Rational depletion of natural resources

Variable relationship:

Acheson (2006) suggests that resource users may rationally deplete natural resource stocks (Commons Condition) when resources have low levels of productivity (Productivity) and users are not dependent on a particular instance of a resource (i.e. a particular environmental commons) and can invest in other income generating activities (Livelihood Alternatives).

First, Clark (1973: 630) has advanced the most widely known explanation of the failure of private property to conserve resources. He argues that “[a] corporate owner of property rights in a biological resource might actually prefer extermination to conservation, on the basis of maximization of profits.”  This occurs when the growth rate of the resource is less than the discount rate. It does not make sense to borrow money from the bank at 8% interest to invest in a resource that increases in value at only 4% per year. This would not be a rational investment. Under these circumstances, it would only be sensible to deplete the resource as fast as possible and invest the money where it will give higher returns." (Acheson 2006).

Project

SESMAD

Sector(s)

 

Scientific Field

Component Type(s)

Natural Resource Unit, Natural Resource System

Status

Public