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Mineral Depletion and the Rules of Resource Dynamics

Open Access Article

Conditions of exploitation of natural resources under certainty and uncertainty in some canonical natural resource problems are unified as r-percent rules by which the sum of all sources of gain from refraining from an irreversible action is compared to the interest rate. Action is initiated once the gain from action equals the gain from inaction. Morris Adelman's insights, succinctly presented his 1990 paper on mineral depletion, are highlighted as implicitly recognizing, and even being grounded by, these timing rules.

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JEL Codes: Q31: Nonrenewable Resources and Conservation: Demand and Supply; Prices, Q33: Resource Booms, Q21: Renewable Resources and Conservation: Demand and Supply; Prices, L71: Mining, Extraction, and Refining: Hydrocarbon Fuels

Keywords: Adelman, r-percent rule, Non-renewable resources, Renewable resources, Certainty, Uncertainty, Investment, Oil

DOI: 10.5547/01956574.36.SI1.rcai

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Published in Volume 36, Adelman Special Issue of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.