2.6.1 The Fixed Stock Paradigm
While putting down the input rule for environmental
sustainability a restriction has been imposed that the rate of harvesting
renewable natural capital be less than, or equal to, the sustainable yield.
However, with non-renewable resources, there cannot be any sustainable yield.
The resource will be depleted so long as the use rate, - the 'harvest', is
positive. This means their supply at any particular point in time is a fixed
stock that can only diminish with use. It is therefore necessary that in the
case of non-renewable resources, instead of seeking to find an optimal rate
of use, attention should be restricted towards finding the optimal rate of
depletion of the resource (Pearce and Turner 1990).
Some attempts have been made to estimate the time in future up to which the
corresponding projected demands can be met from the known reserves. At recent
levels of global production, for example, the 310 million tonne of world copper
reserves would last about 35 years (Tilton 1996). However, the term reserve,
by definition, means the quantity of economically exploitable mineral under
the given technology. Such estimations fail to take into account the influence
of new discoveries, new technologies and changing prices on the mineral stock
over time. Nevertheless, if current situation is any indication the spiralling
increase in demand (due to rising per capita income and growing population)
for raw materials, particularly minerals, cannot be offset by new discoveries
alone. While technology may allow a great quantum of geological resources
to be turned into mineable reserves by allowing lower grade, more remote and
more difficult-to-process deposits, the environmental wastes to be generated
per unit of output will, without doubt, rise significantly. This is evident
from the fact that copper produced from 0.3% ore generates at least ten times
more waste-rock per tonne of ore than copper from 3.0% ore (Tilton 1996).
On the demand side, modern technology has broadened the scope and option for
meeting a particular need and in the process often increasing the substitutability.
Recent evidences suggest that advancement of technology has more than offset
the depletion of mineral reserves through consumption and left them progressively
less scarce (Pearse 1991). The case of copper is a good example. It would
have been extremely costly, if not materially impossible, to provide the quantity
of copper that would have been required to maintain today's level of communication
through the available technology of 1940s. Fortunately, the metal has virtually
been replaced for long distance communication.
The proponents of fixed stock paradigms quite rightly suggest that if the
cost of environmental degradation is not internalised in near future, prevailing
market mechanisms will definitely lead to over production of exhaustible resources
through deployment of excessively polluting technologies. Such a situation
if allowed to continue will soon result in crossing the carrying capacity
of environment at the production sites in particular and the global environment
in general.
2.6.2 The Opportunity Cost Paradigm
Historic evidences suggest that the neo-Malthusian concern over possible scarcity
of land and natural resources due to excessive increase in population and
expansion of economies is largely misplaced. It is mostly the economists who
support the opportunity cost paradigm. According to them the limited stock
of land and natural resource, in the world does not prevent continuing expansion
of production and improvement in material standards of living. They question
the validity of reserves as an appropriate measure of ultimate stock and argue
that the total available stock of minerals invariably results in an exceedingly
long life expectancy. For example, the 1.5x1015 tonne of copper available
in the earth's crust would last for some 161 million years (Tilton 1991, 1996).
Moreover, with the notable exception of fossil fuels, many so-called non-renewable
resources are not destroyed when consumed.
The possible recycle and re-use of such commodities depend on the cost of
recycling vis-à-vis intake of mined resources. Scarcity is therefore only
economic and not due to physical availability. Economists further suggest
that,- much before the exhaustion of physical stock, either rises in production
cost or availability of substitutes would cause a cessation of demand.
Many development thinkers therefore reject the fixed stock paradigm and propose
an opportunity cost paradigm that stresses the heterogeneity of exhaustible
resources. Exploitation is prioritised based on ease of access, the ease of
working and the richness of a deposit. With the exhaustion of low-cap high
grade deposits mining gradually shift to 'difficult-to-mine' low grade deposits
with a corresponding rise in cost, which in turn causes the demand to fall.
However, not all exhaustible resources would be subjected to scarcity due
to over exploitation and cost rise. The cost increasing effects of depletion
may often be more than offset by the cost reducing effects of new discoveries,
new technology and other developments. The relevant costs are the full opportunity
cost of finding and producing mineral commodities, including any external
environmental cost (Tilton 1996). Studies (Barnett and Morse 1963) reveal
that capital and labour costs for producing minerals have actually reduced
consistently. Proponents of the opportunity cost paradigm believe that any
price rise (as an effect of scarcity) would set in motion a series of self
correcting activities making the system quite robust. These self-correcting
activities may also take into account environmental cost if public policies
allow internalisation of such costs.