distribution of foodstuffs. There is a direct correlation between economic growth and oil consumption. Faster growth requires more oil, lower growth less. That’s why, in times of recession, when growth softens, demand for oil also falls. The same is true for other strategic metals and minerals like copper, iron, nickel, chromium, zinc, tin and manganese. Yet, like oil, the overall trend in the price of raw materials has been rising over the past decade.
When Dennis Meadows and his associates were building the original Limits to Growth model back in the early 1970s they were concerned that we would exhaust supplies of basic metals and other industrial raw materials within 50 years. That hasn’t happened. The global economy has expanded 10-fold since then and mining corporations have ransacked countries from Brazil and Peru to Canada and Mongolia in search of strategic materials. Extraction technologies have become more sophisticated and exploration continues to expand at an ever-increasing rate to the remotest corners of the planet. In 2008, the weight of all materials extracted and harvested around the world totaled 68 billion tonnes, nearly 25 kilograms a day for every person living on the planet. Global resource extraction has grown by nearly 80 per cent since 1980. The largest rise in per-capita consumption has occurred in the industrialized world.3
Digging it all out
Global resource extraction has grown by 78% over the past 30 years, from around 38 billion tonnes in 1980 to around 68 billion tonnes in 2008.
Global resource extraction by material category, 1980-2008
Source: SERI, materialflows.net nin.tl/19pu5tO
We have not bumped up against the limits of these strategic metals yet. But it would be imprudent to assume that supplies are limitless. If the rest of the world consumed copper, zinc, tin, chromium and silver at the same rate as the US, it is estimated that the global supply of those strategic metals would disappear in less than two decades.
A 2009 study highlighted by the Worldwatch Institute outlines broad-brush estimates of the availability of common metals based on current levels of consumption. Within the next century we will see major shortages of most basic raw materials as rich seams of ore are used up and new discoveries dwindle.4 Existing stocks will also become more expensive to pry out of the ground as ore grades decline. Part of the problem will be real physical shortages, but equally important will be the price of energy used in extraction as oil prices inevitably creep upwards.
Mainstream economists, business leaders and many scientists place their hope in technology and human ingenuity. They look at the last century of scientific achievement and technological progress as just the beginning of more and better innovation. Why worry about running out of resources, they ask, when we can become more efficient by improving our technology?
Isn’t technology an infinite resource? The short answer is, no. As Herman Daly writes: ‘Improved technology means using the entropic flow [remember our entropy discussion from the last chapter] more efficiently, not reversing the direction of the flow. Efficiency is subject to thermodynamic limits. All existing and currently conceivable technologies function on an entropy gradient, converting low entropy into high entropy, in net terms.’5
The counter argument is that efficiency improvements – doing more with less – mean we don’t need to worry about running out of raw materials. We can continue to have economic growth using less energy, fewer material inputs and fewer workers. (Don’t ask what happened to full employment. Efficiency demands increased productivity and, if that means more labor-saving technology and fewer good jobs, then so be it. That is the price we must pay for growth.)
Indeed, these claims are not without precedent. Industry has made huge strides in efficiency in recent years. Across the world economies have become less ‘energy intensive’, driving down the amount of energy used to produce every unit of GDP. The US, for example, used 20,000 BTU (British Thermak Units) of energy in 1950 to produce one dollar of GDP. By 2008 that had been slashed to 8,500 BTU. In addition to technology ‘fixes’, economists have a strong faith in ‘price signals’ and ‘substitution’.
Introductory economics textbooks say that if a resource becomes scarce then its price will rise to the point where users will look for a cheaper substitute. This might make sense in some instances. For example, if a bakery finds refined white sugar hard to source and too expensive then it might search for a cheaper alternative – honey, perhaps, or an artificial sweetener. But what works at the micro level may not work at the macro level. In the case of critical inputs, like oil, a substitute is not so easily available.
The Jevons Paradox
The notion that the economy can be ‘de-coupled’ from material inputs and so continue merrily down the growth pathway is dubious. This is largely due to a little-known hiccough called the Jevons Paradox or ‘rebound effect’. In his 1865 book, The Coal Question, the British economist, W Stanley Jevons, posited that greater energy efficiency produces savings in the short run but in the long run results in higher energy use.
‘It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption,’ Jevons wrote. ‘The very contrary is the truth.’
How can that be? Well, Jevons argued that just because we use energy (or raw materials) more efficiently doesn’t mean we’ll use less of them, especially in an economic system predicated on growth. The Jevons paradox, in a nutshell, says that the benefits of increased technical efficiency are inevitably swamped by increased consumption. Improvements in efficiency translate into lower prices in the short term, which in turn trigger higher consumption. You see this ‘rebound effect’ when the price of gasoline falls and people drive their cars more. Or when savings on energy-efficient light bulbs and appliances are used to buy a new flat-screen TV or another household gadget.
We’re caught in a bind. Ramping up GDP without improving technological efficiency leads to more resource inputs, more energy consumed and environmental damage. Yet improving efficiency triggers more growth – which leads to the same end. Total resource consumption grows even while efficiency improves. Between 1970 and 2000, rich countries saw impressive gains in energy efficiency of up to 40 per cent. But average improvements of two per cent a year were eclipsed by growth rates of three per cent a year or more.
In one study cited by the New Economics Foundation (NEF), environmental economist Toyoaki Washida found a significant ‘rebound effect’ in the Japanese economy that swallowed 35-70 per cent of the efficiency savings.6 According to NEF, ‘even if technological energy efficiency and the uptake of new, more efficient devices increased by 50 per cent over the next 20-30 years with GDP rising by a conservative 2.5 per cent, within 25 years we’d be back where we are now.’
Other researchers confirm that growth eventually swamps efficiency improvements. In a study of the material outflows of five industrial nations, the World Resources Institute found that industrial economies are becoming more efficient in their use of materials, but that waste generation also continues to increase. ‘Even as decoupling between economic growth and resource throughput occurred on a per-capita and per-unit GDP basis, however, overall resource use and waste flows continued to grow. We found no evidence of an absolute reduction in resource throughput.’7
The chart below shows exactly that. Even though ‘material intensity’ (the volume of materials consumed per unit of GDP) has been decreasing since 1980, the total volume of materials extracted continues to increase. We are using fewer resources more efficiently. But it makes little difference if growth and population continue to rise.
Relative
