Intergenerational resource rights, efficiency, and social optimality

• Published in: Land economics Vol. 66; no. 1; pp. 1 - 11
• Main Authors: Howarth, R.B. (University of California, Berkeley), Norgaard, R.B
• Format: Journal Article
• Language: English
• Published: Chicago University of Wisconsin Press 01.02.1990
• Subjects: AFFECTATION DE RESSOURCES; Allocative efficiency; ASIGNACION DE RECURSOS; BIEN ETRE SOCIAL; BIENESTAR SOCIAL; ECONOMIA; Economic efficiency; Economic models; Economic resources; Economic theory; ECONOMICS; ECONOMIE; Efficiency; Endowments; Environmental policy; Land economics; Market equilibrium; MODELE; MODELOS; Natural resources; Natural resources conservation; optimal depletion; OWNERSHIP; Pareto optimum; PROPIEDAD; PROPRIETE; RESOURCE ALLOCATION; Resource economics; Resource ownership; SOCIAL WELFARE; Utility functions; Welfare economics
• ISSN: 0023-7639; 1543-8325
• DOI: 10.2307/3146678

In resource economics, the line demarcating efficiency and equity is often crossed. The term "optimal depletion" is often used when only efficient depletion is meant. Resource economists have generally espoused particular use rules that ensure efficiency but overlook possible improvements in social welfare that can be achieved through the reassignment of property rights across generations. The evolution and current status of the misuse of the term optimal depletion is documented. A simple 2-generation, 3-period general equilibrium model is developed to illustrate how alternative distributions of resource rights between generations relate to alternative Pareto-efficient solutions. It is demonstrated how different social welfare functions affect the optimal solution and the associated assignment of resource rights between generations.