Real Costs of Natural Resource Exploitation

Abstract

Natural resources are usually termed either renewable or non-renewable. Renewable resources include ‘biological’ resources, such as fish and forests and also energy flow resources such as hydro, solar, tidal, wave and wind power. Existing economic theories concentrate on the biological renewable resources to the extent that there is no separate explanation of the economics of the energy flow renewables. Analysing the physical and economic characteristics of natural resources enables the real costs of natural resource use to be identified, providing the basis of a single unifying theory of all resources based on their ‘user costs’. The most important aspects of user costs are: rate of consumption relative to rate of supply, as a quantitative aspect of resources; and secondly the pollution effects of resource use. Establishing the real costs of natural resources means they can be classified in a systematic way, demonstrating clear differences between different types of natural resource.