Bonus Chapt 27 Web - Natural Resource and Energy Economics...

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Natural Resource and Energy Economics BONUS WEB COMPANION TO CHAPTER TWENTY-SEVEN NATURAL RESOURCE AND ENERGY ECONOMICS CHAPTER OVERVIEW This chapter extends the discussion of resource pricing, applying it to concerns about natural resource exhaustion and rising oil prices. The chapter begins by demonstrating why the seemingly endless increase in natural resource demand will likely subside, and why we are unlikely to run out of natural resources. Data presented reveal that global population growth will not continue unchecked, commodity prices have fallen (reflecting less scarcity), and that in the United States (representative of industrialized countries), per capita consumption of natural resources has either stabilized or declined. The section on energy economics explains how it is economically efficient to rely on multiple sources of power generation, and how changes in the price of one energy source (e.g. oil) make other sources economically viable. The discussion then turns to the extraction of non-renewable resources, with the objective of determining the rate of resource extraction that will maximize net benefits (measured using net present value). The final section looks at the harvesting of renewable natural resources, demonstrating through the examples of forestry, fishing, and elephants, how careful assignment and protection of property rights can promote conservation and sustainable use of natural resources. WHAT’S NEW This is a brand new chapter, written by Sean Masaki Flynn. It will be particularly useful to those students planning to study environmental economics or otherwise engage in environmental studies programs. INSTRUCTIONAL OBJECTIVES After completing this chapter, students should be able to: 1. Summarize Malthus’ population theory 2. Use data and the relationship between fertility rates and replacement rates to help explain why global population is likely to peak and then decline. 3. Explain what commodity prices tell us about the availability of resources. 4. Describe patterns of U.S. consumption of energy and water use, and trash generation. 5. Explain why it may be more economically efficient to use multiple energy sources rather than to specialize in a single source. 6. Explain why running out of oil does not mean running out of energy. 7. Demonstrate how a change in oil prices can make alternative fuels economically viable. 8. Describe the differences between renewable and non-renewable resources. 9. Explain how present values are used to determine the optimal rate of natural resource extraction. 10. Demonstrate how a company should decide how much of a non-renewable natural resource a company should extract now versus extracting in the future. 11.
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Bonus Chapt 27 Web - Natural Resource and Energy Economics...

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