Guest post by David Middleton

Back in 1980, the great libertarian economist, Julian Simon, and the prepetually wrong Malthusian biologist, Paul Ehrlich, entered into a little wager regarding population growth and resource scarcity. They decided on using the inflation-adjusted prices of five metals to decide the bet. Simon allowed Erlich to pick the five metals. If the 1990 prices were higher, Erlich would win. If they were lower, Simon would win. With the help of a fellow perpetually wrong Malthusian, John P. Holdren, Ehrlich selected chromium (Cr), copper (Cu), Nickel (Ni), tin (Sn) and tungsten (W). Julian Simon won the bet. However, a couple of years ago, economist Paul Kedroski suggested that had the time period of the bet extended to 2010, Ehrlich would have been the winner every year since 1991…

Given its 30th anniversary, and with commodities in the news – especially oil – I thought it was an apropos time (and TED an appropriate venue) to revisit the bet’s context, outcome, controversies and implications. Without getting into it too deeply, here are some things worth knowing. Given the above graph of the five commodities’ prices in inflation-adjusted terms, it will surprise no-one that the bet’s payoff was highly dependent on its start date. Simon famously offered to bet comers on any timeline longer than a year, and on any commodity, but the bet itself was over a decade, from 1980-1990. If you started the bet any year during the 1980s Simon won eight of the ten decadal start years. During the 1990s things changed, however, with Simon the decadal winners in four start years and Ehrlich winning six – 60% of the time. And if we extend the bet into the current decade, taking Simon at his word that he was happy to bet on any period from a year on up (we don’t have enough data to do a full 21st century decade), then Ehrlich won every start-year bet in the 2000s. He looks like he’ll be a perfect Simon/Ehrlich ten-for-ten.

In light of the fact that the world population clock recently crossed the 7 billion mark, I thought I’d see if there was a more accurate measure of the increasing scarcity (or lack thereof) of these metals over time.

Rather than “cherry-picking” particular decades, I took a look at the full historical price record (available from the USGS). The inflation adjusted prices of Chromium (Cr), Copper (Cu), Nickel (Ni), Tin (Sn) and Tungsten (W) exhibit no statistically meaningful inflation-adjusted price trend over the last 110 years…

Cu, Ni and W have slightly negative slopes; while Cr and Sn have slightly positive slopes… Only chromium’s (R^2 = 0.3187) and copper’s (R^2 = 0.1719) trend lines approach statistical significance.

While the inflation adjusted price of these metals is a good measure of affordability, it is not a complete measure. The price is only relevant if it is measured against the financial resources available. Relative to world real per capita GDP all five metals have become more affordable since 1969…

The GDP slope is positive and highly statistically significant (R^2 = 0.98). The GDP slope (81.354) is almost three times larger than the largest positive metal slope (Ni, 32.506).

More importantly, from a scarcity perspective, the production output of all five metals has been rising over time. Four are rising exponentially …

While the ratio of price to output has been declining exponentially…

If these metals were becoming more scarce, the price would be rising faster than the supply.

The USGS estimates that the current prover reserves of all five metals are sufficient to meet demand for the next 20 to 59 years. For “fun” I estimated the crustal mass of all five metals and estimated how long it would take to literally run out at the current production rate…

Debunking the Population Bomb Dud

The human popupation hit the seven billion mark last fall…

Published online 19 October 2011 | Nature 478, 300 (2011) | doi:10.1038/478300a News Seven billion and counting A look behind this month’s global population landmark reveals a world in transition. Jeff Tollefson What’s in a number? This month, the world’s attention turns to a big one: 7 billion, the latest milestone in humanity’s remarkable and worrying rise in population. […] On one level, a figure of 7 billion is incredible for the sheer momentum it represents: a full doubling of the planet’s population since 1967, with current growth adding 200,000 people each day, and a nation larger than the size of France each year. But although the 6-billion mark was reached about 13 years ago according to revised figures, it will take nearly 14 years to hit 8 billion (see ‘Snapshots of growth’). The comparison shows that population growth is decelerating; it is likely to level off at about 10 billion before the end of the century. Between now and then, the fastest growth will be in Africa, where fertility levels remain higher than anywhere else in the world. Population levels among industrialized countries, by contrast, will remain relatively constant. Although Asia will remain the most populous continent, decreasing fertility rates there will add to the overall ‘greying’ of the planet. […] Nature

The Nature article included the following graphic, indicating that the word population will most likely level off at ~10 billion ca. 2070…

Is that a problem? I don’t think so. The human race handled the rise from 3.5 to 7 billion rather well. The global per capita food supply has steadily increased since 1960…

Source: UN FAOSTAT

Per capita real GDP has risen at the same rate as the population…

Per capita food supply has also risen with the population…

And… Amazingly… Per capita food supply and per capita GDP are highly correlated…

The percentage of the world’s population suffering from undernourishment has steadily declined over the last 40 years, despite a rising population…

Very few nations have failed to reach the MDG 1 target of reducing the percentage of their population suffering from undernourishment by 50%…

The world isn’t running out of water either. The UN FAO Aquastat data base showed that in the year 2000, the world’s total renewable water resource was 53,730 x 10^9 m3/yr. The total withdrawal was estimated to be 2,871 x 10^9 m3/yr. That’s a 5% utilization rate.

The far from perect human condition doesn’t negate the fact that clear progress has been made over the last half-century to reduce hunger, despite a growing population.

Almost all of the population growth over the next 60 years will be in Africa and Asia – the two largest land masses on Earth.

Assuming that the populations of Asia and Africa reach 5 billion and 3.6 billion respectively, their population densities will be 114 and 119 people per km^2. The population densities of the rest of the world will remain about the same or decline. Asia’s density is currently 95 per km^2. The greatest stress will be on Africa, which is currently underutilizing its resources more than any other continent.

Water resources are underutilized in Africa across the board, yet conflicts between water uses are common

Africa has plenty of potentially arable land, plenty of water and plenty of resources. Africa just lacks the economic and political infrastructure to realize its own potential.

Current and potential arable land use in Africa. Out of the total land area in Africa, only a fraction is used for arable land. Using soil, land cover and climatic characteristics a FAO study has estimated the potential land area for rainfed crops, excluding built up areas and forests – neither of which would be available for agriculture. According to the study, the potential – if realised – would mean an increase ranging from 150 – 700% percent per region, with a total potential for the whole of Africa in 300 million hectares. Note that the actual arable land in 2003 is higher than the potential in a few countries, like Egypt, due to irrigation… LINK

The “world” isn’t running out of anything. Global proven oil reserves have doubled since 1980.

Most other commercial mineral resources have seen its proven reserves grow at least as fast as consumption has grown.

The world has plenty of food, water, space, mineral resources and the Earth’s environment is generally cleaner now than it was 35 years ago. Crop yields have continued to maintain an increasing upward trend for 40 years… And there is every reason to believe that crop yields will continue to improve (unless we really are on the verge of returning to Little Ice Age climate conditions).

But it will get worse in the future!!!

The “bear” is always just out of sight in the woods. For centuries, Malthusians have trotted out one invisible bogeyman after another (Malthusians pre-date Malthus by at least a few thousand years). The disaster is just over the horizon, just around the corner or lurking in the woods.

The Earth is finite; but humans have barely tapped its resources… We will still barely be tapping the Earth’s resources when we hit the 10 billion mark about 90 years down the road… And the Malthusians will still be warning us about the bear in the woods.

The only thing the world has a genuine shortage of is honest and competent people in gov’t. Almost all of our problems are due to political interference with market forces.

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