These lags in time and distance matter for several reasons. They can add to uncertainty (discussed in chapter 2) since, if a problem emerges far in time or space from its causes, the connection between cause and effect may not be immediately made. It also means that, by the time a problem is noticed, the behavior that causes it may already be widespread and thus harder to change. And on the side of resolving problems – which is often the stage at which the political process becomes involved – the time between when a behavior stops and a problem is resolved may be quite long, requiring people to take costly action long before the benefit is felt, which politicians may be reluctant to demand. The distance between cause and effect can be politically problematic if the causes of an environmental problem – and thus the location where the costs of changed behavior are felt – is in a different jurisdiction than the location where the effects – and thus the benefits of change – are experienced.
Non-linearities/Tipping Points
Another important element of some environmental problems is that their effects may be related in a non-linear way to their causes. We tend to think of problems as having a clear and consistent relationship between cause and effect: the more CFCs we emit, the more the ozone layer is depleted, and when we stop the emissions the ozone layer will recover. But for many environmental problems the relationship is more complex. There may be tipping points after which changes in natural systems mean that recovery to a previous state is no longer possible. A species may suddenly collapse once a sufficient percentage has been harvested. Enough climate change may cause ocean currents to slow or change direction, dramatically altering weather patterns around the world. More dramatic are feedback loops in which effects compound. For example, as the global average temperature increases, ice melts. Because ice reflects sunlight, when it melts the system takes in more sunlight and warms even more, which causes more ice to melt, and so on. Once this kind of feedback loop engages, it continues to magnify. One of the particular dangers of climate change is that it features many such feedback loops. In other words, more climate change leads to even more (and even faster) climate change. These characteristics of some environmental problems make it more difficult to understand the relationship between cause and effect and increase the urgency of intervening before such dangerous tipping points or feedbacks happen.
Effects of Scarcity: Will We Run out of Resources? Another important aspect of environmental issues is their intersection with economics: in particular, how people and systems respond to scarcity. Because non-renewable materials are finite, people often express concern that we will use up these resources. Given their importance to our industrial economy, no longer having access to these resources could be problematic. The economist Julian Simon argued that we will never run out of non-renewable resources,3 and it’s worth understanding his reasoning.
Simon made a bet with Paul Ehrlich, a biologist concerned that the world’s growing population would lead us to run out of resources, especially those that are not renewable. Ehrlich’s logic is easy to understand: as more people use more of these resources, either because there are more people or because the same number of people use more, there will be fewer of them left.
The famous Simon–Ehrlich wager took place in 1980.4 Ehrlich chose $1,000 worth of five metals – copper, chromium, nickel, tin, and tungsten. He bet that ten years later the inflation-adjusted value of these metals would be higher, which is what you would expect if they were becoming scarcer relative to demand. It is a basic tenet of economics, accepted by both Simon and Ehrlich, that when demand increases relative to supply (in other words, when there is the same amount of something but more people want it, or when the same number of people want something but there is less of it) prices will increase. Simon, who was not concerned that we would run out of resources, bet that the collective price would decrease.
Simon won the wager; collectively the prices in 1990 had decreased. It’s worth noting that there were periods of time during that decade in which the prices actually had increased; if the bet had been called at that point, Ehrlich would have won. But the broader trend was on Simon’s side, and it’s useful to explore both the mechanisms for that and their implications for the possibility of using up non-renewable resources.
It is because these resources become more expensive as they become scarcer (or as demand increases relative to supply) that several other important processes are set in motion. We are more likely to conserve, to substitute, and to innovate because of the increasing cost. For purposes of illustration, let’s examine what happens with oil, which includes things such as the gasoline used in most motor vehicles.
When oil becomes scarcer, gasoline prices rise. When fuel costs more, we are likely to use less of it, both as individuals and as a society. Some people might start to carpool to get to work, so that more people are commuting with the same amount of gasoline. Others might wait between trips to the supermarket, so that they use less gasoline per trip. Industry users will try to figure out whether they can become more efficient in their use of fuel, because it costs more. Can they heat or cool buildings less? Run machinery less often? Capture waste heat from mechanical processes to help heat buildings? All of these approaches can fit under the idea of conservation.
We also may be more likely to find substitutes for scarcer, or more expensive, resources. Some people will start taking the bus or subway instead of driving, which could count as both conservation (of fuel) and substitution (of mode of transportation). An electric utility that previously generated electricity with fossil fuels might instead substitute nuclear power or electricity generated by wind. Any of these approaches might have been less convenient or more expensive than using fossil fuels, but once the price of fossil fuel rises the substitution makes sense.
Underpinning all of this is innovation. Because people want to conserve gasoline when it becomes more expensive, they will be more likely to buy fuel-efficient cars, so that gives an incentive to automobile engineers to develop cars that use less fuel. Finding other ways to provide energy that doesn’t rely on fossil fuels also makes sense as prices rise – someone has to innovate the ways to get energy from wind or sun and to connect it to a power grid, and it is worthwhile spending the money and effort to do that if the cost of fossil fuels is higher.
Another aspect of innovation involves accessing resources that are more remote and difficult to retrieve. As oil prices rose in the 1970s for a variety of reasons, oil companies were willing to invest more resources in exploration. Since they could earn more per unit of oil they could access, they were able to invest more in finding or extracting it. It was during this period, for instance, when drilling for oil in the deep ocean (such as the North Sea) became cost-effective.5 It was hard, and dangerous, and required the invention of new technologies to be able to drill deeper and extract and transport the oil. But it was worthwhile for oil companies to invest in this technology, and for inventors to work to create it, because the amount for which each barrel of oil would sell had increased. Likewise, it was worth exploring for oil in places where it was less likely to be found, because, if it were discovered, the payoff would make up for some of the unsuccessful efforts.
We could do the same mental exercise with any non-renewable resource, such as trees or water. As they become scarcer, individuals and society will conserve, substitute, and innovate in ways that both decrease use of the resource and access new reserves of it. So why is it, when we could have more renewable resources if we were just able to leave them be for a while, that we so frequently do deplete these resources, sometimes beyond recovery?
Although demand is the most important determinant of resource prices, these processes of conservation, substitution, and innovation help account for the volatility in prices (and the reason that, in some years of the decade-long bet, Ehrlich would have won the wager he made with Simon). After prices rise and these factors change behavior, prices are likely to fall as the new sources have been accessed and conservation and substitution have decreased consumption. The price trend may be generally upwards, but with notable fluctuations. Some of the conservation and substitution will likely stick, however: once you’ve bought