THE NON – RENEWABLE
RESOURCES
Today or tomorrow?
The general quantity of a non
renewable resource is a given
THE MORE IT CONSUMES TODAY, SO
MUCH WILL BE AVAILABLE TOMORROW
In the management of
the non – renewable resources the attention
is moved so that the sustainability
matter is those of availability,
from the concept of sustainable factor
to that of impoverishment
How do we evaluate the real
availability of non – renewable?
We must consider the consistence of the
accessible score today and in the future
Therefore the developments of
TECHNOLOGY
And their present and future possible
investments
Therefore the growth of the
POPULATION and the ECONOMIC
and SOCIAL EXPECTATIONS
According to the neo – Malthusian point of
view we are of
 absolute physical shortage in which it is
necessary to employ more and more
energies ...
... To extract resources of quality
with big costs in terms of pollution
and of environmental degrade
According to the neo – recardian
point of view the most probable
scenery is that of an increase of
the extraction cost and the prices
of the non – renewable resources
that will become necessary to
exploit layers of small quality ...
... But the technological progress and
the action of the market will favor
the use of methods less invasive and
more efficient as well as the
recycling of the already drawn out
and used resources
The physical measures of shortage
are based on a relative evaluation of
the reserves and the future demand.
The real existence of the exploitable
reserves is economically uncertain ...
... And the estimation are seen
continually
 In terms of portable and possible
availability
We talk instead of resources with
reference to the non – individualized
layers with certainly or not
economically exploited to the actual
state of technology and the question
The Para marginal resources are those
whose exploitation is not currently
convenient but it would differ with an
increase in the price up to 1.5 times...
 And that they could
become resources in brief times
... While those sub-marginal would
not become convenient even with
such increase of price
 And those that are not to be taken
in consideration fot the moment
The knowledge of the availability
of non – renewable resource is fundamental
Planning for a long time
of its employment
The most prudent ( or pessimistic ) base
their calculation only static stock
or currently
certain and available
... And on estimation of future
growth of the question
This estimation look out as a
COMPLETE EXHAUSTION
of many non – renewable resources in
brief times
If the esteemed reserves is considered
even if it is not currently available the
perspective becomes very dramatic
 And this explains why the problem
of the resources exhaustion is
relatively of a little sense today
It is necessary to consider for some
unexpected complications
A Sudden strong necessity of an
available resource following an
important technological innovation
The shortage economic indexes of a non
renewable resource are:

The cost of production
 extraction and work
 The relative prices of market

The price shades or cost of the resource
use
The observed dynamics of these
indications doesn’t seem to suggest
extreme pessimistic scenario with
reference to the exhaustibility of the
resources ...
... Even if the interpretations of the data
stay very controversial
ON WHICH LOGIC IS THE DECISION TO
EXTRACT A RESOURCE TODAY BASED?
Behind the extractive process there are three
separate phases:
• Exploration  Identification of the deposits
• Development  Preparation for the extraction
• Extraction  Offer on the market
Each phase is influenced by the
dynamics of the resource
price in the market!
For non-renewable resource
the extraction rate today conditions
the future availability of the resource
The extraction cost depends on

The price of the productive factors
necessary to the extractive activity
But...

From the modality of quick extraction
 to the nature of the resource still
exploitable

From the respect of the future
profitability of the ressource
Increasing the extraction
rate
The level of the available
reserves is reduced currently
It gives impulse to the activities
of exploration and development
to increase future availabilities
The net effect on availability
can be ambiguous!
If there is no possibility of reproducibility of
the resource, the decision is based on the
comparison between future growth of its
price and ‘impatience’ of the proprietary
 measured by the rate of discount
If the proprietary is not interested so much
for maximizing the profit, the fundamental
rule would require that then ...
 If the costs of extraction were remarkable
... The rhythm of extraction should
make the growth of the stock value
available  Induced from the increase of the price
equal to the proprietary discount rate
In equilibrium, the discount rate must be
equal to the interest rate on the capital
where the owner can extract the
resource and buy it in the market,
employing the result in activity that yield
an interest
SUPERIOR INTEREST TO THE INCREASE
RATE OF THE PRICE OF THE RESOURCE
lead
To extract more
INFERIOR INTEREST
lead
To extract less
The competition between investors will
bring the alignment of the outputs of
varied activities
If we keep track of the extraction costs,
it is noted that these are of two types:
- The operational costs
- The cost of use, or the missed profit
derived from the fact that…
... today a quantity of drawn resource
is not exploitable tomorrow
Cost opportunity of the
extraction today
The perfect price of the resource will
owe to reflect the operational cost
and that of use
or
The totality of the extraction today
This what happens in a competitive
market, where the price stays superior
to the extraction costs
 operational+cost of use
how much more to produce ...
... And vice versa if the price
becomes inferior to the costs
If the entreprises held count of
operational costs, they would extract
a superior amount of resource that
performs their future profit !
For an efficient allocation of the
resources, it is noticed that the cost of
use should also reflect all the
externalities  generally negative
if related to extractive activity !
The prespective of a future diminution
of the extraction costs lead to reduction
of today’s extraction
An increase of the interest rate
will increase the rhythm of
actual extraction
 The future profits are discounted more heavily
... But on the other hand it would
increase the cost of an investment in
new equipments for the exploration
contributing to preserve from the
exploitation