First lecture

Introduction to Resource Economics
Economic theory emerged from problems related to allocation of scarce resources. Natural resources are limited and increased demand of such resources makes them relatively scarcer. In resource economics we study the allocation of natural resources under different conditions, including optimal allocation while maximizing given objective functions.
  • Economics is the study of the allocation of limited resources to satisfy human wants or desires.
  • Scarcity of resources implies that their use is costly
  • Using a resource incurs an opportunity cost, in the form of an alternative foregone benefit.
Natural resources may have direct economic consumption values or they may have value as input factors in production of other consumables.

Natural resources are often classified into two groups: Renewable and Non-renewable resources. These two terms refer to the human use of natural resources, where stock resources as oil and minerals are considered being non-renewable even though they in principle (and in a geological time perspective) really are renewed

Natural flow resources are divided into two groups: Exhaustible and Non-exhaustible resources. Non-exhaustible renewable natural resources are resources where future availability is not dependent of earlier consumption. The most pronounced resource of this kind is the energy we receive from the sun.

Exhaustible renewable stock resources may also be separated into two groups: Biological stock resources (biotic resources) and physical stock resources (abiotic resources). To the latter we count soil components, the earth's ozone layer, etc.

Biological stock resources are finally grouped into two: Resources which are object for hunting and fishing and biological stocks which are farmed or breeded for food production. The two groups differ only by the latter leaving more control to resource exploiter, e.g. population density, rotating one generation cultures, etc.

Introduction to resource economics