In a famous bet, Julian Simon and Paul Ehrlich put their money where their mouths were on the question of "running out of precious resources." Ehrlich thought that the world was going to hell in a handbasket due to overuse of resources; Simon thought that human ingenuity ("the ultimate resource") would find ways to stretch resources such that they would not "run out." The bet, made in 1980, was that the price of five metals would rise (Ehrlich) or fall (Simon) over the next decade.
By 1990, the prices were lower and Ehrlich lost.
I was at the annual dinner of the Competitive Enterprise Institute (a think tank somewhere between CATO and AEI) last night when they handed out the annual Julian Simon award for advancing the free market environmentalism that Simon espoused, and I got to thinking.
Although I am a free market type, I think that Ehrlich lost a sucker-punch bet. Economists like Simon, after all, possess abundant evidence that humans are capable of innovating around and substituting for scarce resources. Ecologists and environmentalists (Ehrlich was a biologist) do not understand human structures as well, but they do understand carrying capacity, sustainability, etc.
I think that Simon deserved to win that bet, but he would have lost a bet on the bigger picture: If there's anything that global warming should tell people, it's that human innovation affects the environment, the environment will give negative feedback, and we will just have to deal with it. The environment, like some other "goods" with few substitutes (oil, water, ocean, air) is only getting more "expensive" as its quality decays, i.e., as a healthy environment grows more scarce.
Ehrlich lost the battle, but he won the war. Too bad -- for all of us -- that his was a pyhrric victory.
Today at Aguanomics: The USDA Sees the Light, i.e., global warming is going to cause severe problems in the western US (and small ones elsewhere).
Erratum: Spelling error corrected.