
Contents
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35.1 Introduction 35.1 Introduction
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35.2 An overview of the theory of nonrenewable resource extraction 35.2 An overview of the theory of nonrenewable resource extraction
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35.2.1 Society’s Management of a Mine 35.2.1 Society’s Management of a Mine
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35.2.1.1 Case 1: Oil is Abundant, i.e., 35.2.1.1 Case 1: Oil is Abundant, i.e.,
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35.2.1.2 Case 2: Oil is Scarce, i.e., 35.2.1.2 Case 2: Oil is Scarce, i.e.,
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35.2.2 Competitive Mining Industry 35.2.2 Competitive Mining Industry
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35.2.3 Monopolistic Extraction 35.2.3 Monopolistic Extraction
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35.2.4 Extensions of the Basic Model 35.2.4 Extensions of the Basic Model
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35.2.4.1 Different Grades of Oil 35.2.4.1 Different Grades of Oil
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35.2.4.2 Extraction Cost as a Function of Time and Cumulative Extraction 35.2.4.2 Extraction Cost as a Function of Time and Cumulative Extraction
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35.3 Optimal management of renewable resources: the case of even-aged forests 35.3 Optimal management of renewable resources: the case of even-aged forests
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35.3.1 The Basic Framework 35.3.1 The Basic Framework
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35.3.2 Extensions and the Case of Cameroon 35.3.2 Extensions and the Case of Cameroon
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Notes Notes
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References References
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35 The Analytics of Natural Resource Management
Get accessEric Bahel, Virginia Polytechnic Institute and State University
Octave Keutiben, University of Moncton
Francis Didier Tatoutchoup, University of Moncton
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Published:26 January 2023
Cite
Abstract
This chapter presents the theoretical framework of how society allocates scarce natural resources. We distinguish between the cases of nonrenewable resources and renewable resources. Nonrenewable resources differ from renewable resources because they have a fixed stock of reserves that, once removed, cannot be replaced. Extracting a unit of resource today means that a lower resource stock will be available for future extraction. For both renewable and nonrenewable resources, the economic analysis aims to determine (i) the flow of production over time and (ii) whether and when the resource stock will be depleted. In the case of nonrenewable resources, we present Hotelling’s theory of the mine as well as its extensions. In the case of renewable resources, we examine the derivation of Faustmann’s optimal rotation for even-aged forests. These building blocks will be used in the next chapter to test the dynamic efficiency of Cameroon’s resource management.
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