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Overcoming Natural Resource Constraints Through R&D

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  • Jean-Pierre Amigues
  • Ngo Van Long
  • Michel Moreaux

Abstract

We study the optimal policies of research and development in the context of a resource-exploiting economy. We distinguish two cases: non-renewable resources and renewable resources. In the first case, we show that it is useful to construct an index of scarcity, which is the product of the level of technical know-how and the aggregate stock of resources. Provided that the rate of discount is not too high, there exists a critical level of this index, below which one must maximize the rate of investment in R&D. Starting from this critical level, it is possible to maintain a constant rate of consumption, by substituting knowledge for natural resources. In the case of renewable resources, we show that the optimal policy is to give priority to the production of consumption goods, and the rates of investments in R&D are determined residually. Nous étudions la politique optimale en R&D dans le secteur de ressources naturelles. On distingue deux cas : ressources non renouvelables, et ressources renouvelables. Dans le premier cas, nous montrons qu'il est utile de construire un indice de rareté, qui est le produit du niveau de connaissance scientifique et du stock de ressources. Pourvu que le taux d'escompte ne soit pas trop élevé, il existe un niveau critique de cet indice au-dessous duquel il faut maximiser le taux d'investissement en R&D. À partir de ce niveau critique, on peut atteindre un état stationnaire de consommation en substituant la ressource par la connaissance. Dans le cas de ressources renouvelables, la politique optimale est d'accorder la priorité à la production des biens de consommation, et les investissements en R&D sont déterminés comme résiduels.

Suggested Citation

  • Jean-Pierre Amigues & Ngo Van Long & Michel Moreaux, 2004. "Overcoming Natural Resource Constraints Through R&D," CIRANO Working Papers 2004s-14, CIRANO.
  • Handle: RePEc:cir:cirwor:2004s-14
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    File URL: https://cirano.qc.ca/files/publications/2004s-14.pdf
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    References listed on IDEAS

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    1. Jean-Pierre Amigues & André Grimaud & Michel Moreaux, 2004. "Ressources non-renouvelables, impatience et effort optimal de recherche-développement," Revue d'économie politique, Dalloz, vol. 114(3), pages 393-416.
    2. Bretschger, L. & Smulders, J.A., 2003. "Sustainability and Substitution of Exhaustible Natural Resources : How Resource Prices Affect Long-Term R&D Investments," Other publications TiSEM 2ae844f6-5ea5-45d4-963d-1, Tilburg University, School of Economics and Management.
    3. Smulders, Sjak & de Nooij, Michiel, 2003. "The impact of energy conservation on technology and economic growth," Resource and Energy Economics, Elsevier, vol. 25(1), pages 59-79, February.
    4. Spence, A Michael & Starrett, David, 1975. "Most Rapid Approach Paths in Accumulation Problems," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(2), pages 388-403, June.
    5. Tsur, Yacov & Zemel, Amos, 2001. "The infinite horizon dynamic optimization problem revisited: A simple method to determine equilibrium states," European Journal of Operational Research, Elsevier, vol. 131(3), pages 482-490, June.
    6. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
    7. Tahvonen, Olli & Salo, Seppo, 2001. "Economic growth and transitions between renewable and nonrenewable energy resources," European Economic Review, Elsevier, vol. 45(8), pages 1379-1398, August.
    8. Tsur, Yacov & Zemel, Amos, 2003. "Optimal transition to backstop substitutes for nonrenewable resources," Journal of Economic Dynamics and Control, Elsevier, vol. 27(4), pages 551-572, February.
    9. Jean-Pierre Amigues & Ngo Van Long & Michel Moreaux, 2004. "Ressources renouvelables et non renouvelables, impatience et progrès technique exogène," CIRANO Working Papers 2004s-07, CIRANO.
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    Citations

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    Cited by:

    1. AMIGUES Jean-Pierre & MOREAUX Michel & RICCI Francesco, 2006. "Overcoming the Natural Resource Constraint Through Dedicated R&D Effort with Heterogenous Labor Supply," LERNA Working Papers 06.22.215, LERNA, University of Toulouse.
    2. Amigues, Jean-Pierre & Moreaux, Michel & Ricci, Francesco, 2008. "Resource-augmenting R&D with heterogeneous labor supply," Environment and Development Economics, Cambridge University Press, vol. 13(6), pages 719-745, December.
    3. Maciej Malaczewski, 2017. "Warunki przejścia gospodarki na odnawialne źródła energii," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 33-51.
    4. Amigues, Jean-Pierre & Moreaux, Michel, 2008. "Dedicated Technical Progress with a Non-renewable Resource: Efficiency and Optimality," IDEI Working Papers 497, Institut d'Économie Industrielle (IDEI), Toulouse.
    5. Illge, Lydia & Schwarze, Reimund, 2009. "A matter of opinion--How ecological and neoclassical environmental economists and think about sustainability and economics," Ecological Economics, Elsevier, vol. 68(3), pages 594-604, January.
    6. Jean-Pierre Amigues & Ngo Van Long & Michel Moreaux, 2004. "Ressources renouvelables et non renouvelables, impatience et progrès technique exogène," CIRANO Working Papers 2004s-07, CIRANO.
    7. LAFFORGUE Gilles, 2006. "On the Effects of Stochastic Technical Change on Optimal Sustainable Growth Paths with Exhaustible Resource," LERNA Working Papers 06.02.195, LERNA, University of Toulouse.

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    More about this item

    Keywords

    optimal R&D policies; natural resources; scarcity index; politique optimale en R&D; ressources naturelles; indice de rareté;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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