Scarcity. Scarcity.
What is the general meaning of this phenomenon, which we can hear from
different resources like TV or radio more and more often? This term has already
become the central problem of economy studies.
Economists explain this in a very simple way: people or firms have
unlimited wants, but all resources to satisfy us are limited. In terms of
production, for firms those resources are land, labor and capital. In terms of
people and our whole planet, scarcity can appear in face of shortage and lack
of water, fuel, food, wood and even corn. In my writing I will introduce you
with scarcity of water and food, which lead to opportunity cost as a
consequence of limited resources (Investopedia, 2013).
I
believe that many of you heard about Africa and Third World countries like Angola,
Kenya, Nigeria, South Africa and the level of life there, and I am sure that
you were shocked and would never wish to live there. This is the result of
scarcity of main resources required for maintaining nation’s physical health. And
one and the most important lack that this continent experiences - is water
scarcity. The reason lies in the fact that the African continent is mostly
covered with dry zones, that is where natural reason of scarcity rises, at the
same time Africa is only on its developing stage, it is very poor part of our
planet, hence, it has not strong industrial institutes that generate billiards
and provide the whole nation with high gross national product.
So
one of Africa’s earnings’ sources is exporting grain overseas. Therefore 88% of all fresh water is wasted
necessary to irrigate crops. To produce 1 ton of crops, 1,000 tons of water is
consumed per 1 year. So now it is easy to imagine why only 22% of fresh water
goes to people. Additionally another issue is rising: Africa is the continent
of high population growth, and no doubts, it will lead to even larger lack of
water (Danilov-Daniliyan and Losev, 2006). United Nations World Population
Prospects states that in 2010 population of Africa reached 1 billion people,
and this trend is still rising. By 2025 and 2050 the population is expected to
reach 1.4 and 1.9 billions respectively. Like that every third child on the
planet will be from Africa, but how is it possible to provide each child and
family with water at least to be able to survive? This problem is still one of
the most widely discussed problems nowadays (Nogueira, 2012).
Thus,
Africa – is a victim of vital water scarcity, and reasons lie in several
factors: dry and lifeless geographic location, irrational waste of water for
agriculture, population’s very high growth and underdeveloped level of economy.
What solution is appropriate for this particular case? Unfortunately, factors
are too weighty to be easily removed, and there is no positive forecast for Africa
in terms of ability to provide people with water.
The
lack of water in the future will affect not only Africa, but also the whole
world in terms of food scarcity. According to Census Bureau, International
Database by 2050 the world’s population will grow to 9 billion and it is going
to be very hard to feed everyone, because for the cultivation of plants and
animals a huge amount of water, which is also not enough, is needed (Heywood,
2010). That is how another type of food scarcity is coming out. Also the
biggest water consumer in agricultural industry is a cattle breeding. It
consumes 5 times more than any other type of agriculture. So it is obvious way
out to reduce hunger in future – to reduce meat eating and switch to vegetable
food (Pravda, 2012).
But
this is only one possible solution, because there is another reason of people’s
possible hunger – high unattainable cost. According
to Jean Ziegler, Special Rapporteur of the UN organization, over the past time,
the average price of rice has increased by 52% and the grain since the
beginning of this year has risen in price by 84%. It is terrible to imagine
that if previously every 5 seconds one child died because of hunger before even
reaching their age of 10, what consequences are awaiting the world in future
because of food scarcity. There are no doubts that this problem will touch
third world countries like Zimbabwe, Uruguay, Tanzania, Argentina, because the
difference in spending family’s monthly budget for food is extremely huge. So, if
for instance Americans and Europeans spend from 10% to 20% of their month
income on food as it was stated by Ziegler, then poorest countries’ citizen
have to spend from 60% to 90% of their income only on food to be able to stay
alive.
Unfortunately,
with the trend of subsequent increase in food prices, the third world will
hardly be able to buy expensive products for the pitifully small salary, hence,
people will switch to vital products that are lacking and it is impossible to
avoid food scarcity. This situation is still the keenest discussion topic for
United Nations. As UN analytics think, deepening food crisis is comparable to
terrorist threats as it can lead to war and riots. The reason is that in order
to stay alive, human nature will go for everything; parents of their children
are able to commit any illegal actions just to feed their children. That is why
food scarcity can provoke a war, since in some Latin, Asian and African
countries riots have already took their place as a consequence of increasing
price for food.
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| A Tunisian protester holds a baguette while taking to riot police in January 2011. |
So what is
another solution for reducing food scarcity? UN specialists offered to provide
the poorest countries with food, and the main food providers are supposed to be
European and North American countries. Besides, larger investments into agriculture
will also help to settle crisis problem, but even if this actions are
performed, threat of global food scarcity will still hang over the world
(Utro.ru, 2013).
Opportunity Cost.Next
interrelated economic event with scarcity is opportunity cost. When there is a
scarcity of anything, we should trade off one object for another to get
required product, and this value of exchanging one product for getting another
will be opportunity cost. Economics terminology defines opportunity cost as
what we should give up in order to get and buy what we want, hence, the value
of a product that we gave up will be considered as a forgone opportunity
(NetMBA, 2010).
Danilov-Daniliyan, V. and Losev, K.
(2006) Water Consumption. Environmental,
economic, social and political aspects [online]. Moscow: Science.
[Accessed 10 May 2013].
Heywood, T. (2010) World Population Growth in History. Available from: http://highwayfive.hubpages.com/hub/World-Population-Growth-in-History [Accessed 12
May 2013].
Investopedia (2013) Scarcity. Available from: http://www.investopedia.com/terms/s/scarcity.asp [Accessed 09
May 2013].
NetMBA (2010) Opportunity cost. Available from: http://www.netmba.com/econ/micro/cost/opportunity/ [Accessed 13
May 2013].
Nogueira, T. (2012) Africa’s population boom. Available
from: http://www.worldreview.info/content/africas-population-boom [Accessed 10
May 2013].
Pravda.ru (2012) The mankind will have to turn to vegetarianism as a consequence of food
scarcity [online] 27 August. Available
from:http://www.pravda.ru/news/society/27-08-2012/1126233-go_vegan-0/ [Accessed 14
May 2013].
Salary Explorer (2012) Salary Survey in Kenya. Available from: http://www.salaryexplorer.com/salary-survey.php?&loctype=1&loc=111 [Accessed 13
May 2013].
Shirayeva, N. (2013) Food deficit would
plunge the entire world into chaos. Utro.ru
[online] 14 April. Available from: http://www.utro.ru/articles/2008/04/14/730710.shtml [Accessed 13
May 2013].
When
we are going back to scarcity problem, we can see how opportunity cost theory
works in reality. For instance, when people experience lack of sufficient
budget, they should make a choice. So here, where all problems from my writing
like food, water scarcity and limited budget meet. Let’s go a little bit
further. For example, according to salary survey, in Kenya average salary
equals to 153,127 KES per month, converting to United States Dollars it is
approximately $ 1800 per month (Salary Explorer, 2012). So, if from above
stated percentage about African countries, expenditure for food from the budget
is from 60% to 90%, that means that a person can spend for food $3.6 per day only.
(1800$/30 days=$60; $60*60%= $ 3.6$). Since this budget is very small, person
should be able to make a right choice, connected with which type of product to
buy. Let’s say those products are water and vegetables. Consider the case of
Kenyan citizen who wants to spend his $3.6 for 5 liters of water or 5 kilograms
of vegetables. So, if he decides to buy only 5 liters of water for $3.6, the
opportunity cost will be 5 kilograms of vegetables that he also could buy, but
he had to give up this opportunity in order to buy water, which is more
essential for human survival. Opportunity cost also help to understand the
benefits of making particular decisions. On the example of water and vegetables (see the graph) it can be said that it is rational choice is to buy 4 liters of water and only 1.5
kilogram of vegetables to satisfy daily human’s nutrition needs, because water
is much more essential and important part for human physical health rather than
food. The proof lies in the fact that people can stay alive without food for
approximately 3 weeks, but without water, person will die after 8-10 days only
(Binns, 2012). Also opportunity cost is directly related with Production
Possibility curve, which shows combination of 2 goods that can be produced, as
well as in our case it is combination that should be consumed by a human.
To conclude, it
is the fact, that scarcity and opportunity cost are closely interrelated in
reality, because despite all attempts to reduce food and water scarcity, it
still exists and becomes more, and this results in people’s necessity to be
able to make a right choice between several options, if they just simply want
to stay alive.
References
Binns, C. (2012) How Long Can a Person Survive Without Water? Available from: http://www.lifeslittlemysteries.com/229-how-long-can-a-person-survive-without-water.html [Accessed 13
May 2013].
