Complementarity, Impatience, and the Resilience of Natural-Resource - Dependent Economies

38 Pages Posted: 14 Nov 2011

See all articles by Martin F. Quaas

Martin F. Quaas

German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig

Daan van Soest

Tilburg University - CentER & Department of Economics

Stefan Baumgärtner

University of Freiburg - Department of Environment and Natural Resources

Date Written: November 14, 2011

Abstract

We study how human preferences affect the resilience of economies that depend on more than one type of natural resources. In particular, we analyze whether the degree of substitutability of natural resources in consumer needs may give rise to multiple steady states and path dependence even when resources are managed optimally. This is a major shift in the interpretation and analysis of resilience, from viewing (limited) resilience as an objective property of the economy-environment system to acknowledging its partially subjective, preference-based character. We find that society tends to be less willing to buffer exogenous shocks if resource goods are complements in consumption than if they are substitutes. Hence, the stronger the complementarity between the various types of resource goods, the less resilient the economy is.

Keywords: resilience, substitutes and complements, discounting, multiple steady states, natural resources, path dependence, regime shifts, tipping points

JEL Classification: C62, O13, Q01, Q20

Suggested Citation

Quaas, Martin F. and van Soest, Daan P. and Baumgärtner, Stefan, Complementarity, Impatience, and the Resilience of Natural-Resource - Dependent Economies (November 14, 2011). Available at SSRN: https://ssrn.com/abstract=1959292 or http://dx.doi.org/10.2139/ssrn.1959292

Martin F. Quaas

German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig ( email )

Deutscher Platz 5e
Leipzig, 04103
Germany

HOME PAGE: http://www.idiv.de/bioecon

Daan P. Van Soest

Tilburg University - CentER & Department of Economics ( email )

P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 2072 (Phone)

Stefan Baumgärtner (Contact Author)

University of Freiburg - Department of Environment and Natural Resources ( email )

Tennebacher Str. 4
Freiburg, 79106
Germany

HOME PAGE: http://www.ere.uni-freiburg.de

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