472sln9 - Classes of Natural Resources A. Nonrenewable, or...

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Classes of Natural Resources A. Nonrenewable, or Exhaustible – e.g. coal deposit, oil deposit, body of iron ore (the subject of Ec. 471) B. Renewable – a resource that is capable of growth, or regeneration, e.g. a forest, a fishery resource The use of the term “Exhaustible” can be misleading -often impossible to physically exhaust category A natural resources. Many category B natural resources can in fact be physically exhausted -examples
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2 ECONOMIC BASE of a REGION (e.g. British Columbia) -goods and services produced by the Region that are sold primarily beyond the Region’s borders All other productive activities in the Region are seen as being dependent on this BASE. The Economic Base of the Region that is British Columbia is heavily oriented towards Natural Resources –forestry in particular.
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3 Natural Resources as Capital Capital is any asset that is capable of yielding a stream of economic returns through time – as opposed to a consumer good or service. Real capital vs. financial capital All natural resources, non-renewable and renewable, fall within this definition of real capital The World Bank 2005 publication: Where Is the Wealth of Nations? – based upon the fundamental idea that society’s income through time is produced by its stock of real capital, which consists of: I. Produced capital (person made capital) II. Natural capital III. Intangible capital (human and social capital) Traditional national income accounting only recognizes produced capital. The World Bank and others call for “green accounting” Development seen by the World Bank as a process of real capital portfolio management through time (portfolio – a set of assets).
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4 Natural Capital vs. Produced Capital (person made capital) a. Natural capital assets come as endowments of nature b. Can be optimal –within limits –to deplete, to disinvest in, Natural capital - deliberate disinvestment of Produced capital never discussed. No nation is ever seen as having more than enough Produced capital. Our ability to manage these resources is affected by the existence, or lack of existence, of resource property rights. The property rights, if they exist, may either be private, or public (i.e. state), property rights. As a first step, we must define what we mean by property rights.
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5 Property Rights – Text definition “A bundle of characteristics that convey certain powers to the owner of the right” Key characteristics I. Exclusivity II. Enforceability III. Transferability IV. Divisibility Characteristics I and II are crucial -the Text’s example of a farmer holding a deed to farm land. Absence of property rights: “common pool” resources Open Access
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6 Sustainable Harvesting and Resource Investment: A Crude Example A Forest At the end of period t , the volume of wood in the forest is estimated to be equal to X cubic metres.
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This note was uploaded on 03/24/2012 for the course ECON 472 taught by Professor Gordonmunro during the Spring '12 term at The University of British Columbia.

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472sln9 - Classes of Natural Resources A. Nonrenewable, or...

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