Environmental Economics
NON-RENEWABLE
RESOURCES
Andrea Bauer-Gáthy, PhD
Assistant Professor
University of Debrecen
Faculty of Econimics and Business
Institute of Economics
Natural Resources (land or raw materials)
Natural resources are derived from the environment. Many of them are essential for
our survival while others are used for satisfying our wants.
Classification
• Biotic resources
⪢ Origin
• Abiotic resources
• Renewable resources
⪢ Renewability
• Non-renewable resources
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WHAT IS A NON-RENEWABLE RESOURCE?
• A Non-renewable resource (also called a Finite resource) is a
resource of economic value that cannot be readily replaced by
natural means at a quick enough pace to keep up with
consumption. An example is carbon-based fossil fuel.
• Other examples of Non-renewable resources include nuclear
fuels, coal, iron ore, Limestone etc.
• It is important to state that every resource in reality is
renewable, however we classify resources as renewable(Solar,
Wind) and non-renewable(Fossil fuel) on a human time scale
BASIC TERMS AND DEFINITIONS
• Natural resources: These are resources/ materials occurring in the nature
without the action of mankind.
• Non renewable energy: This refers to the energy produced from non-
renewables sources such as coal.
• Reserves(Physical reserves): This is the total amount of a given resources
present or available in a given geographic location.
• Recoverable reserves: Estimated quantity of energy sources which exist, and
can be recovered with presently available technology at an economically
viable cost.
• Subeconomic resources: used to describe mineral resources which cannot be
extracted profitably with the current technology
• Resource life time: Number of years the economic reserves of a resource is
projected to last under the present consumption rate
• Static Reserve index: an index which divides the economic
reserves of a resource by the current rate of use for the
resource
• Recycling: use of waste materials as the input of a process
• Choke price: The price at which the quantity demanded
becomes zero
• Hotelling principle: This states that at equilibrium the net
price equals the rate of interest
Types of Non-Renewable Energy
Renewables vs Non-renewables
FOSSIL FUELS
• This is formed when large quantities
of dead organisms mostly algae are buried
beneath sedimentary rocks are subjected to
high temperature and pressure [Link],
natural gas, coal
• They make up over 70% of world’s energy
production
• Crude can be conventional e.g subsea
deposits and Uncoventional e.g Oil sands
• Oil sands are naturally occuring mixture of
sand and bitumen
Crude Oil
NUCLEAR ENERGY
• Nuclear energy is produced from the
fission or fusion of the nuclei of atoms
of nuclear fuels such as uranium 235
and uranium 238
• These fission/ fusion generates heat
which is used in steam turbines to
generate electricity
• It is a cleaner source of energy with
little or no CO2 emission
• The draw back is the potential hazard
to people and environment
APPLICATIONS OF NON-RENEWABLES
DRAW BACKS
GREEN HOUSE EFFECTS AND CLIMATE CHANGE
• Climate change refers to the changes in the atmospheric and weather
condition of a place over a period of time e.g. changes in rainfall
patterns, increase in temperature.
• The effects of climate change are seen in the rising sea levels, increased
temperature, Melting of ice caps and snow covers, droughts
• Global warming is the long term rise in the average temperature of the
earth climate
• Although global warming and climate change are used interchangeably,
climate change includes global warming and its effects
• Greenhouse gases are gases which trap heat in the atmosphere. They
produce a blanketing effect e.g ozone, CO2, methane, CFCs
MITIGATION TECHNIQUES
Economics of Non Renewables
• Economic Supply
• Identified reserves
• Economic reserves can change due to exploitation, new
deposits, tech changes
• Static reserve index: Economic reserve/Annual consumption
• Exponential reserve index assumes that consumption of
resources will increase exponentially over time leading to a
more resource exhaustion.
Classification of Resources
• At stage four when the prices of virgin resources become
high and the demand is high. It becomes cheaper to recycle
waste than use virgin resources
• Another advantage of recycling is the reduced environmental
cost(social cost) and pollution on the environment. It also
extends the lifetime of resources
• The objectives of recycling can be achieved by imposing
taxes on the extraction of virgin resources, research and
development, government procurement, consumer
participation, raising the royalty payments on access to the
mineral resources
