ABSTRACT
Resources can be renewable or nonrenewable. Renewable resources, if properly managed, can last indefinitely. A simple initial model of nonrenewable resource allocation deals only with two time periods. Our economic analysis weighs the economic value of copper to society in the present as compared with the value of copper in the future. Marginal net benefit is the vertical difference between price on the supply curve and price on the demand curve. The economic concept of present value relies on the use of a discount rate to convert future to present monetary values. A resource depletion tax is not the only policy approach for the allocation of a resource across time. A payment to resource owners in excess of what is necessary to keep those resources in production is known as scarcity rent. Nonrenewable resources can be used in the present or conserved for future use. Economic theory offers some guidance concerning the optimal way to allocate nonrenewable resources over time.
