March 21, 2008

Prices of natural resources

Andy Dobson and Laura Lynes write in Trends in Ecology & Evolution (How does poaching affect the size of national parks? [Beware if you read the whole paper: the authors repeatedly confuse "demand" and "quantity demanded"]):
The central problem here is that natural resources tend to do the opposite of consumer resources; consumer resources are usually initially rare and highly prized, human ingenuity then ensures that they become common and competitively priced. In contrast, natural resources are initially common and undervalued; overexploitation and competitive greed then ensure they rapidly become rare, and they are often inherently non-substitutable.
Dobson and Lynes do not define "natural resources" and "consumer resources". By "natural resources" they do not mean commodities like minerals and basic agricultural products, which have become more abundant and cheap through time thanks to ingenuity and "greed." Rather, they mean elephant tusks, rhino horns, bushmeat, and similar goods that, absent private property rights, are subject to intense poaching. So, a better wording for their thesis is:
The central problem here is that open-access and state-owned goods tend to do the opposite of private-property goods. Privately-owned or privately-produced goods are usually initially rare and highly prized, and human ingenuity and greed then ensure that they become common and cheap. In contrast, open-access and state-owned goods are initially common and undervalued; human ingenuity and greed then ensure that they rapidly become rare and expensive.
Finally, I doubt there is such thing as an "inherently non-substitutable" resource.

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