Complementarity, impatience, and the resilience of natural-resource-dependent economies

M. Quaas, D.P. van Soest, S. Baumgärtner

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We study how society's preferences affect the resilience of economies that depend on more than one type of natural resource. In particular, we analyze whether the degree of complementarity of natural resources in consumer preferences may give rise to multiple steady states and path dependence even when resources are managed optimally. We find that, for a given social discount rate, society tends to be less willing to buffer exogenous shocks if resource good are complements in consumption than if they are substitutes. The stronger the complementarity between the various types of natural resources, the less resilient the economy is, and even more so the higher is the social discount rate.
Original languageEnglish
Pages (from-to)15-32
JournalJournal of Environmental Economics and Management
Volume66
Issue number1
Publication statusPublished - 2013

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complementarity
discount rate
natural resource
resource
economy
Resilience
Natural resources
Impatience
Complementarity
Social discount rate
Resources

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title = "Complementarity, impatience, and the resilience of natural-resource-dependent economies",
abstract = "We study how society's preferences affect the resilience of economies that depend on more than one type of natural resource. In particular, we analyze whether the degree of complementarity of natural resources in consumer preferences may give rise to multiple steady states and path dependence even when resources are managed optimally. We find that, for a given social discount rate, society tends to be less willing to buffer exogenous shocks if resource good are complements in consumption than if they are substitutes. The stronger the complementarity between the various types of natural resources, the less resilient the economy is, and even more so the higher is the social discount rate.",
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Complementarity, impatience, and the resilience of natural-resource-dependent economies. / Quaas, M.; van Soest, D.P.; Baumgärtner, S.

In: Journal of Environmental Economics and Management, Vol. 66, No. 1, 2013, p. 15-32.

Research output: Contribution to journalArticleScientificpeer-review

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AB - We study how society's preferences affect the resilience of economies that depend on more than one type of natural resource. In particular, we analyze whether the degree of complementarity of natural resources in consumer preferences may give rise to multiple steady states and path dependence even when resources are managed optimally. We find that, for a given social discount rate, society tends to be less willing to buffer exogenous shocks if resource good are complements in consumption than if they are substitutes. The stronger the complementarity between the various types of natural resources, the less resilient the economy is, and even more so the higher is the social discount rate.

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