Handbook of Environmental and Resource Economics
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Handbook of Environmental and Resource Economics

Edited by Jeroen C.J.M. van den Bergh

This major reference book comprises specially commissioned surveys in environmental and resource economics written by an international team of experts. Authoritative yet accessible, each entry provides a state-of-the-art summary of key areas that will be invaluable to researchers, practitioners and advanced students.
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Chapter 7: Indicators of Natural Resource Scarcity: A Review and Synthesis

C.J. Cleveland and D.I. Stern


Cutler , l Cleveland and David I. Stern 1. Introduction There is considerable uncertainty about the extent to which human economic aspirations are limited by biophysical constraints. One aspect of this question is natural resource scarcity. In general terms, an increase in scarcity is defined by a reduction in economic well-being due to a decline in the quality, availability or productivity of natural resources and vice versa. A major issue in the literature on the measurement of natural resource scarcity is which of the alternative indicators of scarcity, such as unit costs, prices, rents, elasticities of substitution and energy costs, is superior (for example Brown and Field, 1979; Fisher, 1979; Hall and Hall, 1984; Cairns, 1990; Cleveland and Stern, 1993). Most neoclassical economists argue that, in theory, price is the ideal measure of scarcity (see Fisher, 1979), although some argue in favour of rents (Brown and Field, 1979; Farzin, 1995). Barnett and Morse (1963) developed the unit cost indicator from their reading of Ricardo as an alternative to the neoclassical indicators. Some ecological economists favour a biophysical model of scarcity and derive energy-based indicators (for example Cleveland et al., 1984; Hall et al., 1986; Gever et al., 1986; Cleveland, 1991a, 1992; Ruth, 1995). The central point of this debate has been under what economic, technological, institutional and environmental conditions each indicator provides clear or ambiguous signals of scarcity. The purpose of this chapter is to review the different methods used to analyse resource scarcity, including their underlying theories, methodologies and principal...

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