Blog Post

The Limits to Ingenuity: Where Malthus May Have Had it Right

Aug 14, 2012 | James W. Boyd

Marine biologists project the collapse of harvested seafood species by 2050. But do we need those species? The very question should generate ethical discomfort but also confront an economic truth: humanity might be able to innovate our way around the problem, at least from the perspective of food protein production. This raises a question for conservationists. Is our ability to substitute or innovate our way out of environmental problems relevant to how we think about conservation?

Our planet has looming resource availability issues. We have to find food, water, and shelter for two billion additional humans by 2050. Not only that, the 9 billion of us in 2050 will be richer than we are now. We'll demand more steaks and hamburgers, which means more cows and corn, which means more land and water consumption. Not to mention all the IKEAs.

These concerns aren't new – they’ve been periodically reignited, whether sparked by Malthus, the Club of Rome’s Limits to Growth, or the "peak oil" debate. Most economists will tell you that Thomas Malthus was wrong: Malthusian handwringing is just that, a lot of worrying about problems that never develop. Billions more live more materially rich lives than in Malthus' time. The Green Revolution in agriculture means billions more have their nutritional needs satisfied than 50 years ago. And don’t worry about oil because we can always drill deeper or frack our way out of it.

Scarcity isn't a problem, the argument goes, because ingenuity yields abundance in response to scarcity.

An illustration is the Ehrlich-Simon wager. In the 1970s, biologist Paul Ehrlich parlayed his book The Population Bomb onto bestseller lists. His thesis was that population growth drives appetites for natural resources that outstrip their availability. Contesting this view, economist Julian Simon bet Ehrlich $1000 that the combined price of five commodity metals would fall over the next decade.

Ehrlich lost the bet. The main reason was that he picked commodities (the five metals) where demand substitution and supply innovation opportunities were present. The trap Simon laid was obvious to economists and is now obvious to Ehrlich: Scarcity increases prices, higher prices lead consumers to seek substitutes and push producers find, extract, or produce more. Unfortunately for Ehrlich, the metals in the bet had substitutes (other metals), and innovations in extraction technology meant that more could be produced than in 1990 than in 1980 even as population grew.

But can we expect human ingenuity to always save the day? Consider two different natural resources, clean drinking water and the existence of rare bird species. Can we innovate our way around scarce drinking water? Yes, at least in the long run. The developed world already does this. We build facilities to treat water, drill deeper to access aquifers, and find ways to waste less. Should energy become cheap enough, we can desalinate all we want.

But now consider a threatened bird species whose very existence we value. How would we innovate our way out of that species' extinction? Just switch our affections to some other species? It's also hard to imagine how we'd innovate our way around the loss of natural resources important to our cultural identity or sense of beauty and wonder. There aren’t many substitutes for the relatively untouched expanse of Alaska’s North Slope if what matters to you is its very wildness. Also, some biophysical processes (the Gulf Stream) or features (keystone species) are so pervasively important to the health of other natural resources that we can’t imagine a substitute.

These examples suggest that all the things we value in nature are not equivalent in terms of innovation's ability to deal with their scarcity or loss.

Ehrlich's wager might have been successful if he had chosen commodities like rare species, wilderness, or even urban parks and coral reefs. One difference with such a bet is that there are no "market prices" for these things. So we'd have to reframe the bet around the "benefits people express" for species, wilderness, urban parks and coral reefs, which are harder to measure. But this is a winnable bet. Why? Because its almost impossible to innovate our way around a loss of species and wilderness, and relatively hard to innovate our way around a loss of urban parks and coral reefs. There are substitutes for these things (open space outside the city, other places to dive) but they are weak substitutes.

The point is that we should not only ask what natural resources our growing appetites will threaten, but also which of these scarcities will most resist our ingenuity. What are the environmental places, features, and functions for which there really is no substitute? Economics, not just ecology, suggests we should focus on those.