– Working draft for review and comment. By Robert U. Ayres. For https://ruayres.wordpress.com/
Rachel Carson’s landmark book “Silent Spring” was published in 1962. It, alone, of the important environmental best-sellers of that era, had a significant impact: it led to the banning of DDT (at least in the Western world) and major shifts in agricultural practice.
Paul Ehrlich, a noted American biologist, best known for his warnings about the consequences of population growth and limited resources, was the author of a famous book “The Population Bomb” (1968), in which he claimed (as Malthus had claimed in 1798) that increasing population – demographic catastrophe — would inevitably outstrip food and resources, and that hundreds of millions of people would starve to death in the 1970s.
There were other dire predictions around that time. The First Report to the Club of Rome, entitled “Limits to Growth” was published in 1972 and sold 5 million copies in 15 languages. But it was immediately attacked by top economists and business leaders, and led to no changes in government policy.
The same can be said of the two subsequent Reports to the Club of Rome, which were instantaneously ignored. Lester Brown wrote a report for USDA in 1963 called “Man, Land and Food”, followed by two journal articles on agricultural problems. His best-seller “By Bread Alone”, with Erick Eckholm, appeared in 1954. He founded the WorldWatch Society (and a later think-tank) which have produced literally hundreds or Reports on environmental issues.
The culmination of this publishing activity was the most ambitious Report of all, called “Global 2000”. This one was initiated by President Jimmy Carter in 1977, supervised by his Council on Environmental Quality and published in 1980. It was an attempt to bring together under one hat (so to speak) all of the trends regarding resource needs on the one hand, and resource availability on the other, that might confront a President in the year 2000.
The mainstream response to the neo-Malthusian publications during the 60s and 70s was to label them ‘models of doom’ and their authors as ‘doomsters’. The anti-doomster crowd was led by Julian Simon and Herman Kahn, both of whom argued that there would never be any shortages of anything, because human ingenuity would always come to the rescue.
These people have been called “Cornucopians’ for obvious reasons. Much of the evidence favoring their view came from work by Resources for the Future, especially a study by Harold Barnett and Chandler Morse called “Scarcity and Growth”: The economics of Resource Scarcity” (Barnett and Morse 1963), followed sixteen years later by “Scarcity and Growth Reconsidered” (Smith and Krutilla 1979). The main message of these books, backed up by data, was that natural resource prices (with a few exceptions) have been declining, more or less monotonically, since records have been kept.
This history tended to support Julian Simon’s cornucopian view. In the Social Science Quarterly Julian Simon famously offered to bet $10,000 that the inflation adjusted price of any natural resource would fall over any period longer than a year. Paul Ehrlich, along with Berkeley physicists John Holdren and John Harte, took him up on it. They proposed a basket of equal amounts of 5 metals (copper, chromium, nickel , tin and tungsten) and the bet covered the period September 28 1980 to September 29 1990. The prices of 4 of the 5 metals did decline, so on Sept. 29, 1990 Ehrlich sent Simon a check for $576.07. Incidentally, in 1996 Simon lost a $1000 bet on timber prices to David South, a prof at Auburn University. Simon bet that timber prices would fall. They rose instead.
Regarding the Ehrlich-Simon bet, later analysis has shown that (1) in most of the 10 year periods in the last century, Ehrlich would have won the bet. Or (2) if the term of the bet had been extended to 2011, Ehrlich would have won. Or (3) if all the important commodities had been included (not just those 5 metals) Ehrlich would have won big. Then Simon offered to double the original bet to $20,000.
In 1993 Ehrlich and Steve Schneider (a climatologist) made a counter-offer. They offered to bet on a different set of 15 trends. Here is the list:
- The three years 2002-2004 will be warmer than the three years 1992-1994
- More CO2 in the atmosphere in 2004 than in 1994
- More nitrous oxide (N2O) in the atmosphere in 2004 than in 1994
- More ozone (O3) in the troposphere in 2004 than in 1994
- Emissions of sulfur dioxide (SO2) in Asia will be higher in 2004 than in 1994
- Less fertile cropland per person in 2004 than in 1994
- Less agricultural soil per person in 2004 than in 1994
- Less rice and wheat harvested per person in 2004 than in 1994
- Less firewood available per person in developing nations in 2004 than in 1994
- The area of moist virgin tropical forests will be less in 2004 than in 1994
- The harvest of oceanic fish per person will be less in 2004 than in 1994
- The number of plant and animal species extant in 2004 will be less than in 1994
- More people will die of AIDS in 2004 than in 1994
- The male sperm count in 2004 will be less than in 1994, while reproductive disorders will increase
- The gap in wealth between the top 10% of humanity and the bottom 10% will be greater in 2004 than in 1994.
Julian Simon declined to bet against these trends (which he would have lost by a wide margin.) All of these trends (with the exception of AIDS deaths) are still continuing. Nevertheless, Julian Simon (and Herman Kahn) were extremely critical of the Global 2000 Study (GTS) in particular, and all of the Reports to the Club of Rome, by extension.
Here are the reasons given, from one of his articles.
- The project director (of GTS) was originally told to produce the report in six months. Extensions came a few months at a time. Hence there was no opportunity to prepare a workable plan for a three-year study, nor to hire competent staff for a 3-year study.
Implication: the staff actually employed were incompetent.
- The sectoral models probably used in GTS would have been short term models reflecting changes in output and demand based on world income and changing population but not reflecting declines in costs over time.
Implication: historical evidence of declining costs (for resource extraction) were not taken into account. A serious criticism if true, but pure conjecture. No evidence of this offered.
- Lack of historical perspective. For example, the Jevons predictions in 1865 of British industrial collapse by 1900 due to coal scarcity were wrong, hence the new forecasts will be wrong by analogy.
Comment: Jevons didn’t think oil was important. In 1865 it wasn’t, but later it made all the difference. Does Simon think that there is a new resource discovery, comparable to petroleum, waiting in the wings to replace copper? Or Oil? (Actually he did think that nuclear power was the answer to everything. But look at what has happened to the nuclear dream.)
- Organizational self-interest: the CEQ had an interest in predicting disaster, to get more funding. Because of possible self interest, its forecasts are probably wrong.
In any case, it didn’t work. The CEQ was eliminated by the incoming Reagan administration.
- Bad news gets headlines, so the GTS people wanted headlines.
So did the anti-doomsters. (Six pages on J. Simon, in The Economist. None, except attacks, for the GTS.)
- PIPO (prejudice in, prejudice out) : the advisors to GPS are all from the ZPG (zero population growth) camp. Implication: the advisors were all prejudiced, resulting in mistakes, such as erroneous assumptions.
Fact, both sides are prejudiced. It is true that Simon won that famous bet with Ehrlich about declining resource prices – he was right about that – but if excess extraction and consumption are causes of pollution (which they are) than lower prices create incentives to increase consumption, resulting in yet more pollution (which is what has happened.)
The GPS may have been wrong, in that it did not sufficiently take into account declining raw material prices. (Limits to growth has been criticized for the same failing.) But that means that GPS actually underestimated the projected consumption of natural resources, and thus the negative environmental consequences that would result.
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- Barnett, Harold J., and Chandler Morse. 1963. Scarcity and growth: The economics of resource scarcity. Edited by Henry Jarrett. Baltimore MD: Johns Hopkins University Press.
- Smith, V. Kerry, and John Krutilla, eds. 1979. Scarcity and growth reconsidered. Baltimore MD: Johns Hopkins University Press.
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About the author:
Robert U. Ayres is a physicist and economist, currently Novartis professor emeritus of economics, political science and technology management at INSEAD.. He is also Institute Scholar at the International Institute for Applied Systems Analysis (IIASA) in Austria, and a King’s Professor in Sweden. He has previously taught at Carnegie-Mellon University, and as a visiting Professor at Chalmers Institute of Technology. He is noted for his work on technological forecasting, life cycle assessment, mass-balance accounting, energy efficiency and the role of thermodynamics in economic growth. He originated the concept of “industrial metabolism”, known today as “industrial ecology” with its own journal. He has conducted pioneering studies of materials/energy flows in the global economy.
Ayres is author or co-author of 21 books and more than 200 journal articles and book chapters. The most recent books are Energy, Complexity and Wealth Maximization (Springer, 2016), The Bubble Economy (MIT Press, 2014) “Crossing the Energy Divide” with Edward Ayres (Wharton Press, 2010) and The Economic Growth Engine with Benjamin Warr (Edward Elgar, 2009).
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