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

Martin Quaas, Daan van Soest and Stefan Baumgärtner

Journal of Environmental Economics and Management, 2013, vol. 66, issue 1, 15-32

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.

Keywords: Resilience; Substitutes and complements; Discounting; Multiple steady states; Natural resources; Path dependence; Regime shifts; Tipping points (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (18)

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Working Paper: Complementarity, impatience, and the resilience of natural-resource-dependent economies (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:66:y:2013:i:1:p:15-32

DOI: 10.1016/j.jeem.2013.02.001

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