18 Nature Resources

The use of natural resources is the next topic we want to investigate. The same as with land, if the marginal benefits are higher than or equal to the marginal costs determines whether conserving natural resources would have a positive economic impact. Natural resource benefits are more likely to be seen in the long run than in the short run, unlike some of those associated with the land. Natural resources encompass both renewable and non-renewable resources, including oxygen, fresh water, and forests, as well as fossil fuels and metal ores.

First, because non-renewable resources are finite and can jeopardize the sustainability of the economy, there should not be an excessive reliance on them in the economy. Over-exploitation of renewable resources also has an impact on their biological cycle. Natural resource conservation has a higher opportunity cost than the actual cost. Natural resources are different from land in that all we need to preserve them is what we have to reduce, not what we need to pay extra effort. For example, we need to reduce logging, oil exploration, and water use. And the advantage that these behaviors deprive us of is what we called the opportunity cost.

Again, let’s start with a discussion of the costs that may be involved in protecting natural resources. Similar to land, the conservation of natural resources can also be achieved by establishing nature reserves. This includes upfront establishment costs, which are the purchase, construction, and planning costs that you need to pay. Recurrent management costs in the medium term, the cost of labor to maintain, and materials. And the opportunity cost of it, for example, trees, is the benefit that is lost by not cutting them down (compared to previous years). Similarly, while protecting the environment provides us with new jobs, it also hurts some people’s jobs. For example, some logging companies may make layoffs. Next, we look at the opportunity costs that may be lost as a result of protecting natural resources. The global forestry and logging market will grow from $883.81 billion in 2021 to $972.37 billion in 2022, at a compound annual growth rate (CAGR) of 10.0%. ^[1]

Thus, it is evident that natural resources, including oil resources, may greatly increase our wealth. Consequently, it is clearly clear how important cost management is. We require a strategy to safeguard the interests of all stakeholders while protecting the resources, such as how to compensate the loggers who will lose their jobs or prevent the oil companies from losing money due to the limit on the amount of oil drilling. Besides all government spending, what else? Economic profit is highly pragmatic, and although it may seem to us intuitively that environmental protection will hinder economic growth, in the long term it will reduce our reliance on natural resources, allowing for the advancement of human capital, which means the knowledge and skills one human has to enable them to contribute to the society. Additionally, we must foster an awareness of environmental protection because the future of the earth, as well as our health, cannot only be assessed by hard data.

At the same time, we can also use more clean energy and improve the efficiency of energy use, instead of blindly using those non-renewable resources, which can greatly reduce carbon emissions. Transport, for example, could cut carbon emissions by up to half the IEA estimates that future investments in new energy sources could boost GDP by US$18 trillion by 2035, or 1.1% a year. And it will provide three times as many jobs as fossil fuels. ^[2]

In conclusion, safeguarding land and natural resources will undoubtedly result in advancement over time. Additionally, there are immediate advantages to protecting land, such as the money made from tourists. And both can provide more job opportunities. But if we want it to be economically viable, we need to find ways to reduce prices or improve environmental protection methods, not only rely on government regulation.