LU 1: The Natural

Environment & Resource

Management Issues

Natural Resources Definition

Include all the original element that comprise the life support system
like:
air, water and radiation from the sun

Representative example of natural resources:

Forest land and arable land
Water bodies (river and lakes)
Watersheds and wilderness area (hutan rimba)
Mineral feul and non-fuel mineral
Atmospheric space

Categories Natural
Resources
Non-renewable

Metal,
gold

Charcoal,
oil and
gas

Renewable

Air,
water

Tree,
biomas
s

Key Issues
Cause
Environment degradation (penurunan persekitaran)
Re-establish
Re-establish disciplinary relationship between ecology and economist
Assign ownership right
The difficulties associated with assigning ownership rights to
environmental resources
Management of natural resources
Trade-off between environmental degradation and economic goods and
services.
Ineffectiveness of the market

Key Issues
Assessing the monetary value of environment damage
Public policy instrument- to slow, limit, stop and reverse the
deterioration of environmental resources.
Macroeconomic effect of environmental regulation and others
resources conservation policies.
Ethical and moral imperative of environmental resources
conservation.
Interrelationship among population, poverty and environmental
degradation in the developing countries of the world.

Definition of Subsidies
Benefit given by the government.
2 example of the benefit given:
Cash payment
Tax reduction

Unique features of NR

Ultimate limits to environmental resources availability are

imposed by nature.

These resources have no readily available market.

No serious environmental economic study can be entirely

descriptive.

Uncertainties are unavoidable considerations in any serious

study of environmental and natural resource issues. These
uncertainties may take several forms, such as prices,
irreversible environmental damage, or unexpected and sudden
species extinction

Human perspective of Long Term Global Problem.

human perspective over space and time.

Possible factor influencing the human
perspective

Social, culture and moral value

Economic
Belief
Ignorance

Biological growths
Growth of biological resources resembles a simple
sigmoid curve (s-shaped curve)
In the early parts of the growth, the growth is slow.
In the case of timber volume production, it
accelerates to a maximum rate of growth stage (slope
of total growth is steepest, ie. dV/dt is max.) and
peaks at the a point (maximum total growth, i.e.
dV/dt=0) and then slows down as time goes by

Forest growth (timber volume)

Max. growth,
dV/dt=0)

V (Vol. in
cu. Meters)

Fastest growth
rate (dV/dt is
max)

t1

t2

Time (t)

Characteristic of natural resources

production/growth
Age of financial maturity influenced by: Rate of wood production(growth of tree)
Cost of operation
Price of stumpage(kayu)(price of log)
Others things influencing: Objective of management
Public policies on taxes and subsidies

Property Right, Externalities and Environmental problem.

Property right-law that created by government in

regards to how individual can control, benefit from
and transfer property. It is determinant regarding
the level of economic success seen in the area.

Externalities-external influences and affects the

market.

Efficient of Right properties

Efficient of Right properties

Market equilibrium=consumer maximize
their surplus(kelebihan) and producer
also maximize their surplus(kelebihan).
Net benefit is maximized by the market
allocation.

Reasons
Externalities as market failure
Example: - The case of a paper and pulp mill is located
upriver from a holiday resort where both parties (mill
and resort) use the river water.
Improper design property right system
Pulp and paper mill release its waste into the river
but resort uses the river water (recreation) to
attract its visitors

Terrible Design:
Property Right System

LU2 Nature Resources and

Allocation
2.1 Environmental
Degradation

Environmental Degradation
Poverty (kemiskinan), environment and
degradation :
Are linked in a close and complex way
linked between environmental degradation,
poverty and development are more apparent in
arid land desertification.
Dam construction.
Deforestation
Pollution

The Environmental Impacts of Development.

Development and environment Pollution

Industrial waste discharge
Domestic waste and discharge

Third world (concern)

Cost of control unaffordable (due to limit of resources)
Control are often at the expense of production and
growth.

The environmental impact of Pesticides

Pesticide=.needed to improve agriculture production

insufficient knowledge => for long term effect of

these chemical

over time more pests are immune or resistance to

the pesticide.

The environmental impact of Pesticides

For example :use of organophosphoruspesticide was

more acceptable to human compared to the
organochlorines.

- but, the organophosphorus caused high dermal

toxicity which can inhibit the production of

cholinesterase. Cholinesterase > enzyme important in
nerve function. If lack will cause convulsion.

Main Cause of Deforestation

Forest farmers
Timber trader
Cattle farming
Fuel wood collection

Impact of Dams
Construction
Economic loss
Human suffering (loss of land)
Hydrological changes