Global Resources

Stock resources

Non-renewable resources

Distinction bw fuels – other minerals.1. Fuels: important for industrial economy

Combustion is irreversible processFuel combustion = waste emission2. Minerals can be recycled

Important for sustainability: relations bw. natural capital – man-made capital.

Examples: sewage treatment investment energy conservation.Production, consumption, waste emission circle is

illustrated by the MATERIALS BALANCE MODEL:

MATERIALS BALANCE MODEL

Economy cannot create materials Mass of residuals (B+C+D) = to the

mass of fuels, foods, raw material, oxygen.

For any fixed final output, with increased recycling (important identity: B+R+E = R+A1+F) the quantity of material and energy inputs can be decreased. IE: less primary extraction need to take place.

Change perception of resourcesKenneth Boulding distinguishes: Cowboy economy (open system) Spaceman economy (closed material system, except

energy from outside) Economic performance (growth of GDP)BASIC CONCEPTS IN ECONOMIC APPROACH TO

RESOURCES AND ENVIRONMENT ISSUES1. Property rights, efficiency and government intervention. 2. Valuation, achieving efficiency3. The time dimension of using nat. res. (stock and flow

concepts)4. The sustainability and irreversibility

Interdependence bw economy and resource use (environment)

We should treat the planet as a closed system. It has implications, that can be summed up in the 1st and

2nd Law of Thermodynamics.Review of elements of environmental services. Thermodynamics Recycling Materials balance principle Ecology Biodiversity Population Technology (Affluence and technology: the EKC

(Environmental Kuznets Curve)

POST OILPRICE-EXPLOSION

—New epoch: end of cheap energy and materials —New requirements towards economy and

development.1./ BUT: price fluctuation is considerable2./ Price can’t be arbitrary3./ Contradictory response4./ Difficult separation of cyclical and structural effects

in consumption5./ Separate discussion of fuels and non-fuels6./ Real problem of scarcity7./ Changing power relations (FE: consumers –

suppliers, energy policy)8./ Interdependency – extent of internationalizationSTAGES OF INTERDEPENDENCIES

CHARACTERISTICS OF THE NEW ERA after 1973 Increasing importance of the export of working capital

and the TNCs Development of the new world economic era is

accelerated by: Political transformation of the previous Soviet Block. Possible emergence of a new world order in which

global problems will be more effectively treated on the basis of more efficient international cooperation.

Possibilities for diminishing military confrontation, to concentrate more effort on the solution of the pressing problems of the human existence.

Increasing interdependence and globalization

Beginning of transformation of energy basis

Deepening globalization Proliferation of issues requiring closer

international cooperation Increasing 3rd W differentiation

Characteristics of the global problems

1. Unforseeable consequences of social and econ. & technol. dev. or of negligence.

2. These are extreemly complex, the results of

many different factors, appearing in large number of cs in one historical period.

3. The harms originating from them are already felt, the seriousness of these problems can be foreseen.

4. The problems are so serious, that the mere existence of the mankind is endangered.

5. Global management is required Most of them are related to the future

development of the world, and are related to: Resources availability “ use “ needs

Increasing rawmaterials interdependence

Forced way of development based on the demogr. explosion

Closely related problems are: agricultural prod.& food supply. as well as critical situation in the ecological

balance. There are two kinds of comprehensive

approaches: to reorient consumption of the natural resources and

to reorganise world economy:

I. Concentrates on the international system II. " " " existence of the sovereign states.

Two approaches within the first case too:a./ Club of Rome It emphasized: internat. global cooperation is needed to support

the survival of the mankind. The most comprehensive Report was

produced by the BRUNDTLAND Commission, ("Our Common Future„)

It is in favour of the sustainable dev. which is in harmony with the environment and resources use.

b./ The supporters of the TNC model. II. Concept of NIEO

RAWMAT. INTERDEPENDENCE

It has two main aspects:1. Consumption of nearly all essential

minerals is still rising (although its rate of increase is on the decline). Western European cs (industrialised earliest), exhausted many of their domestic supplies of basic raw materials.

2. The known reserves of a number of minerals are highly concentrated in a few, mostly 3rd w. regions.

Rate of increase of raw mat. consumption and world market demand for mineral res.

It depends on the growth of industrial prod., although raw-mat consumption is not proportional to the expansion of industrial output.

REASONS:1./ STR has changed the composition of both --the consumption and --the production. 2./ Fuel and material efficient machinery and

equipments decrease the amount of raw-material and energy per unit of output. (specific use)

3./ In addition, new artificial materials are invented regularly.

Ownership relations

I./ At end of WWII.: mining industry was entirely in private hands of private companies.

Most of metals and many non-metallic minerals were produced by corporations owned by investors in the industrial cs:

In communist cs, only state ownership. Latin Am, Africa, S-E Asia were

important mineral producers.

In 1950 : their mining industries were almost entirely

owned and operated by companies, controlled outside their boarders.

II:/ This situation changed rapidly in the 50s and 70s. (pol. Independence, nationalizm, control over natural resources)

The ownership of most large corporations was transferred from foreign to domestic control. State corporations were established in most cases.

Explanation for the substandard operation of the nationalized mineral companies1. Failure of gov. officials to recognise the capital

intensive nature of the mineral industry.

2. The profits of these firms were diverted to social needs of the nation

3. Corruption Exploration, development, } maintenance of equipments was neglected.

RETURN TO PRIVATE CAPITAL PARTICIPATION

But there ARE considerable differences:1./ In 1950 individual mineral deposits in

LDCs were exploited by a single corporation, based in one c.

2./ Tendency now in mining operation in LDCs: it is owned and operated by consortia of

several companies from several cap. exporting cs.

Mineral consumption in the post WW II period

Two distinct stages of growth of consumption of minerals:

I. 1950-74 (time of unprecedented econ. expansion)

II. 1975-90 (energy crises and other factors resulted in

severe recessions and much slower world economic growth. )

CONSUPTION

1950 - 73 1974 - 90 1950 - 73 1974 - 90 ---------------------------------------------------------------------------- aluminium copper---------------------------------------------------------------------------- W-Europe 704 48 239 16 Japan 6758 85 5052 79 USA 523 -16 86 7 Can-AUS 708 34 185 -18 Socialist 983 14 497 9 3rd W 3262 133 350 198 World tot 781 28 242 30

In summary:

1./ Known reserves of major minerals continue to expand.

2./ World mineral industry will be largely in the hands of private enterprises.

3./ Investments in large scale overseas operations are likely to be controlled by multinational consortia.

4./ Host countries in most cases are afforded opportunities to acquire equity positions.

5./ Some state-owned mining properties may remain in operation

6./ Consumption of minerals will continue to grow as population rises and world industry expands.

7./ Industrialised cs will experience moderate growth.

8./ LDCs will have greater gains as they work towards industrialisation & improved living st.

Decline and rise of TNCs in metal mineral industry