Analysis of the Problem of Exhaustible Resources - Term Paper Example

Running head: EXHAUSTIBLE RESOURCES Economic development occurs in the wake ofexploitation of natural resources. As more and more populous and developing countries of the world work towards economic growth in a relentless manner, the issue of sustainability of such growth in the face of depleting natural resources and increasing environmental pollution is drawing the attention of policy makers and international bodies, in order to achieve a state of global equilibrium that ensures growth with sustainability. Key words: Growth, sustainability, population, per capita income/consumption, resources. Exhaustible Resources – A Critique Introduction Our planet is a closed ecosystem of environmental resources and life in which sustainability of any human activity is dependent upon responsible exploitation of natural resources. In their research study entitled ‘The Limits to Growth - A Report to The Club of Rome’, Meadows et al. (1972) came to the conclusion that, “If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years.” The report came to the conclusion that unless prevented, there could be sudden and uncontrollable decline in both population and economic growth as a result of the exhaustion of resources. Finite resources Our environment consists of land, air, water and mineral resources on the one hand, and the vast variety of life forms that have evolved in this physical world over millions of years. Each of these living and non-living entities are our natural resources. Among all living things, human beings have the greatest ability to harness these natural resources to create a world of comfort and luxury, and proceeded to do so. In the process, change has become the hallmark of human existence in the material world – a change that involves abandoning the old and embracing the new. Change is occurring due to man’s needs growing exponentially as a result of scientific progress and enterprise. Since matter can neither be created nor destroyed as postulated by Dalton, the human race is caught in the spiral of development that is using up the available but finite resources, and damaging the ecological balance by releasing pollutants and junk into the environment. The phenomenon of change needs further examination as to its evidence, major contributing factors and the concomitant exhaustion of resources. Change i. Demand-supply dynamics The industrial revolution of the 19th century, de-colonisation and democratisation of the 20th century, and the revolutionary development of the information and communication technologies (ICT) since the 1980s have been the successive causes for worldwide change in the demand-supply dynamics. Living standards in the developed nations of the west, Europe and Japan have improved significantly over the years, a fact that was being increasing noted around the world. Lifestyle in many developed countries has changed from frugal need-based spending to rampant use-and-throw style consumerism, aggressively promoted by the trade and industry, with resultant resource depletion and environmental pollution. In this background, advent of ICT, together with the policies of globalisation and liberalisation, gave fillip to economic growth and prosperity in the populous but underdeveloped countries of Asia, Latin America and other nations, thus spurring further demand. In the face of such trends, the predicted limits to growth as a result of resource exhaustion may well be reached, unless global efforts to promote responsible growth succeed. ii. Population growth The following chart shows the population growth in the period 1950 -2050 as reported by the United Nations (UN) in 2008 and reproduced by the Population Reference Bureau (PRB, 2012): World Population Growth, 1950–2050 (Source: United Nations Population Division, World Population Prospects, 2008). According to PRB (2012): Throughout the 20th century each additional billion has been achieved in a shorter period of time. Human population entered the 20th century with 1.6 billion people and left the century with 6.1 billion…The overall effects of this growth on living standards, resource use, and the environment will continue to change the world landscape long after. The change in the world population both in terms of numbers and geographic distribution needs to be noted in the context of economic development and demand on natural resources. iii. Income and expenditure growth According to Groningen Growth and Development Centre (2012), the per capita GDP (world average) grew from USD 2111 in 1950 to USD 7614 in 2008. The World Bank (2012) also reported that per capita gross national income grew from USD 5608 in 2003 to USD 9491 in 2011 (GNI Atlas Method) and that the household consumption per capita grew from USD 2824 to USD 3713 during the period 1983 – 2010, measured at constant USD of 2000. This data set clearly establishes the trend of growing national incomes and household consumption, which when coupled with the data on population growth, the increasing use of natural resources becomes evident. iv. Limitations of critical resources Water, clean air and fossil fuels are the more critical natural resources of limited availability, to which land can also be added. The production, distribution and consumption of all human needs like food, shelter, clothing, energy etc. are entirely dependent upon exploitation of land, water, air and fuel resources. UNESCO refers to the UN World Water Development Report 4 (2012) and concludes that due to increased use by agriculture, industry, energy production and human consumption, and due to climate change, global water resources are under increasing pressure. According to the UN Water statistics (2012), only 2.5% of all the water on our planet is fresh water, and of this only 0.3% is available in lakes and rivers while the balance 99.7% fresh water is either underground or in ice and snow covered mountains. As such, fresh water is an extremely scarce resource facing increasing demand. It is also being increasingly conceded that global warming is occurring due to environmental pollution, leading to climate changes like increased floods, more frequent droughts, non-seasonal rains etc., threatening food security and water management. Although availability of air is not a major issue, if the quality aspects are considered, today’s air is much polluted compared to the previous century as a result of industrial, agriculture and transport sectors’ growth. Fortunately, intense efforts to reduce emissions by improving equipment designs and control measures are bearing fruit as can be seen from a report by Airpollution.pdf (2012) that established a 59% drop in air pollution in the US between 1990 and 2010. Energy needs are most important to economic growth apart from maintaining/improving current standards of living. Significant volumes of energy is consumed for industrial and agricultural activities, public and private transportation, household needs, communications, commerce and defence. Major sources of energy are coal, crude oil, and natural gas as fossil fuels and these are exhaustible resources. Increasing demand for energy production in the developing countries is fuelling greater volumes of extraction and hence a corresponding depletion of proven reserves. For example, according to the British Petroleum’s (2012) statistical review, between 1965 and 2010, coal consumption in Asia Pacific region increased from about 500 million tons to over 2500 million tons (oil equivalent tons), oil consumption from about 3 million barrels per day to about 28 million barrels per day and natural gas from about 1 billion cubic feet per day to about 58 billion cubic feet per day (cited in Rapier, 2012). The report confirms that fossil fuels meet 87% of all energy needs in the world. In this context, it is appropriate to recall Harold Hotelling’s (1931) observations in his research paper ‘The economics of exhaustible resources’. He postulated that production of exhaustible natural resources such as minerals should be balanced between optimum economic results for the production activity, and for their conservation for future generations. Hamilton was of the view that even though oil production was increasing as a result of finding of newer oil fields or technological improvements, such increases are not sustainable in the long run. Paradox of growth Economic growth, rise in personal incomes/consumption, changing lifestyles etc. around the world is thus an established fact. These changes are occurring in the wake of rising populations and ever increasing exploitation of critical natural resources. Apart from the possibility of exhausting such resources at some time in future, their adverse impact upon the environment in terms of land, air and water pollution needs to be underlined. Thus, the paradox of improved economic conditions is being achieved in the face of deteriorating environment and depleting natural resources. This paradox is drawing the attention of international bodies like the UN for coordinating efforts to achieve a more sustainable growth path for all countries. Conclusion Growth is happening at an ever faster pace, be it in population or national/personal incomes or consumption or access to improved lifestyle etc. Such changes are facilitated by increasing exploitation of critical natural resources like water, and fossil fuels, followed by increased environmental degradation. It is also true that awareness of the possibility of exhausting critical resources and the consequential environmental impact is spreading leading to global action for sustainable growth. Coupled with technological improvements and investments to find new resources, such global action is helping to achieve responsible economic growth to fulfill the promise held out by Meadows et al. (1972) that, “It is possible to alter these growth trends and to establish a condition of ecological and economic stability that is sustainable far into the future. The state of global equilibrium could be designed so that the basic material needs of each person on earth are satisfied and each person has an equal opportunity to realize his individual human potential.” References Anon. (2012) Air pollution.pdf. Retrieved from: https://docs.google.com/viewer?a=v&q=cache:Q55qNFzU9WsJ:www.epa.gov/airtrends/2011/report/airpollution.pdf+air+pollution+pdf&hl=en&gl=in&pid=bl&srcid=ADGEESiiLI4ztWGYViodqfknC9LECIThVPZTujH_IK0hWIKr73JHeWNhQVCPneADm8mgVAKv2baYmcvc3e6LxR0tdPsHgLgX8wX8iIph4JphPqq0t_isL6j-uuapJ6EyGQt7ezm80hns&sig=AHIEtbTYjHfD3lkS5YpUsK-fnuKEudondw BP Statistical Review of World Energy, (2012) Retrieved from: http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2011/STAGING/local_assets/pdf/statistical_review_of_world_energy_full_report_2012.pdf Groningen Growth and Development Centre (2012) ‘Historical statistics of the world economy: 1 – 2008 AD. Retrieved from: www.ggdc.net/.../Historical_Statistics/horizontal-file_02-2010.xls Hamilton, J.D. (2012) ‘Oil prices, exhaustible resources and economic growth’. Retrieved from: http://dss.ucsd.edu/~jhamilto/handbook_climate.pdf Hotelling, Herold (1931). ‘The Economics of Exhaustible Resources’. The Journal of Political Economy’ Vol. 39 Issue 2 (Apr., 1931) pp.137 – 175 [online]. Retrieved from: http://msl1.mit.edu/classes/esd123/2003/bottles/Hotelling.pdf Meadows, Donella H., Meadows, Dennis I., Randers, Jorgen and Behrens, William W. (1972) ‘The Limits to Growth: A Report to the Club of Rome’. Retrieved from: http://www.bibliotecapleyades.net/sociopolitica/esp_sociopol_clubrome6.htm Population Reference Bureau (2012) ‘World population growth 1950 – 2050’. Retrieved from: http://www.prb.org/Educators/TeachersGuides/HumanPopulation/PopulationGrowth.aspx Rapier, R. (2012) ‘World energy consumption facts, figures and shockers’, Consumer Energy Report.com, June 28, 2012. The World Bank (2012) ‘World Bank Search’. Retrieved from: http://search.worldbank.org/data?qterm=world%20per%20capita%20expenditure&language=EN http://data.worldbank.org/indicator/NY.GNP.PCAP.CD/countries?display=graph) http://search.worldbank.org/data?qterm=world%20per%20capita%20expenditure&language=EN UN Water (2012) ‘Statistics: Graphs & Maps’. Retrieved from: http://www.unwater.org/statistics_res.html UNESCO (2012) ‘Water Development Report 4’. Retrieved from: http://www.unesco.org/new/en/media-services/single-view/news/global_water_resources_under_increasing_pressure_from_rapidly_growing_demands_and_climate_change_according_to_new_un_world_water_development_report/ Read More