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

Martin Quaas, Daan van Soest and Stefan Baumgaertner
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Stefan Baumgaertner: Department of Sustainability Sciences and Department of Economics, Leuphana University of Lueneburg, Germany
Authors registered in the RePEc Author Service: Stefan Baumgärtner

No 220, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: We study how human preferences a ect the resilience of economies that depend on more than one type of natural resources. In particular, we analyze whether the degree of substitutability of natural resources in consumer needs may give rise to multiple steady states and path dependence even when resources are managed optimally. This is a major shift in the interpretation and analysis of resilience, from viewing (limited) resilience as an objective property of the economy-environment system to acknowledging its partially subjective, preference-based character. We nd that society tends to be less willing to bu er exogenous shocks if resource goods are complements in consumption than if they are substitutes. Hence, the stronger the complementarity between the various types of resource goods, the less resilient the economy is.

Keywords: Resilience; substitutes and complements; discounting; multiple steady states; natural resources; path dependence; regime shifts; tipping points (search for similar items in EconPapers)
JEL-codes: C62 O13 Q01 Q20 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2011-11
New Economics Papers: this item is included in nep-cbe
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Journal Article: Complementarity, impatience, and the resilience of natural-resource-dependent economies (2013)
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