What are Natural Resources?

    Let's "back" into the answer with some questions. What is the value of natural resources? Can we buy them? Why are natural resources important to us?

    "Value" has multiple meanings, and we must get a clear understanding about what we mean. Monetary or "market" value is determined by exchange of money. If I have a tree and you want a tree, how much money will I accept and give you my tree in exchange? The market value, therefore, depends on a tension between one person wanting to retain what they have, and another person wanting to have what the first person has. The resolution of the tension is achieved when ownership changes simultaneously with a flow of money from the buyer to the seller, and a flow of ownership from the first owner to the second owner. Market value refers only to what we can obtain from other humans. What can people have? What can people exchange for money? Are natural resources always exchangeable for money? Can humans "make" a tree? Who or what makes it "ownable," or makes it "property"?

BS00044A.gif (2229 bytes)

    Humans make artifacts (production) and can give their time and labor (services). Humans do not make natural resources, which are unrelated to either human time or human production. Humans may only modify natural resources. Natural resources are made by Nature and the energy to make them comes from geochemical, geophysical and solar energy. Humans cannot make petroleum, which once was living plants that have been processed for millions of years before humans existed, slowly becoming petroleum. Petroleum is a natural resource that we consider to be "nonrenewable" because it takes too long to make by the time scale that we can experience. But we can change where petroleum is located, and we can process it into components parts.

oildrill.wmf (14422 bytes)

    So, when we say that petroleum is valuable, we refer only to what we do with it. Humans may own the use of petroleum and control the ways that other people can use it. Ownership is a concept of humans, who invented laws to formalize the concept. Groups of humans then agreed to abide by the rules spelled out in the laws. Laws are also artifacts and laws make money "legal tender." If we "own the right to modify a right to modify a natural resource" then we may exchange our right of modification with other people who give us money. Money is another human artifact and its value is defined by laws, and ultimately, by many people's opinion about its value. Money cannot be used to make natural resources, but money and laws are used to influence what other humans do with natural resources.

SY01253_.WMF (1930 bytes)

    So, the monetary value of natural resources is what people believe the value to be. Our ignorance can cause the resources to be greatly undervalued, which is a major problem. We may not consider the "replacement cost" of a limited natural resource when we establish a monetary value. Humans are inherently ignorant; we simplify complex things and processes because we do not understand the "whole"! Natural resources and the ecosystem processes producing them are the most complex systems we can imagine -- if, in fact, we actually can imagine them accurately. Why are natural resources valuable to us? What do we assume about natural resources and their "value" when we equate their existence and use with money?

    Ecosystem services keep our habitat comfortable and livable without the outlay of money. Nature's processes work for free, powered totally by solar energy. Some examples are:

Pest control Flood control
Water filtration Soil fertilization
Food production Oxygen production
Climate stabilization Recreation opportunities

    These services to some extent also can be achieved by technological means, but at significant monetary investment. Furthermore, continuing costs are necessary to maintain the services. The ecosystem, however, will maintain these services without cost, unless we interfere with these processes. In certain instances there is a "loss of opportunity value," such as avoiding building highways or buildings in such a way that they destroy or damage the ecosystem processes. The loss of opportunity value is offset by the ecosystem services value they supply. We may choose one form value over another form of value, such as short term use value for long term service value. Such a choice resembles a decision to save or invest money in order to allow the investment to grow (increase in monetary value) or to preserve future options and benefits that may not be fully recognized. Such long range value requires imagination of future needs and recognition of the benefits of preserving options for those that may be valuable in ways we cannot imagine today. Such projected values require understanding of management of systems, and possibilities regarding the "replacement value" of a resource. Making good decisions implies an awareness of many factors and consequences not easily understood today, or a belief that present people have an obligation to future generations of people to have options, opportunities, similar to those we have today.

    For example, in the area to the west, southwest and northwest of Austin (and the University of Texas) urban sprawl has degraded the aquifers that supply water for many people along with habitats of some species of wildlife. Urban development has harmed, and continues to harm these aquifers by removing habitat (vegetation, soil), which increases the sedimentation of the aquifers, and by releasing toxic chemicals that flow into the aquifers. Consequently, some endemic species are losing their habitat, thereby endangering their survival. From the perspective of human habitat, there is loss of a popular resort springs and park that periodically are closed because of polluted water. Additionally, many people may lose their potable water supply. Only the human uses that are reduced by the degradation of these resources represent economic losses because endangered species that are not used by humans and therefore have no market value. Why should we be concerned about endemic organisms that have no apparent market value?

    Taking one example, some endangered species of plants and animals live in the water flowing from the aquifer. Their declining numbers reflect the declining water quality. If the water becomes unsafe for them, it likely is unsafe for humans. Technologically cleaning the water is expensive (or currently impossible), and would need to be continued for a long time even if the sources of pollution were removed. Sedimentation in the aquifer cannot be removed, and chemicals flush very slowly through the aquifer. Those people who "develop" the areas that damage the aquifer do not pay the costs of cleaning the water and keeping it clean. Nor do they pay the cost of sedimentation filling in the aquifer. This cost is "externalized" by the perpetrators of the damage since it is paid with tax funds (the public pays) or by the individuals who acquire their water from the aquifer directly. The permanent loss of the capacity of the aquifer by sedimentation filling it instead of water is paid by all who eventually lose its "free" services or "use potential" of unknown possibilities in the future. Externalizing costs while retaining the right to have an income from the development seems unfair, but it has been declared legal. The developers thereby are subsidized by others who receive no benefits from the ecologically damaging development. This is a "market failure" for monetized value whereby the human(s) who benefit do not pay the cost of their benefits.

    Of course, we see only the immediate cost to people. As mentioned above, some forms of aquifer damage are permanent, and the greatest loss easily may be experienced by people who have not yet been born. How can such external costs be calculated? One of the major areas of economic and policy research today involves ways for "internalizing" the full cost of human activity. "The polluter pays." Accurate solutions for permanent losses may be impossible since loss of future ecosystem services may be unknown. Money is not an adequate measure of ecosystem services whereby all organisms are supported. How can good management of natural resources preserve the future options for new uses while benefiting from the present uses?

    Also, there are human values -- ethics and morals -- that give non-monetary value to natural resources. Humans themselves are a natural resource, and certain qualities of humans extend beyond their possessions and the direct services they render for other humans and the rest of the biosphere. This condition is expressed in our art and culture. "Money can't buy love." "Being helpful makes me feel good." "We don't respect ourselves until we respect others." Good natural resource management also preserves and enhances the human values.

    Corporations for economic profit represent another human artifact. Initially these were to reduce the economic risk for investors, but, ironically, corporations eventually were given the same legal rights and privileges as humans. This "human" artifact is pervasive among us, and most people in the developed world are dependent on this nonhuman "pseudo-human". This legal nonhuman human can control access to ecosystem services that can be sold at a profit, as in agriculture when food is produced. This nonhuman nonliving legal creation has no value except monetary value to use natural resources. Anything that can be captured and sold will "feed" its corpus (body). If humans access to ecosystem services can be controlled by the nonliving creature, it is possible to increase profit by selling what once was free. Today this is happening as multinational corporations are gaining control of our food production system and even our water. We are yielding our free access, our essentials for life, to a nonhuman creature that has become an immortal monster. It is possible to patent a gene, which is a natural metaphor for a line in a computer program. (But, we can't patent or copyright a statement in a computer program, since it is rather trivial and won't function without the full program.) Corporations only must obey laws, and their behavior is legal, but impersonal -- and often illogical and damaging to life. In our ignorance and homocentric view of everything, we have oversimplified "life." Without realizing the consequences of our actions, we have greatly eroded the role of ethics, morals and sustainability of life and ecosystems in our treatment of each other and of natural resources.

All humans do not understand natural resources.
Most humans do not value natural resources!
Yet we live only because we have the natural resources.

"Houston, we have a problem!"


Obtain Permission.