Everyone has heard the term "natural resources," but what actually constitutes a natural resource can sometimes be up for debate. That's because natural resources are sources of natural wealth, meaning that if a resource is inaccessible due to limitations in technology, profitability or feasibility, it may not technically be considered a natural resource because it cannot contribute to a country's wealth.
TL;DR (Too Long; Didn't Read)
A natural resource is something that can add to the natural capital of a nation through the application of capital and labor for the exploitation of its economic value.
Natural Resources Definition
The most simple natural resources definition is a naturally occurring source of wealth, but that is a little vague. If you ask an economist to define the term "natural resources," though, she will probably describe them as any naturally occurring asset or material that adds to the capital of a nation. She may further expand on that by saying that natural resources require the application of capital and labor to be exploited, whether extracted, processed or refined, in order to actualize the realization of their economic value.
If a potential natural resource cannot currently be exploited for one reason or another, it may or may not be considered part of a country's total natural resources depending on whom you ask. Some things may be considered a natural resource at one point but not in the future or vice versa. For example, if fossil fuels are rendered obsolete by renewable forms of energy, they may no longer be considered a natural resource.
The natural resource definition from a science perspective rather than an economic perspective often involves categorizing the resource in one of a few ways. The two main ways natural resources are categorized are biotic/abiotic and renewable/nonrenewable.
Biotic and Abiotic Resources
Biotic resources are those that come from living or organic material, including materials that can be obtained from them. For example, lumber is a biotic resource because forests are currently living, but fossil fuels are also biotic because it is created through the decay of organic material.
Abiotic resources are those that come from nonliving and nonorganic material. For example, heavy metals such as gold, iron and copper are abiotic, as are air and water.
Renewable and Nonrenewable Resources
Renewable natural resources can be replenished. They are available continuously, and their quantity should not be notably affected by reasonable human consumption. These resources can still be subject to shortages in cases such as drought or fire, and if overused, they are susceptible to depletion. Examples of unlimited natural resources include sunlight and wind. Resources that are renewable but depletable include wood and fresh water.
Nonrenewable natural resources are those that cannot be easily replenished. They form extremely slowly in nature, sometimes over the course of many millennia. A resource is officially defined as nonrenewable if its rate of consumption exceeds its rate of recovery. Minerals and fossil fuels are a few examples of nonrenewable natural resources.
Regulation of Natural Resources
Governments regulate the use of their natural resources through permits, taxation and laws. Permits help regulate how much of a resource is used in a set amount of time, whiles taxes cover (along with other things) the cost of government-monitoring programs that ensure that companies with permits to exploit resources do not take more than allotted or illegally pollute the environment while doing so.
Some laws regulate the protection of natural resources by protecting them from pollution. An example would be the Clean Air Act that was enacted in 1963 to control air pollution in the United States.
- Dictionary.com: Natural Resource
- Your Dictionary: Natural Resources
- BusinessDictionary: Natural Resource
- Lumen Learning: Introduction to Natural Resource Economics
- World Bank. "Is There a Natural Resource Curse in Finance?" Accessed Oct. 7, 2020.
- Invesco. "Invesco Water Resources ETF." Accessed Oct. 7, 2020.
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