1. Presentation outline (9/26/2010b) Concept, categories and types of natural resource Focus on agriculture – water resources Environmental catastrophe Scope of resource economics Objectives of forestry projects and managers

2. Concept and Scope of Natural Resource Economics Economics – rational thinking In John Maynard Keynes’ word (EWC): “ a method which helps its possessor to conclude correctly”. Resources: commodities which can be biotic, abiotic, tangible, intangible Categories as: Natural Cultural Human Types of natural resource: 1)Agriculture (Global decline in grain production) 2)Forests 3)Water bodies (1990: 13 countries, 2025: 48 countries face water scarcity) 4)Mining 5)Fishing 6)Energy and fuel

3. Annual change in world grain yields by decade, 1950 - 95 YearsTotal grain RiceWheatCornOther grains 1950-602.01.41.72.6- 1960-702.52.12.92.42.3 1970-801.91.72.12.70.4 1980-902.22.42.91.31.7 1990-950.71.00.11.7-0.8 Source: Brown (1997) cited in Meier and Stiglitz (eds) 2001. Frontiers of Development Economics: The Future in Perspective

4. Annual growth rate of major grains in Nepal from 1965 - 2005

5. Countries heavily dependent on imported surface water Country% of flow originating outside own borders Egypt97 Netherlands89 Sudan77 Bangladesh42 Pakistan36 Source: Wallenstreen and Swain (1997) cited in Meier and Stiglitz, 2001.

6. Concept and Scope of Natural Resource Economics Natural resource -Land (forest, agriculture land, pasture land etc) -- Water ( all types of water bodies, sea, ocean, rivers, wetlands) -Sunlight, air etc Basic necessities for human survival

7. Natural resource and catastrophe Environmental abuse Mismanagement Over exploitation Social & environmental catastrophe and physical distress

8. Environmental catastrophe Atmospheric pollution Pollution of water (surface + ground) Overuse of chemical fertilisers Injudicious use of insecticides Environmental catastrophe Estimates of environmental damage in selected countries: Country (year)Form of environmental damageAnnual costs (as a share of GNP %) Burkina Faso (1988) Crop, livestock, and fuelwood losses from land degradation 8.8 Costa Rica (1989)Deforestation7.7 IndonesiaSoil erosion and deforestation4.0

9. Environmental catastrophe contd.. Netherlands (1986)Some pollution damage0.5 - 0.8 Poland (1987)Pollution damage4.4 – 7.7 United States 1 (1981) (1985) Air pollution control Water pollution control 0.8 – 2.1 0.4 1: measures of benefits of environmental policy (avoided rather than actual damages) Source: Pearce and Warford, World Without End (Washington DC, World Bank, 1993).

10. Use of different chemical fertilisers in Nepal from 1965 - 2005

11. Trend of use of chemical fertiliser in Nepal (1965 – 2005)

12. Trend of Insecticides use in Nepal 1960s1970s1980s 1990s 2000s Rachel carson’s: Sailent Spring Sierra club, WWF, Green Peace Removal of subsidies Liberalisation’s – scope for commercialisation

13. Scope of resource economics Resource economics – mgt of NR to help satisfy human wants based on the principle of environmental sustainability Forest resource – renewable or flow resource but significantly affected by human interventions. Forest economics comprises of mgt (regeneration, protection, conservation, harvesting, conversion, distribution, consumption etc) of forest resource with the objectives of producing goods and services on sustainable basis. Sustainability: sustainable forest management vs. sustainable management of forest Characteristics of forestry: 1)Longer time period (timber growing) 2)Intangible services and benefits 3)Capital and consumer goods as well 4)Diffused beneficiaries

14. Scope of resource economics Forest Economics – application of microeconomic principles to forestry decisions based on opportunity costs mainly from private perspective Economic decisions in forestry require: Production Possibility Curves Value added concepts – high value added by forest industries – logging, sawmilling and pulp and paper mills, plywood, oilseeds To anticipate and assess market Discounted value, IRR to guide investment decisions comparing alternative projects Allocation of land into different regimes Employment creation through plantations, stand improvement

15. Scope of resource economics Determination of rotation Pricing policy of forest products Wildlife and watershed management decisions Limitation Draws mainly on microeconomic model which depends heavily on market while the aspects like income distribution (wage, interest, rent etc) are peripherically dealt.

16. Objectives of national forestry projects 1)Economic efficiency – increase benefits goods and services) utilising limited resources 2)Emancipation of poor 3)Social, political and economic stability 4)Increased revenue 5)Improve env. conditions and land use Source: Gregersen and Contreras (1979)

17. Explicit objectives of forest managers 1) Increase timber production 2) Achieve self-sufficiency in temperate timbers 3) Protect and enhance nature conservation values 4) Provide recreation facilities 5) Encourage integrated rural development 6) Maximize site productivity 7) Sustain timber supplies to processing industries 8) Provide community with as much of its wood requirement as possible Source: Price, 1989

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