1. 18 Natural Resource and Energy Economics McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Resource Supplies: Doom or Boom?
Population increased from 1 billion people in 1800 to about 6.8 billion today
Standard of living in Western Europe is 16 times higher
Consumption of resources is much higher
18-2
LO1

3. Thomas Malthus’s (1798) predictions Replacement rate Total fertility
Population Growth
Thomas Malthus’s (1798) predictions
Replacement rate
Total fertility
Modernization
Death rates fall
Fertility rate falls below replacement rate
18-3
LO1

4. Resource Consumption Per Person
Increasing commodity demand
Population growth
Rising consumption per person
Commodity supply has risen faster than demand
Commodity prices are falling
18-4
LO1

5. Resource Consumption Per Person
Will resource supplies be sustainable in the future?
Prospects are hopeful
Demand for resources will reach a peak and decline with falling birthrates
Resource consumption per capita leveled off or is decreasing
18-5
LO1

6. Resource Consumption Per Person
Leveled off in the rich countries
Demand will increase in poorer countries
Challenge is to move resource supplies from their place of origin to places of need
18-6
LO1

7. Resource Consumption Per Person
18-7

8. Resource Consumption Per Person
18-8

9. Resource Consumption Per Person
18-9
LO1

10. Efficient Energy Use Achieve efficiency in business conditions with
Variations in fixed costs
Daily variations in demand
Different types of generation technology
18-10
LO2

11. Will run out of oil or cheap energy Lack of energy is not a concern
Running Out of Energy?
Will run out of oil or cheap energy
Lack of energy is not a concern
Alternative sources
Externalities
18-11
LO3

12. Natural Resource Economics
Policies for extracting resources to maximize net benefits
Present vs. future consumption
Present value
Renewable resources
Nonrenewable resources
18-12
LO4

13. Natural Resource Economics
Nonrenewable resources
Oil, coal, and metals
Extraction strategy to maximize stream of profits
User cost
Sell today, cannot sell in the future
Higher expected demand encourages less extraction today
Property rights
18-13
LO4

14. Optimal fisheries management Difficult to assign property rights
Renewable Resources
Optimal fisheries management
Difficult to assign property rights
Policies to limit catch sizes
Total allowable catch
Individual transfer quota
18-14
LO5