Simultaneous use of renewable and non-renewable natural resources

Abstract

Optimal use over time of renewable and non-renewable natural resources is studied within a model where the two resources are used for the same purpose. It is shown that the two types of resources should be used at the same time if, and only if, the stock of the renewable resource is at its MSY-level. Contrary to the result when the two resources are studied in isolation from each other the biological concept MSY is economically relevant, independent of the rate of interest. Optimal paths over time for the use of the two resources from different initial situations are also found.