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Post Graduate Institute of Agriculture, Peradeniya, S.THIRUCHELVAM

EC 5153 (2) RESOURCE PLANNING AND MANAGEMENT SEMESTER I : 2006/2007 I BASIC CONCEPTS KEY PROCES OF NATURAL RESOURCES LECTURE NO. 2 SUSTAINABLE ECONOMY AND NATURAL RESOURCE MANAGEMENT. Post Graduate Institute of Agriculture, Peradeniya, S.THIRUCHELVAM.

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Post Graduate Institute of Agriculture, Peradeniya, S.THIRUCHELVAM

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  1. EC 5153 (2) RESOURCE PLANNING AND MANAGEMENTSEMESTER I : 2006/2007 I BASIC CONCEPTS KEY PROCES OF NATURAL RESOURCESLECTURE NO. 2SUSTAINABLE ECONOMY AND NATURAL RESOURCE MANAGEMENT Post Graduate Institute of Agriculture, Peradeniya, S.THIRUCHELVAM

  2. L.2 SUSTAINABLE ECONOMY AND NRM2.1 The Concept of Natural Resources “RESOURCE” are some thing which accomplish human needs and are identified & defined by people. Components of natural resources: Energy, Atmosphere, Water, Land, Mineral, Plant, Animal & Human themselves Resource is a Dynamic Concept Multi Attributes:Quality,Quantity, Time & Space Dim. Properties of Resources Knowledge - Functional change Technology - Human capabilities – No limit to Re.s Demand - Scarcity Economics of extraction – Cost and Benefits

  3. TYPOLOGIES OF ECOLOGICAL CAPITAL Natural Resources are a form of Capital 1.HUMAN CAPITAL - KH - The Stock of Knowledge & Skills.  2.ECOLOGICAL OR NATURAL CAPITAL - KN - Existing Stock of Natural Resources - Biosphere’s Capacity to Sustain Human & Non-H Source; Sink: Entropy, Esthetic,Life Support RESOURCE CONTINUUM Exhaustible Renewable Continuous Flow Fund/ Critical Flow Non Diminishing Mineral Fish/ Forest Solar Radiation 3.HUMAN MADE CAPITAL- KM - Man’s Productive Efforts. Nature is Capitalized - Nature combined with Labour to provide a flow V - Accumulation of human made assets

  4. I. Fund / Stock / Depletable / Exhaustible Resources • Quantities - Finite: Present use reduces e future 1. Depletable, Non Recyclable Energy Resources Oil, Gas, Coal and Uranium 2. Recyclable Resources: Minerals, Paper, Glasses, 3. Replenishable but Depletable Resources: Water II. Flow / Renewable Resources Yields the flow of services with e right management. 4. Storable, Renewable Resources: Forest 5. Renewable Common Property Re.s:Fisheries III. Cultivated Ecological Capital/ Bio Resources 6. Reproducible Private Property Resources: Ag. Increased Productivity & Increased Tech. & Mgt.

  5. THE CATEGORIES OF WILD RESOURCES • Extinct (EX) - A talon is EX when there is no reasonable doubt that its last individual has died. • Critically Endangered (CE) A taxon is CE when it is facing an extremely high risk of EX in e wild in e immediate future. • Endangered (EN) - A texon is EN when it is not CE but is facing a very high risk of EX in e near F. • Vulnerable (VU) A taxon is VU when it is not CE or EN but is facing a high risk of EX in e wild in e medium fut. • Conservation Dependent (CD) Taxa that don’t currently qualify as CE, EN, or VU, may be classified as CD.

  6. 2.2 SUSTAINABILITY DEBATE - Relationships between KN & KM - Implications on Inter – Intra Generational Justice ·Ecological Sustainability : Ecologist & Nature ·Economical Sustainability: Economist & Man ·Collaboration between Social & Natural Scientists Emergence of different Theoretical Positions ·Continuum lying between Techno centrism & Eco centrism

  7. The Question of Sustainability ? Challenge to integrate Sustainable Re.life & Econ. Sustainable Dev.: Max. Net Benefit – Econ. Dev. s.t. Maintain Services & Quality of NR over Time MANAGEMENN RULES • Always use RR : Compensate ER by RR 2. Rate of Extraction (Re) < Rate of Production (Rp) 3. Proper maintenance of composition & eco.health 4. Stock replacement by superior material 5. Always keep W < A Increase SOL through Increase in Resource Use The Issue: Increase avg SOL & reduction of NR? Paradigms of environment and SOL Relations

  8. P Z J SOL Sustainability Paradigm X W Q B Trade-off Paradigm Y A 0 Kmin KN L TWO VIEWS – RELATIONSHIPS KN & SOL • SUSTAIANBILITY PARADIGM • Technical Progress – Efficiency Increase • Dev. & Env. Compatible : SOL & KN both Increase • Path of Development: KMIN WJ, PWQ. • 2. TRADE-OFF PARADIGM • KM Substitute by KN Argument of higher productivity • But Env. Amenity trade off and Development • Development path after take off WXZ

  9. Third View Variations – Composite View Env. & Dev.Early stage - Complements Later stage Trade off – Substitute up to certain limit KM Productivity is higher & can substitute KN But • Environmental Amenities • Life support functions • Waste assimilation • Side effects of KM MAINTAINING KN 1. KM depend on KN 2.KN multi functions 3. All KN cannot be substituted 4. Uncertainty & reversibility 5. Resilience 6. Intergenerational equity 7. Rights in nature

  10. SUSTAINABILITY THEORITICAL POSITIONS • Techno centrism & Eco centrism • Neoclassic Deep Ecologist • Inter – Temporal Choice No Extraction • ·The maintenance of Sustainable Growth over LR • Depends on investment. • ·Economic Growth & Environmental Protection

  11. Techno Centrism & Eco Centrism VWS WS SS VSS • Perfect S S & C C & S C & s • Const. Agg. Upper Limit Constant KN Steady • Capital Agg. Capital Based Thermo State • Dynamics • C=KM+KN+KH Lower Limit KN Critical KN P = 0 • Constant T > P Monitor Resource • Hicksian Income Measure Use = 0 • Hartwick Rulevia Physical • Indicators • Growth s.t SMS Constraint Zero • Hicks Income Criterion Moderate Growth

  12. BASIC REQ. FOR STRONG SUSTAINABILITY • ·Time is a crucial component. • Fundamental Physical Laws • Policy Concern on – Open Access, • Non renewability • Externality • RULES • Regenerative Capacity be Maintained • Removal Rate < Reproduction Rate • Maintenance of Ecological Carrying Capacity. • Technical Change, • Substitution of NRNC with RNC Efficiency • Critical Zone built in Safety Margin

  13. 2.3Resource Scarcity & Limit to Growth • Resource Scarcity is not a constraint - Substitutes - Technical Innovations - Efficient use of marginal stocks - Conservation induced - Curbing demand • Ecologist View - KM grown at the expenses of KN - Reduce Biospheres capacity to provide essential services to support human life. • Absolute Scarcity – Physical limit Relative Scarcity - Relative Price – substitution

  14. Limit to Growth Eco Sys.< Econ. Sub Sys. Radiated Solar Energy Energy Ecosystem Nat.Res. Wastes Energy Pollution Socioeconomic Subsystem Ecological Services

  15. Restructuring Development to Make Growth More Sustainable Socioeconomic Subsystem Ecosystem Ecosystem Socioeconomic Subsystem Sustainable Unsustainable

  16. The Challenge • Global Economy – Sustainable Economy • Increase in environmental expenditure and • employment • Increase resource Productivity • Adopt high technology – International • Simultaneous progress in • Economic, Human, Environment & Technology

  17. Integrating Various Elements of SD • Optimization: Typically Max.W =fw(ct)e-rt dt subject to K<K0 Max. Economic Welfare [(discounted utility of consumption (c) ] Subject to Environment/ Social constraints. Thus, primary focus is on max. output-consumption While maintaining resource is secondary. • Durability: • Typically D = D (Resilience, Vigor, Org., Stress) • Main focus is on durability of econ. & / or social system, and Resilience to external shocks. • Willingness to trade-off some optimality to maintain systems within safety margins.

  18. Optimal Development Paths • Max. welfare (or Utility), subject to non-declining stock of productive assets (or W itself). • Max. of the flow of aggregate W cumulative discounted over infinite time (t), is : Max. ƒ0œW (C, Z) e-rt dt C =consumption rate, Z = a set of other relevant variables, r = the discount rate. C depends on the production rate of the economy which in turn depends on stocks of various assets. Side constraints may be imposed to satisfy sustainability needs, E.g: Non decreasing consumption or stocks of productive assets (including natural resources)

  19. Durable Development Paths • Focus mainly on sustaining the quality of life by satisfying env., social & econ. sustainability req.s. • They permit growth, but are not necessarily econ. Optimal. • There is more willingness to trade off some econ. optimality for the sake of greater safety, in order to stay with in critical econ., env. and social limits. • A simple durability index (D) for an org. or system expected lifespan is a fraction of the normal lifespan • D = D (R, V, O, S); R = resilience, V = vigor, O = org. & S = State of the ext. env. esp. in relation to NRR. • Durable path seek to increase diversity & adaptive capacity while reducing risk.

  20. Economic Sustainability Rules • Max. flow of income that could be sustained indefinitely, without reducing stocks of productive assets. • Economic efficiency ensures both efficient resource allocation in production & effi. consumption e max. Utility. • Weak Sustainability Rule: dA/dt >0 Different forms of assets are substitutable • Strong Sustainability Rule: dE/dt >0 ; dN/dt >0; dS/dt >0 Diff. forms of assets are complementary- not substitutable A =Total assets = Econ. Capital (E) + Natural Capital (N) + Social Capital (S)

  21. The Fundamental Issues Whether the Ecosystems are Productive,Stable & Sustainable? System can have: • Low or high productive over time • Output may fluctuate mildly or significantly or it may remain relatively stable • The system may also be more or less equitable • Finally, systems may recover from shocks and stress, either quickly or slowly Optimality: A path of development that max. the PV value of future gains in Human Welfare(HW) Sustainability HW that rises, or at least doesn’t fall Survivability A path of dev. That lies above min. HW, anything below it is not survival

  22. Dev Dev Growth/ Productivity Stability Low Low High Time Time Characteristic of Sustainable Development

  23. Dev Shock/ Stress High High Low Low Time Production Sustainability and Equitability

  24. Some Key SD Modeling Approaches • Utilitarian – Opti. discounted W or consum. over T. • Equality (Intra-generational) – Ensure income distribution at any given time will not become less equitable over time. • Equity (Inter-generational) – Ensure per capita income will not fall over time. • S.Sustainability – Ensure aggregate stock of productive assets will not decrease over time. • W.Sustainability – Ensure stocks of critical types of productive assets will not decrease over time. • Durability – Maintain R & decrease V of socioecon. & eco. sys. to withstand shocks within desi. limits. • Steady State – Maintain consumption & Re. use at constant levels. • Combination of e above – Utilitarian w S.S. Constraint.

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