Global Resources

1. Global Resources Stock resources Non-renewable resources

2. Distinction bw fuels – other minerals. 1.Fuels: important for industrial economy Combustion is irreversible process Fuel combustion = waste emission 2.Minerals can be recycled Important for sustainability: relations bw. natural capital – man-made capital. • Examples: sewage treatment investment energy conservation. Production, consumption, waste emission circle is illustrated by the MATERIALS BALANCE MODEL:

3. MATERIALS BALANCE MODEL • Economy cannot create materials • Mass of residuals (B+C+D) = to the mass of fuels, foods, raw material, oxygen. • For any fixed final output, with increased recycling (important identity: B+R+E = R+A1+F) the quantity of material and energy inputs can be decreased. IE: less primary extraction need to take place.

4. Change perception of resources Kenneth Boulding distinguishes: • Cowboy economy(open system) • Spaceman economy (closed material system, except energy from outside) • Economic performance (growth of GDP) BASIC CONCEPTS IN ECONOMIC APPROACH TO RESOURCES AND ENVIRONMENT ISSUES 1. Property rights, efficiency and government intervention. 2. Valuation, achieving efficiency 3. The time dimension of using nat. res. (stock and flow concepts) 4. The sustainability and irreversibility

5. Interdependence bw economy and resource use (environment) We should treat the planet as a closed system. • It has implications, that can be summed up in the 1st and 2nd Law of Thermodynamics. Review of elements of environmental services. • Thermodynamics • Recycling • Materials balance principle • Ecology • Biodiversity • Population • Technology (Affluence and technology: the EKC (Environmental Kuznets Curve)

6. POST OILPRICE-EXPLOSION —New epoch: end of cheap energyand materials —New requirements towards economy and development. 1./ BUT: price fluctuation is considerable 2./ Price can’t be arbitrary 3./ Contradictory response 4./ Difficult separation of cyclical and structural effects in consumption 5./ Separate discussion of fuels and non-fuels 6./ Real problem of scarcity 7./ Changing power relations (FE: consumers – suppliers, energy policy) 8./ Interdependency – extent of internationalization STAGES OF INTERDEPENDENCIES

7. CHARACTERISTICS OF THE NEW ERA after 1973 • Increasing importance of the export of working capital and the TNCs • Development of the new world economic era is accelerated by: • Political transformation of the previous Soviet Block. • Possible emergence of a new world orderin which global problemswill be more effectively treated on the basis of more efficient international cooperation. • Possibilities for diminishing military confrontation, to concentrate more effort on the solution of the pressing problems of the human existence.

8. Increasing interdependence and globalization • Beginning of transformation of energy basis • Deepening globalization • Proliferation of issues requiring closer international cooperation • Increasing 3rd W differentiation

9. Characteristics of the global problems 1. Unforseeable consequences of social and econ. & technol. dev. or of negligence. 2. These are extreemly complex, the results of many different factors, appearing in large number of cs in one historical period. 3. The harms originating from them are already felt, the seriousness of these problems can be foreseen.

10. 4. The problems are so serious, that the mere existence of the mankind is endangered. 5. Global management is required • Most of them are related to the future developmentof the world, and are related to: • Resources availability • “ use • “ needs Increasing rawmaterials interdependence

11. Forced way of developmentbased on the demogr. explosion Closely related problems are: • agricultural prod.& • food supply. as well as • critical situation in the ecological balance. There are twokinds of comprehensive approaches:to reorientconsumption of the natural resources and to reorganise world economy:

12. Two approaches within the first case too: a./Club of RomeIt emphasized: internat. global cooperation is needed to support the survival of the mankind. The most comprehensive Report was produced by theBRUNDTLAND Commission, ("Our Common Future„) It is in favour of the sustainable dev. which is in harmony with the environment and resources use. b./The supporters of the TNC model. II. Concept of NIEO I.Concentrates on the international systemII. " " " existence of the sovereign states.

13. RAWMAT. INTERDEPENDENCE Ithas two main aspects: 1. Consumptionof nearly all essential minerals is still rising(although its rate of increase is on the decline). Western European cs(industrialised earliest), exhausted many of their domestic supplies of basic raw materials. 2. The known reservesof a number of minerals are highly concentrated in a few, mostly 3rd w. regions.

14. Rate of increase of raw mat. consumptionand world market demandfor mineral res. It depends on the growth of industrial prod., although raw-mat consumption is not proportionalto the expansion of industrial output. REASONS: 1./STRhas changed the composition of both --the consumption and --the production. 2./Fuel and material efficient machinery and equipments decrease the amount of raw-material and energy per unit of output. (specificuse) 3./In addition, new artificial materials are invented regularly.

15. Ownership relations I./At end of WWII.:mining industry was entirely in private handsof private companies. Most of metals and many non-metallic minerals were produced by corporations owned by investors in the industrial cs: In communist cs, only state ownership. • Latin Am, Africa, S-E Asia were important mineral producers.

16. In 1950 :their mining industries were almost entirely owned and operated by companies, controlled outside their boarders. II:/This situation changed rapidly in the 50s and 70s. (pol. Independence, nationalizm, control over natural resources) The ownership of most large corporations was transferred from foreign to domestic control. State corporations were established in most cases.

17. Explanation for the substandard operation of the nationalized mineral companies 1. Failure of gov. officials to recognise the capital intensive nature of the mineral industry. 2. The profits of these firms were diverted to social needs of the nation 3. Corruption • Exploration, • development, } • maintenance of equipments was neglected.

18. RETURN TO PRIVATE CAPITAL PARTICIPATION But there ARE considerable differences: 1./In 1950 individual mineral deposits in LDCs were exploitedby a single corporation, based in one c. 2./Tendency now in mining operation in LDCs: it is owned and operated by consortia of • several companies from • several cap. exporting cs.

19. Mineral consumption in the post WW II period Two distinct stagesof growth of consumption of minerals: I. 1950-74 (time of unprecedented econ. expansion) II. 1975-90 (energy crises and other factors resulted in • severe recessions and • much slower world economic growth. )

20. CONSUPTION 1950 - 73 1974 - 90 1950 - 73 1974 - 90 ---------------------------------------------------------------------------- aluminium copper ---------------------------------------------------------------------------- • W-Europe 704 48 239 16 • Japan 6758 85 5052 79 • USA 523 -16 86 7 • Can-AUS 708 34 185 -18 • Socialist 983 14 497 9 • 3rd W 3262 133 350 198 • World tot 781 28 242 30

21. In summary: 1./Known reserves of major minerals continue to expand. 2./ World mineral industry will be largely in the hands of private enterprises. 3./Investments in large scale overseas operations are likely to be controlled by multinational consortia. 4./Host countries in most cases areafforded opportunities to acquire equity positions.

22. 5./Some state-owned mining properties may remain in operation 6./Consumption of minerals will continue to grow as population rises and world industry expands. 7./Industrialised cs will experience moderate growth. 8./LDCswill have greater gains as they work towards industrialisation & improved living st.

23. Decline and rise of TNCs in metal mineral industry