The Conservation Multiplier

Every government that controls an exhaustible resource must decide whether to exploit it or to conserve and thereby let the subsequent government decide whether to exploit or conserve. This paper develops a model of this situation and shows when a small probability that some future government will exploit has a multiplier effect on earlier decisions. The multiplier can be taken advantage of by a lobby paying for exploitation, or by a donor compensating for conservation. The analysis also uncovers when compensations are optimally offered to the president, the party in power, the general public, or to the lobby group