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Population Growth and the Tragedy of the Commons: Can Trade Prevent Natural Resource and Welfare Collapse?

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  • Schiff, Maurice

    (World Bank)

Abstract

Many developing countries depend crucially on open-access renewable natural resources (NR). Trade is generally viewed as hurting the long-term health of NR in commodity-exporting countries. I examine whether trade might be beneficial in the case of population growth. Dynamic general equilibrium NR models have typically assumed constant return to scale in the manufacturing sector. I examine trade's impact under constant, decreasing and increasing returns. While population growth always results in NR and welfare collapse under autarky, the impact under trade depends critically on the manufacturing sector's returns-to-scale technology. Under trade, NR and welfare are unaffected by population growth under constant returns, collapse under decreasing returns, and increase under increasing returns. Empirical studies have typically found constant or increasing returns. Thus, countries experiencing rapid population growth may obtain long-term benefits from opening up to trade, though they experience short-term NR costs.

Suggested Citation

  • Schiff, Maurice, 2024. "Population Growth and the Tragedy of the Commons: Can Trade Prevent Natural Resource and Welfare Collapse?," IZA Discussion Papers 17200, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp17200
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    References listed on IDEAS

    as
    1. Amr Elleithy, 1992. "Economies of scale and small firms in developing countries: Theoretical and empirical issues," Journal of International Development, John Wiley & Sons, Ltd., vol. 4(4), pages 463-476, July.
    2. Erwin Bulte & Edward Barbier, 2005. "Trade and Renewable Resources in a Second Best World: An Overview," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(4), pages 423-463, April.
    3. James A. Brander & M. Scott Taylor, 1997. "International Trade and Open-Access Renewable Resources: The Small Open Economy Case," Canadian Journal of Economics, Canadian Economics Association, vol. 30(3), pages 526-552, August.
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    More about this item

    Keywords

    population growth; renewable natural resources (NR); trade vs autarky; NR and welfare or societal collapse;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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