Rent Taxation for Nonrenewable Resources

Diderik Lund

No 01/2009, Memorandum from Oslo University, Department of Economics

Abstract: The literature on taxation of rents from nonrenewable resources uses different theoretical assumptions and methods and a variety of empirical observations to arrive at widely diverging conclusions. Many studies use models and methods which disregard uncertainty, investigating distortionary effects of different taxes on whether, when, and how to explore for, develop and operate resource deposits. Introducing uncertainty into the analysis opens a range of challenges, and leads to results which cast doubt upon the relevance of studies which neglect uncertainty. There are, however, several ways to analyze uncertainty, regarding companies' behavior, resource price processes, and diversification opportunities, all with different implications for taxation. Methods developed in financial economics since the 1980's are promising, but still not in widespread use. Some more specific topics covered in this review are optimal risk sharing between companies and gov- ernments, time consistency and scal stability, the relationship between taxes and discount rates, and transfer pricing.

Keywords: Natural resources; rent tax; royalty; oil; minerals; energy (search for similar items in EconPapers)
JEL-codes: B20 H20 H25 L71 O13 Q38 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2009-01-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-pub and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Published in Annual Review of Resource Economics, 2009, pages 287-307.

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Journal Article: Rent Taxation for Nonrenewable Resources (2009)
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