Resource depletion Notes

What Is Resource Depletion About?

1. In a nutshell, resource depletion is about stocks, flows, and time.
2. It is both an environmental issue and a socioeconomic one, because the way societies extract and trade resources affects growth, security, and sustainability.
3. Often the early stages look like:
   1. Declining quality (lower-grade ore, harder-to-reach oil, less fertile soil)
   2. Rising costs (more machinery, more energy, deeper drilling, longer transport)
   3. Greater environmental damage per unit extracted (because extraction becomes more intensive)

What's The Rule Of Thumb For Understanding Resource Depletion?

1. A helpful way to understand depletion is to separate resources by whether nature can replace them quickly.
2. Non-renewable resources (crude oil, coal, natural gas, many minerals) form extremely slowly.
   1. Oil, for instance, forms deep underground from the decomposition of organisms such as plankton and algae and takes millions of years to become a usable fossil fuel.
   2. When we extract and burn it, the stock available for the future falls.
3. Renewable resources (forests, freshwater, fish stocks, fertile soil) can regenerate, but only up to a point.
   1. If use is faster than regeneration, the resource becomes depleted.
   2. A rainforest can regrow, but not if it is cleared faster than it can recover, or if the ecosystem is pushed past a tipping point.

How Does Extraction Boost Development But Increase Vulnerability?

1. Many developing countries have large quantities of natural resources that can be sold in international markets.
2. Resource gathering (mining, logging, plantations, drilling) is often a relatively "simple" form of economic activity in the sense that it relies heavily on labor rather than advanced machinery.
3. Because wages can be relatively low, extraction industries may be profitable and can create jobs and export revenue.
4. However, resource-based development can create a major risk: overdependence on a narrow range of industrial output.
5. When a country relies on one or two primary exports (oil, coffee, copper etc.), national income becomes tied to:
   1. Global demand for that product
   2. International price changes
   3. Decisions made by large buyers and global corporations
6. When demand is high, export earnings can rise and contribute to economic growth.
7. But prices for primary commodities are often highly volatile, meaning they can rise or fall sharply.
8. During periods of falling prices, economies that rely heavily on these exports can be hit hard, becoming more vulnerable to other shocks such as drought, political instability, or currency problems.

Case study

• Venezuela depends on oil money to pay for government services.
• When oil prices fell after 2014, the government suddenly had far less cash, which is why shortages and anger grew.
• “Resource depletion” here therefore isn't “they ran out of oil" but more like "they couldn't reliably turn oil into money for people’s lives anymore.”
• What’s new now:
  • The US and Venezuela are loosening and adjusting parts of their oil relationship.
  • The US issued a new license (GL 46) that allows some transactions involving Venezuelan-origin oil.
  • Venezuela passed a law to bring in more private and foreign investment into oil.
• Key takeaway:
  • A country can “deplete” a resource in practice when it becomes unable to convert that resource into steady public benefits.
  • This can be due to a combination of factors such as price shocks, trade restrictions, and weak systems, even if the resource still exists.

How Does Scarcity Connect Resource Depletion To Economic Decisions?

1. Resource depletion links directly to the fundamental economic problem: scarcity.
2. Because resources are scarce, all societies must decide:
   1. What to produce (for example, export crops vs. food for local consumption)
   2. How to produce (labour-intensive methods vs. mechanized methods, low regulation vs. high regulation)
   3. For whom to produce (who benefits from resource wealth)
3. In a market economy, prices and profits strongly influence these decisions.
4. Rising prices can encourage faster extraction, which can speed up depletion.
5. In many cases, governments also intervene, for example by granting drilling licenses, subsidizing fuel, setting environmental regulations, or taxing exports.

How Does Depletion Damages Ecosystems (Environmental Pathways)?

1. Resource depletion is closely tied to environmental degradation because extracting resources often requires large-scale land and water use.
2. Examples of environmental damage linked to intensive extraction and production include:
   1. Deforestation to create plantations or grazing land (for example rainforest cleared for palm oil plantations)
   2. Mining impacts such as habitat destruction, toxic runoff, and long-term soil and water contamination
   3. Large-scale animal farming that can increase land pressure, water use, and pollution
3. These processes can reduce land resources (fertile soil, forest cover, biodiversity) and can make ecosystems less resilient.
4. Once ecosystems lose resilience, regeneration slows, and depletion accelerates.

Who Benefits And Who Pays (Socioeconomic Pathways)?

1. Resource depletion is also a question of fairness and power.
   1. Extraction can bring jobs and revenue, but profits may flow disproportionately to large companies, political elites, or foreign investors.
   2. Environmental impacts can fall on communities living near mines, plantations, or refineries (polluted water, reduced farmland, health impacts).
   3. Historically, extraction shaped relationships between colonial powers and colonies, where colonies were exploited for resources to support growth and higher incomes elsewhere.
2. These patterns can persist in modern forms, especially when countries compete for foreign investment or lack strong environmental and labor protections.

What Are Some Sustainable Strategies And Policy Choices For Managing Resource Depletion?

1. Reducing depletion requires both economic planning and environmental management.
2. Effective strategies depend on the resource and the country, but commonly include the following.

Diversifying the economy to reduce price shock risk

1. If a country is overdependent on one export, diversification can reduce vulnerability.
2. This can involve:
   1. Developing manufacturing or services
   2. Investing in education and skills to increase productivity
   3. Supporting a broader mix of exports
3. This doesn't eliminate depletion, but it reduces the pressure to extract rapidly just to stabilize national income.

Making extraction more sustainable and accountable

1. Governments and communities can reduce damage by:
   1. Enforcing environmental regulations (limits on pollution, land restoration requirements)
   2. Requiring environmental impact assessments before projects begin
   3. Improving transparency of revenues (so resource wealth supports public services)

Shifting demand through alternatives and efficiency

1. Because oil and other resources are widely used, demand-side changes matter:
   1. Improving energy efficiency (less energy per unit of output)
   2. Expanding renewable energy (reducing reliance on fossil fuels)
   3. Designing products for reuse and recycling (reducing need for new raw materials)