| In his introductory remarks, Tilton shared remembrances of Landsberg, a personal friend and the "Ernest Hemingway of the mineral economics profession." Tilton recalled that Landsberg was a great mentor, getting Tilton invited to a conference in Tokyo on the future of nonfuel minerals when he was still a "very unknown junior professor." He also complimented Landsberg’s lean writing style, saying he could make even the most technical of topics come alive.
The balance of his speech focused on whether economic development in China poses a threat to the availability of mineral commodities for the United States and other developed countries. To assess the question, Tilton presented two views of mineral availability: the fixed-stock paradigm and the opportunity-cost paradigm. The first, he said, emphasizes that the available stocks of iron, copper, and other mineral commodities are fixed, since Earth is finite. Demand on the other hand, is variable. According to this view, it's only a matter of time before the fixed stock is consumed, and the end is usually sooner than later.
The second model looks at long-run mineral availability in terms of what society has to give up to obtain its resources. According to this perspective, whether scarcity becomes a problem depends on the "race" between new technology and the effects of depletion. Unlike in the fixed-stock paradigm, Tilton explained, "scarcity is not something that will come suddenly like a car speeding along the highway and runs out of gas."
Applying these models to China, Tilton suggested that the fixed-stock paradigm best fits short-run mineral availability and the opportunity-cost paradigm best describes long-run availability.
In China today, he said, supply is not sufficient to satisfy demand at past price levels. Between the resulting higher prices and scarcity caused by inadequate supply, problems can occur. However, he said, these problems are "short-run and self-correcting." He compared the situation in China to that of Japan 25 years ago, pointing out that Chinese efforts to secure minerals through long-run contracts and foreign investment help provide the capital needed to ensure adequate future capacity.
"These efforts should be welcomed and encouraged by the United States and others and not feared," Tilton said.
Turning to a longer view, Tilton said that although it is counterintuitive, "mineral commodities today are actually more available for developing countries than they were for developed countries a century ago." He attributed this to the innovative technology that has sprung from wealth presumably generated by past consumption of mineral resources. While there is no way to be sure this will remain true for China looking forward, he said, it is at least possible.
Tilton also applied his assessment to petroleum, saying that China's economic growth and rising consumption of this mineral are likely to affect energy supply in a manner similar to the pattern for nonfuel minerals. That is, in the short run, prices will rise. In the long run, China's growth should accelerate both depletion and new technology, thus either increasing or decreasing long-run price. In the case of conventional fuel and natural gas, he said, it is less likely that technology can indefinitely offset the effects of depletion than in the case of nonfuel minerals. However, adding a third timeframe, the medium term, Tilton said that China's growth "should hasten the day when conventional petroleum and natural gas are replaced with alternative sources of energy." |
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The Hans Landsberg Memorial Lecture
1st Annual:
Energy and Economics: Questions for the Future
Robert G. Card
January 21, 2004
2nd Annual: Adapting to a Changing Climate
Preston Chiaro
February 9, 2005
4th Annual:
Global Warming: Intellectual History and Strategic Choices
Thomas C. Schelling
December 6, 2006
5th Annual:
Climate Change: A Global Problem Requiring a Global Solution. Or, Maybe Not....
Kathleen A. McGinty
Wednesday, February 6, 2008
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