Hotelling’s Rule Verification of a Mining Project

On the basis of a real (confidential) mining project data the Hotelling’s rule fitting is verified and a new production schedule is proposed, which better fulfill the Hotelling rate rule than the previously program published by the investor. The intertemporal influences in project duration period are analyzed.

Maximin: a direct approach to sustainability

We solve directly a general maximin (sustainment, intergenerational-equity) problem. Because the shadow values of a maximin problem do not correspond to the shadow values from a general discounted-utility solution, they correspond to the prices of only a very special competitive economy. Virtual discount factors for the economy arise. They do not correspond to hyperbolic discount factors. Hartwick's rule is derived and generalized naturally to take into account non-autonomous and non-deterministic features of the economy. Under uncertainty, Hartwick's rule is the analytic expression of a form of precautionary principle. Hotelling's rule is a necessary condition, but may be more complex than has been appreciated in simple models. Some interpretations of strong sustainment are special cases of weak sustainment but, paradoxically, may be more difficult to solve.