{"id":16557,"date":"2020-10-16T16:05:07","date_gmt":"2020-10-16T20:05:07","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=16557"},"modified":"2020-10-31T23:45:33","modified_gmt":"2020-11-01T03:45:33","slug":"renewable-stocks","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/renewable-stocks\/","title":{"rendered":"Renewable Stocks: Creating a Replenishing System"},"content":{"rendered":"\n

What are renewable stocks, and how are they different from nonrenewable stocks? How do these types of stocks<\/a> work within a system. <\/p>\n\n\n\n

Renewable stocks are a type of stock that is infinite, at least for a time. Nonrenewable stocks cannot be replenished. Both are important within a system. <\/p>\n\n\n\n

Read more about renewable stocks and how they work.<\/p>\n\n\n\n\n\n\n\n

Two Stock Systems<\/strong><\/h2>\n\n\n\n

So far we\u2019ve just focused on one-stock systems. In the models, we haven\u2019t worried too much about where the inputs came from and how much there were\u2014the population model assumes infinite food, the thermostat model assumes infinite gas to the furnace.<\/p>\n\n\n\n

But in the real world, the inputs have to come from somewhere. In a system model, the inflow into a stock comes from another stock, which is finite. This finite stock causes a constraint on growth\u2014the population can\u2019t grow forever, and the economy can\u2019t grow forever.<\/p>\n\n\n\n

We\u2019ll explore this here with two system models, one with a non-renewable stock (oil mining) and one with a renewable stock (commercial fishing). Changing whether the stock is renewable changes the implications of how growth ends.<\/p>\n\n\n\n

Renewable Stocks and Non-Renewable Stock<\/strong>s<\/h3>\n\n\n\n

Consider a reservoir of oil underground. The stock of oil is finite. There is an outflow as the oil is mined. (Shortform note: There is also a very slow inflow of generation of fossil fuels through geological processes, but this occurs over millions of years and is so slow that it\u2019s irrelevant in this situation.)<\/p>\n\n\n\n

The company that decides to mine this oil reservoir is a system. The system looks a lot like the system of the economy we just discussed: there is a capital stock (for example, building a mining rig), an inflow of investment in a reinforcing loop, and an outflow of depreciation in a balancing loop<\/a>.<\/p>\n\n\n\n

These two systems are connected by one element\u2014the profit from the oil that is mined. Simplistically, the more oil that is mined, the higher the total profit, which is reinvested into the capital stock; this higher capital stock then mines the resource at a faster rate. In this simplistic system, the capital stock would just grow exponentially, mining faster and faster until the stock is depleted. This is why both renewable stocks and nonrenewable stocks are important. <\/p>\n\n\n\n

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But we\u2019ll add one complication to this system\u2014the oil gets harder to extract as the stock goes down<\/strong>. In the real world, this is true\u2014the oil gets deeper and needs more drilling to access, or it becomes more dilute and more costly to purify.<\/p>\n\n\n\n

This builds a more complicated feedback loop that ties together the two systems:<\/p>\n\n\n\n