Non-Renewable Resources and Sustainable Resource Extraction: An Empirical Test of the Hotelling Rule’s Significance to Gold Extraction in South Africa

Round 1

Reviewer 1 Report

Wonderful study on gold extraction in South Africa.  I'm reminded in the Bible on the Garden of Eden:  The name of the first is Pishon; that is the one which flows around the whole land of Havilah, where there is gold; (Genesis 2:11).

Please shorten the abstract, eg to:

The study  tests the applicability of the Hotelling rule in South Africa to gold mining. In environmental economics, the Hotelling rule has enabled essential insights into the consumption and extraction of  non-renewable resources. According to the Hotelling rule, the extraction path in competitive market economies will, under certain circumstances, be socially optimal. An extraction path that is not socially optimal compromises endangers the welfare of future generations. The welfare of South Africa's present population and  in the future will be determined in great part by the stock of natural resources available. Currently, the production processes deplete natural resources in a way that is  not sustainable. South Africa's gold reserves are becoming depleted at a rate that,  within 25 to 33 years, will mean the end of the industry on which South Africa's economy has been built. This raises questions of how much of these non-renewable resources (gold) should be extracted today and how much should be saved for future use or for future generations. Is gold being depleted more rapidly than the optimisation of the Hotelling rule. In order to empirically test the Hotelling rule, the study was guided by previous literature that had sought to test it. The used graphical analysis and a ARDL approach to assess the applicability of the Hotelling rule. Results  showed that there seems to be no significant relationship between interest rates and gold process.  This shows that the Hotelling rule does not hold in South Africa. The results of the study suggested that the gold extraction in South Africa is not following a social optimally path. The study recommended that the government come up with measures that prolong the lifespan of the gold reserves. These included research and development to promote technological innovations in the mining sector.

I agree with your conclusions, makes good common sense to me.

 

Author Response

We managed to make some changes on the abstract as suggested by the reviewer.

 

Reviewer 2 Report

The subject is interesting, nevertheless, I suggest the following improvements:

-          The title needs to be improved. I suggest a smaller and clearer title.

-          In the abstract, the author refers “a ARDL approach” without explaining before the meaning of the acronym ARDL

-          The author writes the bibliographic sources in an incorrect way. For instance: (Shogren, 2000 & Rodrigo, 2014) in line 33 does not follows the rules suggested by Sustainability publication and the same applies for the rest of the text.

-          In the literature review, the author should refer other studies that use the same reasoning or methodology and present its results in order to compare with the results achieved in this study.

-          In line 561, the table`s number is missing.

-          In the conclusion, in the following sentence: “Many analysts conclude that depleted reserves …”, the author should specify the name of the analysts.

-          This paper only refers 49 bibliographic references which is, in my opinion, a considerable low number of references.

Author Response

Thank you so much for the invaluable comments. We managed to incorporate the comments.

• The abbreviation ARDL was written in full.
• The in test referencing will be corrected once the paper is accepted for publication. All references will be inserted according to the requirements of the journal.
• Literature was surveyed and some recent studies were added to the literature review section. These studies were also used to corroborate the study’s findings.
• In line 561, the table number was added.
• The word analysts was deleted. The sentence had to be reconstructed. It was seen that there was not need to refer to the analysts. The study simply had to offer recommendations.
• The study used more than 70 sources. We had made an error at first.

Round 2

Reviewer 2 Report

Thank you for all the improovements 

Author Response

Reply to Academic Editor

 

The comments came from the academic editor and not the reviewer.

We managed to do the comments. We surveyed literature and managed to get 2 articles from the sustainability journal. We used information from these articles. The cited articles are as follows:

 

• Steinbach, V and Wellmer, F. 2010. Consumption and Use of Non-Renewable Mineral and Energy Raw Materials from an Economic Geology Point of View. Sustainability 2010, 2, 1408-1430; doi:10.3390/su2051408
• Boos, A. 2015. Genuine Savings as an Indicator for “Weak” Sustainability: Critical Survey and Possible Ways forward in Practical Measuring. Sustainability 2015, 7, 4146-4182; doi:10.3390/su7044146

 

 

Author Response File: Author Response.docx