Discussion Paper

Economics of Natural Resource Scarcity: The State of the Debate

Apr 15, 2005 | Jeffrey Krautkraemer


Whether economic growth can be sustained in a finite natural world is one of the earliestand most enduring questions in economic literature. Even with unprecedented growth in humanpopulation and resource consumption, humans have been quite adept at finding solutions to theproblem of scarce natural resources, particularly in response to signals of increased scarcity.Because environmental resources generally are not generally traded on markets, however,scarcity signals for these resources may be inadequate, and appropriate policy responses aredifficult to implement and manage. In the debate over the economic scarcity of natural resources,one significant change in recent years has been a greater focus on the ecosystem services andthe resource amenities yielded by natural environments. The general conclusion of this paperis that technological progress has ameliorated the scarcity of natural resource commodities;but resource amenities have become more scarce, and it is unlikely that technology alone canremedy that.