We like environmental economics, maybe more than we should. So we're happy to note the arrival of the Environmental Economics Blog, which manages to be both dismally scientific and readable at the same time:

The cost of a depletable resource increases as the stock is depleted for two reasons: 1) Extraction costs increase, and 2) The value of the resource left in the ground.increases. The first cost makes sense, it is easy to pick the low hanging fruit but more expensive to harvest the difficult to reach fruit. The second cost is more subtle, but just as important.

To understand why the value of the resource left in the ground must increase, think of the stock of a depletable resource as a giant savings account. When will you draw down the savings? When the value of that resource left in the ground is less than the value of the money you could receive for that resource if it were extracted. For each unit of the resource left in the ground the owner has two choices, leave the resource there and let it’s value grow, or extract the resource, sell it and invest the money elsewhere.

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