Dateline 2,000 - the Looming Resource Crunch! Poorna Pal by.
Transcript of Dateline 2,000 - the Looming Resource Crunch! Poorna Pal by.
Wind,tides,
flowing water
Directsolar
energy
Perpetual or Renewable
Non-metallicminerals
Metallicminerals
Fossilfuels
Potentially renewable
Freshair
Resources
Exhaustible or Nonrenewable
Freshwater
Fertilesoil
Bio-diversity
1900 21002000
What will happen if world’s population and economic growth continue at the 1990 levels, assuming no major policy changes or technological innovations*
* Donella Meadows et al., Beyond the Limits: Confronting Global Collapse, Envisioning a Sustainable Future (Chelsea Green, 1992)
Population
Pollution
Resources
1950 2050
• is a problem if we take
– the Malthusian perspective, that exhaustibility limits socioeconomic growth;
– the neo-Malthusian perspective, that resource exploitation has environmental limits; or
– the Ricardian perspective, that progressive depletion raises costs and lowers quality; but
• poses no problem if we take the cornucopian view, that technological innovation will always provide substitutes and alternates.
The exhaustibility of extractive earthresources
C0
TE
0ekt = S
Depletion time based on the “Limits to Growth” scenario*
*Depletion time or the exponential index, TE, is computed here by solving this equation
Aluminium 2003 2027Chromium 2067 2126Coal 2083 2122Cobalt 2032 2120Copper 1993 2020Gold 1981 2001Iron 2065 2145Lead 1993 2036Manganese 2018 2066
MolybdeniumNatural GasNickelPetroleumPlatinumSilverTinTungstenZinc
2006 20171994 20212025 20681992 20222019 20571985 20141987 20332000 20441990 2022
S 5xS S 5xS
1980 2000 20402020 20601960
Five times the current stock
Current stock
The depletion time of selected resources based on the “Limits to Growth” scenario
Depletion of estimated reserves by the year 2100(H. Goeller & A. Zucker: Science, February 1984)
Cobalt
Manganese
Molybdenium
Nickel
150%
120%
249%
152%
Titanium 102%
Tungsten 236%
Zinc 581%
Reserve inadequacy of advanced material elements beyond the year 2000(S. Fraser, A. Barsotti & D. Rogich: Resources Policy, March 1988)
Arsenic 1.7
Barium 1.3
Bismuth 1.2
Cadmium 1.6
Gold 1.9
Indium 1.4
Mercury 1.1
Silver 1.5
Tantalum 1.4
Thallium 1.9
Tin 0.8
Measured Reserve
World demand
1900 1925 1950 20001975
200
100
Long-run inflation-adjusted world prices for nonferrous metals (aluminum, copper, tin and zinc)
Oil40%Coal
22%
Naturalgas: 22%
NuclearBiomass: 4%
Hydel, Geothermal,Solar etc.
Oil33%
Coal27%Natural
gas: 18%
7%
5% 5%
6%
Bio-mass11%
World USA
1991 commercial energy use by source*
* Sources: US Department of Energy and Worldwatch Institute
0 20 40 60 80
Industrialsocieties
Advanced agri-cultural societies
Early agri-cultural societies
Hunter-gatherersocieties
Primitivesocieties
Food HomeFarming &
IndustryTrans-
portation
Daily per capita consumption in kcal
Average daily per capita energy use at various stages of human cultural development
28
60
70
80
90
100
1985 1990 199522
24
30
26
The U.S. oil production costs and proven reserves have
been falling
64
70
67
61 11
12
13
14
199519901985
Oil output per well is rising world-wide, though falling in the U.S.
dC(x)dx F(x)
sdPdt
P - C(x)P - C(x)dF(x)
dx
The basic equation for optimally exploiting a renewable resource is*
dxdt
x
F(x)
where
F(x) is the growth curve for stock of size x and dF(x)/dxits marginal productivity or its own rate of return,
F(x) [dC(x)/dx] is the marginal stock effect that measuresincrease in future costs of harvesting due to reduction instock caused by harvesting now,
P - C(x) is the net utility or gain of consuming now, and
s is that resource’s discount rate or shadow price.
*D. Pearce & R. Turner: ECONOMICS OF NATURAL RESOURCES AND ENVIRONMENT (Harvester Wheatsheaf, New York, 1990)
dC(x)dx F(x)
sdPdt
P - C(x)P - C(x)dF(x)
dx
The Hotelling RuleThe Hotelling Rule* :* :
*Harold Hotelling: ‘The economics of exhaustible resources’, Journal of Political Economy (1931)
dPdt = s
1P
or Pt = Poest
Population or Demand
TotalProduct
StationaryState
ConstantReal Wage
In the long run, economic growth peters out, in the Ricardian* perspective, because rising demand forces society to exploit increasingly poorer quality of resources.
*David Ricardo (1772-1823)
dC(x)dx F(x)
sdPdt
P - C(x)P - C(x)dF(x)
dx
Take the basic equation for optimal resource exploitation:
and set
• dF/dx = -(dF/dC)(dC/dx)
• dC/dx = -, a constant (note that Casx)
and treat [P - C(x)] = /H, where denotes profit and H is the harvest, i.e., this ratio too is a constant.
Then
dF/dC + (H/)F = s/ - (H/) (dP/dt)
so that,
writing Fo = (H)s - (1/) (dP/dt),
we have
(F/Fo) = 1 - e-(H/)C
i.e., F grows asymptotically with C, as thedata on worldwide oil production and pro-duction costs clearly show.
As predicted by theory, the extraction costs indeed rise exponentially
0
20
40
60
80
0 4 8 12 16 20
Cost (US$ per barrel)
1994 World Demand
The Exponential Fit
Also note thatFo = (H)s - (1/) (dP/dt)translates into(dP/dt) - sP = - (Fo + sC)so that, writing Po = (Fo + sC),we have
P/Po = 1 - est
i.e., unlike the Hotelling Rule of rise in the prices, technology induced growth impliesa decline in the prices.
Depletion Time (TE) =
The time when 80% ofthe resource is used up
80%
Time
The depletion curve for a typical nonrenewable resource
1.00
1850
4
Actualproduction
Cummulative production as share of the earlier resource estimate
Cummulativeproduction as the
share of currentresource estimate
0
1
2
3
19501900 2000 20500.00
0.25
0.75
0.50
U.S. oil production (1857-1995)
Fraction used up
Fraction remaining
f
1 - f
eA+Bt=
=
f
1 - fWrite =f1
Then
y = ln f1 = A + Bt
where f1 are the observed data as function of time (t), so that the constants A and B can be found by linearregression analysis.
0
1
2
3
4
1950 20502000
Actual Production
1995 resource estimate1986 resource estimate
Logistic or Hubbard curves for the U.S. oil output and
prospects using
Estimates of the world petroleum
reserves
1,500 2,000 2,500 billion barrels
Numb
er of
estim
ates
0
8
6
4
2
0
20
40
60
1900 2000 2100
Hubbard curves for world petroleum output and prospects assuming
resource estimates of3.0 x 1012 barrels
2.2 x 1012 barrels
1.4 x 1012 barrels
ActualProduction
Wolf population
1900
3000
4000
5000
1000
200050
30
40
20
10
1920 198019601940 20000
Wolves and Moose at the Isle Royale National Park, Lake Superior - an example of “sustainable growth”
FranceU.K.
China
Sweden
Russia
USA
BrazilItaly
Singapore
0.1
1
10
100
0.01 0.1 1 10
Mexico
GermanyIndia Japan
NorwaySwtizerland
Saudi ArabiaNetherlands Australia
Spain
GDP (PPP) in trillion US $
Economic prosperity and energy con-sumption are closely correlated
0.03
0.1
1
3
0.1 1 10
0.3
30.30.03
USA
China
Japan
Russia
GermanyIndia
U.K.
UkrainePoland Canada
Italy
France
Iran
Brazil
MexicoSouthKorea
Australia
SouthAfricaNorth
Korea
Kazakstan
...and so are economic prosperity and carbon emmissions
GDP (PPP) in trillion US $
Carrying Capacity and Sustainable GrowthMoose and Wolves on the Isle Royale National Park, Lake Superior
1900 1920 1940 1960 1980 2000
1000
2000
3000
4000
5000
Moo
se p
opu
lati
on
Carrying Capacity and Sustainable GrowthMoose and Wolves on the Isle Royale National Park, Lake Superior
1900 1920 1940 1960 1980 2000
1000
2000
3000
4000
5000
Moo
se p
opu
lati
on
Carrying Capacity and Sustainable GrowthMoose and Wolves on the Isle Royale National Park, Lake Superior
1900 1920 1940 1960 1980 2000
1000
2000
3000
4000
5000
Moo
se p
opu
lati
on
Wolf p
op
ula
tion
Carrying Capacity and Sustainable GrowthMoose and Wolves on the Isle Royale National Park, Lake Superior
1900 1920 1940 1960 1980 2000
1000
2000
3000
4000
5000
Moo
se p
opu
lati
on
50
25
Wolf p
op
ula
tion
Carrying Capacity and Sustainable GrowthMoose and Wolves on the Isle Royale National Park, Lake Superior
1900 1920 1940 1960 1980 2000
1000
2000
3000
4000
5000
Moo
se p
opu
lati
on
50
25
Wolf p
op
ula
tion
Carrying Capacity and Sustainable GrowthMoose and Wolves on the Isle Royale National Park, Lake Superior
1900 1920 1940 1960 1980 2000
1000
2000
3000
4000
5000
Moo
se p
opu
lati
on
50
25
Wolf p
op
ula
tion
Carrying Capacity and Sustainable GrowthMoose and Wolves on the Isle Royale National Park, Lake Superior
1900 1920 1940 1960 1980 2000
1000
2000
3000
4000
5000
Moo
se p
opu
lati
on
50
25