Impact of the Economy on Resources

[Administrator’s note:  This article needs more depth.  You can help the Interlock Project by expanding it – see the Participation page for more information on contributing to the Interlock Project.]

In the short run, economic growth means more consumption, which aggravates resource shortages.  In the longer run, healthy growth provides capital that can be invested in resource conservation, particularly if resource costs rise rapidly, as they tend to in boom economies.

This leads to some odd and contradictory relationships between these two systems.  For example, one family might buy a larger house in good times and use more physical resources and energy, while another might invest in weatherstripping, solar heating and power, and a new, more fuel-efficient vehicle.  In bad times, they might cut back on consumption, but they would also tend to cut back on investments.

Overall, the impact of economic growth on resource use appears to follow an inverted U-shaped pattern, like the Kuznets curve, with resource consumption per capita rising rapidly as people leave poverty, but then slowing and eventually falling as wealth increases.  Modern post-industrial societies have the resources to invest in higher efficiency and are increasingly shifting their consumption from physical goods to information products.  The shift from physical books and newspapers to electronic versions is just a small example.

Politically, there is also a tendency for societies that are industrializing to deal with shortages by trying to expand product supply.  After the big, glamorous projects are finished and society has time to digest the costs and negative side-effects, there has been a tendency to look more toward reducing demand.  Water management has followed this pattern in the US and a number of other countries, with a long period of construction of large, expensive dams, canals, irrigation systems, and water management projects followed by a shift toward water conservation and recycling.  Energy is clearly following a similar pattern, with some electric companies now paying people to install thermostats and insulation because it is cheaper for the utility to reduce demand than it is to build new power stations.

Ultimately, economic growth would be self-limiting if it required ever greater resources per capita, so one of the challenges of our time is to find a way to create greater wealth while reducing the energy intensity and resource intensity of economic activity.

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