Introducing BREE

In July 2010 ABARES was formed by the merger of ABARE (Australian Bureau of Agricultural and Resource Economics) and BRS (Bureau of Rural Sciences) two Australian government research agencies. Now ABARES will be effectively dismantled by transferring the resource and energy economics parts of ABARES into the Department of Resources, Energy, and Tourism to form the new Bureau of Energy and

Leadership, Social Capital and Incentives Promote Successful Fisheries

A paper in Nature by Nicolas Gutierrez et al. carries out a meta-analysis of the literature on fisheries management. 130 fisheries are included. The aim was to test whether community co-management can promote sustainability as argued by Ostrom and others. They coded success of the fishery according to number of social, ecological and economic outcomes achieved and also counted the number of

Marginal Cost Curve for Crude Oil

Nice figure of the marginal cost curve for crude oil:It's included in a post on the Oil Drum by David Murphy. Of course, reality is a bit more complicated than that and Murphy's article doesn't say that this is a marginal cost curve, but it does give a rough idea. Krugman is also on board for peak oil.

Call for Papers

The Journal of Industrial Ecology has a call for papers on the topic of "Greening Growing Giants". Quoting from the call:"Questions relevant to this special issue include but are not limited to: What quantities of resources will be required globally in the near future, given the current dynamics of per capita resource use in developing countries? What role does the demand in industrial countries,

Is the Drought Over?

As you can see from the above graph, after a long period of standing at about 50% capacity, Canberra's dams are now at around 80% capacity. All the dams in the Western catchment in the Brindabella-Namadgi mountains are near capacity. Googong to the east which is half the total capacity is only at 60%. But that too is an improvement. As we flew into Canberra on Thursday we could see that the

George Fane Seminar @ Arndt-Corden Division of Economics

I went to George Fane's seminar yesterday on "The Taxation of Rents from Mineral Resources". It was well-attended by both people from ANU and the public service. The seminar might have provided the answer to http://stochastictrend.blogspot.com/2010/05/royalties-vs-rent-taxes.html">my confusion about why the Henry Review and most economists discussing it argue that royalties are inefficient, while

Global Map of Forest Canopy Height

NASA has produced a cool map of world forest heights. Woodlands and savannas are not included so the green areas are a very low end estimate of world forest cover.

Gittins Enters the Economics Consensus Debate

Ross Gittins agrees with Ken Henry that academic economists need to get behind "reforms". I don't understand this presumption that economists should all be in agreement about all policies that the government happens to come up with. I disagreed with the basic rationale for the RSPT as presented in the Henry Review. I see royalties as a charge by the resource owner not as a priori a "distorting

The RSPT is Dead Long Live the MRRT!

The Commonwealth Government * is announcing changes to the RSPT. The interest rate is 7% above the government long-term bond rate, the rate of the tax is 30% no refunds of losses and it only applies to iron ore and coal. It is being rebadged the "Minerals Resource Rent Tax". The existing Petroleum Resource Rent Tax will be extended to onshore coal seam gas production.These are changes which the

Jerry Hausman on the RSPT

MIT economist Jerry Hausman has an article in The Australian today that includes a link to his full paper. As I suspected, real option analysis comes into play here.

TV Ad Campaigns

Though both the government and the union movement are running TV ads for the RSPT, I've only seen the mining industry's anti-RSPT TV ad so far:Apparently, I'm not in the target demographic that either the government or the unions think they can influence. I'm amused how the guy says "if it goes ahead" and it sounds like he's talking about all that investment that's on hold rather than the

Ben Smith on the RSPT

Ben Smith, who did some research in the past on resource rent taxes, has an article in today's Australian on the RSPT. He favors the pure "Brown tax".

RSPT: Lack of Transparency is the Issue

From the point of view of the mining industry and their potential financial bankers in the banking industry there are two key issues:1. How are existing projects where the government hasn't been accounting itself as a passive shareholder to date to be dealt with.2. Whether the government is really going to refund losses in the event of a project failing. The miners and banks are saying they place

More on the RSPT

I read a couple more papers on resource taxation and am not much clearer about things. Ben Smith wrote about the impossibility of a neutral resource rent tax and Diderik Lund wrotea recent review.It is pretty clear that a pure "Brown tax" where the mining company immediately gets refunded the tax rate (say 40%) multiplied by all losses minimizes the effect on investment decisions as long as the

Garnaut Says RSPT Needs More Study

Ross Garnaut says that the RSPT needs more study and analysis and that the government hasn't handled this well. Importantly, Garnaut co-authored the paper that initiated interest in such a tax.I'm planning to produce a blogpost soon with some more discussion of the complications involved with this tax. My impression is that the authors of the Henry review did not read recent literature on the

Royalties vs. Rent Taxes

I'm now reading the Henry Review in more detail. The argument against royalties and in favor of a rent tax, which was put forward by Garnaut and Clunies Ross is based on the idea that both are taxes. Because the royalty allows no deductions for costs it acts as an incentive against development of more marginal projects that would have gone ahead in the absence of the tax. The Brown tax

ReSPecT

My immediate reaction to the RSPT proposal was to wonder if it will ever get through parliament as proposed and to suggest that at least the hurdle rate needed to be substantially raised. Today in the Australian, Henry Ergas discusses the "Brown tax" named after E. Carey Brown. I'll admit that I hadn't heard that term before. A quick search found a reference to this in a working paper by Ben

World Trade Report 2010

The 2010 World Trade Report will be about trade in natural resources. In the run-up to publication the World Trade Organization is inviting discussion on the topic. Go to their website to participate.

Does the Natural Resource Curse not Apply in Democracies?

One of my colleagues, Sambit Bhattacharya, has an article out on natural resources and corruption. Their conclusion is:"Resource-rich countries are often cursed by corruption and governance problems. This column shows that the natural resource curse burdens non-democracies, but countries with better democratic institutions are not corrupted by such endowments. For governments accountable to their