learning objectivesAfter reading this chapter you will be familiar with the following:
• key variables affecting the demand for natural resources;
• the notion of derived demand;
• key variables affecting the supply of factors of production in general and natural resources in particular;
• market equilibrium price as a measure of social opportunity cost;
• the concepts of physical and economic scarcity of natural resources;
• alternative measures of emerging natural resource scarcity;
• the concepts of pure rent, differential rent and Ricardian scarcity;
• the concepts of factor substitution and technological advances, and their broader and varied implications for the availability of natural resources.
[I] f something is more scarce in one place than in another, or at one time compared with another, we would know this because its price is greater in the more scarce circumstance. The argument, so fundamental to economics, applies to natural resources. Natural resources are said to be growing more scarce if their relative price is rising over time.
(Brown and Field 1979:227-8)