GOLDEN RULES FOR SUSTAINABLE RESOURCE-MANAGEMENT

This paper presents a simple model of resource management that combines use of a non-renewable resource, such as oil, with eventual transition to a backstop substitute resource in infinite supply (e.g., solar energy). In the context of this model, we derive golden rules that govern efficiency in both the accumulation of capital and in the extraction of natural natural resources for use in production. These results supplement the Solow-Hartwick model of maximin consumption in helping to illuminate the notion of sustainable development.