F. A. Hayek made many contributions to the social sciences in his lifetime. This post shares his thoughts about natural resources–really mineral resources–from his 1960 book, The Constitution of Liberty. His thinking is contained in the section, “Conservation of Natural Resources,” (pp. 367–71).

The question Hayek addresses is whether self-interested free-market decisions overuse important, even ‘depletable,’ resources, leaving less for posterity from an economic viewpoint. Hayek argues against what might be called conservationism, or conservation for its own sake where present-value analysis does not apply.

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Hayek employed familiar reasoning to explain how privately owned resources had a capital or salable value, which was particularly relevant to mineral deposits for which, ceteris paribus, present production meant less future production. [1] In his words:

If the owner can get a higher return by selling to those who want to conserve than by exploiting the particular resource himself, he will do so.

Economic conservation of energy consists of voluntary actions and investments that make sense to the decision-maker in a free-market setting. Political conservation is  government-directed energy reduction measures. The later, conservationism, is energy savings for its own sake through monopolistic coercion or special favor (tax beak, crony regulation, or public check).

Demand-Side Management (DSM) programs by electric utilities are a major element of conservationism. Those who support reasonable efficiency and the elimination of waste should let the energy-efficiency politicos have the DSM term and use other words to describe what is favored.

DSM rose to regulatory prominence during the late 1980’s following the disastrous nuclear generation construction programs of the electric utilities. The confidence of the utility industry and its regulators in high-cost building programs shaken, they listened to new other approaches to meet future energy demand.…

Editor note: Yesterday’s post summarized The American Energy Renaissance Act of 2014, introduced by Senator Ted Cruz (R-Tx) and Representative  Jim Bridenstine (R-Ok) last year. Today’s post summarizes a model bill authored by the Institute for Energy Research/American Energy Alliance several years ago. The logic of free-market policy does not change but becomes stronger with time and change. But judge for yourself–and add (in comments) any suggestions you might have.

The Obama Administration has been implementing an anti-energy agenda since becoming President. For the last six years, Obama’s “dream ‘green’ team” has worked to increase the cost of traditional energy to reduce usage and try to make uneconomic consumer-rejected energy (wind, solar, ethanol, electric vehicles) more economic.

Even before Obama, multiple-hundred-page interventionist legislation has been signed time and again by Republican presidents.…

“A vote for the PTC is a vote in support of President Obama’s destructive climate action plan.”

You can’t beat something with nothing, the anti-consumer, anti-taxpayer environmental Left knows. So even they must have a supply-side strategy to go along with their demand-side strategy of conservationism, or less usage for its own sake.

The anti-fossil-fuel strategy is not nuclear, despite efforts by James Hansen, Breakthrough Institute, and others to legitimize this mass, low-carbon energy source. It is not hydropower either. Biomass is out for the most part.

What is left? There is tiny solar with barely any central station plants (Ivanpah is one of the controversial few.)

That leaves windpower! And this is why resurrecting the expired Production Tax Credit for the umpteenth time is so critically important for the mirage of climate stabilization to continue.…