The World Financial Review

Just another WordPress site

Global Economic Development, Natural Resources and History

By Edward B. Barbier

Introduction

Throughout much of history, a critical driving force behind global economic development has been the response of society to the scarcity of key natural resources, such as land, forests, fish, fossil fuels and minerals.  Increasing scarcity raises the cost of exploiting existing natural resources and creates incentives in all economies to innovate and conserve.  However, economies have also responded to increasing scarcity by obtaining and developing more abundant sources of natural resources.  Since the agricultural transition over 12,000 years ago, this exploitation of new “frontiers” has often proved to be a pivotal human response to natural resource scarcity.

For example, before the Industrial Revolution (ca. 1775), finding and exploiting new frontiers of land and natural resources were fundamental to successful economic development and seen as an important objective of conquering and occupying new lands, monopolizing trade links, and colonizing and populating other regions of the world.  However, since the Industrial Revolution and certainly over the last century, supplies of strategic raw material, mineral and energy commodities have become so cheaply available through global trade that natural resource scarcity is no longer viewed as an economic constraint.  Technological applications to land, fisheries, forests and other natural resource endowments have become sufficiently productive and routine that we believe that human ingenuity and innovations can overcome any resource scarcity problem.

“If humankind is to succeed in overcoming these global problems, we need to find the next “new frontiers” of natural resources and adapt economic development accordingly.”

Today, we are on the verge of a new era, the “Age of Ecological Scarcity”. For the first time in history, fossil fuel energy and raw material use, environmental degradation and pollution may be occurring on such an unprecedented scale that the resulting consequences in terms of global warming, ecological scarcity and energy insecurity are generating worldwide impacts. If humankind is to succeed in overcoming these global problems, we need to find the next “new frontiers” of natural resources and adapt economic development accordingly. This will require developing low-carbon sources of energy, processes of production and technological innovation that require less environmental degradation and pollution. It will also mean instigating institutional changes, creating global carbon and environmental markets, and implementing new policies to foster a new era of “sustainable” economic development.

History has shown that such changes in response to scarcity have occurred before, and those economies that have instigated the transformation first have emerged as leaders.  The question remains, however, how will the world economy respond to the economic and environmental challenges of the Age of Ecological Scarcity?

This is premium content

To continue reading, subscribe using the link on the homepage to our digital edition for £4.99 for three months or purchase one article for $1 per day.