long-run criteria. If we consider the maximin principle, applied to the negative shock on the output percent change, as the short-run criterion, then the optimal transition path can be consistent with the long-run government goals. It is shown analytically and numerically that there are values of parameters for the transition paths of extraction that consumption along these paths is asymptotically constant or infinitely growing. A new approach to the Rawlsian maximin criterion which allows for growth of consumption is offered. [Copyright &y& Elsevier]

Abstract: In this paper we have developed an endogenous growth model to deal with exhaustible resources and secondary materials together, under the assumptions that these two inputs are, or are not, technologically perfect substitutes of each other, in order to compare the results obtained under both hypotheses. We highlight the implication of these two assumptions on the rate of growth of total output and upon the flow of exhaustible resources extracted. There are also some other interesting findings related to the spill-over on welfare of the waste recycling process, and the dynamics of shadow prices of both inputs considered. Finally, some implications on Hotelling''s rule also emerge in our analytical framework. [Copyright &y& Elsevier]

Abstract: We examine the impact of technological change on oil and gas exploration, development and production in the Gulf of Mexico over the past five decades. We analyze the effect of technological change on the production frontier using a unique field-level data set covering 1947 through 1998. We then develop estimates of the growth in total factor productivity (TFP) in the industry at the regional level from 1976 to 1995. To address the unique features of this marine resource industry, we include in our models some key geological variables such as water depth and field size. In addition, the results reveal that environmental regulation had a significantly negative impact on offshore production, although such impact has been diminishing over time. [Copyright &y& Elsevier]

Abstract: The number of studies seeking to empirically characterize the reduced-form relationship between a country economic growth and the quantity of pollutants produced in the process has recently increased significantly. In several cases, researchers have found evidence pointing to an inverted-U “environmental Kuznets” curve. In the case of CO2, however, the evidence is at best mixed. In this paper, we reconsider that evidence by assessing how robust it is when the analysis is conducted in a different parametric setup and when using alternative emissions data, from the International Energy Agency, relative to the literature. Our contribution can be viewed as a robustness exercise in these two respects. The econometric results lead to two conclusions. Firstly, published evidence on the EKC does not appear to depend upon the source of the data, at least as far as carbon dioxide is concerned. Secondly, when an alternative functional form is employed, there is evidence of an inverted-U pattern for the group of OECD countries, with reasonable turning point, regardless of the data set employed. Not so for non-OECD countries as the EKC is basically increasing (slowly concave) according to the IEA data and more bell shaped in the case of CDIAC data. [Copyright &y& Elsevier]

Abstract: The number of studies seeking to characterize empirically the reduced-form relationship between country economic growth and the quantity of various pollutants produced has recently increased significantly. In several cases researchers have found evidence in favor of an inverted-U ‘environmental Kuznets’ curve. In the case of a major greenhouse gas, CO2, however, the evidence is at best mixed. This paper sheds further light on this issue by using a newly developed data set covering over one hundred countries around the world for the last twenty-five years. Alternative functional forms and a rigorous discrimination among competing alternatives are examined. [Copyright &y& Elsevier]

Abstract: The nature of energy and material resources in a non-optimizing growth theory framework is clarified. This involves two modifications of the conventional theory. Firstly, multiple feedback mechanisms or “growth engines” are identified, such that the impact of the cost of production through demand on growth is accounted for. Secondly, a production function distinguishes between resource use, technical efficiency, and value creation. The resulting model is analytically solved under the condition of a constant growth rate. Given model complexity, numerical experiments are performed as well, providing relevant insights to the academic and political debates on ‘environmental Kuznets curves’ and ‘dematerialization.’ [Copyright &y& Elsevier]

Due to inequality in distribution of private wealth and market imperfection if individual members in the society have access to different technologies for extraction of common property resources (CPR), resolving ‘collective action dilemma’ for efficient use of CPR through voluntary participation becomes a difficult task. To lend concreteness to the problem, in the context of Indian semi-arid rural society, this paper has chosen one among those very well-known CPR management problems, viz., conservation of water resources, for irrigation. With the help of a two-stage bargaining game model—with stage one, related to water harvesting and stage two, related to agricultural production—it shows in terms of an asymmetric Nash solution that different types of community programmes based on (i) equal entitlement right to water and (ii) switch over to less water intensive agricultural production cannot ensure successful equitable and efficient water management through voluntary participation. In the presence of inequality and market imperfection, the incentive mechanism to increase efficiency in water use for the purpose of conservation will enhance inefficiency outside the commons water periphery. [Copyright &y& Elsevier]

This paper sets up an input–output system of the relevant ecosystem flows that determine the carbon cycle in the global ecosystem. Introducing energy as the value added component in the ecosystem allows to calculate ecosystem prices expressed in ‘energy values’. Linking the ecosystem with the economy in an integrated input–output model then allows to calculate prices of economic activities and of ecosystem activities. In analogy to the ‘Ecological Footprint’, where productive land is needed to absorb anthropogenic emissions, in this integrated input–output model additional carbon sinks are introduced for emission absorption. These carbon sinks need solar energy input, i.e. ‘ecological value added’. Emission absorption as well as GDP therefore become activities valued in the numeraire of the integrated system, i.e.‘energy values’. From that sustainability indicators can be derived. [Copyright &y& Elsevier]

The paper shows that under reasonable assumptions about technical progress a positive sustainable growth rate fails to exist. The argument is that a growing part of income has to be spent for continuing technical progress in order to compensate the pollution effects of growth. Hence in the long run either the sustainability condition will be violated or the growth rate must decline to zero. Furthermore, in finite time the level of wealth will decrease despite growing income and a constant pollution level, thus further growth is no longer reasonable. Similar arguments also hold for the environmental effects of structural change favoring less pollution-intensive economic activities. An evolutionary change of goods and production technology may shift the limits of growth and is hence a prerequisite for a long-run EKC. [Copyright &y& Elsevier]