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Sustainable Use and Depletion of Natural Resources: a Conceptual Framework

Stephen R. Humphrey - University of Florida. Sustainable Use and Depletion of Natural Resources: a Conceptual Framework. What is an exhaustible natural resource?. All non-renewable resources are exhaustible Amount of stock is usually uncertain or unknowable

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Sustainable Use and Depletion of Natural Resources: a Conceptual Framework

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  1. Stephen R. Humphrey - University of Florida Sustainable Use and Depletion of Natural Resources: a Conceptual Framework

  2. What is an exhaustible natural resource? • All non-renewable resources are exhaustible • Amount of stock is usually uncertain or unknowable • Depleted when used, but the depletion rate can be managed

  3. What’s an inexhaustible natural resource? • Renewable resources can be used sustainably • But only physical-force RRs are truly inexhaustible • Biological-force RRs can be used sustainably or unsustainably

  4. Key insight: don’t confuse stock and flow • The supply in “supply and demand” is not a resource stock! • Supply is flow, or periodic production from stock • Stock is the resource that may be used sustainably or exhausted Stock Flow

  5. Simple Model 1: sustainable use of a renewable resource Stock is renewed indefinitely, if… And price is dependable, like a utility, if… It’s crucial to visualize how biophysical & human behavior integrate. Roughly 1-5% harvest is the most biological systems can sustain. If flow is constrained so as to not draw down stock

  6. Corn: sustainable use, disruptive tech Mendelian hybrid trait selection Applies to non-renewable and renewable resources Mass selection

  7. General Model 2: non-renewable resource with high demand and no substitute Depletion or Exhaustion Phase TechnologicalInnovationPhase In this zone, use looks sustainable, but isn’t Stock is steadily depleted, flow rises-peaks-drops, and price drops-bottoms-rises; use seems sustainable temporarily Utility Phase

  8. Price phases of the resource development-depletion model for oil Event II: Demand growth at supply plateau;price rises,thendemanddrops Innovationphase(Moore’s law,cheap revolution) Event I: US oil production peaked;Arab oil embargo,Iranian revolution,Iran-Iraq War,stagflation Utility phase First half of U-shaped price curve, calmed by elastic flow. When flow becomes inelastic, depletion will bring severe economic disruption. Competition, combination, monopoly, anti-trust, depression, WW I, WW II, import tariffs & quotas, export controls, price controls, cartel, nationalization

  9. When will world oil production peak? • National Petroleum Council 2007: “Facinghard truths” • BP Statistical Review data: • world oil production peaked in 2008 • Dr. Sadad Al-Husseini (former Saudi Oil Minister) • capacity outlook: 10-year production plateau • Association for the Study of Peak Oil: “2010” • Former Shell CEO van der Veer: “2015” • International Energy Agency 2008: “trends in energy supply and consumption are patently unsustainable” • UK Energy Research Centre: between 2009 and 2031 • Business calls oil crunch a threat to UK economy: • http://peakoiltaskforce.net/download-the-report/2010-peak-oil-report/ Opinions vary about the timing, but not about the outcome

  10. 15 divergent forecasts for world oil production, based on either population demand or geological fundamentals A bumpy plateau or “practical peak” has begun

  11. Adding plausible price volatility to the lifecycle of exhaustible oil Business cycles mask the long-term depletion uptrend.High, volatile prices will cause recessions & defaults!Demand destruction offers a solution, if we make it happen early.

  12. Global oil “budget” outlook • Existing oil fields produce 85m b/day • Production is declining by 4m b/day • New discoveries are 4m b/day to 2014 • Reserve capacity ~6m b/day, mostly in Middle East, uncertain • New deepwater discoveries off Brazil and Mexico need new technology to produce, 5-10 years in future • How these factors will integrate depends on demand (esp. in developing countries) and reduction of carbon emissions (if any)

  13. Oil Price Forecast ML sees demand rising and supply inelastic, spare capacity only in OPEC, with the band widening from $70-$85/b now to $60-$100/b in 2011 and to $50-150/b by 2014.

  14. Forecasts of Oil Production, 2010 A crash program to adjust to declining oil will take 20 years (Hirsh-SAIC). Current estimates suggest that we have only 5-10 years.

  15. Good renewable energy substitutes for FLBiofuels Solar

  16. Are we using other resources sustainably? Old-growth long-leaf pine. Rock phosphate. Water

  17. How to prepare our community for resilience to resource constraints? 2010 Chevy Volt 1909 Baker Electric What do you think?

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