An environmental economist explains the challenges of analyzing sustainability for industrial materials
This content was originally published on The Ohio State University Discovery Themes website.
By Elena Irwin
In a world of finite resources, growing population and increasing consumption per capita, it seems undeniable that we will one day reach a limit to the amount of stuff we can produce and consume as humans living on planet Earth.
'Indeed, some would say that this day has already arrived. Environmental scientists such as Will Steffen and Johann Rockström have identified physical limits—so-called "planetary boundaries"—for the most critical environmental impacts generated by human activities. Transgressing these boundaries decreases the stability of environmental systems and increases the threats to human well-being. They estimate that humanity has already transgressed four of these boundaries: climate change, loss of biosphere integrity, land-system change, and altered biogeochemical cycles of phosphorus and nitrogen.
There is widespread agreement that human well-being depends on a well-functioning Earth system that generates a multitude of so-called ecosystem services—a term that quite literally means the benefits that Nature provides to humans. Nonetheless, there is far less consensus about how "close" we are to surpassing planetary boundaries, what this implies for human well-being, and what actions should be taken. Why is it so hard to answer these questions?
One challenge is that ecological limits are uncertain and dynamic—"tipping points" depend on the interactions of many variables, and can change over time. Another is that the impacts of these limits depend not just on physical and ecological processes, but also on how humans perceive, value, and respond to resource scarcity.
A primary example is the role of scarce resources in spurring technological innovation. As raw materials become scarce, their prices rise, and companies find ways to replace them with cheaper substitutes. This in turn tends to reduce the consumption of higher-priced, scarce resources and eases the resource constraints.
Consider the historical case of copper. While the real price of copper trended downward during most of the twentieth century, it increased sharply in the late 1980s. The price increase spurred the development of the "solvent-extraction electrowinning" process for metal deposition. This innovation allowed the use of lower-grade copper ore, including material that was left behind by previous mining operations. Prices subsequently dropped, following this increase in the supply of useable copper.
Technological innovation in response to market signals has managed to contain the ultimate threat of limited resources, at least so far in our human history. But how much innovation and substitution is possible in the future? Some remain confident in our technological progress, while others such as Tom Graedel warn of complicating factors such as political instability in developing countries that supply critical metals. While our increasing reliance on rare earth metals and minerals may pose a serious threat to global supply chains, economists take comfort in the fact that these raw commodities have market prices that will help to offset the effects of scarcity.
In my next blog I will talk about what many see as a larger scarcity problem that arises from our overconsumption of resources that do not have prices—such as clean air and freshwater. These and many other ecosystem services are not priced at all, despite the fact that we derive substantial value from them and indeed, depend on them for human prosperity in the long run.
Elena Irwin is Faculty Director of the Sustainable and Resilient Economy program, and a Professor in the Department of Agricultural, Environmental, and Development Economics. She studies land use economics and policy and the impacts of land use on water quality and other ecosystem services, with funding from the National Science Foundation and other sources. Elena is also co-founder of the Environment, Economy, Development and Sustainability major at Ohio State.
To learn more about planetary boundaries and resource scarcity:
J. Rockström, et al. 2009. A safe operating space for humanity. Nature 461.7263: 472-475.
W. Steffen, et al. 2015. Planetary boundaries: Guiding human development on a changing planet. Science 347.6223: 1259855.
Krautkraemer, J.A. 2005. "Economics of natural resource scarcity: The state of the debate." In Scarcity and growth revisited: natural resources and the environment in the new millennium. Resources for the Future, 2005.
Graedel, T.E., et al. 2015. On the materials basis of modern society. Proceedings of the National Academy of Sciences 112.20: 6295-6300.
August 25, 2015
Photo credit: Daniel Vazquez