Uncertainty in exhaustible natural resource economics: The irreversible sunk costs of Hotelling

According to Pindyck (2007) there are three important aspects of uncertainly in environmental economics: (1) the benefits and costs of environmental policy tend to be highly non-linear, (2) environmental policy tends to involve important irreversibilities, where investment in pollution abatement can impose an irreversible, sunk cost on society, and where certain pollutants can stay in the environment forever and build up to cause even more future harm in which case investment in abatement can cause an irreversible, sunk benefit to society, and (3) environmental policy involves long time horizons and yet the discount rate society should use is uncertain for determining the net present value of costs and benefits of pollution abatement. These same uncertainties also affect non-renewable, exhaustible, natural resource economics and in particular the use of the Hotelling rule: (1) the costs, benefits and transversality conditions of using the Hotelling rule can be highly non-linear, (2) the Hotelling rule involves important sunk cost irreversibilities, which will be explained here, and (3) the Hotelling rule can involve long time horizons with uncertain discount rates. All three of these problem make it extremely difficult for a market to use in any way the Hotelling rule, yet by the sheer number of articles in non-renewable natural resource economics, one would believe that it is the basis of all resource markets. In this article, we concentrate on the sunk cost irreversibilities of using the Hotelling rule. The idea of the Hotelling rule is to optimally store a non-renewable resource, but the optimization is highly dependent on the actual reserves that are available to extract. However, reserves of underground exhaustible resources are often unobservable at the beginning stages of extraction which makes using the Hotelling Rule difficult.     

Rare earth elements as critical raw materials: Focus on international markets and future strategies

Supply of some critical raw materials by European industry is becoming more and more difficult. After the case of natural textile fibres, in particular cotton, and timber, over the last few years the problem of rare earths (REs) availability has also risen. The 97% of the global supply of rare earth metals (REMs) is produced by China, that has recently done copious cuts of its exports, apparently in order to protect its environment. This fact has greatly increased the REs prices, causing tension and uncertainty among the world hi-tech markets. Many of these materials, in fact, have very few effective substitutes and low recycling rates too. In addition, their natural reserves of rare earths are concentrated in a small number of countries (China, Brazil, US, Russia, Democratic Republic of Congo). REMs are a group of 17 elements particularly used in many new electronic and advanced components: such as fuel cells, mobile phones, displays, hi-capacity batteries, permanent magnets for wind power generation, green energy devices, etc. Many analysts foresee much more requests in the next decades.     

The fate of the poor in growing mineral and energy economies

There are frequent suggestions that countries specializing in mineral and energy extraction have a type of growth that is bad for the poor. Others claim that extraction-led growth is particularly good for the poor. Both claims are made without the support of substantial empirical evidence. This paper uses longitudinal data on income growth by quintile in 57 developed and developing countries to statistically assess how mineral and energy extraction has affected the relationship between growth and the poor. We can find no evidence that the data support either the claim that extraction-led growth is good for the poor or that extraction-led growth is bad for the poor. This finding does not rule out that extractive activity can have special positive or negative impacts on the poor in some countries or regions. Rather, it simply brings to light that such effects are not evident as a persistent statistical phenomenon in the national level data that are available, which may be why the debate tends to move along without resolution.     

State mineral production taxes and mining law reform

Fuel and leasable minerals mined in the United States have historically been subject to federal royalties while locatable minerals have not. In recent years there have been multiple attempts to alter this policy and subject locatable minerals to federal royalties as well; most recently the preliminary 2012 Obama budget included a gross royalty on hard-rock mining on public lands. This paper analyzes the issue of imposing such federal royalties from both a legal and economic perspective. From a legal perspective, it is argued that the state of western property rights precludes royalties on currently extant claims so revenues from a royalty would not be realized for many years. From an economic perspective, it is argued that the effect on revenue would be smaller than one might anticipate due to such a royalty crowding out state levies or encouraging vertical disintegration on the part of mining firms to avoid much of the burden of the royalty.     

A collaborative approach to address the cumulative impacts of mine-water discharge: Negotiating a cross-sectoral waterway partnership in the Bowen Basin,Australia

The social and environmental impacts of rapidly expanding coal and gas industries have generated high levels of public concern and there is increasing evidence of cumulative impacts. In the Bowen Basin of Queensland (Australia) water quality issues have triggered a collaborative response to coordinate monitoring efforts, integrate data and information and undertake regional analysis to inform landscape-scale management. Collaborative governance is promoted as a response to complex environmental problems, such as cumulative impacts. However, application of this approach to the resources and energy sectors remains a significant research gap. This paper reports the results of action research in the 2 years taken to negotiate the establishment of collaborative governance arrangements to address mine-water discharge impacts in the Bowen Basin. The long establishment phase has been required to refine objectives, build trust, develop governance mechanisms and secure resourcing commitments. The partnership established involves more than 20 organisations including regulators, resources and energy companies, agricultural industries and research organisations. The breadth of participating sectors is a significant innovation, but also represents a major challenge in establishing this model of regional environmental governance. Promising strategies adopted to manage these tensions have included neutral brokerage, facilitative leadership, establishing legitimacy of the collaboration and credibility of its reports. The case study provides a cautionary tale of the pursuit of the promise of ‘everyone working together’ to address cumulative impacts. Policy implications include the need for extended commitment and integration of collaborative and other responses.     

An analysis of future platinum resources,emissions and waste streams using a system dynamic model of its intentional and non-intentional flows and stocks

Platinum is increasingly used intentionally and non-intentionally in several applications. This has raised the concern about its future resources, emissions and losses during its life cycle. On the one hand, increasing platinum emissions might affect human health. On the other hand, the accumulated platinum in mineral waste, soil, landfill sites and construction materials as a result of the emissions, losses and the utilization of secondary materials can be seen as potential resources for platinum. This paper is aimed at (1) analyzing the long term impacts of the use of platinum intentionally and non-intentionally on its future demand and supply, release to the environment and accumulation in mineral waste, soil, landfill sites and construction materials and (2) quantifying the amount of platinum in secondary materials that would be available for platinum future supply. The analysis is carried out on a global level using a system dynamic model of platinum intentional and non-intentional flows and stocks. The analysis is based on four scenarios for the introduction of fuel cell vehicles (FCVs). The results show that platinum demand is increasing overtime in all scenarios at different rates and its identified resources are expected to deplete before the end of the century with or without the introduction of FCVs. The release of platinum to the environment and the accumulation in soil are expected to decrease when conventional ICE vehicles is replaced by FCVs. The amount of platinum accumulated in mineral waste, soil, landfill sites and construction materials by the time platinum is depleted are more than double its identified resources and would be potential resources for platinum that are available in different parts of the world. The methodology presented in this paper can be used in the assessment of other technologies and other metals.     

龙岩市PMl0污染受山谷风出现频率的影响分析

利用福建省龙岩市2006—2009年PM10的监测数据和龙岩市地区山谷风各风向的统计数据,进行了单因素方差分析、一元线性相关分析等统计分析,结果表明龙岩市区PM10浓度与N风向、NW风向、NNW风向的出现频率之间有较密切的关系。这些风向的出现会导致污染物堆积在谷底范围之内,阻碍了PM10污染物向谷外的扩散,使得处于谷底的龙岩市大气中的PMl0浓度不断增加。     

PM10中重金属的分布及其在模拟酸雨中的释放

运用扫描电镜-X射线能谱分析方法(SEM-EDS)和电感耦合等离子体-原子发射光谱法(ICP-AES),分析和测定了佛山市可吸入颗粒物(PM₁₀)及其中重金属的赋存状态和质量分布.同时研究了模拟酸雨淋溶条件下PM₁₀中重金属Cu、Pb、Zn和Cd的释放过程.结果表明,颗粒物在大气中存在的形态各异,主要以簇状集合体形式存在.PM₁₀日平均浓度为0.19 mg/m³,与国家二级标准(0.15 mg/m³)相比,超标率为79%.PM₁₀中含有一定量的Zn、Pb、Cu和Cd,其中Zn、Pb的含量要高于Cd和Cu.模拟酸雨淋溶实验显示,PM₁₀中Cu、Pb、Zn、Cd均有不同程度的释放,Cd和Zn的释放率明显高于Cu和Pb,且释放速率较快;pH值是影响4种重金属释放的主要因素,随模拟淋溶液pH值降低,重金属的释放强度显著提高.     

Identification of PM sources by principal component analysis (PCA) coupled with wind direction data

The effectiveness of combining principal component analysis (PCA) with multi-linear regression (MLRA) and wind direction data was demonstrated in this study. PM data from three grain-size fractions from a highly industrialised area in Northern Spain were analysed. Seven independent PM sources were identified by PCA: steel (Pb, Zn, Cd, Mn) and pigment (Cr, Mo, Ni) manufacture, road dust (Fe, Ba, Cd), traffic exhaust (P, OC + EC), regional-scale transport (, , V), crustal contributions (Al2O3, Sr, K) and sea spray (Na, Cl). The spatial distribution of the sources was obtained by coupling PCA with wind direction data, which helped identify regional drainage flows as the main source of crustal material. The same analysis showed that the contribution of motorway traffic to PM10 levels is 4-5 microg m-3 higher than that of local traffic. The coupling of PCA-MLRA with wind direction data proved thus to be useful in extracting further information on source contributions and locations. Correct identification and characterisation of PM sources is essential for the design and application of effective abatement strategies.     

Spatiotemporal Features of Severe Air Pollution in Northern Taiwan (8 pp)

Background, Aims and Scope This research attempted to identify the dominant factors simultaneously affecting the airborne concentrations of five air pollutants with principal component analysis and to determine the meteorologically related parameters that cause severe air-pollution events. According to the definition of subPSI and PSI values through the U.S. EPA, the historical raw data of five criteria air pollutants, SO2, CO, O3, PM10 and NO2, were calculated as daily subPSI values. In addition to the airborne concentrations, this study simultaneous collected the surface meteorological parameters of the Taipei meteorological station, established by the Central Weather Bureau. Methods Principal component analysis was conducted to screen severe air pollution scenarios for five air pollutants: SO2, CO, O3, PM10 and NO2. The concentrations of various air pollutants measured at 17 air-quality stations in northern Taiwan from 1995 to 2001 were transformed into daily subPSI values. The correlation analysis of the five air pollutants and four meteorological parameters (wind speed, temperature, mixing height and ventilation rate) were included in this research. After screening severe air pollution scenarios, this study recognized the synoptic patterns easily causing the severe air-pollution events. Results and Discussion Analytical results showed that the eigenvalues of the first two principal components for SO2, CO, O3, PM10 and NO2 were greater than 1. The first component of five air pollutants explained 64, 64, 67, 76 and 63% of subPSI variance for SO2, CO, O3, PM10 and NO2, respectively. Only the correlation coefficient of NO2 and CO had statistically significant positive values (0.82); other pollutant pairs presented medium (0.4 to 0.7) or low (0 to 0.4) positive values. The correlation coefficients for air pollutants and three meteorological parameters (wind speed, mixing height and ventilation index) were medium or low negative values. In northern Taiwan, spring was most likely induced high concentrations and the component scores of the first component for SO2, CO, PM10 and NO2; summer was the worst season that caused high O3 episodes. Consequently, the analytical results of factor loadings for the first principal component and emission inventory of various sources revealed that mobile sources were dominant factors affecting ambient air quality in northern Taiwan. Conclusion According to the results of principal component analysis for the five air pollutants, the first two of 17 components were cited as major factors and explained 71% of subPSI variance. Based on the inventory of NOx emissions and the isopleth diagram of factor loading for the first component, mobile sources in the southwest Taipei City accounted for the highest factor loading values and emission inventory values. Synoptic analysis and principal component analysis demonstrated that three types of weather patterns (high-pressure recirculation, prefrontal warm sector and the southwesterly wind system) easily caused the severe air-pollution scenarios. In summary, if severe air-pollution days occurred, the average meteorological parameters experienced adverse conditions for diffusing air pollutants; that is, the average values of wind speed, mixing height and ventilation index were lower than 2.1 ms-1, 360 m and 800 m2s-1, respectively. If one of the three synoptic patterns were to occur in combination with adverse meteorological conditions, severe air-pollution events would be developed. Recommendation and Outlook By utilizing synoptic patterns, this work found three weather systems easily caused severe air-pollution events over northern Taiwan. Analytical results showed, respectively, the wind speed and mixing height were less than 2.1 m/s and 360 m during severe air-pollution events.