290024 Natural Resource Economics

Responsible DepartmentInstitute of Food and Resource Economics

DurationOne block
Credits7.5 (ECTS)
Level of CourseMSc
ExaminationFinal Examination

written examination

Written Exam in Lecturehall

All aids allowed

Description of Examination: Four hour written examination in the course curriculum

Weight: Written exam 100%

7-point scale, external examiner

Dates of Exam:
11 November 2011
Organisation of TeachingLectures and Exercises
Block PlacementBlock 1
Week Structure: B
Language of InstructionEnglish
Optional PrerequisitesMicroeconomics, Welfare Economics and Policy Analysis, Environmental and Natural Resource Economics
Course Content
Natural Resource Economics deals with the optimal utilisation of renewable and exhaustible resources. Here, a distinction is made between renewable resources such as forests and fisheries and non-renewables such as deposits of minerals and metals. There are several features of natural resources that make them different from other economic goods. First of all, natural resources are both consumption/production goods and assets. The latter implies that they have to be treated in the same way as other assets, such as bonds and stocks. A second feature is that both harvesting or extraction and growth (for renewables) take place over a long period of time. This makes it necessary to use a dynamic approach. Thirdly, it is often hard to define ownership of natural resources. If at the same time there is open access to the resource, the problem of the commons arises. This makes regulation of the utilisation of the resource necessary from the point of view of both the extractors and Society. Finally, especially for renewable resources, values other than those related to direct consumption and production are important in determining the optimal social stock level of the resource. These other values could be recreational (such as in a forest), biodiversity or pure existence value.
Teaching and learning Methods
Teaching will be in the form of lectures and practicals. The lectures will provide an overview of the main issues. Since the field of natural resource economics is rather mathematical, practicals will form a relatively large part of the course. During the practicals, the more technical parts of the literature will be discussed thoroughly and time will be taken to go through exercises.
Learning Outcome
The objective of this course is to give a thorough introduction to and an overview of the economics on natural resources. The course deals with the optimal utilization of renewable resources (e.g. forests and fisheries) and non-renewable resources (e.g. mineral deposits). There are several features of natural resources that make them different from other economic goods. These features are highlighted and dealt with at length in the course. The analyses of natural resources necessitate the use dynamic methods.


- Describe how the various natural resources analyzed in the course develop over time
- Describe and explain the basic economic methods applied in natural resource economics
- Identify and explain the main economic principles of natural resource use
- Classify and explain optimal natural resource use under various market forms
- Define and use the economic concept of natural resource scarcity
- Define and use the economic concept of sustainable development

- Be able to characterize a natural resource by the use of economic theory
- Be able to apply the models developed in the course to problems of natural resource utilization.

- Be able to work alone or in a team on problems of natural resource utilization
Course Literature
Hanley, N., J.F. Shogren and B. White (2006), Environmental Economics in Theory and Practice, Oxford: Oxford University Press

P. Neher (1990), Natural Resource Economics - Conservation and Exploitation, Cambridge, Cambridge University Press (Selected chapters)

P.S. Dasgupta and G.M. Heal (1979), Economic Theory and Exhaustible Resources, Cambridge: Cambridge University Press (Selected chapters)

C.W. Clark (1980), Towards a Predictive Model for the Economic Regulation of Commercial Fisheries, Canadian Journal of Fish. Aquat. Sci. 37, 1111-1129

R. Dorfman (1969), An Economic Interpretation of Optimal Control Theory, American Economic Review 59, 817-831.

R. Hartman (1976), The Harvesting Decision When a Standing Forest Has Value, Economic Inquiry, 14, 52-58

Strang, W.J. (1983), On the Optimal Forest Harvesting Decision, Economic Inquiry 21, 576-583

Plus some other papers and articles.
Course Coordinator
Frank Jensen, fje@foi.dk, Institute of Food and Resource Economics/Unit of Environmental and Natural Resource Economi, Phone: 353-36898
Study Board
Study Committee NSN
Work Load
theoretical exercises48