Working Paper Article Version 1 This version is not peer-reviewed

Hoard or Exploit? Intergenerational Allocation of Exhaustible Natural Resources

Version 1 : Received: 17 November 2020 / Approved: 19 November 2020 / Online: 19 November 2020 (11:05:00 CET)

How to cite: Abo-Kalla, H.; Palatnik, R.R.; Ayalon, O.; Shechter, M. Hoard or Exploit? Intergenerational Allocation of Exhaustible Natural Resources. Preprints 2020, 2020110505 Abo-Kalla, H.; Palatnik, R.R.; Ayalon, O.; Shechter, M. Hoard or Exploit? Intergenerational Allocation of Exhaustible Natural Resources. Preprints 2020, 2020110505

Abstract

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.

Subject Areas

Economic welfare; Energy; Exhaustible resource; General equilibrium model; Sovereign Wealth Fund (SWF); Natural Gas

Comments (0)

We encourage comments and feedback from a broad range of readers. See criteria for comments and our diversity statement.

Leave a public comment
Send a private comment to the author(s)
Views 0
Downloads 0
Comments 0
Metrics 0


×
Alerts
Notify me about updates to this article or when a peer-reviewed version is published.
We use cookies on our website to ensure you get the best experience.
Read more about our cookies here.