Kenneth S. Lyon

Long-Run versus Short-Run Planning Horizons and the Rangeland Stocking Rate Decision

Reduced future forage production, diminished range condition, and reduced animal performance have been major factors considered when setting rangeland stocking rates. The relative economic importance of diminished current period animal performance versus intertemporal forage production impacts was investigated using a dynamic optimal control model. The model is applied to yearling stocker production in eastern Colorado. Results indicate that intertemporal grazing impacts to forage production are not that important; reduced weight gain during the current period drives the economic stocking rate decision. Further, ranchers have no economic incentive as profit maximizers to continually overgraze the range.

Mining of the forest and the time path of the price of timber

Abstract The paper analyzes the effect of transportation (site specific) costs and the effect of mining (depletion) of the forest on the time path of the price and of the net price of timber in two forestry models. The models differ in that one has zero costs and the other has positive costs. The analyses yield the standard mining theory results for certain cases. They also yield extentions of these results for cases with growth of the harvested trees and/or regeneration on the harvested land. The paper concludes, as one would expect, that the theory of the mine is useful in analyzing the time path of the price of timber.

Optimal extraction of petroleum resources: An empirical approach

Abstract Petroleum reservoir behavior at different levels of reservoir pressure is estimated with the actual well data and reservoir characteristics. Using the pressure at the bottom of producing wells as control variables, the time paths of profit maximizing joint production of oil and natural gas under various tax policies are obtained using a dynamic optimization approach. The results emerge from numerical solution of the maximization of estimated future expected revenues net of variable costs in the presence of taxation. Higher discount rate shifts the production forward in time and prolongs the production plan. The analysis of the state, corporate income taxes and depletion allowance reveals the changes in the revenues to the firm, the state and the federal governments.

A Dynamic Analysis of the Global Timber Market under Global Warming: An Integrated Modeling Approach

We develop a dynamic integrated modeling approach to identify the effect of global warming on the global timber market. The Timber Supply Model (TSM) 2000, BIOME 3, and Hamburg are used as suitable economic and ecological models. In particular, the TSM 2000 is developed to incorporate important additional components in the global timber market. We estimate dynamic ecological change based on the simulation results of BIOME 3 using Hamburg and linearity assumptions about change in climate and ecosystem. The projected dynamic ecological changes are run through the TSM 2000 to identify the effects of dynamic climate change on the timber market. We simulate a non–climate change base scenario and a climate change scenario of the TSM 2000, and we conclude that global warming has a positive effect on the global timber market through an increase of timber production causing stumpage prices to be lower than they otherwise would have been. In the welfare sense, we also identify that global warming is economically beneficial to society through the global timber market.

Long-Term Forest Resources Trade, Global Timber Supply, and Intertemporal Comparative Advantage

Forestry today is experiencing a transition similar to that experienced in agriculture two or three millennia ago. Just as agriculture experienced a transition from foraging and hunting to cropping and livestock raising, so forestry today is experiencing a transition from production from naturally created old growth stands of timber to production from industrial forest plantations which involve investments in planting, growing, and harvesting of trees. Today, increasing portions of the worlds industrial wood supply is the outgrowth of investments in forest plantations. The development of forest plantations can imply important changes in the underlying economics of forest production and in the comparative advantage of the various regions in the production of the forest resource.

Why economists discount future benefits

Abstract I believe there is some confusion among non-economists as to why economists insist on discounting future benefits and costs (net benefits). In discussions with non-economists, I have encountered much resistance to and in some cases even hostility towards discounting the future net benefits of natural resources. I believe that at least some part of this comes from a lack of understanding as to why discounting makes sense. Economists postulate that the individual is the important unit in society in determining better or worse with respect to situations, and an analysis of the individual selecting the most preferred attainable situation indicates that individuals will be wealth maximizers. Extending the analysis to the market, indicates that for certain conditions the market equilibrium will be economically efficient; hence, if society is to contribute efficiently to this situation, they too will discount future net benefits. Two dynamic models are examined to explain and support these conclusions.

Learning and Attitude Change of Students Subjected to a National Income Simulation Game: Some Further Evidence

This article compares the results of studies conducted at Utah State University in 1970 and 1972 designed to determine whether economic games deepen the educational experience. The 1970 study proved that “poor” students were penalized for participating in the game while “very good students” benefited. All others had test scores that did not significantly vary from those of a control group.The results of the 1971 and 1972 experiments showed that all levels of ability benefited from participating in the game, although this may have been due to a slight change in the design of the experiment. The authors conclude that more study appears necessary in the areas of incentive and motivation of students.

Government expenditures and the ex ante crowding–out effect:an examination

This paper empirically examines the ex ante crowding–out effect of government expenditures upon private consumption expenditures. Intertemporal consumption theory is used to construct a consumption function which includes the ex ante crowding-out effect. The aggregate consumption function is then derived and estimated in the context of a simultaneous equations model. The empirical results indicate that government expenditures are an explanatory variable of private consumption expenditures. Two estimates of the ex ante, crowding-out effect were generated, 9.4 and 20.4 cents. The 9.4 cent estimate is associated with each dollar of a balanced budget increase in government expenditures crowding-out a dollar of desired consumption expenditures and the 20.4 cent estimate is associated with more than a dollars worth of crowding out for a balanced budget increase.

Compensating variation consumer's surplus via succesive approximations

Many economists agree that the best measure of consumers surplus is the compensating Variation Consumers surplus (CVCS). Howerver, Because the compensated demand function is not observable, there are problems in using this measure in emperical applications. There are ways around this limitations that work well under certain circumstances, However, until now there has been no solution that always works well. We introduce a sucessive approximations method of calculating compensating variation consumer’s surplus using data from the ordinary demand curve. In doing so we numerically identify the compensated demand fuction over the price interval involved. This procedure can be made extremely ‘small’. We also use our method to calculate CVCS for three applications in the literature where Marshallian surplus was reported.