Allocation + fairness · Week 07

Allocation practice and intertemporal fairness

We finished the Lecture 5 wrap-up, beginning at page 52, Intertemporal Fairness, and covered Classwork 5. Lecture 6 was not started this week; fishery dynamics moves to the next class.

Oct 5–9Covered through Classwork 5Homework 2 · Due Oct 9, 9:30 AM

Focus

  • Intertemporal fairness and the sustainability criterion
  • Saving resource rents for future generations
  • Allocation through time in Classwork 5

Review

  • Lecture 5 from page 52 through the end
  • Classwork 5: allocating gravel across two generations
  • Homework 2 · Due Oct 9, 9:30 AM

Practice

  • Compare current and future marginal net benefits
  • Explain user cost and the role of the discount rate
  • Distinguish efficient allocation from a fair distribution of benefits

Guiding question

How can a fixed resource stock be allocated efficiently while also supporting future generations?

Learning targets

  • Apply marginal net benefit, present value, and user cost to a fixed stock.
  • Distinguish dynamic efficiency from intertemporal fairness and explain how saving resource rents can support later generations.
  • Explain the sustainability criterion and distinguish it from efficiency.
  • Compare how different discount rates change the allocation of a fixed stock.
  • Explain how a resource depletion tax can account for the opportunity cost of current extraction.

In-class sequence

  • October 5–9: completed the Lecture 5 wrap-up from page 52, Intertemporal Fairness, and worked through Classwork 5.
  • Homework 2: due October 9 at 9:30 AM.
  • Lecture 6: was not started this week. Fishery dynamics begins in the next class.

Lecture slides

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Lecture 5 · Resource Allocation Over TimeReview from page 52

This week’s materials

TL refers to Tietenberg and Lewis, Natural Resource Economics: The Essentials, 2nd edition. Chapter numbers on this page follow that edition, not the larger Environmental and Natural Resource Economics textbook.

For the allocation wrap-up, review TL Chapter 6, Dynamic Efficiency and Sustainable Development, and Chapter 7, Depletable Resource Allocation Over Time: The Role of Longer Time Horizons, Substitutes and Extraction Cost.

Lecture 5Resource Allocation Over Time · Review from page 52Classwork 5Allocating Gravel Across Two GenerationsHomework 2Petroleum Wealth Across Generations · Due Oct 9, 9:30 AMReadingResource Allocation Over Time

Coming next

The next class, October 14, begins Lecture 6: Fishery Dynamics and Management. Prepare by reading TL Chapter 8, Common-Pool Resources: Commercially Valuable Fisheries. There is no class on October 12 during Fall Break.

The quiz and midterm review remain scheduled for October 16, and the midterm is October 19. Week 9 continues fishery dynamics after the exam; Valuing Nature begins in Week 10 and continues in Week 11.

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