The green paradox of the economics of exhaustible resources

Cairns, Robert D.

doi:10.1016/j.enpol.2013.10.047

Cited by 53 publications

(22 citation statements)

References 24 publications

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“…The resource extraction literature seeks to characterize firms' optimal extraction decisions and depletion rates (Nystad 1987;Adelman 1990; Davis and Cairns 1998;Cairns and Davis 2001;Thompson 2001;Smith 2012;Cairns 2014;Kellogg 2014). Our paper empirically tests the degree to which natural gas production decisions are sensitive to shocks in prices and whether there are differential effects for conventional versus unconventional resources and technologies.…”

Section: Literaturementioning

confidence: 99%

Trophy Hunting versus Manufacturing Energy: The Price Responsiveness of Shale Gas

Newell¹,

Prest²,

Vissing³

2019

Journal of the Association of Environmental and Resource Econom

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Section: Literaturementioning

confidence: 99%

Trophy Hunting versus Manufacturing Energy: The Price Responsiveness of Shale Gas

Newell¹,

Prest²,

Vissing³

2019

Journal of the Association of Environmental and Resource Econom

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“…This constraint tends to reduce the ability of producers to act flexibly and thus constrains their ability to frontload supply and so reduces the GP effect. 41 The need to explore and develop in preparation for fossil fuel extraction (#7) also reduce the strength of the GP. 42 Exploration and development activities are not explicitly included in both IAMs, but the associated costs are a component in the marginal extraction costs.…”

Section: The Green Paradox Literature and Integrated Assessment Modelsmentioning

confidence: 99%

Divestment prevails over the green paradox when anticipating strong future climate policies

et al. 2018

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Fossil fuel market dynamics will have a significant impact on the effectiveness of climate policies. 1 Both fossil fuel owners and investors in fossil fuel infrastructure are sensitive to climate policies that threaten their natural resource endowments and production capacities 2-4 , which will consequently affect their near-term behaviour. Although weak in near-term policy commitments 5,6 , the Paris climate agreement 7 signalled strong ambitions in climate change stabilisation. Many studies emphasise that the 2°C target can still be achieved even if strong climate policies are delayed until 2030. 8-10 However, sudden implementation will have severe consequences for fossil fuel markets and beyond and these studies ignore the anticipation effects of owners and investors. Here we use two energy-economy models to study the collective influence of the two central but opposing anticipation arguments, the Green Paradox 11 and the Divestment effect 12 , which have to date only been discussed separately. For a wide range of future climate policies we find that anticipation effects, on balance, reduce CO2 emissions during the implementation lag. This is because of strong divestment in coal power plants starting ten years ahead of policy implementation. The Green Paradox effect is identified, but is small under reasonable assumptions.

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“…In theoretical papers, including the ones on the Green Paradox, authors use a multitude of specifications for the extraction costs-with or without stock effect and with or without technological progress. If, for example, there is a stock effect, the Green Paradox may not exist (Cairns 2014). The framework of this paper can be adapted to empirically investigate this and related questions.…”

Section: Resultsmentioning

confidence: 98%

Testing the Assumptions and Predictions of the Hotelling Model

Atewamba

Nkuiya

2015

Environ Resource Econ

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In this paper, we empirically examine whether the assumptions and predictions of the Hotelling model are consistent with patterns observed in data. We consider nonlinear functional forms for the extraction cost and resource demand to develop an empirical Hotelling model with technological progress and stock dependent extraction costs. Using panel data on fourteen nonrenewable natural resources to estimate this empirical Hotelling model, we get qualitatively different results as compared to the related literature. We find evidence of stock-dependent extraction costs for most resources. There is no evidence against the linearity of the optimal extraction rate in the resource stock for almost all resources studied. Furthermore, the Hotelling model may sustain a zero long-run growth rate in resource prices. These results depend on whether firms use different extractive technologies or whether the structural break observed on resource prices is taken into account.

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The green paradox of the economics of exhaustible resources

Cited by 53 publications

References 24 publications

Trophy Hunting versus Manufacturing Energy: The Price Responsiveness of Shale Gas

Trophy Hunting versus Manufacturing Energy: The Price Responsiveness of Shale Gas

Divestment prevails over the green paradox when anticipating strong future climate policies

Testing the Assumptions and Predictions of the Hotelling Model

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