the extractive, manufacturing, and energy industries 

 to satisfy environmental and health objectives. This 

 development is certain to have major implications 

 for the projection period. Although it is too early to 

 define the changes that will actually take place and 

 their overall impacts with any certainty, such con- 

 straints have been taken into account in projecting 

 economic activity and demands and supplies of re- 

 newable resources. 



A related development, the reservation of forest 

 and range lands for designated uses such as wilder- 

 ness, parks, and wildlife refuges, has been going on 

 for a long time; this development is specifically 

 taken into account in the projections of forest and 

 range land areas. 



Energy Costs 



Changes in energy costs have substantial effects 

 on the demand for forest and range land products, 

 both through their impact on the level of economic 

 activity^ and through their direct impact on the use 

 of forest and range land products.* 



''Edward Fried and Charles Schultze (In Higher oil prices and 

 the world economy. The Brookings Institution. Washington, D.C. 

 1974 p. 47, 54) estimated that the increase in world oil prices will 

 result in a decrease in aggregate demand in the United States of 

 0.4 percent in 1980 and that these higher prices will reduce the 

 rate of economic growth by 0.1 to 0.2 percent in the early 1980's. 

 Edward Denison (In Effects of selected changes in the institu- 

 tional and human environment upon output per unit of input. 

 Survey of Current Business. U.S. Department of Commerce. 

 January, 1978 p. 2144) stated that pollution abatement regula- 

 tions have substantially lowered the rate of increase in output per 

 unit of input in the United States and that the effect of these 

 regulations is becoming more pronounced. He estimated that 

 output in the nonresidential business sector in 1975 was 1.0 per- 

 cent smaller than it would have been without such pollution 

 abatement regulations. 



*The estimates by Fried and Schultze of the effect of higher oil 

 prices (see footnote 7) were for the U.S. economy as a whole. 

 There are no comparable estimates of the impacts of recent 

 increases in energy prices on the use of renewable natural resour- 

 ces. However, it is evident that there will be a tendency to increase 

 use of those renewable resources that require relatively little 

 energy in use and processing at the expense of substitute resour- 

 ces that require relatively large amounts of energy, and vice versa. 

 For example, lumber and plywood are likely to be substituted to 

 some extent for steel and concrete, which have heavy energy 

 requirements in processing. On the other hand, demand for those 

 kinds of outdoor recreation that require long-distance travel may 

 be dampened somewhat by higher travel costs that result from 

 higher energy prices. 



'Harold Barnet and Chandler Mose (In Scarcity and growth. 

 The Johns Hopkins Press 1963. p. 164-201) show that the unit 

 cost of energy minerals declined from 1870 to 1957. Data for 

 recent years show a continuation of this downward trend in rela- 

 tive energy prices until 1969. See, for example, The New York 

 Times National Economic Survey, January 8, 1978. 



The unit cost of energy minerals, which today 

 accounts for the bulk of United States energy pro- 

 duction, decreased steadily from about 1870 to the 

 late 1960's.' Since then, however, there have been 

 very large increases in energy prices, with the aver- 

 age relative price of crude oil in the United States 

 more than doubling, and the price of coal and natu- 

 ral gas also doubling. At the same time, dependence 

 on relatively high-cost imported crude oil and petro- 

 leum products has also grown rapidly. 



A long historical period has obviously ended. 

 During that time, improvements in technology offset 

 the increase in costs as energy materials were used to 

 process lower quality and less accessible resources. 

 Many of the remaining petroleum reserves are con- 

 centrated in areas such as interior Alaska, the Arc- 

 tic, and the outer continental shelf where the physi- 

 cal environment is severe and where development, 

 operating, and transportation costs are high. Pro- 

 duction of oil from shale and tar sands, which may 

 begin before the end of this century, will entail very 

 high development costs. In recent years, programs to 

 protect the environment have also added to energy 

 costs. 



In summary, it seems fairly clear that the use of 

 increasingly high-cost energy reserves, the removal 

 of remaining controls on natural gas and second-tier 

 oil prices, and added environmental protection costs 

 are likely to push energy prices still higher relative to 

 the general price level. At this time, there are no 

 authoritative and generally accepted estimates of the 

 size of the future increases. It does seem, however, 

 that substantial and persistent upward movement is 

 in prospect. This has been taken into account in pro- 

 jecting demands and supplies for those products 

 where the higher prices can be expected to have a 

 significant effect. 



Capital Availability 



Large amounts of capital will be required to make 

 the necessary investments in management, physical 

 facilities, and processing plants to accommodate in- 

 creased demands for forest and range land resources. 

 Far larger amounts of capital will be needed to make 

 possible the levels of overall economic growth that 

 are projected in this chapter. It is reasonable to ask 

 whether such vast amounts of capital will be avail- 

 able to develop new energy sources, meet environ- 

 mental protection requirements, provide for general 

 economic activity, and meet the requirements for 

 forest and range land resources. However, when cap- 

 ital requirements are required with past investment 

 rates in the United States and western European 



