chapt 17 12_24_07_nocomments

chapt 17 12_24_07_nocomments -...

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1 17. Nonrenewable Resource Management Many goods are easily reproducible; it’s always possible to make more of them. Some goods, though, such as metals and fossil fuels, are in finite supply; we cannot create more of them. The fact that they are irreproducible creates special concerns over their use. If we exhaust, for instance, oil supplies, what will be the consequences for our oil-driven economy? Should we avoid all use of nonrenewable resources? If we do use them, how do we address the problem that, at some point, we will run out of them? This chapter will examine The role of opportunity cost in allocating nonrenewable resources between the present and the future. Why the zero profit condition is inappropriate for nonrenewable resources. The factors that affect efficient allocation of nonrenewable resources over time, and how those factors affect the extraction path. Whether running out of a nonrenewable resource is a problem. Old-Growth Redwoods: A Nonrenewable Resource Trees are a renewable resource, of course. If we harvest trees, they can grow back. Why, then, are redwoods the example for this chapter? In fact, renewability for most resources depends on time scale. Petroleum, for instance, comes from decayed plant material that was compressed in the absence of oxygen for thousands of years. We could re-create petroleum deposits, but the time scale is unreasonable; by the time we created new oil deposits, civilization would have long since found another energy source, or evolved into completely different creatures. Many agricultural crops, on the other hand, are reproducible annually, or even more frequently. Renewable resources, such as fisheries or trees, typically grow to maturity over periods in between these extremes. How renewable a resource is, then, depends on its time scale.
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2 Old-growth redwoods, found in the Coast Range mountains of California, are majestic trees. They can rise more than 100 meters (300 feet) into the air, with unique ecosystems that have barely been explored in their upper reaches. At the ground level, their trunks may have diameters over 7 meters (20 feet). While not the oldest trees in existence, they may nevertheless live over 2000 years. Their longevity is due to factors that contribute to their desirability for human uses: they are both fire- and decay-resistant. In addition, the rich color and light weight of the wood make it highly valued for housing material and for furniture. Though redwood trees are grown as a crop (a crop that takes 40-70 years to maturity), these trees do not approach the size of the old-growth trees. The wood from old-growth trees is considered to have higher quality than that wood from “second-growth” (regrown, younger) forests: the latter is more likely to have knots, burls, or other imperfections. As a result, there is demand for wood products specifically from old-growth redwoods. Since redwoods take 200
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This note was uploaded on 03/03/2009 for the course ECON 370 taught by Professor Helfand during the Winter '08 term at University of Michigan.

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chapt 17 12_24_07_nocomments -...

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