Economics ETDs

Publication Date

10-14-1996

Abstract

The use and management of nonrenewable resources are problematic in that by definition they are finite. If extracted and consumed these resources will not be available to some future generations. It is also possible that such exhaustion could curtail the ability of an economy to endure. However, both of these issues can be addressed by a nonrenewable resource indemnity permanent trust fund.

This dissertation consists of four interrelated papers on the subject of attaining intergenerational equity and sustainability from the implementation and management of such a fund. Chapter one provides a philosophical motivation for implementation of a resource trust fund. It finds that although there are broad views of both objectives, there is a consensus of a moral obligation of the present generation to future generations.

Chapter two uses a theoretical model in an optimal control framework to show that it is possible to model a nonrenewable resource as a renewable resource which, by definition, is capable of attaining these objectives.

Chapter three shows two financial performance measures using quarterly data from the five largest resource trust funds in the United States. The results show that the portfolios of these funds are relatively efficient. However, real property is shown to be an asset of dubious value.

Chapter four is a continuation of chapter three which derives an unconstrained Markowitz efficient frontier using annual data and then plots the five state portfolios with respect to this derived frontier.

Chapter five concludes by reviewing the ideas for successfully implementing and managing a resource permanent trust fund to attain the goals of intergenerational equity and sustainability. These include better information on a funds' status, aiming for a specific return target, diversification into foreign markets, more emphasis on equity assets, valuing the funds in real terms, and a more equitable distribution policy.

Degree Name

Economics

Level of Degree

Doctoral

Department Name

Department of Economics

First Committee Member (Chair)

Micha Gisser

Second Committee Member

Dwight Grant

Third Committee Member

Alok Bohara

Fourth Committee Member

Chung Pham

Fifth Committee Member

Robert Berrens

Language

English

Document Type

Dissertation

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