The underestimated contribution of energy to economic growth

Extending market allocation to ecosystem services: Moral and practical implications on a full and unequal planet

“…Oil supply is particularly relevant because cheap energy has fueled our ability to increase market supply and/or develop substitutes for other essential resources, including food and water (e.g. Ayres et al, 2013;Hall and Klitgaard, 2011). In other words, for essential resources on a full planet, neither supply nor demand will be very responsive to price signals.…”

The Vermont Common Assets Trust: An institution for sustainable, just and efficient resource allocation

“…New technologies and increased energy use can reduce extraction costs even as resources become scarcer, temporarily masking stock depletion while simultaneously speeding it up. Many substitutes for scarce resources, such as industrial nitrogen for natural nitrogen fixation and mined phosphorous, also rely on rapidly depleting supplies of fossil fuels (Ayres et al, 2013;Cleveland, 1991). Eventually, growing scarcity of resource stocks must dominate these other factors.…”

“…Ayres et al (2013) actually show that the cost share theorem does not hold when some resources are essential and non-substitutable, such as energy.5 Paradoxically, because there is a very inelastic demand for food, a new technology that increased global food production could drive down the total value of food, hence the income stream from land and the price of land. However, given that food can be converted to biofuels, this outcome is highly unlikely in today's world.6 Ironically, while Coase is generally given credit for the idea of creating private property rights as a means to solve the problem of externalities and open access resources, he believed that this approach was only appropriate when transaction costs were minimal, which they rarely are.…”

Constitutive Explanations as a Methodological Framework for Integrating Thermodynamics and Economics

“…In fact, when it comes to estimating the contribution of energy to economic growth, the literature is well aware of the limitations of GDP in measuring economic activity: Energy, as evaluated by market prices, would only be represented in terms of value added of the energy sector, and therefore appears to be much less significant as a driver of growth than other economic inputs, in particular labor, because the contribution of energy industries to total GDP is small; this reasoning can be theoretically undergirded if the assumption is made that the neoclassical cost share theorem applies (which is problematic) [15]. Accordingly, researchers who wish to expose the role of energy in growth do not use the market valuations but material measures of energy input, thus actually mixing up different measurement standards (in the corresponding production functions, capital is measured in monetary terms, labor in hours per annum, and energy in physical magnitudes, with different specifications, see e.g., [16]; [5]: 197ff, 334ff; [6]: 205ff, 262ff, who, however, proceeds with transformations into dimensionless magnitudes via referring to a base year).…”