Natural Resource Economics
Economics in its broader sense deals in the distribution, production and consumption of goods and services in the most efficient way. It tries to explain how goods and services can be distributed or allocated to effectively meet the needs and demands of the market. Natural resource economics is slightly similar to this broader economic perspective, in that it seeks to efficiently allocate the earth’s ‘goods and services’ to meet the needs and demands of the economy. These ‘goods and services’ are the earth’s natural resources. The only difference between economics and natural resource economics is that natural resource economics tries to allocate earth’s natural resources, as compared to the goods and services, which economics tries to allot (Prato 1998, p. 19). This paper discusses natural resource economics, its importance, its rules and its benefits.
Natural Resource Economics Overview
Natural resource economics in actual sense is a subset of the economics’ theory, concerned with the demand, supply, allocation and economic use of the earth’s natural resources (Reynolds, Redfern & Shulstad 1974, p. 7). This subset of economics looks at the biological, physical, economic and institutional issues that condition, affect and control how natural resources are used. It examines issues that deal with land, minerals, water, marine products, air, forest products and the environment in a broad-spectrum.
In addition, natural resource economics covers concepts like the study of ownership, development, utilization, conservation and the management of these natural resources. This area’s main objective is striving to achieve a better understanding of the role of natural resources in the broader economy for purposes of developing a more effective and sustainable method of managing these resources. This management ensures that natural resources are available even to the future generations.
Natural resource economics unlike other faces of economic theory, places much emphasis on externalities and the value of evaluation of natural resources in the determination of public policy relating to natural resources and environmental issues. It also aims at applying the principles of economics to identify the causes, consequences, and finding ways of handling natural resource problems like the ones associated with fisheries, water, forests, and land.
Types of Natural Resources
Natural resources refer to the things or products that are obtained from the environment and used to satisfy human needs and wants, which are essential for survival (Prato 1998, p. 3). Natural resources are grouped into three categories, which are renewable, nonrenewable, and energy resources.
Renewable resources are those resources in the environment that can be easily replenished for example, sunlight, air, solar radiation, water, precipitation, atomic power and wind among others. These resources are also referred to as inexhaustible resources since they are...