Measuring resource scarcity in non-renewable resource with an application to oil and natural gas in Alberta

In this paper annual Canadian exploration data are used to estimate a multiple-output translog exploration cost function. A new definition of depletion is introduced and its estimated coefficient is found to be statistically significant. The fitted cost function parameters are then used to obtain estimates of the marginal costs of exploration for oil and gas. Our estimated marginal exploration costs are smaller than in previour studies because we have allowed for technical progress which offsets the depletion effects. These marginal cost estimates are employed, along with previous estimates of exploration rents, to measure resource scarcity. We find some evidence for the increased scarcity of oil and gas in Alberta. For oil there is a 10.1% per year increase in scarcity along the trend line while for natural gas there is a 2.4% per year increase in scarcity along the trend line.     

International trade of scarce water

Recent analyses of the evolution and structure of trade in virtual water revealed that the number of trade connections and volume of virtual water trade have more than doubled over the past two decades, and that developed countries increasingly import water embodied in goods from the rest of the world to alleviate pressure on domestic water resources. At the same time, as demand continues to increase and climate change threatens to alter hydrological cycles, water scarcity is a growing problem. Does research into virtual water trade need to consider water scarcity and differentiate flows out of water-scarce regions from flows out of water-abundant regions? Previous studies sum and compare virtual water volumes originating in countries experiencing vastly different degrees of water scarcity. We therefore incorporate water scarcity into an assessment of global virtual water flows. We use input–output analysis to include indirect virtual water flows. We find that the structure of global virtual water networks changes significantly after adjusting for water scarcity.     

Water and Economic Growth

Several hydrological studies forecast a global problem of water scarcity. This raises the question as to whether increasing water scarcity may impose constraints on the growth of countries. The influence of water utilisation on economic growth is depicted through a growth model that includes this congestible nonexcludable good as a productive input for private producers. Growth is negatively affected by the government's appropriation of output to supply water but positively influenced by the contribution of increased water use to capital productivity, leading to an inverted-U relationship between economic growth and the rate of water utilisation. Cross-country estimations confirm this relationship and suggest that for most economies current rates of fresh water utilisation are not yet constraining growth. However, for a handful of countries, moderate or extreme water scarcity may adversely affect economic growth. Nevertheless, even for water-scarce countries, there appears to be little evidence that there are severe diminishing returns to allocating more output to provide water, thus resulting in falling income per capita. These results suggest caution over the claims of some hydrological-based studies of a widespread global 'water crisis'.     

Estimating the market value of collegiate football players from professional factor shares

Although the level and growth of revenue in college football has drawn increasing public attention, reliable estimates of the value of college and associated rents remain elusive. Many players do not have easily observable performance statistics and there are significant complementarities. Using a simple estimation strategy based on professional factor shares and rooted in economic theory, we generate estimates of market value for college players across seven National Collegiate Athletic Association conferences using professional football and basketball salaries from 2011 to 2013 as shadow prices. With this method, market value of an average starting football player in a Bowl Championship Series (BCS) conference ranges from $120,000 to $1.7 million per year. The value of superstar players may exceed $4 million per year. We find that rents can flow from the institutions to players in some cases at relatively low-revenue institutions outside the BCS.     

Economic and demographic factors in U.S. alcohol demand: A growth-accounting analysis

During the 1980s, per capita consumption of absolute ethanol in the U.S. declined by 14 percent. In 1979, consumption was 2.94 gallons per capita compared to 2.52 gallons in 1989. The objective of this paper is to explain the decline in consumption, both for total ethanol and by beverage. The historical growth of ethanol demand is decomposed into several components, with emphasis on the role of relative prices, real income, and demographic factors. Using the Rotterdam model of a demand system, I first estimate the conditional demand for ethanol for each of the three beverages (beer, wine, distilled spirits). Second, I estimate the composite demand for total ethanol. Both sets of estimates are obtained using quarterly data for the period 1974–90. The estimates are tested for conformity with the theoretical restrictions of homogeneity, symmetry, and negativity. The decomposition analysis indicates a positive net effect for the combined impact of autonomous trend, real income growth, and relative price changes, both for total ethanol and each of the three beverages. The negative growth of per capita ethanol consumption is attributable to an increase in the proportion of the population aged 65 and over and a simultaneous decline in the proportion of the population aged 18–29.     

Prices versus Rationing: Marshallian Surplus and Mandatory Water Restrictions*

An aggregate daily water demand for Sydney is estimated and used to calculate the difference in Marshallian surplus between using the metered price of household water to regulate total consumption versus mandatory water restrictions for the period 2004/2005. The loss in Marshallian surplus from using mandatory water restrictions is calculated to be $235 million. On a per capita basis this equates to approximately $55 per person or about $150 per household – a little less than half the average Sydney household water bill in 2005.     

Estimating the causal effect of water scarcity on the groundwater use efficiency of rice farming in South India

There is no consensus among researchers on the influence of scarcity on common pool resource use: some suggest that scarcity leads to prudent use, whereas others suggest that it will cause over-extraction of resources. This issue is particularly of interest for developing countries, where natural resources are becoming scarce at an alarming rate. This paper investigates the causal association between water scarcity and groundwater use efficiency in a rice based cropping system in south India, where groundwater is increasingly becoming a scarce resource. Contextualization of the work is done under the premise of reported contradictions concerning the scarcity — efficiency nexus. Using a two stage approach the causality is estimated: first, farm level groundwater use efficiency (GWUE) scores are calculated using non-parametric efficiency analysis, and then these inefficiencies are linked to farm level scarcity indicators using the Inverse Probability Weighting method. Our results showed a negative causal association between farm level water scarcity and GWUE, indicating the existence of competitive appropriation behavior in the face of scarcity. Hence, policy measures to conserve groundwater should include supply enhancement to remove the threat of immediate scarcity on farm to avoid inefficient pumping in addition to demand management measures and improved governance.     

Depletion,climate, and the incremental value of groundwater

Groundwater provides vital inputs to crop production and contributes to rural economies throughout the world. Research on the economic benefits associated with groundwater resources has typically focused on the impacts of groundwater availability on the profitability of agricultural production or on the non-market benefits associated with groundwater quality for human consumption. In this research, we use stated-preference methods to investigate the total economic value to agricultural producers of an increase in groundwater availability in the Ogallala Aquifer region. The contingent valuation method allows for estimation of values beyond agricultural profitability, including non-market values such as the ability to leave additional groundwater to future generations. We find a median willingness to pay (WTP) for an additional 100 gallons per minute of well capacity of $77 per well, and that this estimate depends strongly on current well capacity and climate conditions. For counties in hotter and drier regions of the aquifer with low well capacity, median WTP is significantly higher. These results are then used in conjunction with projections of future climate and groundwater availability to generate predicted changes in the WTP for additional groundwater across the aquifer. This research provides important feedback on how the benefits of additional groundwater availability are predicted to change as groundwater resources are diminished in a changing climate.     

Advertising and US alcoholic beverage demand: system-wide estimates

The effects of advertising on consumption of alcoholic beverages in the US are analysed. The goal is to obtain evidence on the importance of advertising at the level of beverage demand(beer, wine, spirits) and for total consumption of alcohol (per capita gallons of ethanol). A three-equation conditional demand system is estimated that includes own- and cros-beverage advertising as explanatory variables. Four models of the differential demand system are estimated, including the Rotterdam, AID, CBS, and NBR models, using annual US data for the period 1964-90 on beverage consumption, prices, expednitures, and real advertising. Estimates are obtained of the complete matrix of own- and cross-elascities for each beverage’ price and advertising. At the beverage level, the results indicate a positive butr very small effect of advertising on beverage consumption, with most of the impact due to wine advertising and non due to beer advertising. There is no efect of advertising in the composite demand function for alcohol. Hence, the results from system-wide modelling suggest that alcohol advertising serves to reallocate brand sales, with no effect on total ethanol consumption and very small effects on beverage consumption.     

Why Finance Ministers Favor Carbon Taxes,Even If They Do Not Take Climate Change into Account

Fiscal considerations may shift governmental priorities away from environmental concerns: finance ministers face strong demand for public expenditures such as infrastructure investments but they are constrained by international tax competition. We develop a multi-region model of tax competition and resource extraction to assess the fiscal incentive of imposing a tax on carbon rather than on capital. We explicitly model international capital and resource markets, as well as intertemporal capital accumulation and resource extraction. While fossil resources give rise to scarcity rents, capital does not. With carbon taxes, the rents can be captured and invested in infrastructure, which leads to higher welfare than under capital taxation. This result holds even without modeling environmental damages. It is robust under a variation of the behavioral assumptions of resource importers to coordinate their actions, and a resource exporter’s ability to counteract carbon policies. Further, no green paradox occurs—instead, the carbon tax constitutes a viable green policy, since it postpones extraction and reduces cumulative emissions.     

Environmental aspects of water price formation. An empirical investigation of the cost of ground water protection

This paper tries to develop a scarcity price for groundwater resources in the Federal Republic of Germany (FRG). The present legal framework in the FRG is based on quantity regulation. This framework, as well as the quantitative structure of demand and supply, is analysed. In the absence of market values, a model calculation for water protection is carried out to estimate the scarcity price of water. According to this model calculation, the average water price should be twice as high as it is. The implications of such a price development for the demand side are being analysed.     

空间稀缺性--公共政策地理研究的一个视角

空间稀缺性是人类经济活动空间需求的数量与质量的提高与空间供给的有限性的矛盾。产生空间稀缺性的原因有自然原因和经济原因。人类在经济活动中发展了应对空间稀缺性的各种措施，如以技术进步应对空间稀缺性、通过空间扩展应对空间稀缺性、优化空间组合应对空间稀缺性、通过政府管制应对空间稀缺性等。经济地理学应该致力于空间稀缺性研究，并从空间稀缺性的视角发展公共政策地理学。     

Determinants of residential water demand in Germany

We econometrically analyze the impact of several economic, environmental and social determinants for the per capita demand for water in about 600 water supply areas in Germany. Besides prices, income and household size, we consider the effects of population age, the share of wells, housing patterns, precipitation and temperature. We also explore why current per capita residential water consumption in the new federal states is about 30% lower than in the old federal states. Since average cost pricing may cause an endogeneity problem, we apply instrumental-variable procedures in addition to single equation ordinary least squares, but find no evidence that prices are endogenous. Our estimation results suggest that the price elasticity of water demand in Germany is around − 0.24. The income elasticity is positive, decreases with higher income levels and is at least three times higher in the new federal states than in the old federal states. Current differences in prices and income levels explain about one third of the gap in residential water use between the two regions. Household size and the share of wells have a negative impact on per capita water demand, and water use increases with age. Finally, the findings provide some evidence that rainfall patterns rather than total rainfall affect water consumption, while temperature appears to have no impact at all. All outcomes are robust to a log-log and two types of semi-log specifications for the water demand function.     

Are virtual water “flows” in Spanish grain trade consistent with relative water scarcity?

Virtual water adds a new dimension to international trade, and brings along a new perspective about water scarcity and water resource management. Most virtual water literature has focused on quantifying virtual water “flows” and on its application to ensure water and food security. Nevertheless, the analysis of the potential gains from international trade, at least from a water resources perspective, needs to take into account both spatial and temporal variations of blue (groundwater and stream flow) and green (soil moisture) water, as well as the socioeconomic and policy conditions. This paper evaluates whether Spanish international trade with grains is consistent with relative water scarcity. For this purpose, the study estimates the volume and economic value of virtual water “flow” through international grain trade for the period 1997-2005, which includes 3 years with different rainfall levels. The calculations show that Spain is a net virtual water “importer” through international grain trade. The volume of net virtual water “imports” amounts to 3420, 4383 and 8415 million m³ in wet (1997), medium (1999) and dry (2005) years, respectively. Valuing blue water at its shadow price or scarcity value, blue water “exports” oscillate between 0.7 and 34.2 million Euros for a wet and dry year, respectively. Overall, grain trade is apparently consistent with relative water scarcity as net imports increase in dry years. However, the evolution of grain exports, expressed as a variation in quantity and volume, does not match the variations in resource scarcity. A disaggregated crop analysis reveals that there are other factors, such as quality, product specialization or the demand for a standardized product, which also influence trade decisions and are not included in the notion of virtual water. These facts, among others, can therefore create potential distortions in the application of virtual water to the analysis of specific trade patterns. Nevertheless, from a water resources perspective, virtual water can bring important insights across countries for improving water and land management globally, fostering adaptation strategies to climate change and to transboundary resource management.     

Jurisdictional Tax Competition and the Division of Nonrenewable Resource Rents

This paper presents a model of nonrenewable resource extraction across multiple jurisdictions which engage in strategic tax competition. The model incorporates rents due to both resource scarcity and capital scarcity as well as intra-region Ricardian rents. Regions set taxes on nonrenewable resource production strategically to balance tax revenues and local benefits from investment conditional on other regions’ tax rates. A representative extraction firm then allocates production capital across regions and time to maximize the present value of profits. Generally, we find that the division of resource rent between firms and regional governments ultimately depends on the relative scarcity of natural and production capital, relative costs across space, and the value regional governments place on economic activity. This theoretical result provides policymakers with information on the determinants of optimal tax rates and motivates future empirical research on the factors influencing the division of resource rent in practice.     

Determinants of agricultural water saving technology adoption: an empirical study of 10 provinces of China

In recent years, China has been faced by an increasingly severe water shortage due to the continual growth of demand on water resources. Although the Chinese government has been actively promoting the agricultural water-saving technology adoption, it is ill-informed of the adoption degree of the current agricultural watersaving technologies as well as the function of the governmental policies, Therefore, this paper＂ analyzes the aforesaid problems based on investigative data of 10 provinces in China. The results demonstrate that although there is a rapid increase of adopted agricultural water-saving technologies, the actual adoption area is rather limited. Moreover, the governmental policies and scarcity of water resources are the deierminants of agricultural water-saving technology adoption. Ultimately, the paper proposes some policy suggestions.     

Strategic resource dependence

We consider a situation where an exhaustible-resource seller faces demand from a buyer who has a substitute but there is a time-to-build delay for the substitute. We find that in this simple framework the basic implications of the Hotelling model (1931) are reversed: over time the stock declines but supplies increase up to the point where the buyer decides to switch. Under such a threat of demand change, the supply does not reflect the current resource scarcity but it compensates the buyer for delaying the transition to the substitute. The analysis suggests a perspective on costs of oil dependence.     

An assessment of the influence of bioenergy and marketed land amenity values on land uses in the Midwestern US

There is substantial concern that bioenergy policies could swamp other considerations, such as environmental values, and lead to large-scale conversions of land from forest to crops. This study examines how bioenergy and marketed environmental rents for forestland potentially influence land use in the Midwestern US. We hypothesize that current land uses reflect market values for environmental benefits of forestland, so that the marketed component of the environmental value of land can be captured as the difference between Census land values and value of land as a timber asset. We use a multinomial logit model to estimate the land use shares of forests, crops and urban in Ohio, Indiana, and Illinois. The results show that marketed environmental rents increase forestland relative to cropland. To examine the effects of biofuels on land use, we conduct policy analysis by altering future land rents. Our baseline scenario projects that urban development uses mostly cropland, but with higher crop rents resulting from increased demand for bioenergy, there will be significant losses of forestland to urban and cropland. On the other hand, if marketed environmental rents grow while crop rents are maintained at their baseline value, urban growth will occur, primarily at the expense of cropland.     

Social security trust fund flows and the welfare costs of rent seeking

The current study provides estimates from a Parks regression (using panel data) that suggest that the welfare costs due to rent seeking efforts by interest groups to obtain Social Security trust fund flows ranged from approximately $132 million (per twoyear federal election cycle from 1985–1994) to a theoretical expectation of $66 billion, all in real terms. These welfare costs are in addition to any other social costs that may be present, including the reduced levels of national saving that Social Security may induce.     

Spring cleaning: rural water impacts, valuation, and property rights institutions

Using a randomized evaluation in Kenya, we measure health impacts of spring protection, an investment that improves source water quality. We also estimate households' valuation of spring protection and simulate the welfare impacts of alternatives to the current system of common property rights in water, which limits incentives for private investment. Spring infrastructure investments reduce fecal contamination by 66%, but household water quality improves less, due to recontamination. Child diarrhea falls by one quarter. Travel-cost based revealed preference estimates of households' valuations are much smaller than both stated preference valuations and health planners' valuations, and are consistent with models in which the demand for health is highly income elastic. We estimate that private property norms would generate little additional investment while imposing large static costs due to above-marginal-cost pricing, private property would function better at higher income levels or under water scarcity, and alternative institutions could yield Pareto improvements.