LOJK10229U Natural Resource Economics

Volume 2024/2025

MSc Programme in Agricultural Economics
MSc Programme in Agriculture 
MSc Programme in Environmental and Natural Resource Economics
MSc Programme in Environmental Science
MSc Programme in Forest and Nature Management

MSc Programme in Mathematics-Economics


The course in Natural Resource Economics mainly deals with optimal pricing, extraction, and management of natural resources. Examples of such resources are oil, forests, water, biodiversity, and fish stocks. Three characteristics make natural resources different from other goods. First, natural resources are both economic goods and capital assets. Second, extraction and growth takes place over a reasonable long time period. Third, imperfect renewability of natural resources implies supply limitations (unlike conventional goods, which are indefinitely reproducible). These three characteristics make natural resources interesting economic objects that deserve a special analytical treatment since pricing and extraction has an intertemporal dimension, and thus a direct relevance for sustainability.

Because of the intertemporal dimension, dynamic optimization methods must be used to analyze natural resources and, therefore, we start by introducing these methods. From an economic point of view, it is important to distinguish between non-renewable (e.g. oil and gold) and renewable resources (e.g., forestry and fisheries). In the course, both kinds of resources are analyzed by using economic models. We further use the newly learnt methods to also characterize the optimal management of accumulating pollutants, discuss optimal growth models, and proceed to analyze how natural resources affect and limit the possibilities for sustainable consumption and green growth.

Learning Outcome

Learning outcome:

The main objective is that the students become able to analyze an economic problem involving pricing and extraction of natural resources. This learning outcome is not only relevant for private companies, but also for the regulation of these companies by public agencies. Another objective is that students acquire sufficient knowledge (in terms of mathematical techniques) to undertake analysis of intertemporal, dynamic problems.


  • Understand the analytical methods for dynamic problems (typically represented by adjustments in the price and extraction over time and a steady state equilibrium).
  • Identify natural resources and classify these as non-renewable or renewable.
  • Be familiar with the specific concepts within natural resource economics (e.g., shadow prices and stock sizes).
  • Obtain knowledge about the implications of various assumptions about the economic relations for the price and extraction of natural resources.



  • Characterize the properties of natural resources formally.
  • Address a problem with natural resources by applying consistent analytical tools.
  • Understand the implications of various assumptions about the economic relations characterizing natural resources.



  • Autonomously analyze dynamic economic problems involving natural resources in a rigorous way.
  • Explain the main concepts of natural resource economics.
  • Autonomously develop further knowledge related to natural resource economics.
  • Present and discuss main arguments in established academic literature.
  • Communicate economic analyses on natural resources. 

Notes written by the teacher will be provided and, furthermore, it is likely that the following literature will be used (the precise literature will be announced in Absalon):

Phaneuf & Requate (2017), A course in environmental economics, Cambridge University Press.

Perman, R., Y. Ma, J. McGilvray, and M. Common (2011): Natural Resource and Environmental Economics, Prentice Hall.

Acemoglu (2007), Introduction to Modern Economic Growth. Princeton University Press, Princeton.

Weil (2013): Economic growth, Routledge, 3rd edition

Hartman, R. (1976). The Harvesting Decision when A Standing Forest has Value, Economic Inquiry, 14, pp. 52-58.

Brock and Taylor (2010): “The Green Solow model”. Journal of Economic Growth, 15, pp. 127-153.

Drupp, Moritz A., Mark C. Freeman, Ben Groom, and Frikk Nesje. 2018. "Discounting Disentangled." American Economic Journal:

Ostrom et al. (1999), Revisiting the Commons: Local Lessons, Global Challenges, Science 284, pp. 278-282.

Rawls (1971): A theory of justice, Harvard University Press, ## 24& 44.

This is an advanced microeconomics course.

Extensive knowledge of intermediate microeconomics with mathematics (especially optimization) is highly recommended.

It is also highly recommended that students have attended BSc courses in Environmental and Natural Resource Economics.

Academic qualifications equivalent to a BSc degree in either environmental economics or economics are recommended.

The course relies heavily on math – students must be prepared to for example work with partial derivatives and understand Lagrangian optimization.
Following a short introduction to dynamic optimization, a number of economic models covering pricing and extraction of non-renewable and renewable resources, as well as growth, will be presented and each model differs with respect to the assumptions adopted. Where-ever applicable, the relevant empirical research will be discussed. We will also read original texts and discuss them in class. Text discussions, exercises to be calculated in class in groups, as well as small hands-on games will provide interactive learning opportunities. In addition, students have to make a group project during the course. If possible, guest lectures will be provided on relevant topics by scientific experts and IFRO expert staff members.
  • Category
  • Hours
  • Lectures
  • 40
  • Preparation
  • 131,5
  • Exercises
  • 32
  • Exam
  • 2,5
  • Total
  • 206,0
Continuous feedback during the course of the semester
7,5 ECTS
Type of assessment
On-site written exam, 2.5 hours under invigilation
Type of assessment details
The on-site written exam is an ITX exam.
See important information about ITX-exams at Study Information, menu point: Exams -> Exam types and rules -> Written on-site exams (ITX)
Exam registration requirements

One approved group project report during the block.

All aids allowed

The University will make computers available to students at the ITX-exam.

Students are not permitted to bring digital aids like computers, tablets, calculators, mobile phones etc.

Marking scale
7-point grading scale
Censorship form
No external censorship
One internal examiner

Same as ordinary exam. If 10 or less register for the reexamination the exam form will be oral. The oral reexam last 20-25 minutes with 25 minutes for preparation. All aids are allowed during the preparation.

If the project report has not been approved before the ordinary exam, then it must be handed in individually three weeks prior to the reexam.

Criteria for exam assesment

Evaluated according to the learning outcome