1 / 19

NATURAL RESOURCES

NATURAL RESOURCES. Classification Economic characteristics Nonrenewable resources Renewable resources. IMPORTANCE: They produce vital services (air, water) They are part of final production (food) and intermediate consumption They support the distribution and the exchange.

majed
Télécharger la présentation

NATURAL RESOURCES

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. NATURAL RESOURCES • Classification • Economic characteristics • Nonrenewable resources • Renewable resources • IMPORTANCE: • They produce vital services (air, water) • They are part of final production (food) and intermediate consumption • They support the distribution and the exchange

  2. 1. CLASSIFICATION - Minerals NONRENEWABLE - Energy • NATURAL RESOURCES - Biological RENEWABLE - Environment - Provide resource • Dynamic classification: supply and demand

  3. 2. ECONOMIC CHARACTERISTICS OF GOODS • excludable • rival in consumption A good is excludable if the supplier of that good can prevent people who do not pay from consuming it A good is rival in consumption if the same unit of the good cannot be consumed by more than one person at the same time

  4. Why Markets Can Supply Only Private Goods Efficiently • Goods that are both excludable and rival in consumption are private goods  efficiently produced and consumed in a competitive market. • When goods are nonexcludable, there is a free-rider problem consumers will not pay producers, leading to inefficiently low production. • When goods are nonrival in consumption, the efficient price for consumption is zero. But if a positive price is charged to compensate producers for the cost of production  inefficiently low consumption.

  5. A. PUBLIC GOODS Because most forms of public good provision by the private sector have serious defects, they must be provided by the government and paid for with taxes. How Much of a Public Good Should Be Provided? The marginal social benefit of an additional unit of a public good is equal to the sum of each consumer’s individual marginal benefit from that unit. At the efficient quantity, the marginal social benefit equals the marginal cost. The following graph illustrates the efficient provision of a public good…

  6. No individual has an incentive to pay for providing the efficient quantity of a public good because each individual’s marginal benefit is less than the marginal social benefit

  7. B. COMMON RESOURCES A common resource is nonexcludable and rival in consumption: you can’t stop me from consuming the good, and more consumption by me means less of the good available for you (Examples: clean air and water, biodiversity) Common resources left to the free market suffer from overuse: a user depletes the amount of the common resource available to others but does not take this cost into account when deciding how much to use the common resource. In the case of a common resource, the marginal social cost of my use of that resource is higher than my individual marginal cost, the cost to me of using an additional unit of the good. The following figure illustrates this point…

  8. Each fisherman’s individual marginal cost does not include the cost that his or her actions impose on others: the depletion of the common resource  the marginal social cost curve, MSC, lies above the supply curve; in an unregulated market, the quantity of the common resource used, QMKT, exceeds the efficient quantity of use, QOPT.

  9. EXTERNALITIES • An external cost is an uncompensated cost that an individual or firm imposes on others. • An external benefit is a benefit that an individual or firm confers on others without receiving compensation. • Pollution is an example of an external cost, or negative externality; in contrast, some activities can give rise to external benefits, or positive externalities. External costs and benefits are known as externalities. • Left to itself, a market economy will typically generate too much pollution because polluters have no incentive to take into account the costs they impose on others.

  10. When individuals do take externalities into account, economists say that they internalize the externality: • Ways to internalize the externality: • Public regulation: taxes, laws • Private negotiation (Ronald Coase): • - Property rights of markets well defined • - Low negotiation costs

  11. Panel (a) shows that without government action, the market produces the amount QMKT. It is greater than the socially optimal quantity of livestock production, QOPT, the quantity at which MSC crosses the demand curve, D. At QMKT, the market price, PMKT, is less than PSC, the true marginal cost to society of livestock production. Panel (b) shows how an optimal Pigouvian tax on livestock production, equal to its marginal external cost, moves the production to QOPT, resulting in lower output and a higher price to consumers.

  12. The most common examples of external benefits are technology spillovers. When these occur, the marginal social benefit of a good or activity exceeds the marginal benefit to consumers, and too little of the good is produced in the absence of government intervention A Pigouvian subsidy is a payment designed to encourage activities that yield external benefits

  13. The Efficient Use and Maintenance of a Common Resource To ensure efficient use of a common resource, society must find a way of getting individual users of the resource to take into account the costs they impose on other users. Like negative externalities, a common resource can be efficiently managed: • by Pigouvian taxes (tax or otherwise regulate the use of the common resource) • by making it excludable and assigning property rights, • or by the creation of a system of tradable licenses for the right to use the common resource.

  14. C. ARTIFICIALLY SCARCE GOODS An artificially scarce goodis excludable but nonrival in consumption. Because the good is nonrival in consumption, the efficient price to consumers is zero. However, because it is excludable, sellers charge a positive price, which leads to inefficiently low consumption. It is made artificially scarce because producers charge a positive price but the marginal cost of allowing one more person to consume the good is zero. The problems of artificially scarce goods are similar to those posed by a natural monopoly.

  15. In this example the market price is $4 and the quantity demanded in an unregulated market is QMKT. But the efficient level of consumption is QOPT, the quantity demanded when the price is zero. The efficient quantity, QOPT, exceeds the quantity demanded in an unregulated market, QMKT. The shaded area represents the loss in total surplus from charging a price of $4.

  16. 3. NONRENEWABLE RESOURCES • RESOURCES ≠ RESERVES • Two effects of nonrenewable resources: • ↑ price if its exploitation increases • ↓ price if new resources or find substitutive are exploited (this last effect PREDOMINATE)

  17. 4. RENEWABLE RESOURCES • PROVIDE RESOURCE: no economic interest • BIOLOGICAL: problem of SUSTAINABILITY (exploit them allowing their renovation) • Forest (externalities) • Fishery (the “tragedy of the commons”)

  18. ENVIRONMENT: problems of changing its provision (quantity and quality) From local problems to world problems • Water • Biodiversity • Ozone depletion • Climatic change

More Related