2002 World Congress of Environmental and Resource Economists

This paper uses a two-sector overlapping generations model to study the interaction between commodity production and natural resource management, for instance of a forest in private non-industrial property. The natural resource is essential in the production of the consumption good and delivers income from harvest and selling of the resource stock. Since natural resources are in private property of the households and traded from one generation to the next, intragenerational externalities are not accounted for. But the representative household faces a intertemporal trade-off whether to harvest the resource (and so increase present consumption) or to preserve the resource in order to increase future consumption. Unlike previous work, the resource evolves according to a concave natural growth function and a non-linear harvest function. Thus, natural growth is stock dependent and harvest is subject to decreasing returns to effort. After a description of the model and its equilibrium dynamics, existence and stability of the steady states are analyzed. Subsequently the impact of increasing harvest costs is investigated in comparison to the case of free harvest.



	Paper Title:	Dynamic Resource Management In A Two-Sector Overlapping Generations Model With Increasing Harvest Costs
	Presenting Author:	Birgit Friedl (University of Klagenfurt,)
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	Abstract:	This paper uses a two-sector overlapping generations model to study the interaction between commodity production and natural resource management, for instance of a forest in private non-industrial property. The natural resource is essential in the production of the consumption good and delivers income from harvest and selling of the resource stock. Since natural resources are in private property of the households and traded from one generation to the next, intragenerational externalities are not accounted for. But the representative household faces a intertemporal trade-off whether to harvest the resource (and so increase present consumption) or to preserve the resource in order to increase future consumption. Unlike previous work, the resource evolves according to a concave natural growth function and a non-linear harvest function. Thus, natural growth is stock dependent and harvest is subject to decreasing returns to effort. After a description of the model and its equilibrium dynamics, existence and stability of the steady states are analyzed. Subsequently the impact of increasing harvest costs is investigated in comparison to the case of free harvest.
	Link to paper:	Not available

	Session / Day / Time	6A / Tuesday / 10:15 - 11:45 am

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