FEEM working papers "Note di lavoro" series
2006 .023

When is it Optimal to Exhaust a Resource in a Finite Time?

Authors: Y. Hossein Farzin, Ken-Ichi Akao
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Book
Keywords: Renewable resource management,Sustainability,Finite-time exhaustion,Optimal path,Policy implications
JEL n.: Q20
JEL: Chapter in Sustainability and Diversity of Forest Ecosystems, Tohru Nakashizuka (ed)
Pages: pp. 422-430
Published in: Springer Japan
Date: 2007


Exhaustion of a natural resource stock may be a rational choice for an individual and/or a community, even if a sustainable use for the resource is feasible and the resource users are farsighted and well informed on the ecosystem. We identify conditions under which it is optimal not to sustain resource use. These conditions concern the discounting of future benefits, instability of social system or ecosystem, nonconvexity of natural growth function, socio-psychological value of employment, and strategic interaction among resource users. The identification of these conditions can help design policies to prevent unsustainable patterns of resource use.

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