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Comment by c1sc0 | Hacker News Reader

We're running out of all kinds of natural resources. The main problem I see is that natural resources are way underpriced in current markets since markets only assign value based in the short term. We need a pricing mechanism that spans generations and encourages conservation for the centuries to come. A free market for helium is a start, but is still heavily biased towards short-term profits. Or am I wrong here?

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If you suspect certain resources will be more expensive in the future, you can buy futures and make a killing. You can also look at the going rates for futures contracts and compare them to the current price of the commodity to get an idea of future scarcity.

sure, but who's going to cash in on those contracts if my horizon is 500 years?

I think any action taken today is unlikely to preserve resources 500 years from now. You'd have to start some sort of monastery devoted to hoarding helium. (This is harder than it sounds. Helium diffuses through metal tanks.)

More importantly, I don't think future generations will benefit much from our conservation efforts. Resource needs and constraints change over time. As technology advances, we find new ways to create substitutes for rare materials, or find ways to use rare materials more efficiently. Someone in 1500 would be unlikely to correctly guess scarce resources 500 years in the future.

Yet in most of the middle ages it was common practise to plant oak when a new building in e.g. a monastery was completed, in order to enable the next generation to replace e.g. the roof structure.

I've never heard of this before and Google gives me nothing. Can you provide a link or something? I thought most medieval structures had thatch roofs made with straw.

I'm not sure what your anecdote has to do with my argument. The medieval times did not have the sort of growth we have today. Hoarding resources for future generations doesn't make sense in our economy. You could help the future a lot more by selling those resources and investing in index funds. A generation from now, that money will have compounded to be much more valuable than if you had preserved your original resources and tried to sell them 100 years later.

He did say 'roof structure', not 'roof covering'. A thatched roof needs a structure to support it, that straw does not stay up in the air by magic. All the gussets and beams were made of wood.

I seem to remember visiting an ancient English church, and being told by our guide that the original architect had caused a stand of trees to be planted near the city, of the same wood as the roof timbers. Centuries later, some of the roof timbers needed to be replaced; thanks to the architect's foresight, the necessary trees were there.

The one I had heard about had to do with Oxford.

http://atlasobscura.com/place/oak-beams-new-college-oxford

Kevin Kelly, I believe, in _The Clock of the Long Now_ mentions a funny story about the Swedish parliament putting aside an island to grow trees for the navy. A bishop argued against it, saying that a century hence ships may well be made of something besides wood. A century hence was the 1900s, where pretty much everything was made of steel or iron or another metal...

or find ways to use rare materials more efficiently

This won't necessarily have the effect of making the remaining Helium last longer: http://en.wikipedia.org/wiki/Jevons_paradox

I do agree with you that worrying about the resource needs of society 500 years from now is unlikely to prove useful. Furthermore, it strikes me a bit odd that the lives of humans hundreds or thousands of years after we are dead is of such great importance to everyone. Unfortunately, this article seems to be discussing running out of Helium in our lifetimes, which probably is something we need to think about.

Okay, I godda ask.

How would you hoard helium for 500 years?

It sounds like a fun technical problem. Anyone know any solution?

you could buy a depleted gas field and fill it up.

It's been hoarded for tens of millions of years in existing salt domes. That's more or less how both the national helium reserve (being sold off) and the privately-owned BLM helium reserve are maintained. It's by no means a trivial problem (you have to know where the domes are and be able to drill through kilometers of solid rock to reach them, then repressurize the helium to a high enough pressure to make it go back underground) but it's not out of the reach of 1920s technology.

There isn't really a functioning long-term futures market for most commodities, though: the vast majority of the contracts are <1 year, and most of the rest are <2 years. There are a handful of commodities where it's possible to trade 10-year contracts with relatively good liquidity (U.S. natural-gas delivery is one), but they are quite uncommon, and 20-year contracts aren't even traded on the major exchanges. So, I really tend to see the futures markets, at least the way they currently operate, as more a way of betting on or hedging against (depending on your other positions) short-term logistics and demand spike issues, rather than as a long-term pricing mechanism.

I think the lack of long-term futures contracts is evidence that nobody has a clue about the price of commodities in the long-term.

But then futures contracts don't give "an idea of future scarcity". How does your current statement mesh with your previous one?

It seems like the conclusion is that no one thinks they know enough about future scarcity to be willing to place bets on it.

While the predictions of scarcity are likely correct, the predictions of the consequences of scarcity likely aren't. For example: Once the cost of helium increases, substitutes will be found for many applications. For a buoyant gas, people might use hot air, or hydrogen mixed with some kind of flame retardant. Low temperature research might rely more on computer simulations. MRIs and other devices might use high temperature superconductors bathed in liquid nitrogen.

The only problem would be if helium scarcity happened too quickly for people and technologies to adapt. If you thought that was likely, you could invest in companies making or researching helium substitutes and make a killing.

It seems like the conclusion is that no one thinks they know enough about future scarcity to be willing to place bets on it.

Almost. Nobody knows enough about future scarcity to be willing to place bets on it instead of placing bets on other investments such as index funds. If you enter into a 20 year futures contract, you're saying, "I believe I will make more money from selling this resource in 20 years than I would from investing the value of this contract in index funds for 20 years."

Thank you for the clarification.

> While the predictions of scarcity are likely correct, the predictions of the consequences of scarcity likely aren't. For example: Once the cost of helium increases, substitutes will be found for many applications. For a buoyant gas, people might use hot air, or hydrogen mixed with some kind of flame retardant. Low temperature research might rely more on computer simulations. MRIs and other devices might use high temperature superconductors bathed in liquid nitrogen.

Those are cool speculations.

Hydrogen is probably the only option for a buoyant gas. I don't think mixing flame retardants in with hydrogen will work; you either need something lighter than nitrogen (and hydrogen, helium, and neon are the only candidates) or something that can retard flame appreciably in such small quantities that it doesn't counteract the buoyancy, and I don't think any such substances exist. They'd either have to produce a lot of non-inflammable gas, the way sodium bicarbonate does, or absorb a lot of heat like tetraethyl lead, and in either case they have to be pretty heavy.

For superconductor and other cryogenic coolants, as they said, liquid helium is already recycled.

I like the idea of using high-temperature superconductors. Maybe invest in yttrium mines? (I guess there are lots of high-temperature superconductors today.) Why don't these devices currently use high-temperature superconductors? Are they too expensive? (Edit: http://pubs.acs.org/subscribe/archive/ci/31/i06/html/06chem.... says that 123, YBCO, and its family are only superconducting within a single crystal, which makes it hard to make large coils out of them.)

Yes there is, you can take delivery of the good and store it or pay someone to store it. And sell at some point in the future.

You can buy the good (although that's a lot more expensive than buying a call); you can buy shares in a mining or refining operation whose profits will rise if the commodity prices do; you can buy shares in equipment suppliers who sell to the above; you can do any of the above for commodities that substitute for the commodity in question (e.g. rice and corn, if you expect wheat supplies to be short); or you can bet against commodities that complement the commodity in question, either in production or consumption (e.g. mining more indium will probably push zinc and gallium prices down, since the three tend to occur together; cheap energy would probably depress the price of aluminum somewhat; and similarly, cheap energy would probably elevate the price of bauxite.)

Disclaimer: I'm broke at the moment; following my financial advice would be a bad idea.

Well, yeah--- my main point is that the futures market doesn't serve as a functioning long-term pricing mechanism. That's why you have to go to other things outside the futures market if you want to speculate on/hedge against long-term price movements, like buying physical commodities, or stocks, or other such things.

There's a good book [1] and LSE podcast [2] on the morality of letting future generations participate in natural resources.

[1] http://www.oup.com/us/catalog/general/subject/Economics/Poli... [2] Direct link to mp3: http://richmedia.lse.ac.uk/publicLecturesAndEvents/20100524_...

And the problem with a pricing mechanism that spans generations is that it will have to assume a great deal about how helium will be produced and consumed generations from now.

Remember when the world ran out of wood and whale oil a bit more than a century ago? Nope, cause our great grandparents pivoted into using other materials for ships and houses and mineral oil instead.

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