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Substances, Resources, and the Future

Here’s a letter to DiscoveryNews.com:

You report that “A growing, more affluent population competing for ever scarcer resources could make for an ‘unrecognizable’ world by 2050, researchers warned at a major US science conference Sunday” (“Planet could be ‘unrecognizable’ by 2050, experts say,” Feb. 21).

These scientists need a course in basic economics.  Some of what they’ll learn is that

– the supply of resources (as with human wealth) is not fixed; it increases over time in response to market forces as the quest for profits sparks innovations in resource exploration and recycling, as well as in finding less costly substitutes for resources currently in use;

– if the supply of some resource does fall, the price of that resource rises, causing people to use it more frugally as they switch to using resources whose supplies are more plentiful;

– if these scientists’ prediction of consistently decreasing resource supplies over the next 40 years does come true, world incomes over the next 40 years will fall rather than (as these scientists worry) rise.  Fewer resources mean less production, and less production means lower real per-capita income, not “more affluence.”  Lower income, in turn, means that people over the next 40 years will reduce, not increase, their per-capita demands for goods and services.

Because any substance’s status as a “resource” inherently reflects that substance’s use and valuation in the economy, questions about resources’ future supplies are not exclusively – or even mainly – ones of physics, mineralogy, or other physical sciences.  They are, instead, chiefly questions of economics.

Donald J. Boudreaux

(HT to Mark Steckbeck for alerting me to this article.)