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Resources

BIBLIOGRAPHY

A resource is anything of value as an input in production. Classical political economy identified land, labor, and capital as the three factors of production, and in this way it distinguished between natural resources, human resources, and financial resources. Capital could be understood merely as physical instruments of production, but, for example, William Stanley Jevons (1871) considered a sum of money or financial resources a transitory form or capital that could be transformed into physical instruments of production. Whereas human resources and financial resources are terms that are still in common usage, the term resources can also be used more narrowly to refer to natural resources only. This is the sense in which resources are discussed in this article.

Natural resources are conventionally divided into three categories: indestructible or nondepletable, renewable or depletable, and exhaustible or nonrenewable resources. Examples of nondepletable resources include wind and solar energy, whereas fisheries, pastures, forest resources, and soils are examples of renewable resources. Minerals, ores, coal, and oil are exhaustible resources. Sometimes the term exhaustible resources is also used to refer to both renewable and nonrenewable resources. A broader definition of environmental resources would include newly discovered or defined resources such as biodiversity, the ozone layer, and atmospheric and other sinks, in addition to conventional natural resources. Most of these resources are best understood as renewable or depletable resources.

Exhaustible resources are categorized further by the U.S. Bureau of Mines and the U.S. Geological Survey (1976) on the basis of the economic feasibility of their extraction and the state of knowledge on their quantity and quality: Resources are identified or undiscovered, and economic or subeconomic. Identified and economic resources constitute reserves. Reserves, such as those of oil, increase when technology changes and reduces extraction costs, making it economically feasible to extract previously identified but subeconomic resources. New discoveries can also increase reserves if it is economically feasible to extract them.

The 1972 book The Limits to Growth: A Report for the Club of Romes Project on the Predicament of Mankind (Meadows, Meadows, Randers, and Behrens 1972) raised concerns upon its publication regarding the future availability of key resources. Its computer simulations, which were based on the postwar experiences of high population and economic growth and the prevailing technological performance of the time, suggested that a continuation of resource use as it was happening would result in the exhaustion of many important resources such as oil, coal, and metals in a few decades. However, the standard economic argument is that when resources become scarcer, new stocks are called into reserves by increasing prices. Price increases also give incentives for technological development and new discoveries that harness new resources to replace the ones that are exhausted. The exhaustion of resources is not a problem from an economic point of view if the proceeds from resource use can be invested in a way that compensates for the loss of economic returns from the resource use.

While the predictions of the report have not become literally true, some general trends have played out: Population growth, increasing income levels, and globalization have put pressure on renewable resources, in particular, to such an extent that physical scarcity and absolute limits have to be taken seriously. In their article Human Appropriation of the Products of Photosynthesis (1986), Peter M. Vitousek and his coauthors estimate that humans consume 40 percent of total terrestrial net primary production. Boris Worm and his coauthors in Impacts of Biodiversity Loss on Ocean Ecosystem Services (2006) find that global fish landings have diminished since 1994 despite significantly increased fishing efforts, and that the main commercial fisheries are likely to collapse in the coming decades if marine biodiversity is not protected effectively. In their article Tracking the Ecological Overshoot of the Human Economy (2002), Mathis Wackernagel and his coauthors estimate that the global mean ecological footprint is 2.3 hectares per person, but it is twice that figure in Europe and four times higher in the United States. This means that many developed countries have to import carrying capacity, often from the developing world, as described by Marc L. Imhoff and his coauthors in Global Patterns in Human Consumption of Net Primary Production (2004). The global ecological footprint, the area needed to produce the goods and resources that humanity uses, currently amounts to 1.3 Earths. According to the authors, we currently overshoot the carrying capacity of the earth by a large margin.

SEE ALSO Natural Resources, Nonrenewable

BIBLIOGRAPHY

Imhoff, Marc L., Lahouari Bounoua, Taylor Ricketts, et al. 2004. Global Patterns in Human Consumption of Net Primary Production. Nature 429 (6994): 870873.

Jevons, W. Stanley. 1871. The Theory of Political Economy. London and New York: Macmillan.

Meadows, Donella H., Dennis L. Meadows, Jørgen Randers, and William W. Behrens III. 1972. The Limits to Growth: A Report for the Club of Romes Project on the Predicament of Mankind. New York: Universe Books.

U.S. Bureau of Mines and the U.S. Geological Survey. 1976. Coal Resource Classification System of the U.S. Bureau of Mines and U.S. Geological Survey. Geological Survey Bulletin 1450-B.

Vitousek, Peter M., Paul R. Erlich, Anne H. Erlich, and Pamela A. Matson. 1986. Human Appropriation of the Products of Photosynthesis. BioScience 36 (6): 368373.

Wackernagel, Mathis, Niels B. Schulz, Diana Deumling, et al. 2002. Tracking the Ecological Overshoot of the Human Economy. Proceedings of the National Academy of Sciences of the United States of America 99 (14): 92669271.

Worm, Boris, Edward B. Barbier, Nicola J. Beaumont, et al. 2006. Impacts of Biodiversity Loss on Ocean Ecosystem Services. Science 314 (5800): 787790.

Jouni Paavola

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resources

resources In economics, a country's collective means of support. Economists divide resources into four categories: land, labour, capital and raw materials.

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