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 purpo...
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...t the most economically profitable extraction path of an exhaustible resource is the one in which the net price of the natural resource, as determined by marginal revenue proceeds from its sales, rises at the rate of interest.
In conclusion, natural resource economics is the subset of economic theory that deals in the allocation and economic use of the natural resources. Since natural resources have a great impact on the nation’s economy, certain laws like Hotelling’s and Hartwicks rule are put forth to govern their operations.
Works Cited
Barbier, EB, 2007, Natural resources and economic development, Cambridge University Press, New York, NY.
Prato, T 1998, Natural resource and environmental economics, Iowa State University, Ames, IA.
Reynolds, JE, Redfern, JM & Shulstad, RN, 1974, Readings in natural resource economics, Ardent Media, New York, NY.
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