Back in 1980, the great libertarian economist, Julian Simon, and the prepetually wrong Malthusian biologist, Paul Ehrlich, entered into a little wager regarding population growth and resource scarcity. They decided on using the inflation-adjusted prices of five metals to decide the bet. Simon allowed Erlich to pick the five metals. If the 1990 prices were higher, Erlich would win. If they were lower, Simon would win. With the help of a fellow perpetually wrong Malthusian, John P. Holdren, Ehrlich selected chromium (Cr), copper (Cu), Nickel (Ni), tin (Sn) and tungsten (W). Julian Simon won the bet. However, a couple of years ago, economist Paul Kedroski suggested that had the time period of the bet extended to 2010, Ehrlich would have been the winner every year since 1991…
Given its 30th anniversary, and with commodities in the news – especially oil – I thought it was an apropos time (and TED an appropriate venue) to revisit the bet’s context, outcome, controversies and implications.
Without getting into it too deeply, here are some things worth knowing. Given the above graph of the five commodities’ prices in inflation-adjusted terms, it will surprise no-one that the bet’s payoff was highly dependent on its start date. Simon famously offered to bet comers on any timeline longer than a year, and on any commodity, but the bet itself was over a decade, from 1980-1990. If you started the bet any year during the 1980s Simon won eight of the ten decadal start years. During the 1990s things changed, however, with Simon the decadal winners in four start years and Ehrlich winning six – 60% of the time. And if we extend the bet into the current decade, taking Simon at his word that he was happy to bet on any period from a year on up (we don’t have enough data to do a full 21st century decade), then Ehrlich won every start-year bet in the 2000s. He looks like he’ll be a perfect Simon/Ehrlich ten-for-ten.
In light of the fact that the world population clock recently crossed the 7 billion mark, I thought I’d see if there was a more accurate measure of the increasing scarcity (or lack thereof) of these metals over time.
Rather than “cherry-picking” particular decades, I took a look at the full historical price record (available from the USGS). The inflation adjusted prices of Chromium (Cr), Copper (Cu), Nickel (Ni), Tin (Sn) and Tungsten (W) exhibit no statistically meaningful inflation-adjusted price trend over the last 110 years…
Cu, Ni and W have slightly negative slopes; while Cr and Sn have slightly positive slopes… Only chromium’s (R^2 = 0.3187) and copper’s (R^2 = 0.1719) trend lines approach statistical significance.
While the inflation adjusted price of these metals is a good measure of affordability, it is not a complete measure. The price is only relevant if it is measured against the financial resources available. Relative to world real per capita GDP all five metals have become more affordable since 1969…
The GDP slope is positive and highly statistically significant (R^2 = 0.98). The GDP slope (81.354) is almost three times larger than the largest positive metal slope (Ni, 32.506).
More importantly, from a scarcity perspective, the production output of all five metals has been rising over time. Four are rising exponentially …
While the ratio of price to output has been declining exponentially…
If these metals were becoming more scarce, the price would be rising faster than the supply.
The USGS estimates that the current prover reserves of all five metals are sufficient to meet demand for the next 20 to 59 years. For “fun” I estimated the crustal mass of all five metals and estimated how long it would take to literally run out at the current production rate…
Debunking the Population Bomb Dud
The human popupation hit the seven billion mark last fall…
Published online 19 October 2011 | Nature 478, 300 (2011) | doi:10.1038/478300a
News
Seven billion and counting
A look behind this month’s global population landmark reveals a world in transition.
Jeff Tollefson
What’s in a number? This month, the world’s attention turns to a big one: 7 billion, the latest milestone in humanity’s remarkable and worrying rise in population.
[…]
On one level, a figure of 7 billion is incredible for the sheer momentum it represents: a full doubling of the planet’s population since 1967, with current growth adding 200,000 people each day, and a nation larger than the size of France each year. But although the 6-billion mark was reached about 13 years ago according to revised figures, it will take nearly 14 years to hit 8 billion (see ‘Snapshots of growth’). The comparison shows that population growth is decelerating; it is likely to level off at about 10 billion before the end of the century.
Between now and then, the fastest growth will be in Africa, where fertility levels remain higher than anywhere else in the world. Population levels among industrialized countries, by contrast, will remain relatively constant. Although Asia will remain the most populous continent, decreasing fertility rates there will add to the overall ‘greying’ of the planet.
The Nature article included the following graphic, indicating that the word population will most likely level off at ~10 billion ca. 2070…
Is that a problem? I don’t think so. The human race handled the rise from 3.5 to 7 billion rather well. The global per capita food supply has steadily increased since 1960…
Per capita real GDP has risen at the same rate as the population…
Per capita food supply has also risen with the population…
And… Amazingly… Per capita food supply and per capita GDP are highly correlated…
The percentage of the world’s population suffering from undernourishment has steadily declined over the last 40 years, despite a rising population…
Very few nations have failed to reach the MDG 1 target of reducing the percentage of their population suffering from undernourishment by 50%…
The world isn’t running out of water either. The UN FAO Aquastat data base showed that in the year 2000, the world’s total renewable water resource was 53,730 x 10^9 m3/yr. The total withdrawal was estimated to be 2,871 x 10^9 m3/yr. That’s a 5% utilization rate.
The far from perect human condition doesn’t negate the fact that clear progress has been made over the last half-century to reduce hunger, despite a growing population.
Almost all of the population growth over the next 60 years will be in Africa and Asia – the two largest land masses on Earth.
Assuming that the populations of Asia and Africa reach 5 billion and 3.6 billion respectively, their population densities will be 114 and 119 people per km^2. The population densities of the rest of the world will remain about the same or decline. Asia’s density is currently 95 per km^2. The greatest stress will be on Africa, which is currently underutilizing its resources more than any other continent.
Africa has plenty of potentially arable land, plenty of water and plenty of resources. Africa just lacks the economic and political infrastructure to realize its own potential.
Current and potential arable land use in Africa. Out of the total land area in Africa, only a fraction is used for arable land. Using soil, land cover and climatic characteristics a FAO study has estimated the potential land area for rainfed crops, excluding built up areas and forests – neither of which would be available for agriculture. According to the study, the potential – if realised – would mean an increase ranging from 150 – 700% percent per region, with a total potential for the whole of Africa in 300 million hectares. Note that the actual arable land in 2003 is higher than the potential in a few countries, like Egypt, due to irrigation…
The “world” isn’t running out of anything. Global proven oil reserves have doubled since 1980.
Most other commercial mineral resources have seen its proven reserves grow at least as fast as consumption has grown.
The world has plenty of food, water, space, mineral resources and the Earth’s environment is generally cleaner now than it was 35 years ago. Crop yields have continued to maintain an increasing upward trend for 40 years… And there is every reason to believe that crop yields will continue to improve (unless we really are on the verge of returning to Little Ice Age climate conditions).
But it will get worse in the future!!!
The “bear” is always just out of sight in the woods. For centuries, Malthusians have trotted out one invisible bogeyman after another (Malthusians pre-date Malthus by at least a few thousand years). The disaster is just over the horizon, just around the corner or lurking in the woods.
The Earth is finite; but humans have barely tapped its resources… We will still barely be tapping the Earth’s resources when we hit the 10 billion mark about 90 years down the road… And the Malthusians will still be warning us about the bear in the woods.
The only thing the world has a genuine shortage of is honest and competent people in gov’t. Almost all of our problems are due to political interference with market forces.
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thingadonta
January 25, 2012 3:22 am
Good article.
Incidentally, you can’t actually ‘run out’ of any metals, since they are formed in the virtually limitless earth’s crust (as opposed to fossil fuels which are formed organically, and near the top).
We will only run out of Al, for example, when we run out of rocks, as there is Al in virtually every rock, but we only mine those parts of the crust where it is concentrated enough to be economically extractable (from weathering, tectonic forces, volcanoes or whatever).
But the key to understanding metals, is that once you mine the most concentrated stuff, with every drop in grade there is vastly more resources available; a rule of thumb is that with every drop in grade of 10% there is ~3-10 times as much resource available. So there is 3-10 times more copper at 0.9% than 1%, and 3-10 times more at 0.8% than 0.9%, and so on. This exponential increase in resource with every drop in grade ensures we will never ‘run out’ of any metal commodity-at lower grades the size of the resource is virtually limitless, it can only get to a point when the cost of extraction may exceed the cost and effectiveness of competing materials for demand (say replacing Al with plastic, or something else). Also, resources quoted by governments are only what has been defined, and only defined at a certain cut off grade, however metals themselves are effectively limitless in supply, on a world scale.
ZZZ
January 25, 2012 3:38 am
You might want to take another look at how the US government has been calculating “core” inflation over the last two decades (because I assume that is what you used to calculate your inflation-adjusted raw material prices). If, as many people argue, inflation has been seriously understated by omitting the energy and food components from the CPI calculations, you have not been adjusting your prices correctly. Suppose you instead use how much of a given raw material — copper, petroleum, etc. — one ounce of gold buys as your metric for whether the true price of raw materials has been increasing or decreasing over the last 20 years. It suspect it would make a big change in the shape of your graphs!
G.K. Chesterton
“THE answer to anyone who talks about surplus population is to ask him whether he is surplus population; or if he is not, how he knows he is not.” ~GKC: Introduction to ‘A Christmas Carol.’
Mike M
January 25, 2012 3:43 am
Certainly huge populations of a great many varieties of animals died off in the last ice age primarily because of a lack of food. The next one will include us and will be the ultimate test of our technology to see how much of our population will be culled by starvation – and war.
R Barker
January 25, 2012 3:45 am
“We have met the enemy and they is us” …….or our politicians to be more specific.
Curiousgeorge
January 25, 2012 3:47 am
Good post. But an epic buzz kill for the Malthusian doom and gloomers. 😉
Spartacus
January 25, 2012 3:52 am
Hi David
Great article. As a geologist I fully agree with you.
Make please a small correction:
You wrote “More importantly, from a scarcity perspective, the production output of all five metals has been rising over time. Four are rising exponentially”
The trends do not show any exponential trend because they all have arithmetic trends. You should use “more intense trends” or something similar. Exponentially must be used when we have any “J shaped” trend and that does not apply to linear fits. Looking to the values, even if you used a polynomial fit, I could barely see any exponentially.
Cheers
When viewed as a percentage of a whole this is a very effective presentation. In terms of absolute numbers however it is deceiving. There are certainly more impoverished peoples than there were a century ago – there are certainly more people without ready access to clean water than there were a century ago – there are more malnurished people than there were a century ago – there are more people without adequate health care than there were a century ago – there are more murders than there were a century ago – in fact there are many unpleasant human circumstances that in absolute terms have increased significantly over the last century
I can confidently predict that these numbers will increase over the next century. It will get worse in the future.
How about some thought into computing technology that each individual will have access to in the not too distant future, as well as in the later part of this century.
Here is an article about an Intel 14nm fab factory to help spark some thought on what future technology will do to solve many problems that we face today.
“The new plant is also the first volume production facility that is compatible with 450 mm wafers, which offer a substantial economic advantage over the current 300 mm generation that Intel launched with its 130 nm processor generation in 2001.” http://www.tomshardware.com/news/intel-fab42-14nm-cpu-factory,14545.html
I have been researching the technology of cars and trucks being driven by computers and have come to a remarkable conclusion that in the USA alone, the economic savings, which I believe I can provide convincing arguments for, could amount to $2 trillion dollars a year that we waste today because we have no alternative (I have been studying this for 15 years now).
I am afraid that honesty and competence are the scarcest of commodities amongst Africa’s political elite.
Thanks for another good post.
William Abbott
January 25, 2012 4:08 am
Human beings are unique. The more of us there are, the richer we grow. Over-populate a rat colony and you get alls sorts of shortages and pathologies. People collaborate, they share knowledge and work in teams. We compete naturally, not out of necessity, and when those competitive juices are directed towards commercial ends a beautiful thing happens; everybody is competing to serve the customer. Natural resources are of no value unless they are coupled with human ingenuity.
Nick Shaw
January 25, 2012 4:13 am
As far as I can see, the world is about to run out of nothing except folks who yell….BEAR!
R. de Haan
January 25, 2012 4:13 am
Thanks David Middleton. This is a great article, just confirming what I’m telling for a long time.
As for the bear in the woods, that bear is now in Government and it’s screwing things up.
Big time.
Nick Shaw
January 25, 2012 4:16 am
Oh, excuse me Mr. Middleton! Jeez, I wish there were an edit button!
Excellent post! It certainly puts a whole new perspective on things!
Tony Hansen
January 25, 2012 4:20 am
‘…The only thing the world has a genuine shortage of is honest and competent people in gov’t.’
Is that Malthusian?
BTW, thanks for your work David.
Art Ford
January 25, 2012 4:22 am
Excellent. Putting these claims and predictions into long-term context is very helpful.
BTW, you use R2 as the measurement of statistical significance – by your definition (interpretation), at what point does R2 become “significant”? 0.2, 0.3, 0.4, etc.?
Middleton’s final sentence is dangerously wrong.
Commodity prices have gone wild in the last decade or two, but NOT because of population. Prices have gone wild because governments did EXACTLY WHAT MIDDLETON RECOMMENDS. They deregulated speculators.
WE DO NOT NEED MORE DEREGULATION.
What we need now is a return to the government rules that held from 1936 to 1990, a return to FDR’s rules. During that period speculators were a minor part of the system, so real supply and demand determined most prices.
AusieDan
January 25, 2012 4:38 am
There are real things that we should all worry about, but only if we really enjoy worrying:
1) global financial system collapse – possible but is it likely?
2) global cooling, leading to reduced food production in the face of rising population – possible? Don’t know but more likely than worry number 1.
3) Social collapse as the result of either worry one or two – anybody remember how to add two independent probabilities together? What if they are linked in some indeterminable manner?
4) an aging population as the world population halts and then starts to shrink, leading in turn to reduced economic activity, more demand on medical servces and other costly and difficult to provide facilities. Probability – seems very high from here, but human inginuity has no bounds so probably not so high after all.
5) add other worries to personal taste. Stir and mix well.
AusieDan
January 25, 2012 4:51 am
williamholder you said in part on January 25, 2012 at 4:00 am:
There are certainly more impoverished peoples than there were a century ago UNQUOTE and then you went on and on about more and more of the world’s “woes”.
Do you have figures from an unbiased, reliable source to back up these alarming claims?
My impression is just the opposite.
Or are you just saying that there is more and more misery reported in the media when in reality things are getting progressively better than they were 100 years ago?
Garacka
January 25, 2012 4:53 am
thingadonta January 25, 2012 at 3:22 am
“…. (as opposed to fossil fuels which are formed organically, and near the top).”
Certainly for coal, but regarding petroleum, there is still the very credible abiotic oil theory suggesting a source from a continuous rise of carbon from the core…
AusieDan
January 25, 2012 4:54 am
Most people seem to find that good news stories are hard to take, but we relish rolling in the dirt and in misery, particularly when it affects somebody else.
Sort of touch wood for luck.
Gerard
January 25, 2012 4:56 am
What Ehrlich hadn’t thought of is that population growth in underdeveloped countries made for extra masses of people working in inhumane conditions in copper mines. Yes humanity is able to proliferate but are we able to make circumstances better for the majority of people on this planet. I think your are better of when a cake is divided by 8 then by 16 and that still holds when that cake doesn’t have a fixed size.
Garacka
January 25, 2012 5:00 am
Spartacus January 25, 2012 at 3:52 am
“The trends do not show any exponential trend because they all have arithmetic trends. You should use “more intense trends” or something similar. Exponentially must be used when we have any “J shaped” trend and that does not apply to linear fits. Looking to the values, even if you used a polynomial fit, I could barely see any exponentially.”
The left axis is logarithmic, so these “straightish” lines can be described as exponenltial.
Good article.
Incidentally, you can’t actually ‘run out’ of any metals, since they are formed in the virtually limitless earth’s crust (as opposed to fossil fuels which are formed organically, and near the top).
We will only run out of Al, for example, when we run out of rocks, as there is Al in virtually every rock, but we only mine those parts of the crust where it is concentrated enough to be economically extractable (from weathering, tectonic forces, volcanoes or whatever).
But the key to understanding metals, is that once you mine the most concentrated stuff, with every drop in grade there is vastly more resources available; a rule of thumb is that with every drop in grade of 10% there is ~3-10 times as much resource available. So there is 3-10 times more copper at 0.9% than 1%, and 3-10 times more at 0.8% than 0.9%, and so on. This exponential increase in resource with every drop in grade ensures we will never ‘run out’ of any metal commodity-at lower grades the size of the resource is virtually limitless, it can only get to a point when the cost of extraction may exceed the cost and effectiveness of competing materials for demand (say replacing Al with plastic, or something else). Also, resources quoted by governments are only what has been defined, and only defined at a certain cut off grade, however metals themselves are effectively limitless in supply, on a world scale.
You might want to take another look at how the US government has been calculating “core” inflation over the last two decades (because I assume that is what you used to calculate your inflation-adjusted raw material prices). If, as many people argue, inflation has been seriously understated by omitting the energy and food components from the CPI calculations, you have not been adjusting your prices correctly. Suppose you instead use how much of a given raw material — copper, petroleum, etc. — one ounce of gold buys as your metric for whether the true price of raw materials has been increasing or decreasing over the last 20 years. It suspect it would make a big change in the shape of your graphs!
G.K. Chesterton
“THE answer to anyone who talks about surplus population is to ask him whether he is surplus population; or if he is not, how he knows he is not.” ~GKC: Introduction to ‘A Christmas Carol.’
Certainly huge populations of a great many varieties of animals died off in the last ice age primarily because of a lack of food. The next one will include us and will be the ultimate test of our technology to see how much of our population will be culled by starvation – and war.
“We have met the enemy and they is us” …….or our politicians to be more specific.
Good post. But an epic buzz kill for the Malthusian doom and gloomers. 😉
Hi David
Great article. As a geologist I fully agree with you.
Make please a small correction:
You wrote “More importantly, from a scarcity perspective, the production output of all five metals has been rising over time. Four are rising exponentially”
The trends do not show any exponential trend because they all have arithmetic trends. You should use “more intense trends” or something similar. Exponentially must be used when we have any “J shaped” trend and that does not apply to linear fits. Looking to the values, even if you used a polynomial fit, I could barely see any exponentially.
Cheers
This is all very well but the problem is that “Sustainable” is not sustainable
http://xkcd.com/1007/
When viewed as a percentage of a whole this is a very effective presentation. In terms of absolute numbers however it is deceiving. There are certainly more impoverished peoples than there were a century ago – there are certainly more people without ready access to clean water than there were a century ago – there are more malnurished people than there were a century ago – there are more people without adequate health care than there were a century ago – there are more murders than there were a century ago – in fact there are many unpleasant human circumstances that in absolute terms have increased significantly over the last century
I can confidently predict that these numbers will increase over the next century. It will get worse in the future.
How about some thought into computing technology that each individual will have access to in the not too distant future, as well as in the later part of this century.
Here is an article about an Intel 14nm fab factory to help spark some thought on what future technology will do to solve many problems that we face today.
“The new plant is also the first volume production facility that is compatible with 450 mm wafers, which offer a substantial economic advantage over the current 300 mm generation that Intel launched with its 130 nm processor generation in 2001.”
http://www.tomshardware.com/news/intel-fab42-14nm-cpu-factory,14545.html
I have been researching the technology of cars and trucks being driven by computers and have come to a remarkable conclusion that in the USA alone, the economic savings, which I believe I can provide convincing arguments for, could amount to $2 trillion dollars a year that we waste today because we have no alternative (I have been studying this for 15 years now).
“prepetually”
I am afraid that honesty and competence are the scarcest of commodities amongst Africa’s political elite.
Thanks for another good post.
Human beings are unique. The more of us there are, the richer we grow. Over-populate a rat colony and you get alls sorts of shortages and pathologies. People collaborate, they share knowledge and work in teams. We compete naturally, not out of necessity, and when those competitive juices are directed towards commercial ends a beautiful thing happens; everybody is competing to serve the customer. Natural resources are of no value unless they are coupled with human ingenuity.
As far as I can see, the world is about to run out of nothing except folks who yell….BEAR!
Thanks David Middleton. This is a great article, just confirming what I’m telling for a long time.
As for the bear in the woods, that bear is now in Government and it’s screwing things up.
Big time.
Oh, excuse me Mr. Middleton! Jeez, I wish there were an edit button!
Excellent post! It certainly puts a whole new perspective on things!
‘…The only thing the world has a genuine shortage of is honest and competent people in gov’t.’
Is that Malthusian?
BTW, thanks for your work David.
Excellent. Putting these claims and predictions into long-term context is very helpful.
BTW, you use R2 as the measurement of statistical significance – by your definition (interpretation), at what point does R2 become “significant”? 0.2, 0.3, 0.4, etc.?
Middleton’s final sentence is dangerously wrong.
Commodity prices have gone wild in the last decade or two, but NOT because of population. Prices have gone wild because governments did EXACTLY WHAT MIDDLETON RECOMMENDS. They deregulated speculators.
WE DO NOT NEED MORE DEREGULATION.
What we need now is a return to the government rules that held from 1936 to 1990, a return to FDR’s rules. During that period speculators were a minor part of the system, so real supply and demand determined most prices.
There are real things that we should all worry about, but only if we really enjoy worrying:
1) global financial system collapse – possible but is it likely?
2) global cooling, leading to reduced food production in the face of rising population – possible? Don’t know but more likely than worry number 1.
3) Social collapse as the result of either worry one or two – anybody remember how to add two independent probabilities together? What if they are linked in some indeterminable manner?
4) an aging population as the world population halts and then starts to shrink, leading in turn to reduced economic activity, more demand on medical servces and other costly and difficult to provide facilities. Probability – seems very high from here, but human inginuity has no bounds so probably not so high after all.
5) add other worries to personal taste. Stir and mix well.
williamholder you said in part on January 25, 2012 at 4:00 am:
There are certainly more impoverished peoples than there were a century ago UNQUOTE and then you went on and on about more and more of the world’s “woes”.
Do you have figures from an unbiased, reliable source to back up these alarming claims?
My impression is just the opposite.
Or are you just saying that there is more and more misery reported in the media when in reality things are getting progressively better than they were 100 years ago?
thingadonta January 25, 2012 at 3:22 am
“…. (as opposed to fossil fuels which are formed organically, and near the top).”
Certainly for coal, but regarding petroleum, there is still the very credible abiotic oil theory suggesting a source from a continuous rise of carbon from the core…
Most people seem to find that good news stories are hard to take, but we relish rolling in the dirt and in misery, particularly when it affects somebody else.
Sort of touch wood for luck.
What Ehrlich hadn’t thought of is that population growth in underdeveloped countries made for extra masses of people working in inhumane conditions in copper mines. Yes humanity is able to proliferate but are we able to make circumstances better for the majority of people on this planet. I think your are better of when a cake is divided by 8 then by 16 and that still holds when that cake doesn’t have a fixed size.
Spartacus January 25, 2012 at 3:52 am
“The trends do not show any exponential trend because they all have arithmetic trends. You should use “more intense trends” or something similar. Exponentially must be used when we have any “J shaped” trend and that does not apply to linear fits. Looking to the values, even if you used a polynomial fit, I could barely see any exponentially.”
The left axis is logarithmic, so these “straightish” lines can be described as exponenltial.