Depletion and Development: Natural Resource Supply with Endogenous Field Opening

Venables, Anthony J.

doi:10.1086/677941

Cited by 25 publications

(26 citation statements)

References 23 publications

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“…First, Hart and Spiro (2011, p. 7834) report that "scarcity rents seem to have been marginally or non-existent empirically", so that Green Paradox effects will not be large. Potential explanations for this observation are a finite planning horizon of resource owners (Spiro, 2014) and endogenous field openings (Venables, 2014). Moreover, the emerging abundance of shale gas and other forms of unconventional fossil energy reserves might curb existing Hotelling rents even further.…”

Section: Introductionmentioning

confidence: 99%

International capital markets, oil producers and the Green Paradox

Meijden

Ploeg

Withagen

2015

European Economic Review

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We analyze how general equilibrium effects operating through the international capital market affect this Green Paradox. In a two-region, two-period world with identical homothetic preferences and without investment, the global interest rate falls and the Green Paradox weakens. With investment or a relatively more impatient oil-importing region, the Green Paradox may be strengthened because the future oil demand function shifts downward or because the interest rate rises. If the oil-importing region is very much more patient than the oil-exporting region, the Green Paradox may be reversed but in our calibrated model the effects are tiny. With exploration and endogenous initial oil reserves, a future carbon tax lowers cumulative oil extraction in partial equilibrium. If the boost to current oil extraction is weakened, strengthened or reversed in general equilibrium, so is the fall in cumulative extraction. A partial and general equilibrium welfare analysis of a future carbon tax, both for full and partial exhaustion, is given. Terms of use: Documents inJEL-Code: D900, H200, Q310, Q380.

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Section: Introductionmentioning

confidence: 99%

International capital markets, oil producers and the Green Paradox

Meijden

Ploeg

Withagen

2015

European Economic Review

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“…() leads to a decrease of the total amount of fossil fuels produced, independent of the existence of exploration costs. Venables () extends the standard Hotelling model (with no backstop technology) to incorporate capital expenditures required for development activities. Within this model, he uses simulation to analyse the effect of a permanent reduction in the growth rate of the price path, a situation comparable to an increasing fossil fuel tax.…”

Section: Introductionmentioning

confidence: 99%

“…This assumption is utilised as the aim of the article is to find an analytical solution and to study how different parameters affect the Green Paradox under conditions that are similar to the framework of Sinn (). Nevertheless, Venables (), who incorporates simultaneous exploration into an otherwise similar model, finds consistent results with respect to the appearance of the Green Paradox. As a result, without the assumption that exploration becomes cheaper over time (i.e.…”

Section: Introductionmentioning

confidence: 99%

The Green Paradox and the importance of endogenous resource exploration

Österle

2015

Aus J Agri & Res Econ

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It has been proposed that climate policies aimed at reducing greenhouse gas emissions from fossil fuel use may actually worsen the problem of global warming. Such a Green Paradox could occur if fossil fuel resource owners exploit their resources more rapidly due to the expectation of stricter climate policies in the future. This article shows that the emergence of the Green Paradox is less plausible if exploration activities are taken into account. An extraction model that incorporates exploration investments finds that an increasing cash flow tax is effective in dealing with climate change depending upon the specific formulation of the tax scheme. For example, the higher the initial tax level, the more effective is the tax scheme in mitigating climate change and hence a Green Paradox can be avoided. A very low growth rate is also beneficial for the climate as it leads to a small temporal redistribution of extraction to earlier periods. A very high growth rate leads to faster extraction; however, it also coincides with a significant decrease in total emissions that is inconsistent with a Green Paradox.

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“… These studies do not, however, establish conventional oil supply as a function of oil price parameters. Venables () assumes that the oil price grows at a constant rate. Anderson et al.…”

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confidence: 99%

The supply of non‐renewable resources

Daubanes

Lasserre

2019

Canadian J of Economics

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There exists no formal treatment of non-renewable resource (NRR) supply, systematically deriving quantity as function of price. We establish instantaneous restricted (fixed reserves) and unrestricted NRR supply functions. The supply of a NRR at any date and location depends not only on the local contemporary price of the resource but also on prices at all other dates and locations. Besides the usual law of supply, which characterizes the own-price effect, cross-price effects have their own law. They can be decomposed into a substitution effect and a stock compensation effect. We show that the substitution effect always dominates: a price increase at some point in space and time causes NRR supply to decrease at all other points. Our new-although orthodoxsetting takes into account not only NRR supply limitations but also the heterogeneity of NRR deposits, and the endogeneity of their development and opening. Our analysis extends to NRRs the partial-equilibrium analysis of demand and supply policies. Thereby, it provides a generalization of results about policy-induced changes on NRR markets.Résumé. L'offre de ressources non renouvelables. Aucune étude ne caractérise de manière formelle l'offre de ressources non renouvelables (RNR), c'est-à-dire leur quantité produite en fonction de leur prix. Nous établissons les fonctions d'offre restreinte (à réserves données) et non-restreinte des RNR. A chaque date et sur chaque marché, leur offre dépend non seulement du prix courant mais aussi du prix aux autres dates et sur les autres marchés. Au-delà de la loi de l'offre habituelle, qui caractérise l'effet prix propre, les effets prix croisés obéissent à leur propre loi. Ces derniers consistent en un effet substitution et en un effet compensation qui est lié au stock de ressource. Nous montrons que l'effet substitution domine toujours l'effet compensation : un accroissement du prix à une date sur un marché cause une réduction de l'offre d'une RNR aux autres dates

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Depletion and Development: Natural Resource Supply with Endogenous Field Opening

Cited by 25 publications

References 23 publications

International capital markets, oil producers and the Green Paradox

International capital markets, oil producers and the Green Paradox

The Green Paradox and the importance of endogenous resource exploration

The supply of non‐renewable resources

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