The eco-costs of resource scarcity
The issue of metals scarcity
From the designers point of view, the issue of resource scarcity is an issue of either stimulating the recycling of materials, or use of renewable materials (so that the use of virgin materials is limited), since the mining of virgin materials is considered as not sustainable. Recycling can be regarded as a “system integrated” prevention measure (rather than “end of pipe”). Prevention of mining virgin metals can be resolved as well by other system integrated solutions (‘substitution’), i.e. development of alternative materials to fulfil the same functions. It is likely that new materials will be developed when old materials deplete (as it was the case in history). However, for most of the metals the sustainable alternatives are not known (yet). In other words: the way of calculating eco-costs for metals depletion cannot be based on the marginal prevention costs of replacement of that materials, since these kind of innovations are not known yet.
The original eco-costs of materials depletion was based on a combination of recycling and “deeper digging” in combination with mining of ores with a lower concentration (which is more expensive), as prevention measures for depletion. This method had 3 disadvantages: (1) for many critical materials the recycling rates are limited, caused by ‘diffusion’ (2) the time frame for materials depletion is long term, 100 years – 1000 years or more, which makes it likely that new reserves are discovered or a substitution is developed (3) the long time periods make it less relevant for the short term, e.g. 10 – 30 years
The new eco-costs of metals depletion (as of the eco-costs 2017 V1.3), however, are calculated in a different way. It is related to the short time supply risk of metals, in line with the philosophy of the European union of the Critical Raw Materials (CRM) and the Supply Risk Index of the British Geological Survey. The basic idea is that metals can suddenly become scarce, caused by
geopolitical unrest or other supply problems (strikes, serious accidents), that cause shortages in the balance of supply and demand. The result is heavy price fluctuations (IEA 2021). From business point of view, these sudden price jumps are disruptive for existing markets and are suddenly eroding the profitability of products. From governmental point of view, a sudden price jump may cause economic recession.
The eco-costs of metal scarcity are equal to a sudden, unexpected, price increase compared to the 10 years