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April 15, 2004

Natural Resource Depeletion.

Over at the Adam Smith Institute Blog Alex Singleton makes a small point about natural resources running out. He uses the example of wheat production growing from 2 tonnes per hectare to 6 tonnes per hectare. There seems to be no reason why this should not continue.
While I agree with him I think the point can be better made using one of the resources that were part of the Ehrlich / Simon bet ( which he also mentions ).
And that is copper.
Unlike wheat which grows each year, and can thus be seen as a renewable resource, even by the most fanatically green of us, copper is obviously limited in that pre the transmutation of the elements, there are a limited number of copper atoms on the planet.
So in one sense of course we must be using that resource up. So why wasn't Ehrlich right in the bet ? Why was copper cheaper in 1990 than in 1980 ? As Simon understood, and as many if not most do not today, there is no such thing as a "resource". There is a " resource at a price". And that price is determined by technology . Just what technologies are available to convert a pile of rock ( to continue the copper story ) into something we can use to make telephone cables and computers ?
And we all know that technology continually marches on.
Just to complete the story, in the early 1980's a new method of copper extraction came into use, the SW/SX process ( check out Google for it , I haven't got that bit of the blog working yet ) , which enabled miners to make useable copper out of what had indeed been piles of rock before.
No, Simon didn't know that this process was about to come online, nor obviously did Ehrlich who actually chose the materials for the bet. But Simon was betting on the march of history, that such new technologies would come from somewhere, and Ehrlich was betting against that tide, as if we had already discovered everything there was to know.
The moral would appear to be that if you know something about economics try and find an insect entomologist to bet against you.

April 15, 2004 in Natural Resources | Permalink

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