NATURAL-RESOURCES AND THE MARSHALLIAN EFFECTS OF INPUT-REDUCING TECHNOLOGICAL CHANGES

Input-reducing technologies are often cited as potential solutions to the pressure for over-harvesting natural resources. The underlying implicit assumption that technological change reducing the Hicksian input demand also reduces the Marshallian input demand neglects the impacts of input-reducing technological changes on Marshallian supplies. This reasearch shows that Marshallian supply effects generally offset the impacts of technological change on Hicksian input demands, and, if the offset is large enough, Marshallian input demands could even increase. As an example, I statistically determine the extent increased technological efficiency in lumber production reduced the demand for sawlogs in the Pacific Northwest. The statistical results indicate that input-reducing technological changes did not reduce the overall Marshallian demand for sawlogs. Resource conservation policies which rely solely on the implementation of input-reducing technologies may be ineffective or even counterproductive. © 1992.