Calming news on minerals.

Kleit, Andrew N.

ON BORROWED TIME? Assessing the Threat of Mineral Depletion

by John E. Tilton

160 pp., Washington, D.C.: RFF Press, 2003

John Tilton's excellent short work On Borrowed Time outlines the distinguished professor's views, as refined over his career, on the question of resource depletion. As Professor Tilton notes, the gap between what economics has to say on the subject and what most observers believe is quite large. Tilton's goal is to explain the basic economics of mineral depletion to a non-economics audience. In other words, the book's purpose is to convince the lay audience that the sky is not about to fall.

That message begins in the second chapter, where Tilton presents an historical review of the conservation movement. He offers a brief introduction--about three pages--of the basic Ricardo-Hotelling model, which asserts that resource availability is more an issue of current value vs. future value than a question of using up all of a resource. Unfortunately, this theory is never really put forth in any systematic way; the author notes that it is important and has many extensions and limitations, but he never really describes them. While presenting the Ricardian theory to a lay audience would be difficult, I believe it is important to try. Facts without theory are useless; thus, the relevant theory needs to be presented as fully as possible.

The next chapter takes up the mantle of reviewing the basic measure of depletable resources. That measurement is often done without consideration of economic factors. But what is the use, really, of data on reserves, resources, and the resource base if those data are highly speculative and constantly shifting in the wake of both geological and technological discoveries? Tilton makes a powerful argument that the most useful information on resource availability comes from economics, not geology.

Chapter Four reviews the historical record. Despite the pessimists' proclamations, the evidence is clear: Minerals are not growing scarcer in the economy. indeed, thanks to technological progress, the cost of minerals to society is decreasing, not increasing. There is no need to panic, at least not right now. Unfortunately, this chapter, by focusing on trends in scarcity, is a little more confusing than it has to be. The work on trends is sufficiently ambiguous so that not much emphasis (or text) should be placed on it.

The future The following chapter lays out the heart of the matter--does the empirical evidence suggest that we will be running out of minerals soon? The evidence seems clear that society will be fine for the next 50 years. But after that, Tilton is not so certain. He is careful to point out that the nature of that uncertainty is such that society really should not plan to address this potential problem today. Given positive discount rates, it is a question for another time.

In the final chapter, which deals with environmental issues, the text becomes a bit murky. In the end, what comes out is that the problems associated with resource extraction are simply environmental tools to be dealt with through appropriate economic incentives.

There is a definite need for this book. But this reviewer wonders if the people who would benefit the most from reading it will choose to do so. While the writing is most readable for such difficult economic material, it is still a little stilted for the average human being. Hopefully, Tilton and publisher Resources for the Future will follow on this book with an outreach program to try to affect those who think about resource issues

Andrew N. Kleit is a professor of energy and environmental economics at The Pennsylvania State University. He can be contacted by e-mail at [email protected].