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13 November 2013

Valuation of natural resources in Mistra Arctic Futures

In his thesis Eric Sjöberg, an economist, has developed a model that explains why it is difficult to resolve disputes about access to natural resources.

‘My game-theory model shows how resource distribution can reduce conflicts. Either the parties accept a proposal or they have to spend resources on winning the dispute, and that can be costly,’ Eric Sjöberg says.

His Stockholm University thesis, Essays on Environmental Regulation, Management and Conflict, contains an article about estimating the value of different resources. If an oil company wants to exploit an area in the Arctic and it affects the fishing industry, the parties must agree on what the various livelihoods are worth. The cost of the population’s concerns about living near an oilfield should be included in the calculation.

If a model can be used to estimate the value of these various resources, it reduces the risk of conflict in the form of court proceedings and costs of lobbying campaigns. In the economic model Sjöberg has developed, he has studied various marine areas in the Atlantic.

‘But the model is particularly interesting in an Arctic, where climate change is subjecting old livelihoods to competition from, for example, drilling for oil,’ he says.

The article in his thesis, entitled ‘Settlement under the threat of conflict: the cost of asymmetric information’, is published within the framework of the ‘Arctic Games’ project in Mistra Arctic Futures.

‘It was fun being a researcher in Mistra Arctic Futures. I like interdisciplinary research, and going to conferences and meeting sociologists, ethnographers and political scientists is interesting. Inputs from many areas are needed,’ Sjöberg explains.

The thesis also reports on research to investigate how the size structure of fish caught affects pricing, and on how environmental legislation is implemented in Swedish municipalities depending on the political colour of the political majority. Today, Sjöberg teaches and carries out research at the University of Utah.

Text: Thomas Heldmark, Vetenskapsjournalisterna

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