The world is not running out of natural resources

Is it true that non-renewable resources are finite?

Let me begin by saying that I believe the premise of this question is mistaken. It is quite incorrect to think that fossil fuel resources are finite. It may be true that there is a finite quantity of such resources in the earth’s crust, but that does not mean that we will ever run out. Indeed, I would be willing to place a bet with anyone in this room that human beings will cease using fossil fuels long before we have exhausted the available resource and that this is completely independent of any policy designed to speed up the invention and distribution of alternative “green” sources of energy.

Why? Because construction waste crushing intelligence and ingenuity have consistently and repeatedly unlocked technological and scientific advances that have raised the standard of living of each generation compared to its predecessor, while increasing the ability of human society to support larger numbers of people and increasing the carrying capacity of the planet.

Thomas Malthus earned economics the nickname of the dismal science in the 18th century by observing that the population was growing faster than the food supply. He predicted mass starvation.

In the 1970s, the Club of Rome predicted massive shortages of natural resources due to overconsumption and overpopulation, with disastrous effects on human health and material well-being.

In 1980, the construction waste crusher 2000 Report to the President, wrote: “If present trends continue, the world in 2000 will be more crowded, more polluted, less stable ecologically, and more vulnerable to disruption than the world we live in now. . . . Despite greater material output, the world’s people will be poorer in many ways than they are today.”

The reason why the ecosystem hasn’t collapsed, why we haven’t run out of oil, why we are still successful in feeding ourselves, why incomes are rising and health status improving around the globe is that the doomsayers have completely misunderstood the way the world works.

Of all their misunderstandings, two stand out. They don’t understand what natural resources are. And they don’t understand that the greatest natural resource of all is the human mind.

It may be popular, but it is quite incorrect, to think of natural resources as not only exhaustible, but on the verge of being exhausted. If, for example, natural resources were actually getting scarcer, then the price would go up. That’s part of what prices are for, to signal shortages and availability and to trigger exploration and innovation where required.

But the price of natural resources has been steady or else in decline for centuries, although the recent entry of developing countries like China into the marketplace may have moved natural resources prices temporarily to a higher level, not because of shortages, but because of China’s fondness for old-fashioned and highly inefficient mercantilism.

Remember they gfs combined crushing plant bet between ecologist Paul Ehrlich and economist Julian Simon. Simon bet Ehrlich that the prices of any five natural resources Ehrlich chose would drop over a 10 year period, whereas Ehrlich, inspired by the Club of Rome, was convinced that we were on the cusp of huge shortages driven by overconsumption and population growth. Ehrlich paid up in 1990.

Ehrlich, like his many forerunners and successors, forgot that shortages and rising prices are an opportunity. Malthus didn’t foresee that farmers could become hugely more productive in response to rising demand for food, eventually unleashing the last century’s Green Revolution. Aquaculture, hydroponics, genetic modification and other technologies will allow us to keep feeding the world’s population, probably at a declining real cost in the long haul.