Barry Field, University of Massachusetts—Amherst Ph. D. from University of California at Berkeley in 1967



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  • Barry Field, University of Massachusetts—Amherst
  • Ph.D. from University of California at Berkeley in 1967
  • Natural Resource Economics:
  • An Introduction (2nd edition)

Why this book?

  • “A comprehensive, well-written text that has appeal in many undergraduate programs.”
  • —Timothy Considine, Penn State University
  • “Very readable and informative… not so quantitative… extensive coverage of topics…”
  • “…written in nontechnical terms…a clear connection between natural resource uses and the economy.”
  • “a nice balance of theoretical principles and policy analysis.”
  • FYI

An email from Dr. Barry Field

  • From: Barry Field [mailto:field@isenberg.umass.edu] Sent: Thursday, August 23, 2012 6:00 AM To: Xiaobing Zhao Subject: RE: Bing's questions about Natural Resource Economics textbook
  • FYI

Professor Zhao

  • Professor Zhao
  • Thanks for your message. I have been on vacation and out of touch… The course here is being taught by my colleague John Stranlund… I remember Cheryl Brown quite well, though it seems quite a long time ago. Good luck with your course.  
  • Barry Field
  • * Dr. Cheryl Brown was on Bing’s dissertation committee back to West Virginia University. She earned her B.S. from University of Massachusetts, Amherst in 1990, and Ph.D. from University of California, Berkeley in 1997.
  • http://www.umass.edu/resec/faculty/field/index.shtml
  • FYI
  • Table 4. Top Graduate Programs in Agricultural Economics by Field
  • Field and School
  • B. Resource and Environmental Economics (n=17)
  • Maryland
  • UC-Berkeley
  • UC-Davis
  • Oregon State
  • Maryland uses Barry’s text for AREC 453: Natural Resources and Public Policy!
  • Source: Ranking M.S. and Ph.D. Programs in Agricultural Economics–Spring 2004, Gregory M. Perry
  • FYI
  • SECTION I
  • Introduction
  • Chapter 1
  • Important Issues in
  • Natural Resource Economics

1. Natural Resource Adequacy

  • The longest-running issue—will future supplies be sufficient to support the economic needs of generations?
  • In history:
    • before the industrial revolution: wood and water
    • the industrial revolution: coal
    • the 1970s energy crisis: petroleum
    • today: nonrenewable resources (petroleum, coal, and natural gas)

Will Resource Scarcity Undermine Economic Growth?

  • Pessimists:
    • Thomas Malthus, An Essay on Population, London, 1798: population growth would inevitably outstrip the ability of nature to provide sustenance in ever-increasing amounts
    • Donella Meadows et al., The Limits to Growth, New York , 1972: scarcity along with pollution would lead to output declines beginning in the 21st century—“When asked if we have enough time to prevent catastrophe, she'd always say that we have exactly enough time—starting now.”
  • (1766 -1864)
  • (1941-2001)

“The power of population is indefinitely greater than the power in the earth to produce subsistence for man.”

  • “The power of population is indefinitely greater than the power in the earth to produce subsistence for man.”
  • Source: Malthus T.R. 1798. An essay on the principle of population. Chapter 1, p 13 in Oxford World's Classics reprint.

Malthus argued that two types of checks hold population within resource limits:

  • Malthus argued that two types of checks hold population within resource limits:
    • positive checks, which raise the death rate; include hunger, disease, and war
    • preventive ones, which lower the birth rate; abortion, birth control, postponement of marriage……

The exponential nature of population growth is today known as the Malthusian growth model.

  • The exponential nature of population growth is today known as the Malthusian growth model.
  • where
  • P0 = initial population
  • r = growth rate, also called Malthusian parameter
  • t = time
  • e ≈ 2.71828

It is clear that the discrete logistic growth model follows the U.S. census data better than the Malthusian growth model, but not as well as the non-autonomous growth model.

  • It is clear that the discrete logistic growth model follows the U.S. census data better than the Malthusian growth model, but not as well as the non-autonomous growth model.
  • Optimists:
    • Scarcities will surely occur in the future
    • But human beings have the capacity to overcome scarcities by finding substitutes and by controlling population growth

Long-Run Price Changes

  • Resource economists examine the historical paths of resource prices
  • Rising prices signal increasing scarcity
  • Prices have historically decreased due to technological change

Natural Resource Substitution

  • To mitigate scarcity
  • Figure 1-1 (p6): substitution among energy forms in the U.S. from 1949-2005
    • Oil: 37% of total consumption to 43%
    • Natural gas: 16% to 24%
    • Coal: 37% to 24%
    • Renewables: 10% to 9%
  • Energy substitution: renewable energy for nonrenewable forms

Global Warming

  • Sunlight hits earth’s surface, radiates back into atmosphere, where its absorption by GHGs heats atmosphere and warms earth’s surface
  • Somewhat like a greenhouse that allows sunlight through the glass but prevents the heated air from escaping back outside, thus “greenhouse effect”
  • Primary GHGs is carbon dioxide (CO2)
    • Accumulating CO2 is linked to fossil fuel combustion and deforestation
  • Combustion of natural gas emits 30% less carbon dioxide than oil, and 45% less carbon dioxide than coal.
  • ECO324-Ch13
  • Review

2. Socially Optimal Rates of Resource Use

  • Criteria
    • Social efficiency: the maximum of net benefits accrued by members of a society
    • Sustainability: maintaining or augmenting some valued index of human or ecosystem welfare
    • Irreversibility (not reversible): avoid it; avoid the destruction of unique natural resources
    • Fairness: actions impact people in equitable ways

3. Natural Resource Policy: Moving Toward the Optimum

  • Natural resource misuse can arise from:
    • The difficulties that prevent private markets from functioning effectively (ocean fisheries: an open-access resource)
    • Misguided public policy and regulation (Federal energy subsidies)
  • New types of property rights help solve certain problems
    • individual transferable quotas (ITOs), a closed-access system based on private property rights for fisheries
  • Classic division of goods in economy
  • Rival in consumption
  • (consumption
  • diminishes its value)
  • Not rival
  • Excludable
  • (have to pay)
  • private goods:
  • food
  • clothing
  • natural monopolies (club goods):
  • cable TV
  • Not excludable
  • common resources: fish in the sea
  • public goods:
  • national defense
  • tornado siren
  • ECO324-Ch2-Slide 36
  • Review

Policy Options to Prevent Overconsumption of Common Resources

  • Greg Mankiw: Microeconomics, Chapter 11: Public Goods and Common Resources
  • regulate use of the resource
  • impose a corrective tax to internalize the externality
    • example: hunting & fishing licenses, entrance fees for congested national parks
  • auction off permits allowing use of the resource
    • example: spectrum auctions by the U.S. Federal Communications Commission
  • if the resource is land, convert to a private good by dividing and selling parcels to individuals
  • Review

4. Natural Resource Accounting

  • Conventional GDP
    • does not allow for natural resource depletion or depreciation in natural resource capital
    • does not measure non-market goods and services
  • Natural Resource Accounting
    • Involves estimating the non-market value of ecosystem services: scenic values, support for outdoor recreation, biodiversity preservation……

Natural capital is the extension of the economic notion of capital (manufactured means of production) to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future. For example, a stock of trees or fish provides a flow of new trees or fish, a flow which can be indefinitely sustainable. Other examples: oil deposits, minerals, coal, etc. Natural capital may also provide services like recycling wastes or water catchment and erosion control. Since the flow of services from ecosystems requires that they function as whole systems, the structure and diversity of the system are important components of natural capital.

  • Natural capital is the extension of the economic notion of capital (manufactured means of production) to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future. For example, a stock of trees or fish provides a flow of new trees or fish, a flow which can be indefinitely sustainable. Other examples: oil deposits, minerals, coal, etc. Natural capital may also provide services like recycling wastes or water catchment and erosion control. Since the flow of services from ecosystems requires that they function as whole systems, the structure and diversity of the system are important components of natural capital.

5. Benefit-Cost Analysis in Natural Resource Economics

  • The Endangered Species Act (ESA) in 1973: to protect no matter what the cost
  • B/C: developed to evaluate federal water projects
  • Should be applied to all natural resource and environmental decisions in the public sector
  • Applicability and accuracy
  • Please read Exhibit 1-4
  • on page 16!

6. Land-Use Issues

  • For housing, work locations, roads, farms, parks, wilderness areas…...
  • Decisions are made through private land markets and public oversight
  • To preserve agricultural land uses: development rights purchase
    • Public authority purchases the right to develop from the farmers, leaving them with the remaining rights on their land and the freedom to farm the land
    • FYI: Exhibit 1-5, p17

7. International Natural Resource Issues

  • Developing countries rely on natural resource capital (endowments) for economic growth
    • the Middle East: oil
    • South America and Asia: timber
    • Africa: minerals
    • China: coal
    • Mongolia: copper and gold
  • Please read Exhibit 1-6 on page 20!
  • Issue #1:

Geologist David Bond exploring Altan Rio Minerals’ Chandman-Yol copper-gold project in western Mongolia, BY MATTHEW KEEVIL, May 11, 2012

  • Geologist David Bond exploring Altan Rio Minerals’ Chandman-Yol copper-gold project in western Mongolia, BY MATTHEW KEEVIL, May 11, 2012
  • FYI
  • Resource rents: the difference between what a resource is worth in the market and what it costs to extract, transport, and process it
  • Rent seeking: competition by the various parties to appropriate larger share of the rents arising from natural resource extraction
  • Textbook, page 74

Typically, because natural resources are scarce, there is an economic return to the resource itself above the return needed to cover intermediate input costs, labor costs, and the opportunity cost of capital invested in the business.

  • Typically, because natural resources are scarce, there is an economic return to the resource itself above the return needed to cover intermediate input costs, labor costs, and the opportunity cost of capital invested in the business.
  • This return to natural resources is called a resource rent and is measured as the difference between the revenue obtained by selling a resource and the opportunity costs of extracting that resource.
  • In the absence of government policies to recover this rent, it accrues as “windfall” profits to operators of natural-resource-based industries.
  • FYI

In economics, rent-seeking is an attempt to obtain economic rent by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth, for example, spending money on political lobbying in order to be given a share of wealth that has already been created.

  • In economics, rent-seeking is an attempt to obtain economic rent by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth, for example, spending money on political lobbying in order to be given a share of wealth that has already been created.
  • In natural resource economics, rent-seeking could be a behavior among agents who compete for high shares of a common natural resource.
  • FYI

Conflict among countries over access to particular natural resources

  • Conflict among countries over access to particular natural resources
    • Surface water resources
    • Productive fisheries
    • Deep-sea minerals
    • Undersea petroleum deposits
  • Possible solutions
    • Bilateral treaties (for the Pacific salmon between Canada and the US)
    • Multilateral agreements (the regional seas treaties)
  • Issue #2:


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