Denigrating "The Limits to Growth" is Still a Popular Pastime. But can we Learn Something From it?

Many people seem to be surprised when I tell them that I follow the abominable science denial blog "Watts Up With That" kept by Alan Watts. Yes, it is abominable, sometimes, but it has one feature that makes it stand a couple of notches above the other science denial blogs: it is almost never boring, It has the same fascination that you can find in a well-done evil character of a literature piece, think of Shakespeare's Iago in Othello. And sometimes you can learn something even from WUWT: if nothing else about how your enemies think and behave.

The first report to the Club of Rome, the 1972 study titled "The Limits to Growth," is one of the typical bugaboos of those people we call "denialists," people who deny the main findings of climate science. The study didn't consider global warming explicitly, but its results relative to pollution could be seen as hinting at the problem. So, it is not surprising that the same attitude of denial embraces both studies on resource depletion and climate change. No surprise that, in the 1980s, "The Limits to Growth" started to be the target of a denigration campaign that's continuing nowadays in parallel with the one ongoing against climate science. I told the "Limits-Bashing" story in my 2011 book "The Limits to Growth Revisited."

The story is not over. Today, I found Limits-bashing alive and well in a post by Eric Worrall on "Watt's Up With That" (WUWT). The post starts with a citation from an article by Annabel Crabb on ABC news describing the split on climate change that took place 10 years ago in the Australian parliament. The story is not so easy to decipher for someone who is not Australian, but Ms. Crabb attributes the collapse of bipartisan policies on climate change on the actions of MP Andrew Robb who, apparently, had been an early supporter of the ideas of the Club of Rome but who later reversed his position.

Crabb reports:

He (Robb) mentions that when he was a much younger man, he was "a great student" of the Club of Rome, an association of scientists, bureaucrats, politicians and public thinkers who in 1972 published the book Limits To Growth, warning that the world's resources could not withstand the depredations of ceaseless economic growth indefinitely.

Limits To Growth is still the highest-selling environmental book in the history of the world, having sold 30 million copies in more than 30 languages.

But Robb's early fascination with the work gave way to distrust of its conclusions and primitive computer modelling; he says its warnings of resource exhaustion and economic collapse towards the end of the 20th century were overstated.

"The thing they didn't talk about was technology. That you could find gas 300 kilometres offshore, for example, and find a way to bring it onshore. Because of this, the Club of Rome — which was quite a reputable group of people — looked more and more ridiculous as the years rolled on."

The Club of Rome has its critics and its defenders; Limits To Growth was commonly derided by the 1990s as a misguided Doomsday scenario, but has enjoyed something of a renaissance lately. The CSIRO published a paper in 2008 finding that the book's 30-year modelling of consequences from a "business as usual" approach to economic growth was essentially sound.

But what's not deniable is that this work influenced one young man who grew up to be one member of a parliamentary party with a singular role to play in one vote on a policy that would either change or not change the course of a country.

In the end, Ms. Crabb arrives at the surprising conclusion that if the Australian parliament failed to adopt environmental policies it was a fault of a Club of Rome. A bit of a flight of fancy to say the least. It seems more likely that Mr. Robb just thought that a little "Limits-Bashing" was appropriate to justify his actions of 10 years ago. So, he engaged in a few remarkably statements for someone who claims to have been a "Great Student" of the Club of Rome. For instance, the Limits study never said that the collapse of the world's economy was expected "toward the end of the 20th century." (and, about one of Ms. Crabb's statements, 30 million copies sold for The Limits to Growth is a wildly exaggerated number).

More interesting than the somewhat convoluted Australian story is the reaction of Eric Worrall on WUWT. Apparently, he had never heard of the work of Graham Turner, so he engages in a somewhat rambling criticism of The Limits to Growth where he cites Turner more than once. The surprising thing is that Worrall doesn't engage in the usual sneers against the Club of Rome. No, Worrall makes several mistakes, evidently he doesn't know much about dynamic modeling nor about the specific study he is criticizing, but, considering the standards of the WUWT site, it is a reasonably balanced text.

But I said that you can often learn something from WUWT. What is that you can learn in this case? A typical trick they play: they publish a post that looks superficially balanced, but they know that it is a bait for their commenters who will then proceed to state what climate science deniers really think. With this post, as for many others on WUWT, the real learning experience is to read the rabid comments. Just as an example, about Turner's work, we read that "CSIRO is a cesspool of socialist academics including some IP theft specialist employees working for China; yes really!"

And we keep going and we keep learning 

The Decline of Transition Towns: Why do Good Ideas Always Flare up and Then Disappear?

If you don't know what the Transition Town Movement is, you can take a look at their page, here. It is an interesting idea to increase the resilience of the civilization network by making each node less dependent on other nodes. 

The figure above shows how the concept of "Transition Towns" flared up in the late 2000s and then slowly declined in terms of Internet searches, as shown by Google Trends. That not everything is well with the Transition Town Movement seem to be confirmed by this page. What happened? Was it a bad idea? It didn't work in practice? Or people just got bored of it?

Sam Allen finds the reason for the decline Transition Towns in the fact that " we hitched our wagon to the peak oil narrative big time." In reality, complex systems always behave in a complex manner and the attempt to find a simple explanation for why things go in a certain way is normally bound to fail. Here, saying that "peak oil didn't come, therefore people stopped being interested in transition towns" is really forcing the system into an oversimplified narrative.

In the studies we are performing on memetics (1), we are discovering that memes are virtual creatures, only marginally correlated to the real world. So, if the Transition Town meme declined, it doesn't mean that the idea is not valid or not useful, it has to do, rather, with the limited lifetime of memes in our society, something probably correlated with the way the human mind works.

In practice, the transition meme behaved as all virtual memes do: it flared up and declined as the result of its internal dynamics. The same thing happened with the peak oil meme, which started to decline years before anyone could say whether it corresponded to reality or not, as I argue in this post. The same trajectory was followed also by other memes, for instance, "The Limits to Growth" study that declined in popularity decades before it could be said whether the concepts it proposed were right or wrong.

Memetics is a fascinating field, unfortunately not much studied today (2). Maybe, in the future, we'll know much more about memes. For the time being, anyway, we have to realize that the persistence of most good ideas in the memesphere is not long enough for these ideas to have an impact in changing things. And so it goes.




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(1) h/t Ilaria Perissi and Sara Falsini

(2) Below, the result of a search on "memetics" on the Web of Science. The number of studies in the field is increasing, but the numbers are still minuscule in comparison to those for other fields of science

Epistemology of a Dying Empire: Can Growth Last Forever?

Recently, Michael Liebreich published an article titled "The Secret of Eternal Growth." I have been mulling over in my head if it is appropriate to spend time discussing one more mishmash of legends, including the one that's by now a classic, the "errors" that the Club of Rome is said to have made with the 1972 report, "The Limits to Growth." Eventually, I decided that it was worth a post, not so much because the post by Liebreich is especially wrongheaded or silly, but because it illustrates one basic point of our civilization: who, and how, takes decisions? On which basis?

In the end, I think we have a problem of epistemology, the question of the nature of knowledge. In order to make decisions, you have to know what you are doing -- at least in principle. In other words, you need some kind of "model" of reality in order to be able to act on it. It was Jay Forrester, the father of system dynamics and the originator of the "Limits to Growth" report who pointed out that, (World Dynamics, 1971, p. 14)

Everyone uses models all the time. Every person in his private life and in his community life uses models for decision making. The mental image of the world around one, carried in each individual’s head, is a model. One does not have a family, a business, a city, a government, or a country in his head. He has only selected concepts and relationships that he uses to represent the real system.

And the big question is where these "selected concepts" come from. My impression is that the mind of our leaders is a jumble of ideas and concepts grafted from haphazard messages that come from the media. Our leaders use no quantitative model to take their decision, only whim and feelings. This is how an idea such as MAGA came about.

The point is that there seems to exist a certain convergence of ideas and concepts in the mediasphere. Somehow, a consensus tends to appear and it is reinforced by repetition. This is how the world's leadership tends to assume the existence of some self-evident truths, such as that economic growth is always good.

The article by Liebrich is a good example of this process. We have an article written by someone who is influential: he is senior contributor at Bloomberg, and also an engineer. What is most disheartening about it is how it is based on half-baked ideas, superficial interpretations, half-truths, and legends. Just as an example, we read in the article that:

. . . a group of concerned environmentalists calling themselves the Club of Rome invited one of the doyens of the new field of computer modelling, Jay Forrester, to create a simulation of the world economy and its interaction with the environment. In 1972 his marvellous black box produced another best-seller, Limits to Growth (iv), which purported to prove that almost every combination of economic parameters ended up not just with growth slowing, but with an overshoot and collapse. This finding, so congenial to the model’s commissioners, stemmed entirely from errors in its structure, as pointed out by a then fresh-faced young economics professor at Yale, William Nordhaus.

Note how Liebrich provides a reference to the "Limits to Growth" book, but none for the supposed "pointing out of the errors in its structure" by the "fresh-faced" William Nordhaus. The reality is that Nordhaus wrote a paper criticizing Forrester in 1973 and Forrester responded to it with another paper, defending his approach. It is perfectly legitimate to think that Nordhaus was right and Forrester wrong, but you can't say that that the purported "errors" in the model are an established fact. I discussed this story in my book, "The Limits to Growth Revisited" and in a recent post on "Cassandra's legacy." Basically, Liebrich reported a legend without bothering too much about verifying it.

There is much more in Liebrich paper that can be criticized in terms of mistakes, personal attacks, misinterpretations, and more (see also another critical assessment by Tim Jackson). But the point is how ideas are thrown into the mediasphere and there they float, to be picked up by human minds as flu viruses flow in the air. Here, Liebreich's thesis is likely to have a certain influence because it is so cleverly presented: basically it tells us that you can eat the pie and still have it. It tells people that humankind can keep growing while reducing its impact on the ecosystem. It is like telling a heroin addict that heroine is good for health and it is OK to continue using it because technological progress will make it possible to get the same kick - or even more kick - from a lower dose. That is what a heroin addict likes to hear, but it won't work in the real world.

The same is true for our leaders and for all of us. We tend to make choices on the basis of what we like, not on how things stand. The sickness of the Empire, in the end, is just bad epistemology.



(h/t Anders Wijkman and Nora Bateson)

Why is Overpopulation Ignored by the Media? The Reasons of a Historical Failure

Some people think there exists a conspiracy that prevents the media from ever mentioning the charged word, "overpopulation." Conspiracies do exist but, in this case, my impression is that population is such a charged issue simply because it has to do with the fact that we are all humans and discussing about reducing population touches some inner mechanisms of our psyche that we feel uncomfortable about.

But there is more to that: the real problem with overpopulation is that most decision makers lack the concept of "overshoot,"  a view that didn't exist in the study of social systems until Jay Forrester introduced it in the 1960s.If you don't understand overshoot, at best you can understand that there are limits to population, but you can't understand that population could exceed the limits and crash down ruinously with the deterioration of the agricultural system that feeds it.

The lack of a the concept of overshoot may well be what leads the concerned and the unconcerned to minimize the problem. Many people seem to think that the "demographic transition," the reduction in fertility observed in most rich nations of the world, will spread over all humankind and stabilize the world's population at a sustainable level without any need for governments to intervene to force lower birth rates.

Almost certainly, it is too late for that: we should have started decades ago. But only China implemented a serious policy birth control -- for the rest of the world it was a historical failure.

In the discussion, below, Bernard Gilland discusses the problems we will face in the attempt of stabilizing the human population mainly in terms of the degradation of the agricultural system in its dependence on non-sustainable resources. It is not the only problem, with climate change potentially able to do even more damage to agriculture. At the same time, the many young people in poor countries will push population onto a still growing trajectory. If these two tendencies, population growth and agricultural decline, crash against each other, the result might well be a Seneca Cliff for the world's human population.

A sustainable global population -and why we cannot achieve it

Guest Post by Bernard Gilland


In the period 1975 – 2018, world population increased at an average of 83 million per year, and reached 7.6 billion in 2018. The increase in 2017 was the difference between approximately 145 million births and 62 million deaths. Despite population growth, the global average daily food supply per person rose from 2440 kilocalories in 1975 to 2940 kilocalories in 2015 (1). However, over 800 million people are undernourished and 300 million adults are obese.

Cereals are the most important crops for food and feed; globally, 45 percent of the cereal production is consumed by humans, and 35 percent by livestock. The remainder is used for industrial purposes, including ethanol, beer, whisky and vodka. The rise in world cereal production since the 1960s is mainly due to two technological advances. The first was Haber-Bosch ammonia synthesis, in which atmospheric nitrogen is fixed as ammonia (containing 82 percent nitrogen) which plants utilize for protein formation. Production of Haber-Bosch ammonia began in 1913, but did not begin to rise rapidly until the 1960s. The second advance was the Green Revolution that began in the mid-1960s, after agronomist Norman Borlaug had bred varieties of dwarf wheat that give higher yields in response to heavier applications of nitrogen, phosphorus and potassium fertilizer, pesticides and irrigation. The breeding and use of semi-dwarf rice and hybrid maize paralleled that of wheat.

The most striking achievement of chemical agriculture is the maize yield in the U.S., which rose from 2.5 tonnes per hectare (40 bushels per acre) in 1950 to 11.0 tonnes per hectare (175 bushels per acre) in 2016. The global cereal yield rose from 2.81 tonnes per hectare in 1992-96 to 3.91 tonnes in 2012-16 (2). Linear extrapolation of the 1992 - 2016 yield trend (52.3 kg per hectare per year) gives a yield of 5.73 tonnes per hectare in 2050. If the population in 2050 is taken as 9.85 billion (3), and the harvested cereal area remains 718 million hectares (as in 2016), production per person in 2050 would be 420 kg, 10 percent above the 2016 level of 382 kg; the uncertainty is about 10 percent either way. Assuming that the global average cereal yield without using nitrogen fertilizer is 1.6 tonnes per hectare, and that fertilizer increases grain yield by 30 kg per kg nitrogen applied, the global average nitrogen application on cereal crops, 80 kg per hectare in 2015, would be approximately 140 kg per hectare. If the incremental yield-nitrogen ratio rises to 35 by 2050, the nitrogen application would be 120 kg per hectare.

The success of the Green Revolution created three major ecological problems:

1. Globally, about half the applied nitrogen is taken up by the crop plants; the remainder volatilizes in the form of ammonia and nitrous oxide (a powerful greenhouse gas) or leaches to groundwater, resulting in eutrophication (the formation of algae) in rivers, lakes and coastal waters; this creates “dead zones” in which fish cannot live.

2. Applying nitrogen, phosphorus and potassium fertilizer to crops changes the balance between these nutrients and those needed in small or trace amounts; the latter include calcium, sulphur, magnesium, iron, manganese, copper, zinc, cobalt, boron and selenium.

3. Approximately 40 percent of global irrigation water is obtained by pumping groundwater from tube wells; this has resulted in the depletion of aquifers and the lowering of groundwater levels, thereby contributing 0.4 mm to the global sea level rise of 3.4 mm per year (4).

As population growth increases the need for fertilizer, it follows that population reduction would ultimately solve the ecological problems. Unfortunately, human nature is such that global population reduction is not feasible. The reasons for this are given in the following.

In 1950, France had a population of 42 million and 20 million hectares of arable land, i.e. 2 persons per arable hectare. The nitrogen fertilizer application on cereals was negligible, and cereal production per person was about 400 kg per year, slightly higher than the present world average. If the ratio of population to arable land were 2 persons per hectare on the world’s 1.6 billion arable hectares, world population would be 3.2 billion. Reducing world population to this size would mean reducing the global average fertility rate (currently 2.5 children per woman) to 1.5 by 2050 and holding it at that level until 2200. The proportion of the population in the 65+ age-group would rise to 35 percent. Such a drastic change in the age distribution would mean raising the pensionable age to 70 years or more.

Adopting and enforcing a population limit for each country would be an insurmountable obstacle, as Charles Galton Darwin pointed out in 1952 (5). To lower the global average to 2 inhabitants per arable hectare, countries such as Canada, Russia, Australia and Argentina would not be required to reduce their populations, but would not be permitted to reach 2 inhabitants per arable hectare; they would be obliged to have a grain surplus for export to countries that need grain imports. China and India would each have to reduce its population to roughly 300 million; the combined population of the two countries would then be 20 percent of the world population instead of the present 35 percent (6). The relative population reductions in Japan and Egypt, which have 30 and 33 inhabitants per arable hectare respectively, would be much greater (6).

The population of China is projected to peak at 1.45 billion around 2030 and decline to one billion by 2100. This is partly a result of the so-called one-child policy launched in 1979 (in reality a 1.5-child policy). It was replaced by a two-child limit in 2016, but the fertility rate remains 1.6. Japan has a population of 126 million and a fertility rate of 1.4; the population is projected to decline to 102 million in 2050 and 60 million in 2100. These projected long-term declines are likely to be halted by pro-natalist policies based on the advice of growth-obsessed economists who believe that population decline results in a shortage of labour. A world population peak of at least 10 billion is almost inevitable, and this would make 70 percent of the world’s population dependent on Haber-Bosch ammonia. This is not sustainable, but there is no solution in sight. As a sustainable population cannot be attained by fertility decline alone, a mortality rise is highly probable. We can only guess when.


Bernard Gillan is an independent researcher with a degree in Engineering, based in Copenhagen, Denmark. He is the author of several papers on demography and population



NOTES AND REFERENCES

1. FAOSTAT data.

2. World Bank data.

3. Population Reference Bureau. World population data sheet 2018.

4. Konikov, L.F. 2011. Contribution of global groundwater depletion since 1900 to sea-level rise. Geophysical Research Letters, 38; L17401.

5. Darwin, C.G. 1952. The next million years. Hart-Davis, London.

6. Lionos, T.P., A. Pseiridis. 2016. Sustainable welfare and optimum population size. Environment, Development and Sustainability, 18(6), 1679 - 1699. According to the authors, the optimum population of the world is 3.1 billion, and the populations (in millions) of the ten most populous countries are:

China 253, India 341, United States 326, Indonesia 88, Brazil 156, Pakistan 43, Nigeria 79, Bangladesh 17, Russia 249, Japan 9.2. The figure for Egypt is 7.4.

Saving the World: Top-Down or Bottom-Up? A Review of the Latest Report to the Club of Rome, "Come On"

Come On: Capitalism, Short-termism and the Destruction of the Planet. A new Report from the Club of Rome. By Ernst von Weizsaecker and Anders Wijkman -  Book Review by Ugo Bardi

Nearly half a century has passed since the publication, in 1972, of the first – and still the most famous – report of the Club of Rome, “The Limits to Growth.” That first report was heavily criticized but, nowadays, it is turning out that it had correctly identified the main lines of the trajectory that the human industrial society was to follow and is still following. To the authors of this report and to their mentor, Jay Forrester, goes the merit of having identified for the first time the critical problem that we are facing nowadays, that of “overshoot”, exceeding the limits that the planetary ecosphere can sustain and forcing humankind to a return within the limits that could be painful or even disastrous.

Today, the Club of Rome keeps following its tradition of studying the long-term prospects of humankind facing the twin challenges of resource depletion and climate change. The latest report of the Club on these matters is “Come On” by Anders Wijkman and Ernst Von Weizsacker, published with Springer in 2017, in occasion of the 50th anniversary of the foundation of the Club.

Clearly, this is a book which has been thoroughly planned and carefully created. The text is divided into three parts: 1) A review of the currently unsustainable trends, 2) A review of how to look at the situation 3) A discussion of solutions designed to avoid disaster. It is a sort of Aristotelian syllogism structure.

The first part, the review of the current trends, is – in my opinion – the best part of the book. It is a well thought-out review which doesn’t shun from facing some politically unnameable subjects, such as that of overpopulation and of the need to stop its growth. The unsustainable nature of the current agricultural system is also discussed in detail here. This section is also an excellent summary of the results of the first version of “The Limits to Growth” and how the scenarios of that early work have played out in our world. The “Come on!” here, refers to how obvious all this should be, but it isn’t in the current debate.

The second part of the book is a review of the theories and models currently used to understand the situation in which we find ourselves. This section provides a description of religious views of the relation of humankind with the world, starting with the Pope’s encyclical letter “Laudato si” and then moves to a detailed criticism of the current economic theories. It includes also a very interesting section on the moral imperative of change and on the need of a “new enlightenment” rather than a “new rationalism.” It is correctly recognized that a purely rational choice is often framed in a short-term vision and it may lead to effects opposite to those intended.

In this second section, the “Come On” is referred to the need of not sticking to outdated but still current philosophies, especially in economics. It is what the authors call a "mind shift," that we may describe in terms of the often mentioned (although probably apocryphal) quote by Albert Einstein, "we cannot solve problems with the same thinking that created them.” This is the context in which the quest for a new enlightenment should be seen. A fundamental element of this vision is the circular economy, returning to the ecosystem what we took from the ecosystem. It is a concept that's making inroads in the debate, but much work remains to be done to make it real and not just an empty slogan.

Finally, the third part of the book. This is the most ambitious section, indeed it is as long as the first two summed together. It is also the most difficult and complex: what to do, in practice? Here, the authors face a problem that has affected the Club’s analysis over the past 50 years: who should act to save humankind from destruction?

The initial attitude of the Club on this point was heavily influenced by the personality of the Club’s founder, Aurelio Peccei. In the 1960s, Peccei had developed a vision that saw humankind as an ekklesia, a gathering of free and equal citizens of the world. As a consequence, the Club tended to propose actions that were to be agreed upon by all the citizens of the Earth by means of a democratic process. It was a top-down vision, in the sense that it implied that the choices made by the people were to be enforced by some kind of world government, or at least by an association of all the existing governments

As we all know, this approach has not worked. Peccei was misunderstood and the Club of Rome was accused of planning a world dictatorship and all sorts of nefarious actions, including even a new holocaust designed for population control. It was all false. As you can read in my book "The Limits to Growth Revisited," it was just propaganda, but it turned out to be effective in demonizing the Club of Rome and protecting the special interests of various lobbies. But then, what to do?

50 years after that first report, the authors of “Come On” describe a different approach, basically focused on the “bottom-up” strategy. This choice appears most clearly in the third section of the book, which is dedicated to practical, implementable solutions, such as agro-ecology, the blue economy, regenerative urbanization, benign investments, and much more. The basic idea is always the same: do not force people not to do something with laws coming from a government (top-down). Encourage them to choose to do something for their own benefit (bottom-up).

For instance, instead of forcing people to emit less CO2, encourage them to use technologies which don’t emit it and that make people save money. Or help people seeing the economic advantages of waste recycling. Or show them how they can save money by using the public transportation system instead of private cars. Here, the "Come on" statement refers to pushing people to overcome their inertia and stop sticking to their old ways simply because they never thought there were other ways of doing the same things.

The third chapter goes on for about 100 pages and I won’t try to summarize it here – it is surely worth reading for the wealth of ideas it carries. But will this approach work? The answer remains unclear. If we compare the "top-down" and the "bottom-up" approaches, we see that neither has done much to stop the ongoing unsustainable trends. Decades of attempts of setting up top-down international treaties to reduce, for instance, the overexploitation of resources has brought very little in terms of results - for instance, the CO2 emissions keep increasing. On the other hand, the bottom-up approach is successful in some areas, but not with most people. Just as an example, it would seem strange that people buy the expensive and useless vehicles called "SUVs." It is not a rational choice, one feels like telling SUV owners something like "come on, why are you wasting your money in this way?" Yet - today - about one car in three sold in Western countries is an SUV. The fact that some people choose to use bicycles, instead, doesn't change the situation.

All this doesn't mean that the world is not changing, just that it is not changing fast enough (and this can be quantitatively demonstrated). It means, also, that we have to keep pushing for the change to occur in the right direction. Probably, neither a purely bottom-up nor a purely top-down approach can save humankind. We need an integrated approach. The "Come on" book is a step in the right direction.

Book Review: Food Scarcity. Unavoidable by 2100?

This is an excerpt from the review by Ugo Bardi published on the "Journal of Population and Sustainability"

Scientific studies that examine the food supply and its correlation to human population have a long tradition that goes back to Thomas Malthus and his “An Essay on the Future of Population“ of 1798. From then on, the field has remained politically charged. Still today, Malthus is often dismissed as a doomsday prophet whose apocalyptic predictions turned out to be wrong. But Malthus lacked the modern concept of “overshoot and collapse” and he never predicted the kind of population crashes that we associate to modern famines.

Another study often accused of having been overly catastrophistic in terms of the future of the human population is the report to the Club of Rome titled “The Limits to Growth”, published in its first version in 1972. This is also a misinterpretation, since none of the several scenarios reported in 1972 foresaw a population decline before entering the second half of the 21st century.

Overall, studies in this field may be considered pessimistic or optimistic: it is a fact that, so far, the world's food supply system has been able to cope with an increasing population that is reaching today about 7.5 billion people. The question is for how long that will be possible.

In analogy with the first report to the Club of Rome, the recent book by Weiler and Demuynck, "Food Scarcity" approaches an old problem with a new methodology. While “The Limits to Growth” was one of the first studies to apply system dynamics to the study of the economy, “Food Scarcity” is among the first studies that applies the modern network theory to the world’s food system. The resulting book is an ambitious attempt to pack an enormous amount of material into just 150 pages. It starts with a review of the situation of the world’s food supply with extensive data on the different climate systems, cultivation technologies, geographical conditions, and more.

Is it a successful attempt? Under several respects, yes. An integrated approach is always better than the piecemeal approach of many superficial reports that don't go farther than admiring the increases in agricultural yield obtained so far and assuming that the trend can be continued forever and ever in the future. "Food Scarcity" does much better than this and identifies the limits to the world's food production system, which may lead to scarcity by 2100 or even earlier.

At the same time "Food Scarcity" has limits in its approach dedicated mainly to food production. Surely, it is the central point of the story, but food supply is not the same thing as food production. In particular, there is no mention in the book of the importance of the financial system in the issue of feeding the world’s population. As I argue in my book, "The Seneca Effect", food is delivered to people today because people are able to buy it, otherwise it would rot where it is produced. A long lasting global financial crisis could crash the food supply system and create again major famines. And for such an event, we may not have to wait for the food production system to reach its limits in 2100.

So, by all means an interesting book, well worth reading even though you have to take into account its aims and purposes. You can read the complete review by Ugo Bardi at "The Journal of Population and Sustainabilty" 

The "Seneca Cliff", how the concept evolved

An image taken at a recent meeting in Barcelona. You can see the evolution of the concept of "collapse", from Malthus to Forrester. The latter can be seen as the true originator of the concept that I call the "Seneca Cliff" or the "Seneca Effect" 

Malthus (1766 - 1834) is supposed to be the catastrophist in chief, the prophet of doom whose prophecies never came to pass. And yet, if you read what he wrote (not everyone does), you see that he never mentioned the concept, familiar to us, of "civilization collapse". Malthus was perfectly able to imagine pestilences, wars, and famines; all common occurrences at his time. But he wasn't aware of the idea that population could grow well above the "Malthusian limit" and then crash.

The idea of a cyclical pattern of growth and decline came much after Malthus, you find its origins in biological studies, with Lotka and Volterra being perhaps the first to propose it in the form of a mathematical model in the 1920s and 1930s. Later on, in the 1950s, Marion King Hubbert proposed his "bell-shaped" curve for the cycle of production of crude oil in a specific region. For us, it is a relatively well known story even though most people seem to remain convinced that - somehow - growth can go on forever.

Finally, the idea that the bell shaped curve is asymmetric was explicitly expressed in terms of a mathematical model by Jay Forrester, in the 1960s, Even though Lucius Annaeus Seneca had already proposed it in qualitative terms long before, Forrester can be seen as the true originator of the concept of "Seneca Cliff."

Over more than a century of work, humankind has developed tools that make us able to face the future. We only have a little problem: we are not using them; our current leaders don't even know that such tools exist. And so, our destiny is to slide down, blindfolded, along the Seneca Cliff.

MEDEAS: the more we wait before acting, the more difficult the transition will be

Michael Green of the Sustainability Institute at Anglia Ruskin presents his models at the workshop of the MEDEAS EU project held in Barcelona on Nov 2-3 2016. Note in the image how waiting before acting requires more drastic measures than acting immediately, assuming that it is still possible to attain the goals of the Paris agreement.

The MEDEAS models are still being refined, but the main results are already robust. At the recent workshop that was held in Barcelona, it was clear that business as usual (BAU) is not taking us where we want to go, that is to attain the targets of the Paris agreement. Only drastic policy measures can do that. And the longer we wait, the harder it will be.

This is nothing new: we were already alerted long ago about the crisis that we would be facing. It was in 1972 that the "Limits to Growth" report was published, and its results were also robust. Relying on non-renewable resources would have brought the human civilization to a crisis that could be expected for somewhere during the first 2-3 decades of the 21st century. Today, the  models tell us that the crisis is here.

40 years ago, we could have acted decisively and with little pain to avoid the present crisis. Today, it is extremely difficult, although not yet impossible, but it takes pain and effort. But we can't wait much longer before taking drastic measures to boost renewable energy and phase out fossil fuels.

Jorgen Randers: updating "2052"

Jorgen Randers speaking in Cambridge, 12 Oct 2016

Today, in Cambridge, a meeting was held with several of the authors of the "Glimpses" that were part of the "2052" book by Jorgen Randers. The idea was to update the forecasts that were published in 2012.

Randers showed the update of his model, obtained with new data and with some modifications of the model itself. In five years, there have been modest changes and the basic results of the initial model are confirmed. Basically:

1. Randers' model sees the growth of both the economy (in terms of GDP) and of the population up to 2052; although the forecasted population is less than 9 billion people, much lower than the UN predictions.

2. Randers' model doesn't see scarcity for any resource, at least up to 2052

3. Inequality and poverty will remain as significant problems.

4. The model clearly says that we are NOT staying below the 2 degrees limits. Renewables will be growing fast, but so will do fossil fuels at least for another couple of decades. Randers' climate model (a different one) doesn't produce a "climate tipping point" for the rest of the century, but the raising temperatures will do enormous damage to the world's economy and to people.

Of course, forecasts are always difficult, especially when dealing with the future. My modest opinion is that Randers' model is good and I was impressed by the work that was done and that's being done to keep it up to date and to improve it; so I think that these results should be carefully studied and understood.

Then, still according to my modest opinion, there remains a fundamental problem: models based on system dynamics are not really made to catch tipping points. I think Randers is right when he says that we won't see the climate "catching fire" during this century. We may well be on our way to an ice free planet (and the corresponding 70 m of sea level rise) but that will not be for this century (hopefully!). The kind of tipping points that we are more likely to see are the result of coupling between the climate system and the socio-economic system. For instance, no model could predict the Syrian disaster, and yet its root cause is the double whammy of global warming and oil depletion. What can happen in the future as temperatures keep rising and resources being depleted, it is probably impossible to predict by any model.

But the meeting of today produced also elements of hope. The idea that renewables can make it seem to be diffusing and I myself presented the results of the study that we performed with Sgouridis and Csala that demonstrates just that. Others argued that the financial system is gearing up to provide the necessary resources for the transition. And, who knows? We might really make it! The future cannot be predicted, but we can always hope for a good future!

The "Limits to Growth" was right: Italy's population starts declining.

The "base case" scenario described in the 2004 edition of "The Limits to Growth", an update of the original study sponsored by the Club of Rome and published in 1972. Note how the world's population is supposed to start declining some years after the peaking of the world's economy. We are not yet seeing this decline at the global level, but we may be seeing it in some specific regions of the world; in particular in Italy.

More and more data are accumulating to disprove the legend of the "mistakes" that has been accompanying the study titled "The Limits to Growth" (LTG). For instance, Graham Turner has shown how the historical data for the world's economy have been following rather closely the curves of the "base case" scenario presented in 1972. But the fact that this scenario has been working well up to the beginning of the 21st century doesn't mean it will keep working in the same way in the future. The base case scenario describes a worldwide economic collapse that should start at some moment during the first two-three decades of the century. Clearly, the world's economy has not collapsed, so far, even though it may be argued that it is giving out ominous signs that it is starting to do just that. But, we can't yet prove that the base case scenario was right.

Yet, the LTG collapse scenario is an average over the whole world and we may imagine that some sections of the world's economy should collapse earlier, and some later. And, indeed, it appears that some local economies are collapsing right now. It may be that a country like Italy is already well advanced in this process, so that we shouldn't be not just seeing the decline of its GdP, but also the start of an irreversible population decline. And some recent data indicate that this is exactly the case: the LTG base case scenario is playing out in Italy, and probably not just in Italy.

So, let's try to make a qualitative comparison of the LTG scenario and the actual data for Italy. First of all, the scenario shows how the consumption of natural resources is supposed to reach a maximum and then decline, followed by a similar trajectory for the economic output. We are already well past this point in Italy. As you can see in the figure below, from a previous post on Cassandra's legacy, Italy's consumption of hydrocarbon fuels (by far its main source of energy) peaked in 2005, followed by the peak in the GdP in 2008. Considering that the GdP is a measure of the overall economic output of a country, we can take it as proportional to the parameters that were indicated as the industrial and agricultural production in the LTG study (the data for 2015  indicate a small GdP increase for Italy, but that changes little to the overall trend).

So, we may say that the base case LTG scenario has been playing out in Italy in terms of the behavior of the economy of the country. But, if this is the case, at some point we should expect another curve of the scenario to peak and start declining: the population curve. And, indeed, we seem to be seeing exactly that. Here are the most recent data from the Italian statistical agency, ISTAT

You can see the remarkable jumping up in the mortality rate for 2015: it corresponds to 165,00 more deaths than births. Despite the influx of immigrants, Italy has lost 139,000 residents in 2015; not a large loss (0.23%) but it is significant. And it had never happened during the past few decades. Also, Italy sees for the first time in decades a reduction in the life expectancy at birth (from 80.3 years to 80.1 years for males and from 85 years to 84.7 years for females).

What have been the causes of this population decline? There are several, and the torrid summer of 2015 has surely played a role in killing more old people than usual, as you can see in the figure below (again from ISTAT)

Then, other causes have been proposed; the general aging of the population, the economic crisis, the worsening diet, pollution, the higher costs of medical care, and more. But the point, here, is not to discuss these various causes, most of which probably had a role in the decline. The model doesn't describe the details of the process, nor it is detailed to the point of considering different age cohorts. It is a quantitative description of a relatively simple phenomenon: a population under stress because of reduced resource availability and pollution will react by an increasing number of deaths in its weakest age groups: the elderly ones. And this is exactly what we are seeing in Italy: a decline in population following the decline in GdP.

Of course, we only have data for one year and we cannot say if what we are seeing is a long-term trend or just a statistical fluctuation. Yet, it is hard not to think that the degrading economic, social conditions in Italy, as well as the degradation of the ecosystem, are not taking their toll on the population. And that we are indeed seeing the LTG scenarios playing out.

The Club of Rome, almost half a century later

The Club of Rome held its general assembly in Winterthur, Switzerland, on Oct 16-17 2015. In the image, you can see Ugo Bardi (center) together with the co-presidents of the Club, Anders Wijkman (right in the photo) and Ernst Von Weizsacker (left in the photo).

Almost half a century ago, in 1968, Aurelio Peccei convened for the first time the group that was later to be known as the "Club of Rome". The aim of the group was not what the Club was to become known for, "The Limits to Growth". At that time, the concept of limits was vague and scarcely understood and the interest of the members was, rather, in an equitable distribution of the resources of the Earth. What moved Aurelio Peccei was the attempt to fight hunger, poverty, and injustice.

That approach led the Club to commission a report on the world's resources and their limits to a group of researchers of the MIT. The result was the study for which the Club of Rome became known ever since: "The Limits to Growth," published in 1972.  From then on, the debate mostly moved on whether the scenarios of "The Limits to Growth" were correct and whether the study would really describe the possible trajectory of the world's economy and its collapse as the result of the combination of persistent pollution and resource depletion. It soon degenerated into insults directed against "Cassandras" and "catastrophists." Still today, it is widely believed that the study was "wrong", even though it was not.

But world models were not so much what Peccei and the other founders had in mind. Their aim had remained the initial one: justice, social equality, freedom from want. The discovery of the world's limits had made these objectives more difficult than they had seemed to be at the beginning, but not an impossible target. The "Limits" report, indeed, had sketched out how the world's economy could be steered in such a way to avoid collapse and to maintain for a long time a reasonable level of production of goods and services per person.

From what Peccei wrote, it is clear that he (and most members of the Club) thought that creating a better world was to be the result of a public debate and of democracy. In the debate, the world's leaders and the general public would have become convinced of the need to slow down economic growth, avoid overpopulation, conserve resources, and invest in actions against pollution. Then, the majority would democratically enforce these actions. Unfortunately, Peccei had badly estimated the power of propaganda to sway the discussion and to demonize all attempts to work for a better world. Peccei himself was the victim of propaganda, and, if you search the Web today, you still find plenty of pages describing him (and the Club of Rome) as working for the enslavement or the extermination of humankind or, sometimes, of the "darker races".

Almost half a century has passed from the first reunion of the Club of Rome, and its members are still struggling with the same question: how to create a more equitable, free, and prosperous world? Whereas understanding our future turned out to be feasible, acting on it turned out to be devilishly difficult. Today, we are still stuck at the most basic level of trying to have people understand the dangers ahead. Think of how easily the efforts to act against climate change are thwarted by the simplest propaganda tricks (do you remember "climategate"?).

So, the Club didn't stray away from Peccei's legacy and it has remained close to its initial approach and structure. It is a forum where people meet to discuss on how a better world could be created and show how we can work in that direction. That was clear at the general assembly of this year, in Winterthur (SW), where the discussion ranged from mineral limits to social structures; including politics and new business avenues. The members reported about long term modeling, but also on their practical, day to day results on how to improve the life of the poor and to reduce pollution at the local level. The magic bullet that will cure the world's ills may not exist, but we all can do something for a better world.





Thanks to Graeme Maxton, Alexander Stefes, and Thomas Schauer for having been the main organizers of this meeting in Winterthur!

The Limits to Growth in the Soviet Union and in Russia: the story of a failure

Above, you can see the full recording of a 2012 lecture given in Moscow by Dennis Meadows; one of the authors of "The Limits to Growth" report of 1972. It is long, more than an hour, but - if you don't have the time to watch all of it - I suggest that you go to minute 21 and watch Dennis Meadows showing this book.

It is titled "Soviet Union and Russia in the global system." According to Meadows, in the 1980s, Viktor Gelovani, first author of the book, adapted to the Soviet Union the world model used for "The Limits to Growth" and he ran it; finding that the Soviet Union was going to collapse. Then, Meadows says "he went to the leadership of the country and he said, 'my forecast shows that you don't have any possibility. You have to change your policies.' And the leader said, 'no, we have another possibility: you can change your forecast'"

Meadows' anecdote is basically confirmed by Rindzevičiūtė, who wrote an excellent article that tells the whole story. It turns out that it is not true that "The Limits to Growth" was ignored in the Soviet Union, as it could be the impression from the documents available in the West. The "Limits" study was translated into Russian, although it was distributed only to very limited circles (generating, by the way, a brisk black market, as Rindzeviciute describes at p. 6). Several Soviet scientists knew very well the study, they had contacts with its authors and a number of them made a considerable effort to warn the Union's leadership that the system was going to collapse. They didn't have much success, as Meadows says in his talk.

Theoretically, you could think that the Soviet leaders could have seen "The Limits to Growth" as a useful planning tool. In principle, they had ways to put into practice the recommendations obtainable from the models in order to avoid collapse. But that wasn't the case. The reaction of the Soviet leadership was the same as it was in the West. Both the Soviet and the Western leaders were completely tied to the concept of "growth at all costs" and refractory to changes. So, the warning was ignored on both sides of the iron curtain.

Another, hugely interesting element of this story is how it shows that the Soviet Collapse was a systemic one; it was caused by the huge military and bureaucratic expenses that the production sector of the economy was becoming unable to bear. In other words, it seems clear that it wasn't caused by Mishka Mecheny, (Gorbachev the madman) or by an evil plot of the Western secret services (although both may have played a role). On the whole, we have here a remarkable confirmation of the predictive power of world modeling: in the 1980s, it succeeded in predicting the collapse of a large chunk of the world's economy. Another, even larger, chunk is collapsing right now.

One more interesting point comes from examining whether the present Russian leadership learned something from the experience of the old Soviet Union. Apparently not; because today there doesn't seem to exist a serious debate on mineral depletion in Russia. Most Russians seem to be convinced that their mineral resources are abundant and that they can tap them at will for the foreseeable future. Hence, depletion is not a problem they should be worried about.

Meadows' talk confirms this impression. Even without paying attention to what Meadows says, do look at the faces and the body postures of the young people in the audience - they are occasionally shown in the movie. I can tell you that, over the years I have developed a certain degree of telepathic capabilities in understanding the feelings of my audience. And I can tell you that most of the students listening to Meadows completely disbelieve him - or so it seems to me (also a Russian friend of mine said that this was "the most boring talk she had ever heard"). Note also the silly and marginal questions the students asked Meadows at the end of the talk. He told them about the upcoming end of the world and they ask him if it is convenient to invest in water producing companies... Come on!

But the lack of understanding about the limits to growth in Russia is really nothing special. It is the rule all over the world. In addition, Russia, right now, is in full emergency mode and the main priority for the Russians is to save their economy from external attacks. They can't be blamed if they don't have (and, possibly, they don't need), the group of Cassandras we have in the West, white haired people who keep telling of dark and dire things to come and whom no one listens to.

With or without Cassandras, the situation in Russia may not be so bad. Dmitry Orlov has described  how the Soviet economy was much better suited than the Western market economy to adapt and survive to the kind of systemic collapse described by "The Limits to Growth." The same considerations may apply to the present Russian system. So, the future is, as always opaque, but, if you ask me which will be the next economy to collapse, I wouldn't bet it will be Russia.

h/t Michael Hebenstreit and Tatiana Yugay. 

What we can still learn from "Star Trek": a saga of harmony in diversity.

Star Trek: a low budget TV series. Cardboard models of spaceships, few and simple special effects, a small number of actors always engaged in the same mock-up of the command bridge of a starship. And, yet, it influenced a whole generation. 

The death of Leonard Nimoy, the actor who played Mr. Spock in the original TV series  "Star Trek" has ended an age. Star Trek was a true 20th century saga, a way of seeing the world. To some of us, it may look completely obsolete, today, but it must have been telling us something deep; something important, if it was so successful, so followed, so revered by so many. So, what was the secret of the series? It was not technological wizardry; it was the human side of the story. It was a story that told us of how it was possible to have harmony in diversity.

The literary origins of Star Trek go back to Homer's Odissey, but its immediate ancestor is "Moby Dick" by Herman Melville. With all the obvious differences, the similarities are many and obvious. One is that the Pequod, the ship of Moby Dick and the Enterprise, the starship of Star Trek, never land anywhere, they just wander over the oceans and in the interstellar space. And, despite all the technological wizardry involved, the command deck of the Enterprise looks very much like that of a 19th century ship (and, maybe, Odysseus himself would have found himself at home sitting in Captain Kirk's chair).

It has been observed many times that Melville's microcosm echoes the structure of the American society of his times, a society which needed to integrate and harmonize its different cultural elements. Think of the character of Quequegg, the tattooed islander who appears very early in the novel and, in a sense, characterizes it. But, if the Pequod is America, it is also a society which is already facing its limits in its search for a disappearing resource: whales. This is why I described "Moby Dick" as "The greatest peak oil novel ever written".

With "Star Trek" we have again a microcosm of the American society. But this future society still faces the problem that the Pequod was facing, a problem that was so deeply felt in the 1960s, when the series was born, that of the limits to human expansion. In Star Trek, humans can travel in the Galaxy but can't (or won't) expand in it. The economy of the "United Federation of Planets" seems to be a steady state one; they don't seem to be obsessed with economic growth, actually they may not even use money! In Star Trek we see no economic growth, no population increase, no industrial production, no attempt of humans to exterminate alien races in order to colonize other planets. The Enterprise hops from one planet to another without ever stopping anywhere, without ever leaving a long lasting trace of its passage. It is like the wake left by the Pequod on the sea, which disappears leaving no trace.

So, with Star Trek, if the problem is the limits, and if you can't go on exterminating aliens in order to steal their planets, then the solution is harmony in diversity, the same as one of the main themes of "Moby Dick" with the multiracial crew of the Pequod. The central point of "Star Trek" is not technology, it is not the future, it is people; and one character in particular: first officer Spock, the equivalent of Quequegg in Moby Dick; the alien to be integrated and, at the same time, respected. Note how the relation of Captain Kirk and Spock mirrors that of Quequegg and Ishmael of Moby Dick. In both cases, they recognize their respective cultural difference and they respect each other. As on board of the Pequod, the deck of the Enterprise is a place where individual differences are neither ignored nor rejected, they are accepted and valued. Star Trek lacks the negative character of Captain Ahab of Moby Dick, and hence emphasizes even more the positive results of collaboration of different individuals. This is the "secret" of Star Trek: harmony in diversity.

In a sense, the message of Star Trek echoes that of "The Limits to Growth", the 1972 study that first quantified the physical limits to human growth on the surface of the earth. The study was the result of the intuition of a man, Aurelio Peccei, who had asked the question of how human beings could live in justice and prosperity on a limited planet. The answer that he obtained from the scientists was a statement of the obvious: humankind cannot grow forever on a finite planet. Little was said in the "Limits" study about the destiny of humankind beyond cold graphics and tables, and that was one of the reasons of its downfall in the decades after its release. But Peccei had not really asked for graphics. He had asked a question that computers could not answer at that time and cannot answer today. The real answer was that we don't need to grow forever to live in harmony without losing our diversity.

It is an answer that Peccei had surely in mind, but that was shadowed, and eventually lost, by the great noise created by the debate on the Limits to Growth. But, perhaps, we can find again and one of the places where we can find it is in Spock's words "Live Long and Prosper." So simple as that: we could live long and prosper if we wanted, but we haven't learned how to do that. Probably we never will and the command deck of spaceship Earth remains manned by homicidal psychopaths.



h/t to Alexander Stefes for the discussion that led me to write to this post

Depletion: the problem with gold

Depletion is the true elephant in the living room of our age: it is a gigantic problem but it is rarely - if ever - recognized. Few people understand that depletion does NOT mean that we run out of anything. It means that producing a mineral commodity becomes so expensive that fewer and fewer people can afford it. It is happening with all mineral resources and, in this post, Steven Rocco reports about the situation in the gold mining industry. Clearly, we are not running out of gold, but with the cost of fuel increasing by a factor of five in ten years, you can't but wonder how the gold industry will be able to maintain the present production rates. (UB)


From the blog "SRSrocco Report", reproduced by permission of the author

GOLD MINING INDUSTRY: Fuel Costs Explode Over The Past Decade

 By SRSrocco on August 4, 2014 

 

The gold mining industry literally devours energy to produce an ounce of gold.  In the past decade, fuel consumption at the top gold miners more than doubled, but the actual energy cost grew at a much higher rate.

The huge increase of diesel consumption at the top 5 gold miners is due to several factors.  As ore grades continue to decline, the gold mining companies need to extract more ore to produce the same amount of gold.  Thus, the massive haul trucks that transport this ore burn more diesel in the process.
Furthermore, as open-pit mines age, they deepen which forces the haul trucks to travel longer distances at a higher grade.  One of the largest haul trucks in the world is the Caterpiller 797F.  These haul trucks are massive and can transport 400 metric tons of ore in a single trip.

The CAT 797F has a standard 1,000 gallon tank and has options for a 1,500 and 2,000 gallon tank.  The graphic below (from the Engineering Network) provides some of the costs and statistics of the CAT 797:

The CAT 797F costs $5 million a pop and uses six tires that cost $42,500 a piece.  Here is a fascinating cost factor that I found quite surprising.  According to an article in the Engineering and Mining Journal:

…studies show tire costs can exceed 25% of total haul-truck operating costs per ton; and total tire service and replacement costs over the useful service life of a haul truck can exceed the original purchase price of the truck.

Basically, tires cost just as much or more than the haul truck itself.  That is an amazing statistic that just goes to show how expensive it is to mine gold.
In addition, you will notice the CAT 797F has an excellent fuel consumption rating of 0.3 miles per gallon…. which is a little more than 3 gallons per mile.  To get an idea of how much more diesel the gold mining industry consumes today, let’s look at the following chart.

Diesel consumption per ounce of gold produced more than doubled from 12.7 gallons per ounce in 2005 to 25.8 gallons per ounce in 2013.  You will notice that the diesel figures for 2012 and 2013 are the same.  At first I thought we would see an increase in 2013, but as companies started cutting back on construction of new mines as well as high-grading (extracting higher grade ore), consumption remained flat.

We must remember, these gold mining companies consume diesel in the transportation of their waste rock and ore, mine construction and to a lessor extent… electric generation when connecting to the grid is not possible or economical.

Diesel consumption per ounce of gold produced increased in 2013 at Barrick and Newmont, but fell at AngloGold, Goldfields and GoldCorp.  However, total diesel consumption in the group increased from 583 million gallons in 2012 to 591 million gallons in 2013.  The reason the gallons per ounce figure remained the same in 2013 as it was in 2012 was due to an additional production of 300,000 oz of gold.

While the top 5 gold miners doubled their diesel consumption per ounce of gold produced since 2005, their actual energy cost increased a great deal more.  The next chart reveals just how much these costs increased.

In 2005, these gold miners spent an estimated $30.48 of diesel per ounce of gold produced.  This figure doubled by 2008 to $69.92 when the price of a barrel of oil skyrocketed to $145.  When the recession hit in 2009, causing the price of oil to plummet, diesel costs for the gold miners declined as well.
Then over the next three years, diesel costs per ounce increased significantly from an estimated $55.91 in 2010 to $102.43 in 2012.  Even though the figure in 2013 is slightly lower than 2012, costs have more than tripled since 2005.

I estimated these figures by using the average annual price of diesel stated by the EIA – The U.S. Energy Information Agency.  Here is their data table:

The price of gallon of diesel was $2.40 in 2005, hit a peak of $3.97  in 2012 and averaged $3.92 in 2013.  So, not only have the gold miners doubled their diesel consumption for each ounce of gold produced (2005-2013), the price of diesel increased 63% during the same time period.

Now, if we go back just a few more years and look at the rate of change since 2003… its staggering.  I don’t have the actual diesel consumption figures for the top 5 gold miners for 2003, so here I provided some estimates below:

2003-2013 Estimated Change In Diesel Consumption & Cost

2003 = 12 gallons per ounce (conservative estimate)

2003 = $1.51 price of gallon of diesel

2003 = $18.12 diesel cost per ounce

2013 = 25.8 gallons per ounce

2013 = $3.92 price of gallon of diesel

2013 = $101.14 diesel cost per ounce

What a difference a few years make…aye?  Here we can see that the price of diesel in 2003 ($1.51) was almost a Dollar less than it was in 2005 ($2.40).  I was conservative and estimated that diesel consumption declined to only 12 gallons per ounce in 2003 compared t0 12.8 gal/oz in 2005.

Thus, the actual estimated diesel costs per ounce increased more than five times since 2003… actually 5.6 times.  Which means, the top 5 gold miners spent on average, $101 on diesel for every ounce they produced in 2013 compared to $18 in 2003.

Even though this diesel cost figure only represents a small part of the overall costs to mine gold, energy still represents the largest factor in determining the value of gold.  When I say that, it goes above and beyond the additional sources of energy such as electricity a gold mining company purchases when they process and refine gold.

It’s important to realize that all the mining equipment and materials used in the gold industry are not produced out of THIN AIR in the same way the Fed creates money.  All the metals and products that go into manufacturing mining equipment are only made possible by the huge amounts of energy consumed in the process.

This is also true for the materials consumed at the mine.  For example, Barrick purchased 292,000 metric tons of lime in 2012 at its mines.  Lime is listed as a material cost on its balance sheet, but the overwhelming factor to produce lime is calculated by the energy consumed in all forms and all stages.

We must remember, lime is extracted by huge excavators and moved by huge trucks which is then transported from the quarry to the mine by more trucks.  This all consumes a great deal of energy.  Again, the value of the lime used in the gold mining industry comes from the amount of energy consumed in all forms and stages.

Lastly, we also need to consider all the human labor in all stages.  Lime isn’t extracted or transported by robots (not yet…LOL), but by humans.  Human labor is a form of energy.  So, when a reader sends me an email saying that labor is a higher cost than energy on a typical gold company’s balance sheet, I politely respond by saying… HUMAN LABOR IS ALSO A FORM OF ENERGY.
In conclusion, the gold mining industry consumes a lot of diesel to produce an ounce of gold.  As we can see, total diesel costs are rising even faster.  I am not concerned about the impact of increased diesel costs on the gold mining industry in the following years.  However,  the real threat to the industry will be a lack of available fuel supplies in the future… not the energy cost.

I will discuss this in more detail in future articles and reports.