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Natural Resource and Energy Economics

15. WEB. Natural Resource and Energy Economics. Chapter Objectives. Resource Supplies: Doom or Boom? Can Governments Raise Birthrates? Are We Running Out of Energy? Turning Entrails (and Nearly Anything Else) Into Oil Natural Resource Economics

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Natural Resource and Energy Economics

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  1. 15 WEB Natural Resource and Energy Economics

  2. Chapter Objectives • Resource Supplies: Doom or Boom? • Can Governments Raise Birthrates? • Are We Running Out of Energy? • Turning Entrails (and Nearly Anything Else) Into Oil • Natural Resource Economics • Using Present Values to Evaluate Future Possibilities • Nonrenewable Resources • Renewable Resources

  3. Resource Supplies:Doom or Boom • Population Growth • Replacement Rate • Total Fertility Rate • Demographers • Resource Consumption Per Person • British Thermal Unit (BTU) • Energy Economics • Efficient Energy Use

  4. Resource Supplies:Doom or Boom • U.S. Electricity Generation Sources • 50% Coal • 20% Nuclear • 18% Natural Gas • 6.5% Hydroelectric • 3.0% Petroleum • 2.3% Renewables • 0.2% Other

  5. Barrel Oil Price Viability Alternative Fuel $80 Biodiesel 60 U.S. Corn-Based Ethanol 50 Shale Oil 40 Tar Sands; Brazilian Sugar-Cane-Based Ethanol; Gas-to-Liquids; Coal-to-Liquids 20 Conventional Oil Resource Supplies:Doom or Boom Oil Prices at Which Alternative Sources Become Economically Viable

  6. Natural Resource Economics • Net Benefits • Renewable Natural Resources • Nonrenewable Natural Resources • Present Value to Evaluate Future Possibilities • User Cost • Present Use Versus Future Use

  7. Extraction Costs Choosing the Optimal Extraction Level TC = EC + UC EC B A Dollars P UC 0 Q2 Q1 Q0 First Year Quantity Extracted

  8. Market Failures Lead to Excessive Present Use • Applications • Conflict Diamonds • Elephant Preservation • Renewable Resources • Forest Management • Forest Growth Rates • Early Slow Growth • Maturing Rapid Growth • Mature Slow to Zero Growth

  9. Market Failures Lead to Excessive Present Use • Optimal Fisheries Management • Fishery • Fishery Collapse • Status of World Fisheries in 2003 • 3% Underexploited • 21% Moderately Exploited • 52% Fully Exploited • 16% Overexploited • 7% Depleted • 1% Recovering From Depletion

  10. Market Failures Lead to Excessive Present Use • Policies to Limit Catch Sizes • Total Allowable Catch (TAC) • Individual Transferable Quotas (ITQ)

  11. Is Economic Growth Bad For the Environment Last Word • Environmental Quality Higher in Richer Countries • Positive Nature of Growth • Improved Standard of Living • Greater Environmental Spending • Yale EPI Environmental Score • Data Supports Positive Aspects of Growth for the Environment

  12. replacement rate total fertility rate demographer British thermal unit (BTU) net benefits renewable natural resources nonrenewable natural resources present value user cost extraction cost conflict diamonds fishery fishery collapse total allowable catch (TAC) individual transferable quota (ITQ) Key Terms

  13. Next Chapter Preview… Government and Market Failure Chapter 16

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