Natural Resource Economics

The Simple Economics

of Easter Island:
A Ricardo-Malthus Model
of Renewable Resource
Use
Brander, J.A. & Taylor, M.S.
 Objectives
1.Study a pattern of:

Economic and Resource Economic

Population Growth Degradation Decline

2. Construct a model linking population dynamics

and renewable resource dynamics
3. Apply the model to the case of Easter Island
 Components of the Model
1. Malthusian population dynamics: increase in
productivity leads to pop growth. Pop growth
might overshoot productivity gains, resulting in
readjustment (boom-and-bust).
2. Open-access renewable resource: no
property rights established, anyone can use the
resource stock freely.
3. Ricardian production structure: production
function where labour and the renewable
natural resource are inputs.
A Short Chronology of Easter Island

● 400 AD: first settlements, between 20 and 100 people

● 900 AD: evident deforestation
● 1100-1400: most forest gone, soil erosion. Maoi carving.
Population peaked at around 10,000 people.
● 1400-1500: falling food consumption. Maoi carving
stopped. Weaponry, conflict, cannibalism.
● 1722: about 3,000 human inhabitants. Moai worshipping.
● 1774: About 2,000 inhabitants. Maoi worshipping
stopped, statues pushed down (usually facedown)
 The Model (parameters)
● Production function: labour (L) and renewable
resources (S) – ecological system of soil and forest:
DS/dt = G(S) – H

● Society harvests (H) the renewable resources.

Society as hunters, resources as prey.
HP = αSLH
● Due to open-access, there is no rent to depletion of
S.
● Biological growth follows a logistic function.
The Model (static equilibrium)
The Model (dynamics equilibrium)

● As consumption increases, net fertility

increases. Positive feedback effect;
● Population growth dissipates resource
productivity improvements;
● Resource depletion decreases carrying
capacity.
Transition Dynamics
The Model (results)
What's different about Easter Island?
● Other Polynesian island societies in the area
did not suffer such overshooting and collapse.
● However, Easter Island has distinct
disadvantages:
- slow growth rate of local resources
- short lifespan of individuals
- climate too cold
- no property rights
- isolation
 Easter Island: a “closed” system

~2100 mi

Source: Diamond, J. (2005) Collapse: How Societies Choose to Fail or Succeed (in Portuguese). Rio de Janeiro: Editora Record.
 Institutional Adaptation
● Various institutional decisions could help
diminish the risk of such collapses:
- Correct and agreed-upon understanding of the
problem
- Relevant policies affect relevant parties in a
similar way (cfr. Pareto)
- Low discount rates
- Low enforcement costs
- Trust and cohesion in the community
 Collapse:
How Societies Choose to Fail or Succeed

Deforestation and habitat destruction

Causes of societal collapse
1. Human impact over surrounding
environment
2. Climate change (natural)
3. Increasing pressure by hostile
neighbours
4. Diminished support by friendly
neighbours
5. Societal response to ongoing
problems
Soil problems (erosion, salinization,
and soil fertility losses)
Water management problems
Overhunting
Overfishing
Effects of introduced species on native
species
Population growth
Increased per-capita impact of people
Thank you all.