Abiotic Resources
Chapter 5: Ecological Economics
by Herman Daly & Josh Farley
Chapter Overview
• Fossil Fuels
• Mineral Resources
• Water
• Ricardian Land
• Solar Energy
• Key Question:
How do the laws of thermodynamics, the distinctions between
stock-flow and fund-service resources, and the concepts of
excludability and rivalness relate to these resources?
Fossil Fuels
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Crude oil
Coal
Natural Gas
TOTAL (fossil fuel)
38% of energy for global economy
25% of energy for global economy
22% of energy for global economy
85% of energy for global economy
• Energy Return on Investment –How many barrels of oil does
it take to recover a barrel of oil (including exploration,
machinery, transportation, etc.)?
• 1950’s Energy Return on Investment in U.S. was about 50:1
• 2000 Energy Return on Investment in U.S. was about 5:1
• What is ‘Peak Oil’? Are we presently in ‘Peak Oil’ globally?
How much oil is left?
• Global Annual Consumption of Oil :
25 Billion Barrels (~70 million/day)
• In 1997 the world used 23 Billion Barrels, discovered 7 Billion
more, yet the estimated reserves increased by 11 Billion.
• How does that make sense? There are uncertainties with respect
to how much oil is left in a given location. For example, the P90
estimate for a field in Norway might be 11 million barrels (that
means there is 90% confidence that 11 million barrels can be
extracted from that field. A P50 estimate for the same field would
be a higher number). Countries and companies manipulate their
estimated reserves for various reasons such as attempts to
increase stock prices, garner greater access to credit, and, for
OPEC countries, to increase their Oil production quotas.
The ‘Peak Oil’ Graph
Noam Chomsky onPeakOilandmore (20min): http://readersupportednews.org/video/4-video/4901-noam-chomsky-peak-oil-and-a-changing-climate
• Question: Economists argue that price reflects scarcity. Do
you think the price of oil is a good indicator of how much oil
left in the ground? Why or Why not?
http://www.energybulletin.net/primer.php
The sink will be full
before the source is empty
Used fuel does not disappear; it must
return to the ecosystem as waste. Acid
rain, global warming, carbon monoxide,
heat pollution, and oil spills are unavoidably
associated with the use of fossil fuels. On a
small scale, some of these wastes could be readily processed by
natural systems, but on the current scale, they pose serious
threats. Indeed, the growing accumulation of waste products
from fossil fuel use and the negative impacts these have on
planetary ecosystems is probably a far more imminent threat to
human welfare than depletion; the sink will be full before the
source is empty.
• Question: What is the bigger problem, running out of oil or
dealing with the oil we have already used?
Mineral Resources
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Grouped with fossil fuels in econ textbooks
Fossil fuels are permanently changed when used.
Minerals are not (they are almost 100% recyclable).
Mining accounts for 10% of Global Energy use.
According to Georgescu-Roegen mineral depletion is a bigger
concern than fossil fuel depletion because fossil fuels can be
substituted with solar energy whereas minerals cannot.
Extracted mineral stocks will eventually succumb to entropy.
(example: Pennies slowly eroding away)
We often find substitutes for scarce minerals.
This process is probably slow enough that we could achieve a steady
state economy through material recycling for a time sufficient that
extinction through evolution would happen before extinction
through resource depletion.
Minerals are rival goods within a generation and nonrival between
generations. Fossil fuels are rival both within and between
generations.
Water (a complex abiotic resource)
The myriad ways we use water makes
it very difficult to characterize its
economic properties in a general way
as an abiotic resource.
Water: or lack thereof
• For drinking, irrigation, industry, and waste disposal water is a stock-flow resource;
however, many water resources are renewable via the hydrologic cycle.
• On the other hand many aquifers are being mined at rates that necessitate
regarding water as a mineral.
• These rivers sometimes never reach the sea: The Colorado, The Rio Grande, AmuDar’ja & Syr-Dar’ja (flowing into the Aral Sea), and the Yellow, Hai and Huai rivers
in northern China.
• It seems natural to think of flowing water as a fund-service but dams allow us to
stockpile water – and fund-service resources cannot be stockpiled.
An ecological economic way of thinking
about Flowing Water as a resource
• Perhaps the best way to think about flowing water is to
distinguish it from the hydrologic cycle. The water itself is a
stock-flow resource that is rapidly renewed by the service
(provided by solar energy) of the hydrologic cycle.
Hydroelectricity is not provided by water, but rather by the
energy transferred to water by the hydrologic cycle – solar
energy stored in water. Solar energy is generally a fund
service, but when stored in water, it can be either a stock-flow
or a fund-service resource. When mechanical energy in the
water is converted to electric energy by a micro-hydro power
plant that depends on river flow, it is essentially a fund-service
resource. However, damming of the river allows the energy to
be stockpiled by converting mechanical energy to potential
energy, which is a stock-flow resource.
Water (continued)
Like Biotic resources, water can
be a stock-flow and fund-service
Resource simultaneously. Unlike
Biotic resources; however, humans
cannot meaningfully affect the total stock of water on the
planet. We can and do reduce the stock of usable water, and
while it is possible to restore the usability of water , there are no
substitutes for its most important uses.
Water has a dual nature. Water can be rival or nonrival depending on its use.
Stock-flow uses are rival, fund-service uses are nonrival. However, as flowing
Water is recycled through the hydrologic cycle, it is intergenerationally nonrival.
Excludability varies dramatically depending on existing institutions, though rainfall
Is practically nonexcludable by nature.
Q: Should water be privatized to ensure we
use it more efficiently?
Ricardian Land
(after David Ricardo – ‘comparative advantage’ guy )
• Land as a physical substrate and location, distinct from its other
productive qualities.
• A fund that provides the service of a substrate capapble of
supporting humans and our infrastructure.
• A fund that provides the service of capturing solar energy and rain.
• Land is excludable. Land is not depletable.
• Land is rival within one generation but nonrival between
generations.
• Questions: Why do you think we distinguish between Ricardian
Land as a physical substrate and the more conventional definition
of land that includes the soil and its mineral content? Who or what
creates value in Ricardian Land? What makes land in one place
more valuable than a similar piece of land elsewhere? Who or
what creates value in fertile topsoil?
Solar Energy
• Some Factoids
• 1 Ton of Oil Equivalent (toe) = 7.33 Barrels of oil
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The Sun shines on the Earth 19 trillion toe per year.
(The energy of ~139 Trillion barrels of oil every year)
Recall that we presently use ~25 Billion Barrels of oil every year.
The sun provides 5,560 times more energy to the earth every year
than we burn as oil every year. (139 trillion / 25 billion)
• But wait a gosh darn second….
• The earth reflects a whole bunch of sunlight
• Photosynthesis (H2O + CO2 + sunlight energy --> CH2O + O2 ) is only
3-6% efficient depending on plant, temperature and other conditions.
• Still, Americans consume 40% more energy energy than is captured by
photosynthesis by all the plants in the United States.
Solar Energy (continued)
• Global Gross Energy Consumption is ~9 Billion toe per year.
( ~ 66 Billion Barrels of oil per year)
• Biomass, hydroelectricity, wind, photovoltaics, and
wave/ocean thermal energy are all forms of solar energy we
can possibly capture.
• Limitations of Biomass liquid fuels (e.g. corn based methanol)
– Even if ALL of the Net Primary Productivity (NPP) of the U.S. was
converted to bio-fuels it would still not meet our liquid fuel needs.
• Hydroelectricity provides 19% of global electricity but even if
fully developed could only provide 60%.
• Wind power is presently negligible as a percentage of global
supply; however, the amount of wind power is doubling every
3 years.
• Photovoltaics Energy return on Investment has been poor but
is improving.
Summary Points
• Question: Why is the information in this table important to
ecological economic analysis?
We should be careful about the rate at which we
unnaturally mix biotic and abiotic resources.
How quickly we forget.
• The BP Coffee Spill – Have you seen this? How far is this from the truth?
http://www.youtube.com/watch?v=2AAa0gd7ClM
Big Ideas to remember…
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Ch 4 ideas in Ch 5
P10 and P90 reserves
Ricardian Land
Entropic Dissipation
Energy Return in Investment
Rival within vs. between generations
Recoverable reserves
Garbo-Junk vs. Pure Waste
Net recoverable energy from fossil fuels
Unique characteristics of water and solar energy
Aboveground and subterranean Mineral Stocks
• Time permitting: The Story of Stuff with Annie Leonard
• http://www.youtube.com/watch?v=gLBE5QAYXp8
• Does she do a better job at this than me or the authors of the text?