Currently, depletable rescources include non renewable sources such as fossil fuels and minerals, and critical renewable such as fish, forests and water in aquifers. Economists believe that as proven reserves become more scarce, the price will increase. This increase will trigger human ingenuity that will solve the issue in three possible ways. Firstly, the price increase will drive new innovation in technology and ideas. This happened during the 70’s oil shock which led to recycling and more efficient advanced methods of drilling. Another way the markets can solve the crisis as society will seek out alternatives, such as a change from coal to oil, or oil to gas. The most recent oil shock along with fears of climate change, has renewed interest in nuclear and alternatives, such as biofuels. Lastly, the increased market price will make it economically possible to extract conditional resources from more marginal areas that were previously uneconomical.
But this the idea that the markets can solve everything is unrealistic. The pessimists such are Ehrlich and Meadows usually examine the issue from a population-physical resource scarcity viewpoint. An increasing population consuming our decreasing resource base will lead to starvation and lower industrial output. But the situation is more complex that. Geopolitical forces also play a part in resource supply. The oil shock during the 70’s was due to political scarcity, not physical or economical. Furthermore, drilling in more marginal regions may be economically possible, but not in terms of thermodynamics. More energy is needed to drill in more extreme areas, while the output may not be of the same quality. Also, energy is lost along the process – so in terms of thermodynamics this is not sustainable.
Then there is the issue of unpriced goods, such as clean air, tropical forests and glaciers. These resources are currently not priced in the market so polluting them is an economically acceptable practice, yet we need them for our very survival.
To this end, the markets can sort out resource concerns regarding those resources for which there are alternatives, such as fossil fuels and resources that can be recycled, such as minerals. However, currently, economic factors alone cannot ensure that our fish stocks, aquifers, tropical rainforests will be available to all in the future. Tropical forests are more valuable cut down than growing, fish stocks are being depleted quicker than ever and ground water deficit reached 160 billion cubic meters. Clearly, relying on market mechanisms alone will be disastrous for our future supply of resources.
