In the eventual case it does, but not in the near/medium case it is not tied.
Farming will continue for years and years without any recycling. It may not make for good farming rates in the end or good overall eventual economy.
But the fact is that paying for resources is disconnected from the paying for farming. The only connection is that Spare resources make up the primary input to the values set for payments and rewards.
If you delve into the actual economics and realise that is a whole lot more than pay for resources translates into paying out for rewards.
Again the network can pay out for years and years without any recycling. This to me is a major disconnect between payment for resources and rewards paid out. Obviously having healthy amount of uploads will encourage more downloads and thus more farming rewards there is a connection and obviously the coins needed for those EXTRA farming rewards will come from the coins paid to upload them including dups. Again it is not necessary to do so to pay rewards for farming. Obviously again rewards for farming will be better if uploads are done and paid for, the fact is that farming rewards would continue without any more uploads.
That is one scenario and is just one of a few.
The free space problem is probably the least of the possibilities. The most likely one is that people simply are not using SAFE anymore.
For the life of SAFE and communications as we understand it, storage can certainly grow. Do you think SAFE has a infinite lifespan? Same that massive increases in storage will not. But SAFE lifespan might be measured in decades to century, but storage increases will be measured in centuries to millions of years.
Its not until we know all things will the increase in knowledge will stop and we would need to do like the brains in Futurma where they have to destroy the universe to stop even more knowledge being created after scanning it all.
We know of many methods of storing data that we have not the physics yet, but know how to do it. Things like electron spin, atom placement, and numerous things that would exceed the 10x in 5 years growth we have experienced for the last 40 or so years, if those new methods are implemented in 100 years or more.
So to say that storage space growth is unsustainable is a strawman argument for the forseeable future of 100+ years. Barring war, natural disasters etc.
Thats like deleting 0.01% of data to fit the next days in. To recover enough space you have to delete everything from two or less years ago just to ensure enough space is kept. Data increases are massive and you need 30% free to cope at all times. So if what describe comes true where storage increases drop away then deleting old data will neither be enough or desirable. History is the basis of scientific growth. It would become a case where you delete 2 years ago when SAFE is 2 years old then at 5 years you need to be deleting 1 years ago and at a decade old you need to be deleting 6 months ago. No disk storage increases is not slowing down significantly yet, and methods of permanent storage is increasing rapidly at the moment.