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Article

Hoard or Exploit? Intergenerational Allocation of Exhaustible Natural Resources

1
Department of Natural Resources and Environmental Management, University of Haifa, Haifa 3498838, Israel
2
Department of Economics and Management, The Max Stern Yezreel Valley College, Yezreel Valley 1930600, Israel
3
Natural Resource and Environmental Research Center, University of Haifa, Haifa 3498838, Israel
*
Author to whom correspondence should be addressed.
Energies 2020, 13(24), 6657; https://doi.org/10.3390/en13246657
Received: 17 November 2020 / Revised: 11 December 2020 / Accepted: 14 December 2020 / Published: 17 December 2020
(This article belongs to the Special Issue Economic Development and Energy Policy)
In this paper, a “general equilibrium” (GE) model was developed for the allocation of exhaustible natural resources to examine the impact of different extraction scenarios on intergenerational economic welfare. A stylized GE model was applied 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 a faster extraction rate. The impact of various resource income-allocation strategies on intergenerational economic welfare was examined 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 compared to a conservative rate. Investment of the government take from the NG market in research and development (R&D) of renewable electricity production can sustainably increase economic welfare. View Full-Text
Keywords: economic welfare; energy; exhaustible resource; general equilibrium model; sovereign wealth fund (SWF); natural gas economic welfare; energy; exhaustible resource; general equilibrium model; sovereign wealth fund (SWF); natural gas
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MDPI and ACS Style

Abu-Kalla, H.; Palatnik, R.R.; Ayalon, O.; Shechter, M. Hoard or Exploit? Intergenerational Allocation of Exhaustible Natural Resources. Energies 2020, 13, 6657. https://doi.org/10.3390/en13246657

AMA Style

Abu-Kalla H, Palatnik RR, Ayalon O, Shechter M. Hoard or Exploit? Intergenerational Allocation of Exhaustible Natural Resources. Energies. 2020; 13(24):6657. https://doi.org/10.3390/en13246657

Chicago/Turabian Style

Abu-Kalla, Hala; Palatnik, Ruslana R.; Ayalon, Ofira; Shechter, Mordechai. 2020. "Hoard or Exploit? Intergenerational Allocation of Exhaustible Natural Resources" Energies 13, no. 24: 6657. https://doi.org/10.3390/en13246657

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