Renewable Resources

Renewable Resources

The rate at which we can safely run down fish and animal stocks,
harvest timber and use fresh water reserves depends on their natural
regeneration rates. These differ for different species. Rabbits reproduce
faster than rhinoceroses and can accordingly be hunted more.
Bamboo grows faster than oak. The costs of harvesting are important
too. The further and more expensive it is to travel to cut down
timber, or fish for disappearing stocks, will have to be compared
against the revenues gained from selling the scarce supplies.
Note that extinction becomes an imminent danger where:
 property rights are ill defined (see Box 7.8),
 the costs of harvesting are low,
 the prices and revenues from selling scarce resources are high,
 stocks have fallen to a CRITICAL MINIMUM SIZE for natural regeneration
and,
 people involved place little value on the future loss of the asset
concerned.
All these conditions are met, for example, in those African big game
parks where poachers are unlikely to be caught and their targets are
Suppose oil prices were rising at a rate of 12 per cent per year as
supplies cannot keep pace with demand. Suppose, however, that
the market values the future at 5 per cent. That is, invest 100
now and you will earn 105 next year.
Clearly you have an incentive to buy oil now and sell it in a year’s
time – you would make 12 per cent rather than 5 per cent that way.
With fast rising oil prices, there would be a surge of interest in
developing oil reserves and increasing supplies. This increased
rate of exploitation would eventually bring prices down, and the
rate of growth of oil prices would fall until eventually it equalled
5 per cent. There would be no incentive to increase exploitation
and drive down the rate of price increase below this.
Box 7.7 Depletion rates: an example
© 2004 Tony Cleaver
easy to identify. The same scenario obtains where certain large
wildlife species have nowhere to hide and are competing for habitat
with poor people (see Box 1.3, p. 15). The safety of your children
has a higher priority than the freedom to roam of tigers or wild
elephants in these circumstances.
MARKETS AND GOVERNMENT
Economic development need not be at the expense of the planet if
we get our policies right. If market prices do not reflect substantial
environmental costs in the sale of certain goods and services then
taxes can be imposed to bring their production and consumption
in line with sustainable limits. Exploitation of common property
can be reduced by allocating property rights where possible and
by active policing wherever not. North Atlantic cod and African
elephants need not go the way of the Dodo.
Governments can use the ingenuity and efficiency of markets.
For example, given agreement on the amount of pollution reduction
Common property, by definition, belongs to everyone. No one
user has a strong incentive to conserve it, therefore. History
shows that, as populations rise, village pasture that is open to all
local farmers tends to be exhausted by the first ones to place
their livestock upon it. ‘Use it or lose it’ is the maxim.
The same principle applies to native forests, fish and wildlife
stocks, underground reservoirs of fresh water and oil – indeed
wherever there is a common resource and access is open to all.
Stocks of North Atlantic cod, for example, have been reduced
almost to their point of no return where there has been open
competition between rival nations’ fishing fleets – except in the
case of Iceland’s territorial waters. Where Icelandic waters are
concerned there has been a conservation policy observed and
enforced and cod stocks are healthy as a result. Where there is a
lack of international agreement, however, and property rights are
absent or weakly enforced, then excessive exploitation will take
place. That is the ‘tragedy of the commons’.
Box 7.8 The tragedy of the commons
© 2004 Tony Cleaver
that must be achieved by a certain date, different countries (or
regions within a country) can trade POLLUTION PERMITS between
themselves to determine who does what. If zone A finds it more
expensive to make cutbacks than zone B then A can pay B to do
more than its share of greenery. So long as there is agreement all
round and targets are met, then everyone gains.
Humankind’s ingenuity is the only resource that is not in short
supply and shows no sign of reaching exhaustion. Although there
are problems, scientists and economists can come together and
calculate the costs and benefits of each and every practice that
seems to threaten the environment and make their recommendations
accordingly. The political will to apply our energies to safeguard
the future is hard to come by, but successes like the Montreal
Protocol in 1987 – which agreed to phase out the production of
CFCs and protect the ozone layer – show that, however difficult,
international accord is possible.
I finish on a note of caution, however. The poor world cannot
wait. Some countries are already growing fast and others are
desperate to follow in their footsteps. Having waited so long and
watched how others have enjoyed the fruits of the planet without
them, poor people naturally have a high preference to get rich
quick and may discount the effects on the environment quite
highly. Populations in temperate lands who have dammed their
rivers, consumed their native forests and burned off their coal
reserves in the course of industrialisation may be rudely received
if they protest about developing countries doing the same. If people
in the developed world want others to ease up on their exploitation
of the planet they will have to pay them to do so. That is the market
solution.