Effects of Technological Change on Non-renewable Resource Extraction and Exploration

Abstract

This paper provides a non-renewable resource extraction model with both technological change and resource exploration. Especially, we consider two types of technology, extraction technology and exploration technology. We show how these technologies affect efficient non-renewable resource extraction differently. Then, progress in extraction technology drops marginal revenue of extraction and resource price by changing the structure of those dynamics, while progress in exploration technology drops marginal revenue of extraction and resource price remaining the structure of those dynamics. Finally, we illustrate the difference becomes significant when innovative technologies are developed using numerical examples.

Assessing the drivers of (non)conventional energy portfolios in the South Asian economies: The role of technological innovation and human development

“…In different perspectives, many studies likened non-renewable energy consumption by carbon emission following the assumption that non-renewable energy, which is mainly based on fossil fuels, corresponds with rising carbon emission. For example, Sawada and Managi (2014) On the income aspect as a determinant of energy consumption, higher income tends to trigger more consumption due to income effect as supported by some studies in the literature. For example, Ansari et al (2020) investigated the relationship between renewable energy, non-renewable energy, and economic growth in the case of the top energy-consuming countries for 1991-2016.…”

“…In different perspectives, many studies likened non‐renewable energy consumption by carbon emission following the assumption that non‐renewable energy, which is mainly based on fossil fuels, corresponds with rising carbon emission. For example, Sawada and Managi (2014) examine the relationship between technological change and non‐renewable resource extraction and exploration. The study demonstrates that innovative technological change can help in improving the efficiency of non‐renewable energy exploration, which consequently implies that the greater supply of non‐renewable energy stimulates its consumption thereof.…”

“…While Santra (2017), Yu and Du (2019), among others, argue that innovation is environmentally destructive and has no significant impact on energy consumption, Fisher‐Vanden et al (2004), Hang and Tu (2007), and Khan et al (2021), among others, argued that innovation is positively correlated with renewable energy consumption. Furthermore, Sawada and Managi (2014), Khan et al (2021), and Rasoulinezhad and Saboori (2018), among others, argue that innovation also increases non‐renewable energy consumption. Additionally, other studies considering human development as a determinant of energy usage also deliver mixed findings.…”