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Environmental Economics Blog
Alex Steffen, 27 Jun 05

We like environmental economics, maybe more than we should. So we're happy to note the arrival of the Environmental Economics Blog, which manages to be both dismally scientific and readable at the same time:

The cost of a depletable resource increases as the stock is depleted for two reasons: 1) Extraction costs increase, and 2) The value of the resource left in the ground.increases. The first cost makes sense, it is easy to pick the low hanging fruit but more expensive to harvest the difficult to reach fruit. The second cost is more subtle, but just as important.

To understand why the value of the resource left in the ground must increase, think of the stock of a depletable resource as a giant savings account. When will you draw down the savings? When the value of that resource left in the ground is less than the value of the money you could receive for that resource if it were extracted. For each unit of the resource left in the ground the owner has two choices, leave the resource there and let itÂ’s value grow, or extract the resource, sell it and invest the money elsewhere.

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Comments

You forgot the link to the Environmental Economics Blog. Can you please confirm the URL ?


Posted by: T on 28 Jun 05

Hey all,

I can't get the blog link to work. Just reloads this website...?

http://www.worldchanging.com/archives/002976.html

Thanks for you help,

dean


Posted by: Reader on 28 Jun 05

Problem fixed. Thanks, guys.


Posted by: Alex Steffen on 28 Jun 05



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