Title: 1. WHAT IS NATURAL RESOURCE ECONOMICS & WHY IS IT IMPORTANT? AGEC 3503 SPRING 2006
11. WHAT IS NATURAL RESOURCE ECONOMICS WHY
IS IT IMPORTANT?AGEC 3503 SPRING 2006
Dept. of Ag Economics Oklahoma State
University
2INTRODUCTION
- Purpose
- to understand the concept of natural resource
economics and its relevance - Learning Objectives
- 1. Introduce the course how it is to be
administered - 2. Define key terms.
- 3. Understand the purpose of studying
environmental natural resource economics. - 4. Understand the classification of resources.
-
3INTRODUCTION
- Natural Resource Economics Syllabus
- Purpose
- Evaluation
- Schedule
- Importance of Student Activity
4Instructor/Philosophy
- Personal/Professional Background
- Teaching Philosophy
- Student Info
5Anxiety Test
- The ultimate test of a set of economic ideas. .
. is whether it illuminates the anxieties of the
time. Does it explain problems that people find
urgent? Does it bear on the current criticism of
economic performance? . . . Does it bear upon the
issues of political debate? For these, though
many have always preferred to believe otherwise,
do not ignite spontaneously or emerge maliciously
from the mouths of agitators to afflict the
comfortable. - --John Kenneth Galbraith, Economics the Public
Purpose, 1973 bold italics added by instructor
6Where to get more information
- Syllabus
- Sources
- Hackett
- ERS-USDA AH722
- Handouts
- Supplementary Readings
- Govt. Documents--Library
- Congress, Legislature, St/Fed Agencies
- Electronic sources (note biased vs. objective
sources) - Experts
7Team Exercise
- Instructor assigns teams
- Each team identify top 3 natural
resource/environmental issues in 5 years - Be prepared to briefly explain each issue
8Key Terms
- Natural Resources
- Specific attributes of the environment that are
valued or have proven useful to humans or have
the potential to do so --G. Johnston - Aspects of nature that can be used by humans to
satisfy human wants--Hite Mulkey - key to human use technology, time,
accessibility, appli-cation, perception
conflicts often related to culture - Economics
- the study of the production, processing,
distribution, consumption of goods/services in an
exchange system
9Key Terms (cont)
- Natural Resource Economics
- application of economics to manage naturally
occurring resources for human needs/wants with
efficiency as the primary goal - efficiency may be defined in market or nonmarket
terms, focused on the short or long run, relative
to current or future generations, local or global
in scope - decision choices include maintaining the status
quo, altering the status quo, or doing nothing
with focus on relevant institutions - evaluation always includes the costs benefits
of a decision to whom those costs benefits
accrue
10Key Terms (cont)
- Environmental Economics vs. Natural Resources
Economics (Hackett) - Environmental Economics economic basis for
pollution problems policy alternatives - Natural Resources Economics problems of managing
common-pool natural resources, determining
optimal rates of extraction, understanding
resource markets - common-pool natural resources difficult to
exclude access, but once extracted is no longer
available to others (groundwater, rivers,
fisheries, public forests) - Scarcity, Opportunity cost, economic rationality
11Special Break for cartoon!
- Sometimes some folks go to extremes to get our
attention!
12Why Study Natural Resource Economics?
- Natural Sciences lack commonly accepted decision
process - Economics may assume the problem away
- Irreversibility
- Market failure
- Joint importance of economic and ecological
systems - Physical-Natural-Economic System Links
- Improves efficient functioning of system
- Improves understanding about the world we live in
- Summary Improved management of natural
resources, whether for private, public or natural
gain
13Classification of Natural Resources
NATURAL RESOURCES
FLOW RESOURCES
FUND RESOURCES
NONSTORABLE RESOURCES (ENVIRONMENTAL RESOURCES)
RENEWABLE RESOURCES
NONRENEWABLE RESOURCES
STORABLE RESOURCES
RECYCLABLE RESOURCES
NONRECYCLABLE RESOURCES
14Classification of Resources (continued)
- 1. Flow Resources (nondepletable)
- a. Nonstorable (sometimes called environmental
resources) - Often indivisible
- Inexhaustible (in human span of time)
- Time management relevant only to consumption,
not supply
15Nonstorable Flow Resources
Scenic Views
Ocean Waves
Sunshine
Weather
Ecosystems
16Classification of Resources (cont)
- 1. Flow Resources (cont)
- Storable (by nature, as in living matter by
humans with technology) - May be divisible
- Time management relevant to both to
consumption supply - The services are what are significant for
humans
17Storable Flow Resources
Geothermal Energy
Wind
Wave Energy
Solar
Hydro Power
Water
Hydrogen Energy
18Classification (cont.)
- 2. Fund Resources (stock or depletable resources)
- a. Exhaustible Renewable
- Regenerative within human use time frame
- Assumes use within minimum maximum thresholds
19Exhaustible Renewable Fund Resources
Timber Crops
Fish
Animals (human nonhuman
Grazing Lands
Soil Water Quality
Forests some Unique ecosystems
20Classification (cont.)
- 2. Fund Resources (cont)
- b. Exhaustible Nonrenewable
- Relatively fixed stocks/fund within human use
time frame - (1) Nonrecyclable--Examples fossil-fuel energy
resources (oil, natural gas, coal, peat, many
renewable resources when thresholds violated) - (2) Recyclable--Examples some minerals (iron,
aluminum, gold, silver)
21Natural Resource Examples
- FLOW RESOURCES FUND RESOURCE
- NONSTORABLE STORABLE RENEWABLE
NONRENEWABLE - nonrecyc. recyclable
- 1.
- 2.
- 3.
- 4.
- 5.
- 6.
- 7.
- 8.
- 9.
- 10.
22Framing Natural Resource Issues
- Quantity Quality of Land, Water, Air, Energy
- Public vs. Private Management Question
- Trend of Magnitude of Problem
- Persistent, Chronic, Cyclical, Declining,
Growing? - Irreversibility
- Geographic scope
- Whose problem who decides (ethics)?
- Property rights
- Time (short vs. long run current vs. future
generations)
23Optimism vs. Concern for Environment Natural
Resources
- Concerns
- Global warming climate impacts
- Over-population biodiversity
- Soil/water quality/Mineral/energy
cost/availability - Pollution/resource shortage impacts on social
political institutions - Optimism
- Legislative progress
- Toxic release rates down
- US competitiveness
24References for Lesson 1
- Hackett text
- Hite, J.C., W. D. Mulkey. Natural Resource
Economics An Introductory Textbook, draft
unpublished text. - Johnston, G.M., D. Freshwater P. Favero
(editors). Natural Resource and Environmental
Policy Analysis Cases in Applied Economics,
Westview Press, Boulder, 1988. - Kahn, J.R. The Economic Approach to Environmental
and Natural Resources, second edition, 1998. - Sanders, various notes
25L1 Homework
- Read Ch. 1, Hackett (10-12 Jan)
- Do Problem 1, p. 16 (12 Jan) 5 points
- Refer to Internet Links (12 Jan) 5 points
- Select 2 links
- Briefly review, including
- Content
- Bias or objectivity
- Likely use of material