Extraction path and sustainability
MPRA Paper from University Library of Munich, Germany
This paper offers an approach to construct a family of extraction paths for nonrenewables that guarantee long-run sustainability of an imperfect economy. A path from this family leads to a monotonic growth of output with a decreasing rate of growth if a sustainability condition holds. Otherwise, the path leads either to a bounded decline or U-shaped path of output. In this sense, the paper extends neoclassical results and provides a bridge between neoclassical and degrowth theories because neoclassical tools are used to quantify degrowth scenarios. The offered path can be incentive-compatible for climate change problems because it reduces the extraction of polluting minerals consistently with the IPCC goals. That is, the climate-benefiting emission cuts by the parties of climate agreements may be guided by purely "egoistic" motives - to make own economies long-run sustainable.
Keywords: natural nonrenewable resource; extraction policy; long-run sustainability; optimal degrowth (search for similar items in EconPapers)
JEL-codes: Q01 Q32 Q35 Q38 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-gro
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:110415
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