Rent Taxation for Nonrenewable Resources

Posted: 4 Jun 2010

See all articles by Diderik Lund

Diderik Lund

University of Oslo - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: October 2009

Abstract

The literature on taxation of rents from nonrenewable resources uses different theoretical assumptions and methods and a variety of empirical observations to arrive at widely diverging conclusions. Many studies use models and methods that disregard uncertainty, investigating distortionary effects of different taxes on whether, when, and how to explore for, develop, and operate resource deposits. Introducing uncertainty into the analysis opens a range of challenges and leads to results that cast doubt on the relevance of studies that neglect uncertainty. There are, however, several ways to analyze uncertainty regarding companies' behavior, resource price processes, and diversification opportunities, all with different implications for taxation. Methods developed in financial economics since the 1980s, though promising, are still not in widespread use. Additional topics covered in this review are optimal risk sharing between companies and governments, time consistency and fiscal stability, the relationship between taxes and discount rates, tax competition, and transfer pricing.

Suggested Citation

Lund, Diderik, Rent Taxation for Nonrenewable Resources (October 2009). Annual Review of Resource Economics, Vol. 1, Issue 1, pp. 287-308, 2009. Available at SSRN: https://ssrn.com/abstract=1602738 or http://dx.doi.org/10.1146/annurev.resource.050708.144216

Diderik Lund (Contact Author)

University of Oslo - Department of Economics ( email )

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Norway
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