590 Chapter 22 Visions of the Future Revisited
scarcity. Though the rise in energy prices in the 1970s was triggered more by cartel
actions than by scarcity, it is possible to use higher energy prices during that period
as an example of how the economic system reacts.
Following the increase in prices in the 1970s, demand growth fell dramatically,
with petroleum experiencing the largest reductions. In the United States, for example,
total energy consumption in 1981 (73.8 quadrillion BTUs) was lower than it was in
1973 (74.6 quadrillion BTUs), despite increases in income and population. Petroleum
consumption went from 34.8 quadrillion BTUs in 1973 to 32.0 quadrillion BTUs in
1981. Though some of this reduction was caused by sluggishness of the economy,
price certainly played a major role.
Price is not the only factor that retards demand growth. Declines in population
growth also play a significant role. Since the developed nations appropriate a
disproportionate share of the world’s resources, the dramatic declines in population
growth in those countries has had a disproportionate effect on slowing the demand
for resources. On the other hand, the rapidly rising consumption levels in high-
growth countries like China and India are having the opposite effect.
Characterizing the resource base as finite—the second aspect of the model—is
also excessively harsh: (1) this characterization ignores the existence of a substantial
renewable resource base and (2) it focuses attention on the wrong issue.
In a very real sense, a significant portion of the resource base is not finite.
Plentiful supplies of renewable resources including, significantly, energy are
available. The normal reaction to increasing scarcity of individual depletable
resources, such as oil, is to switch to renewable resources. That is clearly happening.
The most dramatic examples can be found in the transition to wind, solar, and
hydrogen fuel cells.
In addition, labeling the resource base as finite is also misleading because it
suggests that our concern should be “running out.” In fact, for most resources we
shall never run out. Millions of years of finite resources are left at current
consumption rates. The rising cost of extracting and using those resources including
environmental costs is the chief threat to future standards of living, not the potential
for their exhaustion. The limits on our uses of these resources are not determined by
their scarcity in the crust of the earth, but rather by the environmental consequences
of their use. The implications of climate change, including rising sea level, heat
extremes, droughts and storm surges, are potentially so severe as to force a major
reevaluation of our carbon-based energy choices. Similarly the loss of biodiversity,
which would be intensified by climate change, could irreversibly alter our ecosystems
and reduce their resilience to future shocks.
Resource scarcity can be countered without violating sustainability by finding new
sources of conventional materials, as well as discovering new uses for unconventional
materials, including what was previously considered waste. We can also stretch the
useful life of these reserves by reducing the amount of materials needed to produce
the products. Striking examples include the diminishing size of a typical computer
system needed to process a given amount of information and the substantially
diminished amount of energy needed to heat a well-designed home.
Conventional energy sources such as oil, are likely to become scarce in the
not-too-distant future, but a host of alternative renewable substitutes exist.