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Economic Growth and the EnvironmentAn Introduction to the Theory$
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Clas Eriksson

Print publication date: 2013

Print ISBN-13: 9780199663897

Published to Oxford Scholarship Online: April 2015

DOI: 10.1093/acprof:osobl/9780199663897.001.0001

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Exhaustible resources

Exhaustible resources

Chapter:
(p.107) 6 Exhaustible resources
Source:
Economic Growth and the Environment
Author(s):

Clas Eriksson

Publisher:
Oxford University Press
DOI:10.1093/acprof:osobl/9780199663897.003.0006

This chapter considers whether sustained economic growth is feasible when an exhaustible and non-renewable resource is used in production. Examples of exhaustible natural resources are fossil fuels such as oil, coal, and natural gas, as well as minerals like iron, copper, and aluminium. The main question is whether it is possible to maintain a non-declining per capita income when a natural resource is an important factor in production. In this chapter, the natural resource causes diminishing returns to capital and labour, and its use will decline over time. To compensate for this decline, the technological progress connected to energy must be stronger than the technological progress associated with land. This necessitates further diversion of labour away from production and from labour-augmenting research. The chapter also discusses an alternative possibility for achieving sustainable development: to (gradually) replace the exhaustible energy with renewable energy.

Keywords:   economic growth, non-renewable resource, exhaustible resource, per capita income, natural resources, technological progress, sustainable development, exhaustible energy, renewable energy

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