Political Economy, Resource Rents and Climate Risk
Welcome to our afternoon seminar with Corbett Grainger, Professor II at CET and associate professor at University of Wisconsin-Madison.
Due to time differences, this seminar will take place at 02:15 PM/14:15.
Grainger will talk about a research proposal he and Linda Nøstbakken is working on:
Natural resources, when properly managed, generate resource rents due to scarcity. While rent-seeking behaviour can lead to a natural resource curse (Sachs and Warner, 2001; Torvik, 2002), strong institutions and property rights lead to high rates of return on investment. Firms earn resource rents (aka "super profits") from natural resources like oil and gas, and that gives firms the ability to lobby against climate policies or to influence public opinion.
Norway imposes taxes on revenues in extractive industries like petroleum in order to transfer the resource rents to the government, which can use the proceeds to fund public goods, social programs and pensions. However, there is a tension in setting the socially-optimal resource rent tax: if the tax is too high, it impedes investment, but if the tax is too low, excess profits could fund lobbying behavior.
We develop an analytical model that explicitly links climate policy lobbying to pre-existing resource policies. We then propose studying public opinion in Norway using a panel survey and a choice experiment. Finally we develop an empirical strategy to study the causal impact of resource rents on climate policy lobbying.
About the speaker:
Corbett Grainger is Professor II at CET, and Associate Professor at University of Wisconsin-Madison, Faculty of Agricultural and Applied Economics. His research focuses on understanding the distributional effects of regulations, property rights and institutions as well as the political economy of environmental and natural resource policy.