IMPORTANCE OF NATURAL RESOURCES IN

ECONOMICS: AN ANALYSIS
SCOPE AND OBJECTIVE
The scope of this project paper is limited to an analysis of the concept of a natural
resources and its effects on the economy, and the criticism for it.
The aim of this project paper is to analyse the concept of natural resources in
Economics.
This project aims to study the concepts of natural resources, as well as the effects it
has on economy of a nation.
To understand the concepts of natural resources.
To analyse the concept of its effect on an economy.
NATURAL RESOURCES
Natural resources are very important in the survival of a society.
The economy of a nation largely depends on the amount of natural resources it carries with
itself as with the gradual increase in population.
Karl Marx said, the history of society can be traced through economics, it becomes
conspicuous that the value of natural resources has passed through a long flow of time.
This includes all valued characteristics such as magnetic, gravitational, and electrical
properties and forces. On earth, it includes; sunlight, atmosphere, water, land (includes all
minerals) along with all vegetation and animal life that naturally subsists upon or within the
heretofore identified characteristics and substances.
There are various methods of categorizing natural resources, these include source of origin,
stage of development, and by their renewability.
NATURAL RESOURCES ECONOMICS
Natural resource economics deals with the supply, demand, and allocation of the
Earth's natural resources. Natural resource economics deals with the supply, demand,
and allocation of the Earth's natural resources
Hotelling's rule is a 1931 economic model of non-renewable resource management
by Harold Hotelling. It shows that efficient exploitation of a nonrenewable and
nonaugmentable resource would, under otherwise stable economic conditions, lead to
a depletion of the resource. The rule states that this would lead to a net price or
"Hotelling rent" for it that rose annually at a rate equal to the rate of interest,
reflecting the increasing scarcity of the resource.
. Nonaugmentable resources of inorganic materials (i.e. minerals) are uncommon;
most resources can be augmented by recycling and by the existence and use of
substitutes for the end-use products
Extraction
Resource extraction involves any activity that withdraws resources from nature.
Extractive industries are, along with agriculture, the basis of the primary sector of the
economy. Extraction produces raw material which is then processed to add value.
Examples of extractive industries are hunting, trapping, mining, oil and gas drilling,
and forestry.
Extractive industries represent a large growing activity in many less-developed
countries but the wealth generated does not always lead to sustainable and inclusive
growth. Extractive industry businesses often are assumed to be interested only in
maximizing their short-term value, implying that less-developed countries are
vulnerable to powerful corporations.
sudden inflow of money caused by a resource boom can create social problems
including inflation harming other industries like the Dutch Disease and corruption,
leading to inequality and underdevelopment, this is known as the Resource Curse
Resource depletion is the consumption of a resource faster than it can be
replenished. Natural resources are commonly divided between renewable resources
and non-renewable resources (see also mineral resource classification). Use of either
of these forms of resources beyond their rate of replacement is considered to be
resource depletion. Resource depletion is most commonly used in reference to
farming, fishing, mining, water usage, and consumption of fossil fuels
It occurs for many different reasons, and it has several negative implications on the
atmosphere and the quality of the land in and surrounding the forest.
Wetlands are areas that are often saturated by enough surface or groundwater to
sustain vegetation that is usually adapted to saturated soil conditions, such as cattails,
bulrushes, redmaples, wild rice, blackberries, cranberries, and peat moss. Because
some varieties of wetlands are rich in minerals and nutrients and provide many of the
advantages of both landand water environments they contain diverse species and
possibly even form a food chain.
Some loss of wetlands resulted from natural causes such as erosion, sedimentation
(thebuildup of soil by the settling of fine particles over a long period of time),
subsidence (thesinking of land because of diminishing underground water supplies),
and a rise in the sea level.
NATURAL RESOURCES OF INDIA
The total cultivable area in India is 1,945,355 km (56.78% of its total land area),
which is shrinking due to population pressures and rapid urbanisation. India has a
total water surface area of 360,400 km.
India produces 4 fuels, 11 metallic, 52 non-metallic and 22 minor minerals. India's
major mineral resources include Coal (4th largest reserves in the world), Iron ore,
Manganese ore (7th largest reserve in the world as in 2013), Mica, Bauxite (5th
largest reserve in the world as in 2013), Chromite, Natural gas, Diamonds, Limestone
and Thorium (world's largest along coast of Kerala shores). India's oil reserves, found
in Bombay High off the coast of Maharashtra, Gujarat, Rajasthan and in eastern
Assam meet 25% of the country's demand.
A national level agency National Natural Resources Management System (NNRMS)
was established in 1983 for integrated natural resources management in the country.
It is supported by NITI Aayog and Department of Space.
EFFECTS OF NATURAL RESOURCES IN
ECONOMICS
The perpetual resource concept is a complex one because the concept of resource is complex
and changes with the advent of new technology (usually more efficient recovery), new needs,
and to a lesser degree with new economics (e.g. changes in prices of the material, changes in
energy costs, etc.)
On the one hand, a material (and its resources) can enter a time of shortage and become a
strategic and critical material (an immediate exhaustibility crisis), but on the other hand a
material can go out of use, its resource can proceed to being perpetual if it was not before,
and then the resource can become a paleoresource when the material goes almost completely
out of use (e.g. resources of arrowhead-grade flint).
An important way of replacing a resource is by synthesis, for example, industrial diamonds
and many kinds of graphite, although a certain kind of graphite could be almost replaced by
a recycled product. Most graphite is synthetic, for example, graphite electrodes, graphite
fiber, graphite shapes (machined or unmachined), and graphite powder.
Several other kinds of resources need to be introduced. If strategic and critical
materials are the worst case for resources, unless mitigated by substitution and/or
recycling, one of the best is an abundant resource.
Perpetual resources can transition to being a paleoresource. A paleoresource is one
that has little or no demand for the material extracted from it; an obsolescent
material, humans no longer need it. The classic paleoresource is an arrowhead-grade
flint resource; no one makes flint arrowheads or spearheads anymoremaking a
sharpened piece of scrap steel and using it is much simpler
PROTECTION AND MANAGEMENT OF NATURAL
RESOURCES
Natural resource economics is a transdisciplinary field of academic research within
economics that aims to address the connections and interdependence between human
economies and natural ecosystems.
In 1982 the UN developed the World Charter for Nature, we must protect it just
like our Mother, which recognized the need to protect nature from further depletion
due to human activity. It states that measures need to be taken at all societal levels,
from international to individual, to protect nature.
To look at the importance of protecting natural resources further, the World Ethic of
Sustainability, developed by the IUCN, WWF and the UNEP in 1990, set out eight
values for sustainability, including the need to protect natural resources from
depletion.
Natural resource management is a discipline in the management of natural
resources such as land, water, soil, plants and animals, with a focus on how
management affects the quality of life for both present and future generations.
Hence sustainable development can be followed where there is a judicial use of
resources which compromises the needs of the present generations as well as the
future generations.
The global science-based platform to discuss natural resources management is the
World Resources Forum, based in Switzerland
PRINCIPLES OF SUSTAINABILITY
Principle 1- Human beings are at the centre of concerns for sustainable development. They are entitled to a healthy
and productive life in harmony with nature.
Principle 2- States have, in accordance with the Charter of the United Nations and the principles of international law,
the sovereign right to exploit their own resources pursuant to their own environmental and developmental policies, and
the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of
other States or of areas beyond the limits of national jurisdiction.
Principle 3- The right to development must be fulfilled so as to equitably meet developmental and environmental
needs of present and future generations.
Principle 4- In order to achieve sustainable development, environmental protection shall constitute an integral part of
the development process and cannot be considered in isolation from it.
Principle 5-All States and all people shall cooperate in the essential task of eradicating poverty as an indispensable
requirement for sustainable development, in order to decrease the disparities in standards of living and better meet
the needs of the majority of the people of the world.
Principle 6- The special situation and needs of developing countries, particularly the least developed and those most
environmentally vulnerable, shall be given special priority. International actions in the field of environment and
development should also address the interests and needs of all countries.
Principle 7- States shall cooperate in a spirit of global partnership to conserve, protect and restore the health and
integrity of the Earth's ecosystem. In view of the different contributions to global environmental degradation, States
have common but differentiated responsibilities. The developed countries acknowledge the responsibility that they
bear in the international pursuit to sustainable development in view of the pressures their societies place on the global
environment and of the technologies and financial resources they command.
Principle 8- To achieve sustainable development and a higher quality of life for all people, States should reduce and
eliminate unsustainable patterns of production and consumption and promote appropriate demographic policies.