On the Intergenerational Allocation of Natural Resources

It is known (Hartwick and others) that, under standard assumptions, a society that invests in reproducible capital the competitive rents on its current extraction of exhaustible resources, will enjoy a consumption stream constant in time. It is shown here that this result can be interpreted as saying that an appropriately defined stock of capital -including the initial endowment of resources - is being maintained intact, and that consumption can be interpreted as the interest on that patrimony. This seems like a useful rule of thumb for policy.