MEASURING NATURAL RESOURCE strongSCARCITYstrong A STUDY OF THE PRICE.pdf

MEASURING NATURAL RESOURCE SCARCITY: A STUDY OF THE PRICE INDICATOR by Ece Ozdemiroglu CSERGE Working Paper GEC 93-14 MEASURING NATURAL RESOURCE SCARCITY: A STUDY OF THE PRICE INDICATOR by Ece Ozdemiroglu Economics for the Environment Consultancy London Acknowledgements The Centre for Social and Economic Research on the Global Environment (CSERGE) is a designated research centre of the Economic and Social Research Centre (ESRC). ISSN 0967-8875 Abstract This study investigates natural resource scarcity by using resource prices as an indicator. Price data for 39 resources in five categories are regressed in a quadratic time series model. The economic debate on this subject is set out in the first two sections, while the last section consists of the econometric modelling. The findings are that given the inverted-U trend curve, social and technical changes during the period covered have been significant in reducing scarcity. The graphs of actual and fitted values for selected resources are presented in Annex 1. 1. INTRODUCTION: THE ECONOMIC DEBATE OVER NATURAL RESOURCE SCARCITY When tin became scarce in Ancient Greece, its price rose so high that the Greeks had to switch from bronze to iron. The same happened with timber; its scarcity changed shipbuilding techniques from the frame-first to the hull-first method in order to save timber. These physical limits to natural resources are still one of