Scarcity

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Scarcity

As most commonly used, the term scarcity refers to a limited supply of some material. With the rise of environmental consciousness in the 1960s, scarcity of natural resources became an important issue. Critics saw that the United States and other developed nations were using natural resources at a frightening pace. How long, they asked, could nonrenewable resources such as coal , oil, natural gas , and metals last at the rate they were being consumed?

A number of studies produced some frightening predictions. The world's oil reserves could be totally depleted in less than a century, according to some experts, and scarce metals such as silver, mercury , zinc, and cadmium might be used up even faster at then-current rates of use.

One of the most famous studies of this issue was that of the Club of Rome , conducted in the early 1970s. The Club of Rome was an international group of men and women from 25 nations concerned about the ultimate environmental impact of continued population growth and unlimited development. The Club commissioned a complex computer study of this issue to be conducted by a group of scholars at the Massachusetts Institute of Technology. The result of that study was the now famous book The Limits to Growth.

Limits presented a depressing view of the Earth's future if population and technological development were to continue at then-current rates. With regard to non-renewable resources such as metals and fossil fuels , the study concluded that the great majority of those resources would become "extremely costly 100 years from now." Unchecked population growth and development would, therefore, lead to widespread scarcity of many critical resources.

The Limits argument appears to make sense. There is only a specific limited supply of coal, oil, chromium, and other natural resources on Earth. As population grows and societies become more advanced technologically, those resources are used up more rapidly. A time must come, therefore, when the supply of those resources becomes more and more limited, that is, they become more and more scarce.

Yet, as with many environmental issues, the obvious reality is not necessarily true. The reason is that there is a second way to define scarcity, an economic definition. To an economist, a resource is scarce if people pay more money for it. Resources that are bought and sold cheaply are not scarce.

One measure of the Limits argument, then is to follow the price of various resources over time, to see if they are becoming more scarce in an economic sense. When that study is conducted, an interesting result is obtained. Supposedly "scarce" resources such as coal, oil, and various metals have actually become less costly since 1970 and must be considered, therefore, to be less scarce than they were two decades ago.

How this can happen has been explained by economist Julian Simon, a prominent critic of the Limits message. As the supply of a resource diminishes, Simon says, humans become more imaginative and more creative in finding and using the resource. For example, gold mines that were once regarded as exhausted have been re-opened because improved technology makes it possible to recover less concentrated reserves of the metal. Industries also become more efficient in the way they use resources, wasting less and making what they have go further.

In one sense, this debate is a long-term versus short-term argument. One can hardly argue that the Earth's supply of oil, for example, will last forever. However, given Simon's argument, that supply may last much longer than the authors of Limits could have imagined twenty years ago.

[David E. Newton ]