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Lecture Economics (18th edition): Chapter 15 - McConnell, Brue, Flynn's

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Chapter 15 - Natural resource and energy economics. After studying this chapter you will be able to understand: Explain why falling birthrates mean that we are not likely to run out of natural resources, describe why using a mix of energy sources is efficient, even if some of them are quite costly, discuss why running out of oil would not mean running out of energy, show how the profit motive can encourage resource conservation, relate how to use property rights to prevent deforestation and species extinction. | Chapter 15 Natural Resource and Energy Economics McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Objectives Falling birth rates Sources of energy Running out of oil vs. running out of energy Resource conservation Property rights 15- Resource Supplies Will the world run out of natural resources? World population 6.6 billion Standard of living 12 times higher than 1800 Growing demand for natural resources 15- Population Growth Thomas Malthus 1798 Living standards remain at subsistence level Population continues to grow Higher living standards have produced lower birth rates Replacement rate Total fertility rate 15- Total Fertility Rates 2007 Country Total Fertility Rate Australia 1.76 Canada 1.61 China 1.75 France 1.98 Germany 1.40 Hong Kong 0.98 Italy 1.29 Japan 1.23 Russia 1.39 South Korea 1.28 Sweden 1.66 United States 2.09 15- Population Growth Demographers Population to peak at 9 billion Historically: Death rates fall with modernization Population explodes Fertility rate eventually falls below replacement rate Children as economic assets vs. liabilities 15- Resource Consumption Commodity demand rising the last 150 years Population growth Rising consumption per person Commodity supply rising faster Declining real commodity prices Will this trend continue? 15- Resource Consumption Resource consumption per person leveled off in richest countries Water use Energy use Trash generated Resource demand will increase as more countries modernize 15- Energy Economics Dealing with energy scarcity Rising U.S. inflation adjusted GDP per 1 million BTU’s Energy efficiency Will the world run out of energy? Run out of oil, or cheap energy Alternative sources Externalities 15- Sources of Energy U.S. electricity sources 2006 Coal 49% Nuclear 19.4% Natural gas 20% Hydroelectric 7% Renewables 2.4% Petroleum 1.6% Other 0.6% 15- Alternative Energy Sources Economic viability of alternative fuels Oil . | Chapter 15 Natural Resource and Energy Economics McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Objectives Falling birth rates Sources of energy Running out of oil vs. running out of energy Resource conservation Property rights 15- Resource Supplies Will the world run out of natural resources? World population 6.6 billion Standard of living 12 times higher than 1800 Growing demand for natural resources 15- Population Growth Thomas Malthus 1798 Living standards remain at subsistence level Population continues to grow Higher living standards have produced lower birth rates Replacement rate Total fertility rate 15- Total Fertility Rates 2007 Country Total Fertility Rate Australia 1.76 Canada 1.61 China 1.75 France 1.98 Germany 1.40 Hong Kong 0.98 Italy 1.29 Japan 1.23 Russia 1.39 South Korea 1.28 Sweden 1.66 United States 2.09 15- Population Growth Demographers Population to peak at 9 billion Historically: Death rates .

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