Mary Rose Cook's notebook

The public parts of my notebook.

My homepage.

Thinking in Systems, Donella H. Meadows

The system starts out with enough oil in the underground deposit to supply the initial scale of operation for 200 years. But, actual extraction peaks at about 40 years because of the surprising effect of exponential growth in extraction. At an investment rate of 10 percent per year, the capital stock and therefore the extraction rate both grow at 5 percent per year and so double in the first 14 years. After 28 years, while the capital stock has quadrupled, extraction is starting to lag because of falling yield per unit of capital. By year 50 the cost of maintaining the capital stock has overwhelmed the income from resource extraction, so profits are no longer sufficient to keep inventment ahead of depreciation. The operation quickly shuts down, as the capital stock declines. The last and most expensive of the resource stays in the ground; it doesn’t pay to get it out.