Lec 13 - Natural Resources and Primary Commodities

Question 1

Explain why natural resources are an economic, social, and cultural concept

Answer 1

• Purely anthropocentric expression of material needs and wants: cultural concept
  ○ What is a resource today may not have been a resource in the past and may not be a resource in the future
  ○ e.g. oil and platinum were not always valued
  ○ e.g. of unmaking and making of a resource: wild rubber

Question 2

What are the steps in the resource scarcity cycle?

Answer 2

1. new resource created
2. demand rises
3. easily accessible reserves depleated
4. scarcity
5. rising prices + R&D
6. substitution

–> new resource created

Question 3

Explain the steps in the case of wild rubber

Answer 3

• Explorers found indigenous people coated their feet with rubber and made rubber balls
  
  • First use of product in europe: eraser. Then, used to ruberize coats.
  • 1839, Goodyear: process of volcanization. Unleashed one of great periods of innovation in history –> demand for rubber skyrocketed
  • Rubber was worth 1000x more than steal
  • Massive economic boom in Amazon
  • Rubber seeds stolen and brought to London, where it was domesticated and then planted in Malaya
  • Plantation replaced wild rubber on world market
  • WW2 –> Japanese captured southeast asian plantations, wild rubber made a brief comeback. Both were replaced by synthetic rubber
  • Wild rubber still extracted at a small scale, has special properties
  • A resource scarcity substitution cycle

Question 4

define a non-renewable resource

Answer 4

Non-Renewable: fixed stock, when used amount available decreases. Cannot be renewed within a human life-span
- there are reserves
- often held as private property

Question 5

define a renewable resource

Answer 5

• grow or flow
• can be recycled or renewed within a human lifespan
• state or common property
• talk about flow instead of stock

Question 6

what is sustained yield and what do sustained yield calculations depend on?

Answer 6

how much of a resource you can use without jeopardizing its population/flow size

population dynamics
well behaved, predictable systems

Question 7

What are the different types of reserves?

Answer 7

□ Estimated reserves: total amount available on earth. Finite amount
□ Proven reserves: part of reserves that are worth extracting. Think of quality, size, price
□ Potential reserves: qt available if the price increased by a certain amount. What is economically feasible goes up if price goes up

Question 8

What are the 3 perspectives on resources?

Answer 8

• Malthus
• Marx
• Ultimate resource view

Question 9

define malthus’ view on resources

Answer 9

○ Malthus: objected to ideas of french revolution that egalitarian views will bring the world to a better place
- Human populations grow exponentially, but food supply grows arithmetically

• Basically: population is the problem. Need to make sure that carrying capacity of earth is not exceeded

Question 10

Define Marx’s view on resource scarcity

Answer 10

• not a problem of resource availability, but of resource distribution
• optimist
• tech = allows pop to grow. carrying capacity can change

Question 11

define the ultimate resource view

Answer 11

• very optimistic
• human are the ultimate resource. population is the SOLUTION not the problem!

Question 12

Which 2 views from the 70s are optimistic? How are they different?

Answer 12

the marxian and ultimate resource view
- they both point to the capacity of humans to innovate
- they are both skeptical about the scarcity argument

• marx believes distribution is the issue
• the ultimate resource view believes we need neo-liberal markets

Question 13

Who were different actors in the view on resources in the 1970s?

Answer 13

Elrich
- neo-malthusian
- believed rapid growth of population will lead to resource decline and misery

Club of Rome
- a group of professionals who did some of first computer modelling to project the availability of resources