Abu-Kalla, H.; Palatnik, R.R.; Ayalon, O.; Shechter, M. Hoard or Exploit? Intergenerational Allocation of Exhaustible Natural Resources. Energies2020, 13, 6657.
Abu-Kalla, H.; Palatnik, R.R.; Ayalon, O.; Shechter, M. Hoard or Exploit? Intergenerational Allocation of Exhaustible Natural Resources. Energies 2020, 13, 6657.
In this paper we develop a “general equilibrium” (GE) model for the allocation of exhaustible natural resources to examine the impact of different extraction scenarios on intergenerational economic welfare. We apply a stylized GE model to Israel's natural gas (NG) market to evaluate economic indicators resulting from NG-extraction scenarios: a baseline scenario based on current policy in the NG sector, a conservative scenario based on a lower extraction rate, and an intensive scenario based on faster extraction. We also examine the impact of various resource income-allocation strategies on intergenerational economic welfare through the mechanism of a “sovereign wealth fund” (SWF). The results indicate that a higher NG-extraction rate combined with an appropriate investment strategy for NG profits is preferable from an economic perspective to a conservative rate. Investment of the government take from the NG market in research and development (R&D) of renewable electricity productivity can sustainably increase economic welfare.
Economic welfare; Energy; Exhaustible resource; General equilibrium model; Sovereign Wealth Fund (SWF); Natural Gas
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