Telesis "...an ancient Greek word signifying the achievement of a steady progress towards an objective through careful planning & the intelligent use of resources"
Natural resources represent the foundation for survival for human life. Food, fibre and water are the obvious day to day items which we commonly associate with survival. However, for these to remain accessible in a largely urban society the natural environments from where these resources come need to be protected and sustained.
The Forest Devastation
This sequence of forest destruction in the State of Sao Paulo was undertaken to demonstrate the ineffectiveness of State and Government policies in protecting forests.
Source: A Devastação Florestal, Mauro Antonio Moraes Victor et al., SBS, 2003.
An understanding of the relationships within natural ecosystems where flora and fauna have evolved and adapted to the prevailing state of soil, water and ambient temperatures in any particular location is important as a basis for preserving genetic diversity. Where natural systems have been transformed into "production systems" through range management, rainfed agriculture, intensive production and manmade forests important questions arise with relation to their ecological and economic sustainability as well as their impacts on surviving natural complexes. These areas of consideration of natural resources are covered in our Agriculture section.
Resource allocation decisions ...
In any given geographic area, human community activities make use of natural resources. As a result of the diversity of human objectives there is a competition in how sometimes a single resource is to be used. This requires, sometimes, political decisions because there are often significant trade-offs between uses of natural resources.
As well as the trade-offs between competing uses, each use has a specific cost and benefit. Costs can be measured not only in economic terms but also in more fundamental issue. For example all of a historic community life, natural ecosystems and food production systems might make way, as they have done, for a hyro-electic power station to supply energy to urban areas.
Road construction, as it has done, might threaten to destroy a natural rainforest. Intensive agriculture might, as it has done, pollute and alter the natural ecosystem in rivers or even leave dangerous chemical residues in foods.
Food safety is of fundamental inportance
In terms of benefits, which of course can be measured in terms of increased employment and rising real income and enterprise profits, there might even be the added bonus that the technologies and techniques applied are able to minimise ecosystem damage through so-called sustainable operations.
Where such considerations and trade offs are not considered one can end up with the sort of environmental destruction recorded on the left hand side of this page which shows the progressive deforestation of the State of Sao Paulo under pressure from competing human activities.
Energy, feedstocks, fuel, minerals & water
A separate subgroup of natural resources whose geographic domains overalp natural ecosystems and manmade production systems are sources of energy (such as hydro-electic power), feedstocks for new biofuels, fuel in the form of gas or petroleum, minerals such as metallic ores and water in the atmosphere, rivers, lakes and marine environment.
In general these sectors require a significant capital investment and in order to achieve returns to scale in terms technical efficiency and unit costs, the scale of each operation tends to be quite large.
Decison analysis
Accordingly the decision analysis undertaken to identify the production options and then to invest in the a selected technology needs to be carefully administered. The aim is to minimise commercial risks as well as environmental impacts.
Globalization & risk
Changes in technology and globalization have caused many forms of natural resource usage to change significantly. Thus energy resources have become dominated by relatively few production regions supplying an international market, sometimes under a political control, for example OPEC, the Organization of Petroleum Exporting Countries, for petroleum. There are significant politial implications associated with how and where a country sources energy resources.
SEEL's decision analysis activities include the review of sourcing options with a view to minimizing risks by identifying preferable source mixes through optimization between different geographic sources.
Political risk
One of the associated problems with a failure to optimize energy resources is politcal risk to an economy caused by inappropriate fiscal regimes. This was well-illustrated in the 1970s when petroleum prices were raised 3 times. One of the reasons why both Keynesianism, and subsequently Monetarism, were unable to solve the ensuing slumpflation in a timely manner was that a proportion of government revenues were dependent upon very high fuel levies, duties and value added taxes. As a result of such fiscal regimes, which raise the consumer price of petrol (gasoline) up to five times supply price, the regime also multiplies and levers the negative impacts of price rises into the economy. Since the early 1980s when a different fiscal approach under Monetarism came into effect the amount of revenue raised through fuel taxes did not in fact decrease but it was increased thereby exposing economies to a repeat of the 1970 instability.
Better options
In the case of the British economy which is near to self-sufficient in petroleum, government policies did not respond in the 1970s as they might have done but fiscal policy continued as if the UK was a net importer. SEEL's work in the real incomes approach to economics is one of the activities which aims to provide better fiscal management techniques which reduce the economic and political risks associated with the current fiscal regimes.
