Exergy evolution of the mineral capital on earth - circe

8 STARTING POINT, OBJECTIVES AND SCOPE
Georgescu-Roegen was one <strong>of</strong> <strong>the</strong> first authors in realizing <strong>the</strong> links between <strong>the</strong>
economic process and <strong>the</strong> second law <strong>of</strong> <strong>the</strong>rmodynamics. In his seminal work The
Entropy Law and <strong>the</strong> Economic Process [111], he states that “<strong>the</strong> entropy law itself
emerges as <strong>the</strong> most economic in nature <strong>of</strong> all natural laws [...] and this law is <strong>the</strong>
basis <strong>of</strong> <strong>the</strong> economy <strong>of</strong> life at all levels”. Georgescu-Roegen stresses <strong>the</strong> importance
<strong>of</strong> <strong>the</strong> variable time in economic activity, which is clearly shown in <strong>the</strong> irreversibility
<strong>of</strong> <strong>the</strong> exploitation <strong>of</strong> resources. This author even postulated <strong>the</strong> Fourth Law <strong>of</strong> Thermodynamics,
<strong>the</strong> entropy law <strong>of</strong> matter. According to this law, matter and not energy
is <strong>the</strong> limiting factor in economic growth. Georgescu-Roegen’s Fourth Law has been
criticized by a number <strong>of</strong> analysts in economics and physical sciences. It has been
pointed out that on a fundamental physical level, <strong>the</strong>re is no such law. In principle,
it is always possible to use high quality energy to trace, collect and reassemble <strong>the</strong>
dissipated elements [59]. The <strong>the</strong>oretical flaws <strong>of</strong> <strong>the</strong> Fourth Law, have lead some
to dismiss Georgescu-Roegen’s ideas or deny <strong>the</strong>ir significance.
Faber et al. [92] developed a model integrating <strong>the</strong>rmodynamic considerations into
a model <strong>of</strong> optimal resource use and environmental management. They analyzed <strong>the</strong>
relationship among resource use in <strong>the</strong> economic system, <strong>capital</strong> formation, resource
concentration and entropy production.
Ayres and Nair [17] state that <strong>the</strong> second law <strong>of</strong> <strong>the</strong>rmodynamics has certain consequences
for <strong>the</strong> production process which are not adequately reflected in <strong>the</strong> standard
economic model. Among <strong>the</strong>se consequences are that <strong>the</strong> exergy <strong>of</strong> <strong>the</strong> total
output <strong>of</strong> a sector must be less than <strong>the</strong> exergy <strong>of</strong> <strong>the</strong> inputs and overall entropy
is increased through <strong>the</strong> production <strong>of</strong> waste materials and heat. Ayres and Miller
[16] developed a model that treats natural resources, physical <strong>capital</strong> and knowledge
(measured in terms <strong>of</strong> negative entropy or negentropy) as mutually substitutable
inputs into <strong>the</strong> production process. In 1988, Ayres [13] used <strong>the</strong> model for
<strong>the</strong> calculation <strong>of</strong> optimal investment policies and simulation <strong>of</strong> optimal time paths
and substitution pattern for <strong>the</strong> world primary energy sources from <strong>the</strong> year 1869
to 2050. Recently, Ayres [15], calculated <strong>the</strong> exergy performed in <strong>the</strong> US economy
during <strong>the</strong> twentieth century. One <strong>of</strong> <strong>the</strong> conclusions <strong>of</strong> his study was that growth in
exergy consumption have had an enormous impact on past economic growth. The
increasing efficiency <strong>of</strong> <strong>the</strong> production in primary work tended to result in lower
costs, which triggered increasing demand that <strong>of</strong>ten resulted in greater exergy consumption.
This fact is known as “Jevons paradox”.
Ruth [294] stated that use in economic production processes must consider <strong>the</strong>rmodynamic
limits on material and energy use in order to be optimal in <strong>the</strong> long-run.
And economic decisions must consider <strong>the</strong> finiteness <strong>of</strong> <strong>the</strong> resources available, <strong>the</strong>
interconnectedness <strong>of</strong> <strong>the</strong> economic system with o<strong>the</strong>r ecosystem components, <strong>the</strong>
time preference <strong>of</strong> consumers and producers and <strong>the</strong> technologies with which materials
and energy are transformed in <strong>the</strong> production process. He developed a model
<strong>of</strong> nonrenewable resource use. As an example, Ruth determined <strong>the</strong> optimal extraction
path and production <strong>of</strong> iron ore at each period <strong>of</strong> time, taking into account
<strong>the</strong>rmodynamic limits on material and energy efficiency, <strong>the</strong> treatment <strong>of</strong> endoge-