On natural resource substitution

Francisco André and Emilio Cerdá

No E2004/48, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: We present a simple dynamic model to get some key insights about the substitution of renewable for nonrenewable resources in production and the consequences for sustainability. We highlight the role of the elasticity of substitution (technological component) to determine the adjustment of every sector as a response to scarcity and growing ability of resources (environmental component). Sometimes, the model predicts a smooth substitution of renewable resources for nonrenewables, but this process could work in the opposite direction if renewable resources are temporarily beyond their maximum sustainable yield, so that their marginal natural growth is negative. If substitution possibilities are high enough, it may be optimal to suspend the extraction of a resource, for example, to allow for regeneration of the biomass. We show analytically that a production process is more likely to be sustainable the more heavily it depends on renewable, rather than nonrenewable resources.

Keywords: Renewable resources; Nonrenewable resources; Production; Optimal control. (search for similar items in EconPapers)
JEL-codes: Q20 Q30 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:cea:doctra:e2004_48

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