Growth and Resources: Have we reached our max

Posted on October 19, 2016 by ATB Chartered Accountants

It is a common misconception that we need to continue to use more of the Earth’s resources in order to continue our economic growth. This is particularly evident in the oil and mining industries. While many people are skeptical about the use of resources around the world and claim that we will soon run out, research tells us otherwise.

Using Fewer Resources

In many of the largest economies of the world including the US, Japan and Europe have shown trends of demands for resources plateauing. Despite this, their countries’ economies are continuing to grow by moving away from an industrial economic model, towards an information-rich economy. The OECD estimated a 30% decline in the costs of output between 1980 and 2007 while GDP doubled in the same time period.

Commodities

Following changes in consumer consumption, such as demanding more energy efficient cars and energy, producers have been forced into changing their products and services to meet their needs. This change in products has been facilitated through technological advances, allowing producers to minimize their exploitation on our resources and commodities. A soon-to-be-published report by Wernick and Waggoner found that 36 of the 100 most used commodities in the US have peaked and are declining, while another 48 of these commodities are almost ready to fall. Even in animal agriculture, beef and pork has plateaued and set to decline while chicken farming is on the rise as it is much more efficient and also more environmentally friendly. As well as this, high petrol prices have led to the production of more efficient and environmentally friendly vehicles being developed, weakening between oil and economic growth.

Technology Creating a Better Way

The advent of new technological advances has paved way for the efficient use of resources. Laptops, tablets and smartphones have replaced the function of high-electricity consuming devices including televisions, PCs, and radios. The move online has led to a continually increasing number of paperless offices and schools. Even more recently than these however, ride-sharing services such as Uber have met the demands of public transport in that less cars are now on the roads because of the added convenience.

True Costs of Progress

A move to greater efficiency for businesses means cutting costs, and this is generally how resources are spared. Spending less on materials means that businesses are able to generate more profits, and this is true for both the industrialized nations and the developing world. This has become even more prevalent with the introduction of 3D printing set to reform global trade and production in the coming years. Despite all this however, government subsidies to inefficient market sectors in our economy could potentially throw all of this progress off track. With an expected increase in the global population of 30% by 2050, it is becoming increasingly important that global consumption does not impact our environment more than necessary.