Re: finite world/resource depletion

["John B. O'Donnell" <jackodonnell@xxxxxxxx>]

Gregoire de Nowell (ci-devant) wrote:
>
> As Morris Adelman observes the finite resource argument
> is so obvious that it scarcely elicits any challenge.  In
> the long run prices of non-renewable goods ought to rise.

Then Adelman is wrong. The inevitable outcome so long as the unit of
value is based on a retail measure as the standard of value is for
commodity prices to decline. All the things we do or want as humans
become possible predominantly by a more efficient use of the finite
physical substance of the world we live in. This is also why when
measured in the dimension of economic value there is no limit to the
growth.

Oil is a good example from the past. There was the time when it had
negative value for all the difficulty of removing the goo from places it
soiled. Then it became valuable as a fuel, then even more valuable as
feed stock to a large and growing petrochemical industry while remaining
in sufficient supply to continue to be used at its lower valued function
of an energy source.

 A more recent example is the nearly worthless stuff upon which we often
tread without much thought of its economic value. An intermediate, but
continuing use, has been the making of glass. But its present high value
application quite possibly makes it the most valuable stuff in general
use that we have ever known. A little manipulation of this most common
stuff of earth from nearly worthless silica to several hundred dollars a
gram computer chips.


> Adelman points out however that a whole spectrum of finite
> goods have been declining in price for fifty years, and
> many of them have been declining in spite of efforts to
> use stockpiles and other policies to keep them up.  It may
> be the case, he suggests, that finite resource arguments
> do not seem to describe accurately how in fact resources
> are developed and priced.  He concentrates his argument on
> the increasing technological efficiency with which formerly
> non-profitable resources can be developed.  I always add to
> that (his is an oil-specific view) that inter-commodity
> substitution seems to increase exponentially as technologiy
> developes.
>

> While Club-of-Rome style analyses are indeed sobering and
> frightening, there is another side to this story.  One
> can hardly read Jevon's mid-19th century stories of
> imminent exhaustion of coal resources and the calamity
> this will be for civilization without realizing that one
> could substitute "oil" for coal in his study and
> essentially duplicate the 1970s-1990s oil resource
> depletion literature. But in fact inter-commodity
> substitition will probably make the oil question
> irrelevant.  The transportation fuel of the future may be
> fuel cells or natural gas.  Science News has reported
> earlier this year vast quantities of ocean bed methane
> (sorry I forget the technical name) in crystallized form.

Technological advance is no small thing.

> It is in my view likely that as with coal the oil
> question will become technologically irrelevant long
> before economically exploitable resources will be
> exhausted.  In my view this is unfortunate, because
> I have been involved in teh professional advocacy of
> alternative fuel strategies and the resource depletion
> argument, so prima facie logical, is tough to let go
> of.  And indeed many alternative fuel advocates
> continue to hang onto it.

Don't be so pessimistic. The inevitability that price allocation of
whatever is or can be made available will allocate those resources to
their best use is one of the most rational arguments that economists can
claim as their own. When fuel alternatives become priced as an
improvement over fossil fuels, the substitution will occur unless, of
course, stupid political "solutions" are imposed.

> The more relevant issue in my mind is carrying capacity
> in terms of wastes.  Here too, however, some caution is
> needed.  If the automotive technology of the 1950s
> were still in use today, California would have long
> ago exhausted its human carrying capacity.  The catalytic
> converter extended that carrying capacity (sticking
> with the air dimension) by many decades and several
> tens of millions of people.  When it was thought that
> this technical potential had been exhausted, it was
> found that gasoline could be reformulated to get
> yet another decade or two and additional carrying
> capacity (thought compelling arguments remain for
> moving away from petroleum fuels).  But as we sit
> here today the fact remains that California with
> nearly 30 million people is from an air quality
> point of view much better than it was in my
> childhood (1960s) with 12-15 million people.  I do
> think, however, that other kinds of carrying limits
> may be reached.  The strain on parks in california
> from sheer use is enormous.

On this last item I tend to agree. Although the ecofreaks use
conservationist laws to be obstructionist, [The snail darter nonsense,
etc.] imposition of burdens on third parties is one of the most
significant failures of laissez faire that needs political intervention.
However, this is another of those problems that are best solved with the
economist's solution of charging for pollution and letting the market
determine the distribution instead of exposing the market to the
ecofreaks.
<<SNIP>>
>
> To conclude, I am unimpressed with finite
> world/resource depletion arguments.  I am much
> more concerned with carrying capacity arguments
> especially with regard to pollutants, but I
> find that there is a mixed bag here due to
> the fact that changing technologies impact
> differently and change carrying capacity.  I
> am not, however, one to engage in a resource-by-
> resource discussion of the world's situation.
> I have simply adduced several important examples.
> Finally, I would point out that the world
> fishery problem which I think is critical is
> not one so much of carrying capacity as it is
> of intelligent use and consieration of what it
> is we are after.

This is one of the best expressions of a rational approach to ecological
damage that I have seen.
			-- jbod
___________________________________________________
Come visit and see a new economic perspective --
       http://www.geocities.com/CapitolHill/1067
           Comments/arguments welcome.
..