HOW INNOVATION HAS INCREASED THE PRODUCTIVITY OF NATURAL RESOURCES

The earth’s natural resources are finite, which means that if we use them continuously, we will eventually exhaust them. This basic observation is undeniable. But, another way of looking at the issue is far more relevant to assessing people’s well-being.

Our exhaustible and unreproducible natural resources, if measured in terms of their prospective contribution to human welfare, can actually increase year after year, perhaps never coming anywhere near exhaustion. How can this be? The answer lies in the fact that the effective stocks of natural resources are continually expanded by the same technological developments that have fueled the extraordinary growth in living standards since the Industrial Revolution.

Here we go again with  Innovation advantages: we can state that it actually has increased the productivity of natural resources (e.g., increasing the gasoline mileage of cars). Innovation also increases the recycling of resources and reduces waste in their extraction and processing. And innovation affects the prospective output of natural resources (e.g., the coal still underneath the ground). If a scientific breakthrough in a given year increases the prospective output of the unused stocks of a resource by an amount greater than the reduction (via resources actually used up) in that year, then, in terms of human economic welfare, the stock of that resource will be larger at the end of the year than at the beginning. Of course, the remaining physical amount of the resource must continually decline, but it need never be exhausted completely, and its effective quantity can rise for the indefinite future. The exhaustion of a particular resource, though not impossible, is also not inevitable.

Ever since the Industrial Revolution, world demand for power and raw materials has grown at a fantastic rate. One respected observer estimates that humankind “has consumed more aluminum, copper, iron and steel, phosphate rock, diamonds, sulfur, coal, oil, natural gas, and even sand and gravel over the past century than over all earlier centuries put together,” and Tilton (2001) goes on to write that “the pace continues to accelerate, so that today the world annually produces and consumes nearly all mineral commodities at record rates”.

mela innovazione

Laura C./ SMC Editor

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