EXHAUSTIBLE RESOURCE ALLOCATION, INTERGENERATIONAL EQUITY, AND SUSTAINABILITY

An OLG model with exhaustible resources and solar energy is developed, and equilibrium time paths are characterized numerically using recursive methods. For the parameter values considered, resource prices increase over time, and extractions, output, and utility decline over time until a steady-state is reached. Decreasing the intertemporal elasticity of substitution or raising consumers' subjective discount rate hastens exhaustion of the resource stock. Market equilibrium can result in much quicker use of the stock than social optimality under a constant discount rate, with consequent higher utility for early generations and lower utility for future generations in contrast to social optimality.Resource /Energy Economics and Policy,

Dynamic analysis of lunar gravity simulator

Dynamic analysis of lunar gravity simulato

Recursive Sustainability: Intertemporal Efficiency and Equity

PV-optimality in a capital-resource economy can imply decreasing utility over some portion of the time horizon. Various criteria have been proposed to maintain intergenerational equity defined as nondeclining utility, but these have some limitations and problems. This paper proposes a new welfare criteria incorporating present value to maintain efficiency, and an equity function with convex costs on declining utility. This criterion is economically efficient, time-consistent and recursive. An extension of dynamic programming to multiple value functions is developed to solve this problem. Increasing the equity weight increasingly eliminates declining portions of utility time paths. Sustainability implies increasing consumption in the early time periods and some intermediate time periods relative to PV-optimality. A surprising result is that sustainability can actually result in increased resource usage in early time periods, followed later by higher levels of resource stocks compared to PV-optimality. The sustainability analysis shows that while conventional benefit-cost and valuation analysis contribute to efficiency, they do not necessarily induce sustainability due to incorrect dynamic GE prices. Similar comments apply to Green NNP analysis. The concepts and extended DP methods developed in this paper extend naturally to uncertainty and can also be applied to generalized consumer and social choice models beyond those typically considered in the literature.growth, environment, intergenerational equity, dynamic programming, Research Methods/ Statistical Methods,

Design of minimax output feedback controller for system with parameter uncertainty

The problem of controlling a time-invariant system with parameter uncertainty is considered with incomplete state feedback. The controller is designed by minimaximizing a quadratic performance criterion and a sensitivity (or loss) criterion, involving the state of the system, the control, and the uncertainty vector. The resulting optimal controller is linear and optimal feedback gain matrix must satisfy a set of nonlinear algebraic equations. some algorithms for algebraic minimax problems are presented

DYNAMIC REGIONAL ANALYSIS OF THE CALIFORNIA ALFALFA MARKET WITH GOVERNMENT POLICY IMPACTS

Alfalfa's heavy reliance on irrigation water and its role as an alternate to program crops makes it susceptible to changes in government farm policies. This article presents a dynamic spatial equilibrium model of the California alfalfa market. The model is used to forecast alfalfa acreage, prices paid and received, and transportation flows for the short run and the long run under the base year conditions. The base year results then are compared to a situation of changing demand due to reductions in federal water subsidies and the implementation of a cotton acreage-reduction program.Agricultural and Food Policy, Crop Production/Industries,

ECONOMICS OF AGROFORESTRY PRODUCTION IN IRRIGATED AGRICULTURE

A dynamic optimization model for agroforestry management is developed where tree biomass and soil salinity evolve over time in response to harvests and irrigation water quantity and quality. The model is applied to agroforestry production in the San Joaquin Valley of California. Optimal water applications are at first increasing in soil salinity, then decreasing, while the harvest decision is relatively robust to changes in most of the underlying economic and physical parameters. Drainwater reuse for agroforestry production also appears promising: both net reuse volumes and the implied net returns to agroforestry are substantial.Resource /Energy Economics and Policy,

Ground Water Quantity and Quality Management: Agricultural Production and Aquifer Salinization over Long Time Scales

An economic model of ground water salinization is developed. Starting from a full, high-quality aquifer, there is an initial extraction period, an intermediate waste disposal period, and a final drainage period. Drainage management is initially source control and reuse, but eventually culminates in evaporation basins and a system steady-state. This process occurs over long time scales but is consistent with historical observation. Efficiency is qualitatively similar to common property though quantitative magnitudes differ substantially. Regulatory pricing instruments are developed to support the efficient allocation. The system is not sustainable in that net returns generally decline through time until the steady-state.common property, dynamic programming, efficiency, ground water, irrigation, salinity, sustainability, Resource /Energy Economics and Policy,

Estimated Incident Cost Savings in Shipping Due to Inspections

The effectiveness of safety inspections has been analysed from various angles, but until now, relatively little attention has been given to translate risk reduction into incident cost savings. This paper quantifies estimated cost savings based on port state control inspections and industry vetting inspections. It is based on a unique dataset of 515,194 ship arrivals and inspections from the United States of America and Australia, and inspections of three industry vetting inspection regimes, for the time period 2002 to 2007. The risk reducing effect of inspections is estimated by means of duration models, in terms of inspection gains based on the probability of survival. The results suggest average total estimated cost savings in the range of USD 74 to 192 thousand (median USD 19 to 46 thousand) owing to reduced risk of total loss due to a port state control inspection. Cost savings for industry inspections are found to be even higher, especially for tankers. The savings vary by type, age and size of the ship. The benefits of an inspection are in general larger for older and larger vessels, and also for vessels with undefined flags and unknown classification societies. As inspection costs are relatively low in comparison to potential cost savings, the results underline the importance in determining high risk ships to prevent costs due to total loss of ships.maritime safety;duration analysis;ship inspection