CHAPTER 20
         SHOULD WE CONSERVE RESOURCES FOR OTHERS' SAKES?
           WHAT KINDS OF RESOURCES NEED CONSERVATION?


     I finally got to ask Marla Maples a question.  It 
was      at a frenetic press conference where the 26-
year old      actress, having pocketed a cool $600,000 
for endorsing      No Excuses jeans, was pirouetting 
for the horde of      photographers in a skintight 
pair.  Was she, I      inquired, simply exploiting her 
notoriety as the      Alleged Other Woman?  Au 
contraire, she said, this was      part of her new 
campaign to save the environment.  When      pressed 
for specifics, Maples said breathlessly, "I      love 
the ocean". (Howard Kurtz in The Washington Post      
Magazine, Aug 19, 1990, p. 37). 

CHAPTER TWENTY:  TABLE OF CONTENTS:
Conservation of Replaceable Resources
Conservation of Animals or People?
Resources and Future Generations
Resources and "International Rape"
Summary


   Should we try to conserve our resources?  It depends.  Should we try to avoid all 
waste?  Certainly not.  Are the Sierra Club, Friends of the Earth, and other 
conservationist groups barking up the wrong tree?  Yes and no.
   This is a topic so apparently "simple" and "common-sensical" that adults delight in 
instructing children in it: "Environmental singer Billy B. sings about recycling on 
the stage at Wolf Trap."  Children are told to "Cover both sides of every sheet of 
paper you use...."  (Yes, Einstein did that, but it is disastrous advice for any 
office-worker at today's paper prices.)  They are instructed to "encourage your family 
to take part in your community's recycling program," implying that the author of the 
article is prepared to have children induce guilt in parents she does not know, with 
needs she cannot discern, for the sake of her own values.  That is the sort of social 
relationships that recycling programs engender.  More about this in the next chapter. 
   The kids get the message - too well.  A Wooster, Ohio seventh-grader writes to the 
newspaper:  "On Earth Day we think people should restrain from using aerosol cans 
[which presumably pollute the atmosphere] and disposable diapers, and they should 
recycle everything they can."  
   We can clarify conservation issues by distinguishing among the following: (1) 
Unique resources, which are one of a kind or close to it, and which we value for 
aesthetic purposes; examples include the Mona Lisa, an Arthur Rubenstein concert or a 
Michael Jordan basketball game, and some species of animals. (2) One-of-a-kind 
resources that we value as historical artifacts; examples include the original U.S. 
Declaration of Independence and the Dead Sea Scrolls, Abraham Lincoln's first log 
cabin (if it exists), and perhaps the Mona Lisa.  (3) Resources that can be reproduced 
or recycled or substituted for, and that we value for their material uses; examples 
include wood pulp, trees, copper, oil, and food.  Categories 1 and 2 are truly "non-
renewable" resources, but contrary to common belief, category 3 resources (including 
oil) are all renewable.
   This chapter deals mainly with resources in category 3, those we value primarily 
for their uses. These are the resources whose quantities we can positively influence. 
That is, these are the resources for which we can calculate whether it is cheaper to 
conserve them for future use, or use them now and obtain the services that they 
provide us in some other way in the future. The benefits we get from the resources in 
the other categories - the Mona Lisa or Lincoln's log cabin - cannot be adequately 
replaced, and hence the economist cannot determine whether conservation is 
economically worthwhile. The value of a Mona Lisa or a disappearing breed of snail 
must be what we as a society collectively decide is the appropriate value, a decision 
upon which market prices may or may not shed some light.

   Conservation of resources and pollution often are opposite sides of the same coin.  
For example, waste newspapers are a pollution, but recycling them reduces the number 
of trees that are planted and grown.
   The costs and scarcities of resources in category 3 - mainly energy and extractive 
materials - are likely to decline continuously in the future, according to the 
analyses in chapters 1-3. But this chapter asks a different question: whether as 
individuals and as a society we should try to use less of these materials than we are 
willing to pay for. That is, should we make social efforts to refrain from using these 
natural resources, and hence treat them differently from the consumption of pencils, 
haircuts, and Hula-Hoops for reasons other than their costs? The broad answer is that, 
apart from considerations of national security and international bargaining power, 
there is no economic rationale for special efforts to avoid using the resources. 

   Conservationists perform a valuable service when they alert us to dangers 
threatening humanity's unique treasures, and when they remind us of the values of 
these treasures to ourselves and to coming generations. But when they move from this 
role, and suggest that government should intervene to conserve pulp trees or deer 
beyond what individuals are willing to pay to set aside the trees or the deer's 
habitat, they are either expressing their own personal aesthetic tastes and religious 
values, or else they are talking misguided nonsense.  (When the Conservation Trust in 
Great Britain puts "Re-Use Paper, Save Trees" on an envelope, it is simply talking 
trash; the paper comes from trees that are planted in order to make envelopes.) And 
when some famous conservationist tells us that there should be fewer people so that it 
is easier for him or her to find a deserted stretch of beach or mountain range or 
forest, she or he is simply saying "gimme" - that is, "I enjoy it, and I don't want to 
share it." (In chapter 29, we shall see how population growth paradoxically leads to 
more wilderness, however, rather than less.)
   Thinking straight about conservation issues is particularly difficult because we 
must do what we human beings desperately resist doing:  Face up to the fact that we 
cannot have it both ways.  We cannot both eat the pie and continue to look at it with 
pleasure.  Grappling with such tradeoffs is the essence of microeconomic theory.  For 
example, it is obvious that having the wilderness be pristine and not hearing other 
human voices when one is there means denying the same experience to others.  Many who 
in principle would like others to be able to have that experience, as well as 
themselves, do not face up to that inevitability. 
   Anthropologists lament the arrival of civilization to the Yonomami Indians of 
Brazil.  But the anthropologists also seek the health and cultural benefits of 
civilization on behalf of that group.  Whichever way it goes they will feel regrets, 
and both cannot be the case.  Or, Jews in Israel yearn for the ingathering of Jews 
from the Diaspora into Israel, where most immigrants live a healthier life than 
before.  But when the Jews of Yemen leave their ancient home, Israeli Jews lament the 
passing of the 2500 year old Yemenite community, despite the present miserable state 
of that community. 
   It is natural to want things both ways.  When an economist uses quintessential 
economic thinking to point out that we must accept the necessity for a tradeoff and 
that we cannot usually have our cake and eat it too, the argument is met with denial 
of any such necessity - say, denial that reserving a forest for spotted owls means 
fewer jobs and lost income - or with charges that harvesting wood is an "obscenity".  
This makes it very difficult to think straight about conservation issues. 
   One possible reason why some people refuse to accept the economist's stricture that 
trade-offs are necessary is that the economist's motivations somehow are not 
considered noble.  And indeed, the economist does try to focus on matters other than 
motivations.  As Murray Weidenbaum wisely notes, economists "care more about results 
than intentions."   If we can succeed in focusing others' attention on results rather 
than intentions, too, we will achieve results that people will like better than they 
will otherwise obtain.
   It is useful perspective to go back and re-read the classics of the conservation 
movement in the United States in the early years of the 20th century - for example, 
the great 1910 book by Charles van Hise.  There one finds all the themes being sounded 
today, and expressed very well.  There is one great difference between that literature 
and the present writings, however.  In van Hise's day people believed as follows: 
"What is the purpose of conservation?  It is for man."   As chapter 00 discusses, 
humankind's welfare is no longer the only - or even the main - goal for many 
conservationists. 

              CONSERVATION OF REPLACEABLE RESOURCES

   Should you conserve energy by turning off lights that are burning needlessly in 
your house? Of course you should - just as long as the money that you save by doing so 
is worth the effort of shutting off the light. That is, you should turn out a light if 
the money cost of the electrical energy is greater than the felt cost to you of taking 
a few steps to the light switch and flicking your wrist. But if you are ten miles away 
from home and you remember that you left a 100-watt light bulb on, should you rush 
back to turn it off?  Obviously not; the cost of the gasoline spent would be far 
greater than the electricity saved, even if the light is on for many days. Even if you 
are on foot and not far away, the value to you of your time is surely greater than the 
cost of the electricity saved.

   The appropriate rule in such cases is that you should conserve and not waste just 
so far as the benefits of conserving are greater than the costs if you do not 
conserve. That is, it is rational for us to avoid waste if the value to us of the 
resource saved is more than the cost to us of achieving the saving - a matter of 
pocketbook economics. And the community does not benefit if you do otherwise.

   Ought you save old newspapers rather than throw them away? Sure you ought to - as 
long as the price that the recycling center pays you is greater than the value to you 
of your time and energy in saving and hauling them.  But if you - or your community - 
must pay someone more to have paper taken away for recycling than as trash, there is 
no sound reason to recycle paper.  

   Recycling does not "save trees".  It may keep some particular trees from being cut 
down.  But those trees never would have lived if there were no demand for new paper - 
no one would have bothered to plant them.  And more new trees will be planted and 
grown in their place after they are cut.  So unless the very act of a saw being 
applied to a tree makes you unhappy, there is no reason to recycle paper nowadays. 

   Human beings produce the living raw materials that we value, as long as the 
economic system encourages it.  As Henry George  said a century ago, an increase in 
the population of chicken hawks leads to fewer chickens, but an increase in the 
population of humans leads to more chickens.  Or as Fred Lee Smith, Jr., put it, there 
is a choice between the way bison and beef cattle were treated in the U. S. in the 
19th century;  the bison were public property and the cattle were private, so the 
bison were killed off and the cattle throve.   
   Consider elephants.  If people can personally benefit from protecting elephants, 
and then selling their ivory and the opportunity to hunt them, the elephant population 
will grow in that place - as is the case now in Zimbabwe, Botswana, and some other 
southern African countries, where ownership belongs to regional tribal councils.  In 
Kenya the elephant population had grown so large by 1993 that officials were 
administering contraceptive injections to combat elephant "overpopulation".  But where 
no one has a stake in the welfare of the elephants because they are owned only by the 
"public" at large, a ban on the sale of ivory will not prevent the elephant herds from 
being slaughtered and the size of the herds decreasing - as is the case now in Kenya 
and elsewhere in East and Central Africa. (Indeed, a ban raises the price of ivory and 
makes elephants even more attractive targets for poachers.)

   There is much confusion between physical conservation and economic conservation. 
For example, some writers urge us not to flush our toilets each time we use them, but 
rather to use other rules of thumb that delicacy suggests not be mentioned here. The 
aim is to "save water."  But almost all of us would rather pay the cost of obtaining 
the additional water from ground-water supplies or from cleaning the water; hence, to 
"save water" by not flushing is not rational economics. (You will find discussion of 
the supply of water in chapters 10 and 17 on resource trends and pollution).
   It is economically rational to systematically replace light bulbs before they burn 
out so that all the bulbs can be changed at once; this is not a "waste" of light-bulb 
capacity. To do otherwise is to commit yourself to a lower level of material living, 
unless the country is a very poor one where the cost of labor is small relative to the 
cost of a lightbulb.  (In Russia in the 1990s, burned-out light bulbs are sold on the 
street, to be taken to one's place of work and substituted for working light bulbs to 
be stolen to take home.)
   Though a "simpler way of life" has an appeal for some, it can have a surprisingly 
high economic cost. One student calculated that if U.S. farmers used 1918 agricultural 
technology instead of modern technology, forswearing tractors and fertilizers in order 
to "save energy" and natural resources, "We'd need 61 million horses and mules ... it 
would take 180 million acres of cropland to feed these animals or about one-half of 
the cropland now in production.  We'd need 26 or 27 million additional agricultural 
workers to achieve 1976 production levels with 1918 technology."
   Conservation - or just non-use of given materials - is a moral issue for some 
people, about which it is not appropriate to argue. Todd Putnam, founder of National 
Boycott News, will not wear leather shoes because "that would be cruel to animals"; 
... "rubber and plastic are also out because they don't recycle well."  But there is 
no more economic warrant for coercing recycling than for coercing other sorts of 
personal behavior that are moral issues for some - whether people should eat high-fat 
diets, or pray three times a day, or tell ethnic jokes. 
   Coercion to conserve is not a joke, though it may seem to be.  The community 
adjoining the one in which I live has an "environmental" television program.  On a 
typical show the theme music is from the crime program "Miami Vice", and the narrator 
warns that "a recycling violation is in progress" at that moment somewhere in the 
community.
   Because conservation of ordinary resources confers no economic benefits upon the 
community, each case should be evaluated just as are other private decisions about 
production and consumption.  Misunderstanding on this point leads to foolish 
suggestions and actions which - though they may have expressive value for some of us - 
accomplish nothing, and may even have harmful effects for others. For example, there 
will be no discernible improvement in the food supply of people in poor countries if 
you do not eat meat. In fact, the opposite may be true; heavy meat eating in the U.S. 
stimulates grain planting and harvesting in order to feed cattle; this increased 
capacity represents an increased ability to handle an unexpected massive need for 
food. As D. Gale Johnson put it, 

Suppose that the United States and the other      
industrial countries had held their direct and indirect      
per capita use of grain to half of the actual levels 
for the past several decades.  Would this have made 
more food available to India or Pakistan in 1973 and 
1974? The answer is clearly no.  The United States, and 
the other industrial countries as well, would have 
produced much less grain than has been produced.  
Reserve stocks would have been much smaller than they 
have been. If U.S. grain production in 1972 had been 
125 million metric tons instead of 200 million or more, 
it would not have been politically possible to have had 
70 million metric tons of grain reserves....
If the industrial countries had had much lower total 
grain consumption in the past, the institutions 
required to handle the grain exports to the developing 
countries in the mid-1960s or in 1972/73 and 1973/74 
would not have been able to do so. International trade 
in grains would have virtually disappeared....

Nor would the research have been done that led to production breakthroughs if 
industrial countries had consumed less.

   Yet many laypersons, and even some people considered experts by the media (and 
therefore by government agencies), espouse the "obvious" (though incorrect) short-run 
view that if we consume less, others in need will have more.  Testifying before 
Congress, Lester Brown - whose forecasts about food and other resources have been more 
consistently wrong over the years than almost anyone else's, and whose views are at 
variance with the entire profession of agricultural economics (see, for example, 
chapter 7 and figure 7-2) - said that "it might be wise to reduce consumption of meat 
a few pounds per capita within affluent, over-nourished societies such as the United 
States". And laypersons say, "Millions of people are dying... It sickens me to think 
of the money spent in America on food that is unnecessary for our basic nutritional 
needs. Would a sacrifice be so difficult? And "We serve tens of millions of pets vast 
quantities of food that could be used to feed millions of starving people in Asia, 
Africa, and Latin America - if we would only practice birth control for our pets"! 
   Would it be sound charity to eat less or cheaper food and send the money saved to 
poor countries? It would indeed be kind for each of us to send money. But why take the 
money from our food budgets? Why not from our overall incomes? That is, why not reduce 
whichever expenditures are most comfortable, rather than just reducing our 
expenditures on food? That would make better economic sense (though it might have less 
ritualistic meaning to us, which could be a persuasive argument for "saving food").

   Energy conservation is another favorite target. We are urged not to eat lobsters 
because it takes 117 times as much energy to catch a lobster as it does to catch 
enough herring to yield an equal amount of protein. One of the co-authors of the study 
that reached this nonsensical conclusion is Jean Mayer, adviser to presidents, 
president of Tufts University, and perhaps the best-known student of nutrition in the 
world (but not a student of energy or economics). 
   Marvelous disputes arise in Washington because everyone is trying to get into the 
energy-saving act. Any one group's panacea is another group's problem. "Transportation 
officials are `outraged' by a Congressional report suggesting that buses, van pools, 
and car pools may use less energy than mass transit rail systems."  And the U.S. Post 
Office in 1978 issued a postage stamp entitled "Energy Conservation," picturing a 
light bulb, a gas can, and the sun with an inscrutable face.
   Much of the call for conservation would be funny if it did not have serious results 
- for example, the federal Corporate Average Fuel Economy (CAFE) standards requiring 
manufacturers to raise average miles per gallon from 18 mpg to 27.5 mpg from 1978 to 
1985.   These standards increase highway deaths by making cars lighter, and therefore 
poorer protection in collisions - and this would be true even if all cars would be 
smaller; having all football players wear helmets reduces total football injuries.  
Robert Crandall and John Graham studied the effect on a single cohort of cars and 
found "1989 model year cars will be responsible for 2,200-3,900 additional fatalities 
over the next ten years because of CAFE" - an increase in the death rate of somewhere 
between 14 percent and 29 percent. 
   The CAFE standards have also cost vast sums of money to consumers, and much damage 
to the U.S. auto industry, in addition to the much more important increase in 
mortality.  And for what?  CAFE proponents who are not economists not only make 
arguments about the necessity of "saving" oil but also resort to justifying the 
standards on grounds of "how vulnerable we are to foreign oil" when this undoubtedly 
was not their objective.  And they debase the standards of public debate in the 
service of their cause by calling "liars" those who point out that lightening cars 
makes them more dangerous.  
   Apparently it is an inbred moral intuition that makes us feel that non-conservation 
is wrong.

     Bishop Edward O'Rourke, head of the Peoria diocese 
of the      Catholic Church, and Bruce Hannon, 
environmentalist and      energy researcher in the UI 
Center for Advanced      Computation, attempted to 
raise the "level of      consciousness" of church 
leaders and laymembers....

     One solution they cited for the growing problem is 
for      everyone to lead lives that are simpler, more 
spiritual      and less resource consuming....

     Even buying a tube of toothpaste is energy 
wasting.... The      tooth paste is encased in a 
cardboard box, which must      then be put in a paper 
bag, with a paper sales receipt -      all of these 
products use wood pulp, and all are usually      thrown 
away and destroyed.

     "We are custodians and stewards of God's gifts. 
The more      precious the gifts, such as energy, the 
more urgent the      need to protect them," Bishop 
O'Rourke reminded.
   A Louis Harris poll reveals that

     a substantial, 61-23 percent majority thinks it is      
"morally wrong" for Americans - 6 percent of the 
world's      population - to consume an estimated 40 
percent of the      world's output of energy and raw 
materials.  And, the      public indicates it is ready 
for a number of drastic      cutbacks. ...  A 91-7 
percent majority is willing to      "have one meatless 
day a week" ... A 73-22 percent      majority would 
agree to "wear old clothes, even if they      shine, 
until they wear out...."  By 92-5 percent the public 
reports it would be willing to "reduce the amount of 
paper towels, bags, tissues, napkins, cups and other 
disposables to save energy and to cut pollution."

   I share this moral impulse. I take a back seat to no one in hating waste - 
unnecessary lights, avoidable errands, trivial meetings.  But I try to restrict my 
waste-fighting to matters where the benefit is worth the cost (though when they were 
young my children had a different view of my behavior). I try to remember not to waste 
more additional valuable resources in fighting the original waste than the original 
waste is worth.  And most important, I do not want to legally impose my moral impulse 
on other people who do not share it.
   This anecdote teaches about the role of conservation in the modern world: During 
the 1970s I found that the replaceable nibs for the ink pens I wrote with were no 
longer being sold.  Because those nibs, and the pen into which they fitted, were more 
enjoyable than anything else I had found to write with, I got worried that I might run 
out sometime, costing me efficiency and pleasure. 

   I therefore went around to all the offices in my college and collected the old nibs 
which were tucked away in the backs of the storeroom; no one else continued to use 
them.  I congratulated myself on being set for life.  

   Then in the early 1980s the personal computer and word processing came along.  And 
there went my need for pen nibs.  I was saddled with a lifetime inventory that I would 
never use and that no one else would use, either.  

   This typifies how we worry about running out of something, and how the worry 
usually turns out to be wholly misplaced because of technological advance.  

   When I was collecting the nibs in the 1970s, no one could guarantee me that I did 
not need to worry about a lifetime supply, because no one could guarantee me that a 
better replacement would be invented.  And no one can now make such guarantees for 
other resources.  But it would be foolish for us to assume that the worst case will 
occur -- that no substitute will be invented.  Proceeding on a worst-case basis may 
avoid that worst case, but it is likely to impose heavy costs that would not apply if 
the worst case does not occur -- as in most cases it will not.  

   Worst-case thinking may be appropriate for safety engineers.  But it is not 
appropriate for most everyday planning.  Both of a family's cars may fail to start 
tomorrow.  But you recognize that it would be foolhardy to stockpile two extra cars 
(or even one) just in case.  Instead you recognize that the chance that both will fail 
to start is very small.  And even in that very small eventuality, there are taxis, 
neighbors, and other solutions -- including shank's mare.  So it is with other 
resources.  As far as I can trace its intellectual history, the idea that worst-case 
analysis - which dismisses the cost of taking unnecessary precautions ("What does it 
matter if we are wrong?") - is appropriate for ordinary decision-making seems to be a 
curse foisted on us by game theorists enamored of its mathematical charms.  
   The anti-waste, pro-conservation moral impulse sometimes is used to flimflam the 
public. Consider The Hunger Project, an offshoot of the est organization. Under the 
headline "The End of Starvation," a shiny four-color brochure recites a few figures 
(uncorroborated) about the numbers of children who die of hunger each year, then asks 
people to (a) fast for a day, and (b) contribute money to The Hunger Project. No 
explanations are given about how the fast or the money will affect anyone else's 
hunger. The stated purpose of the fast is "To express and experience my alignment with 
having the end of starvation be a reality in the world. To express and experience that 
I am the source of The Hunger Project". Whether this and the rest of the brochure is a 
masterpiece of communication or of non-communication I leave for the reader to judge. 
But for a decade I have offered six pieces of bubble gum to anyone who will explain 
just how The Hunger Project (as of 1977) would end anyone's hunger except the 
sponsors', with no takers.
   After the first spurt of enthusiasm for conservation and recycling in the 1970s, 
some people began to calculate that the costs of recommended recycling projects can 
often exceed the savings.

     [A high-school student in Los Angeles] for 18 
weeks ...      collected bottles from a restaurant to 
raise money for a favorite organization.  At the end of 
that time, he had collected 10,180 pounds of glass, 
driven 817 miles,      consumed 54 gallons of gas ... 
and used up 153 man-hours of work. It is difficult to 
estimate the amount of pollution his car threw into the 
air.

   Why do conservationists think people must be pressured to conserve more than what 
they "naturally" would? Apparently, the conservationists do not believe that consumers 
will react rationally to changes in resource availabilities and prices.  But the 
reduction in use of electricity per unit of GNP since 1973 (see figure 20-1) is 
striking evidence of consumers' sensitivities to cost and scarcity.  Another striking 
example is the drop far below the trend in gasoline use in the late 1970s, as gasoline 
prices rose sharply.
    Figure 20-1
   Sometimes coercion is justified on the basis that government subsidizes the 
activity.  For example, the Wetland Law prevents farmers in (say) North Dakota from 
draining low spots on their land - even though some of these spots sometimes are dry 
all year - because they can sometimes be a haven for migratory birds.  
Environmentalists say "The American taxpayer has spent billions on farm subsidies.  It 
seems to me we ought to be able to put some strings on that money."   Here we see the 
ill effects of the entire system of government intervention.  The original subsidies 
induce farmers to produce too much, leading to government stockpile programs which 
eventually release food and depress prices in less-developed countries, which destroys 
agriculture in those countries.  The over-production may also lead to the cropping of 
land which would be better left in other uses.  Then the farmers become dependent upon 
the subsidies and are forced to comply with other regulations which in themselves may 
be economically counter-productive (such as idling land, or using inefficient cropping 
practices) lest they lose their subsidies.  And perhaps most insidious in the long 
run, individual actions become subject to politics and decisions by groups of 
outsiders who have no economic stake in the operation, rather than subject to purely 
economic calculation based on the market. 

CONSERVATION OF ANIMALS OR PEOPLE?

   Some say that the human population should be stabilized or reduced because we 
threaten some species of animals. This raises interesting questions. If we assume 
there is a trade-off between more people and more of species X, then which species 
should we favor?  Buffalo or golden eagles over Homo sapiens?  If yes, does the same 
logic hold for rats and cockroaches?  And how many people do we want to trade for more 
buffalo?  Should the whole Midwest be made a buffalo preserve, or do we want only to 
maintain the species just this side of extinction?  If the latter, why not just put 
them in a few big zoos?  And do we want to protect malaria-carrying mosquitoes from 
extinction?
   We ought also consider the species of animals whose numbers are increased when the 
human population increases - chickens, goats, cattle, minks, dogs, cats, laboratory 
white mice, and canaries. Is this a justification for increasing the human population? 
(Here lies a problem for those who are against killing animals for food or clothing. 
Without humans to consume these products there would be fewer chickens and minks to be 
killed.) Which way does one prefer to have it from the viewpoint of animal welfare?

   My point:  Where costs do not settle the issue, the decision about what is 
conserved, and how much, is a matter of tastes and values.  Once we recognize this, 
the arguments are easier to resolve.  There is considerable discussion in chapters 39 
and 40 of particular conflicting values relevant to these issues. 
                 RESOURCES AND FUTURE GENERATIONS

   Conservationists and technologists attend to the future, and often properly so.  We 
should conserve, they say, so that there will be "enough" for future generations, even 
if the value we get from the resource saved is less than what it costs us to achieve 
the saving.

   When we use resources, then, we ought to ask whether our present use is at the 
expense of future generations. The answer is a straightforward no. If the relative 
prices of natural resources can be expected to be lower for future generations than 
for us now - and this seems to be a reasonable expectation for most natural resources, 
as we have seen earlier - this implies that future generations will be faced by no 
greater economic scarcity than we are, but instead will have just as large or larger 
supplies of resources to tap, despite our present use of them. Hence our present use 
of resources, considered in sum, has little if any negative effect upon future 
generations. And our descendants may well be better off if we use the resources in 
question right now to build a higher standard of living instead of refraining from 
their use. So we need make no ethical judgments with respect to leaving resources to 
our descendants.

   Furthermore, the market protects against overuse of materials that may become 
scarcer in the future. The current price of a material reflects expected future supply 
and demand as well as current conditions, and therefore current prices make an 
automatic allowance for future generations. If there is a reasonable basis to expect 
prices to rise in the future, investors will now buy up oil wells, coal mines, and 
copper-mining companies; such purchases raise the current prices of oil, coal, and 
copper, and discourage their use. Paradoxically, normal market speculation "cannot 
prevent an unduly low rate of consumption, which would leave future generations with 
more reserves than they need - just the opposite of what conservationists worry 
about"!
   But what if the investors are wrong? you may ask. In return I ask you, Are you 
prepared to believe that your understanding of the matter is better than that of 
speculators who study the facts full time, who are aware of the information you are 
aware of, and who earn their livings by not being wrong when they invest their own 
money?

   The storage of fresh fruits throughout the year illustrates how markets and 
businesses ensure a year-long supply and prevent future scarcity. The example also 
shows how present price reflects future scarcity, and why it would not make sense to 
buy oranges in the summer to "conserve" for winter or for future years.

   Oranges are harvested in the spring and early summer in various countries such as 
Italy, Israel, Algeria, and Spain. Naturally the price to consumers is cheapest at 
harvest time. But fruit dealers also buy at harvest time and store the fruit in 
warehouses for later sale. The price throughout the winter is roughly the cost at 
harvest plus the cost of storage (including the cost of the capital tied up in the 
oranges). The price in the winter therefore is not much higher than at harvest, and 
there is no reason for consumers to worry about scarcity at any time.

   The desire of merchants to make a profit by buying cheap at harvest and selling 
dear later ensures that prices will not rise precipitously at harvest time. And the 
competition of other merchants who have the same desire prevents them from pushing the 
price very high in the winter. Of course any consumer who worries that winter prices 
will be unbearably high can pay the storage price by stockpiling oranges in the 
refrigerator.  Likewise, these forces work to prevent scarcity or a rapid price run-up 
in natural resources. Merchants who believe - on the basis of a very full 
investigation, because their economic lives depend upon it - that future scarcity is 
not yet fully reflected in present prices will buy raw materials now for future 
resale. They will do our conserving for us, and we will pay them only if they were 
right. And the argument is even stronger with respect to metals because they do not 
require a refrigerated warehouse.

   The fact that there will be another orange harvest next year does not make the 
orange situation different from the copper situation discussed earlier. New 
discoveries of copper, and new technological developments in the mining and use of 
copper, are also expected to occur, though the timing of the events is less certain 
with copper than with oranges. But that just means a wider market for merchant 
speculators. Hence we need not worry that the needs of future generations are being 
injured by our present consumption patterns. And please notice that orange prices at 
harvest time, and present copper prices, too, reflect expected population growth. If 
consumption is expected to rise due to increased population, merchants with good 
foresight will take that into account (and merchants with poor foresight do not remain 
in business for very long).

   If the economic situation were different than it is - if technology were fixed and 
costs of resources were therefore expected to be higher in the future than now, 
indicating greater scarcity to come - it might be appropriate to make ethical 
judgments that would differ from the results of a free market. It might then be 
appropriate to worry that our consumption and fertility (if influenced only by market 
prices) might have such adverse effects on future generations that a prudent 
government might intervene to reduce present use of the mineral natural resources.  
But such intervention is not now necessary or appropriate, because, as Harold Barnett 
and Chandler Morse put it, "By devoting itself to improving the lot of the living ...  
each generation ... transmits a more productive world to those who follow." It does so 
by accumulating real capital to increase current income, by adding to the stock of 
useful knowledge, by making its own generation healthier and better educated, and by 
improving economic institutions. This is why the standard of living has been rising 
with successive generations, which is the central fact in all discussions of 
conservation.
   Because we can expect future generations to be richer than we are, no matter what 
we do about resources, asking us to refrain from using resources now so that future 
generations can have them later is like asking the poor to make gifts to the rich.


RESOURCES AND "INTERNATIONAL RAPE"

   Is there need for ethical judgments to supersede market decisions when rich 
countries buy raw materials from poor countries?

   The idea that the rich countries "rape" the poor countries and "pirate" their 
bauxite, copper, and oil does not rest on a solid intellectual foundation. These 
resources have no value for home use in a country without a manufacturing industry. 
But when sold to an industrial country, the resources provide revenue that can aid in 
development - and, in fact, this revenue may represent a poor country's very best 
chance of development. 

   What if the "exploiters" actually stop buying? This is what happened in 1974 in 
Indonesia:

     Many of those Indonesians who took to the streets 
only      eight months ago to protest alleged Japanese 
exploitation of their natural resources are now 
beginning to complain that the Japanese are not 
exploiting them enough. Because of setbacks in their 
own economy, Japanese importing companies have had to 
cut their monthly purchases of 760,000 cubic yards of 
Indonesian timber by as much as 40%.  As a result, 
Indonesian lumber prices have dropped some 60% and ... 
30 firms have already gone bankrupt, causing widespread 
unemployment in ... timber-dependent areas....

   Nor are contemporary poor-country people who sell their resources benefiting at the 
expense of their own future generations. "Saving" the materials for the poor country's 
future population runs the grave risk that the resources will drop in relative value 
in the future, just as coal has become less valuable over the past century; a country 
that hoarded its coal starting a hundred years ago, as so many then advised, would be 
a loser on all accounts.
   Please remember, too, that the U.S. and other rich countries export large amounts 
of primary products that poor countries need, especially food. The primary products 
that the poorer countries produce enable them to trade for the rich countries' primary 
products, an exchange from which both parties gain. Of course, nothing in this 
paragraph suggests that the prices at which rich countries buy these resources from 
poor countries are "fair" prices. The terms of trade are indeed an ethical matter, but 
one that is likely to be resolved by the hard facts of supply, demand, market power, 
and political power.

   Chapter 00 contains more discussion of this issue.

                             SUMMARY

   A public policy of conservation implicitly assumes that the "true" value of the 
good to be conserved is greater than its price to consumers. But in a well-operating 
free market the price of a commodity reflects its full social cost. Hence if an 
individual or firm refrains from using the product even though its value to the firm 
or individual is greater than the market price, there is an economic loss without 
compensating benefit to anyone directly involved (except perhaps the producers of 
products that compete with the product being "conserved"). For example, saving old 
newspapers when their market value is far below the cost of your time and trouble to 
do so may make you feel good, but it lowers the overall productivity of the economy 
without any long-run benefit to the supply of timber.

   Nor is conservation needed to protect future generations in ordinary situations. 
Market forces and present prices take into account expected future developments, and 
thereby automatically "conserve" scarce resources for future consumption. Perhaps more 
important, present consumption stimulates production and thereby increases 
productivity, which benefits future generations; the use of newsprint today causes 
forests to be grown for future consumption, and encourages research into how to grow 
and harvest trees. Only if you suffer pain for the tree itself when it is cut does it 
make sense for you to recycle newsprint.

   Nor does conservation by the rich benefit the poor, domestically or 
internationally. What the poor need is economic growth. And "economic growth means 
using the world's resources of minerals, fuels, capital, manpower and land. There can 
be no return to Walden Pond without mass poverty."


page# \ultres\ tchar20 February 2, 1994