mandag 16. april 2012

GJESTEBLOGG: NATUR RESSURSER*

LAND USE IN NORWAY
Craig A. Bond
Associate Professor
Department of Agricultural and Resource Economics
Colorado State University

English Tags: environmental policy, resource economics

One of the key concepts in understanding natural resource economics is the value of a particular resource. This is a very old question, of course, dating back at least to Adam Smith, David Ricardo, and Thomas Malthus, all of whom had various theories of value. A simplified, but reasonable interpretation of modern neoclassical economics is that the value of a good or service to an economic agent is the maximum willingness (and ability) to give up another good or service in order to get it. If we interact this notion with various institutional structures (such as property rights and a more or less competitive market), we can predict if a particular observation of prices or other observable statistics truly reflects “value” from a particular accounting stance (say, the perspective of market participants, or alternatively the perspective of “society” at large).

In practice, this general idea can be used for “natural capital” as well. Resources such as an individual land parcel in a particular use (say, agricultural or forestry), the right to fish for a certain share of total allowable catch, or the endogenous information gained in a learning-by-doing resource extraction problem can all be valued, in theory, by applying this idea. The value concept can also be used to predict outcomes of changes in economic parameters as a result of market activity or policy.

Especially as both the developing and developed world continue to evolve and face choices related to population changes, urbanization, and other outcomes that provide important services such as housing and food while impacting the direct (e.g., wood for fuel or timber products) and indirect (e.g., ecosystem services) flows of services provided by the natural world, understanding the notion of value as a trade-off is essential to making good decisions. For example, as mentioned in the Norwegian Ministry of the Environment – State of the Environment page about land use in Norway, the conservation of agricultural land is looking to be an important political topic in Norway over the next twenty years, and approximately 69.8% of annual conversion of land to urban uses comes from forested or transitional lands.

I invite readers to use the neoclassical notion of resource value to comment on these land use challenges (and any others that might be of interest, of course). Some examples might be to think through the sources of variation in land values and how these interact with existing institutions to shape the Norwegian landscape (i.e., an objective analysis), or to do a thought experiment about what a “socially optimal” land use pattern might look like (i.e., a normative analysis). Why might these differ? What policies could be used to move the system closer to the optimum, and what are the advantages and disadvantages of them? How might land use decisions differ in the developed and developing world?

I look forward to interacting with this blog’s readership (and authors, for whom I am grateful for the opportunity to contribute to this great project!) during my stay at the University of Stavanger Business School, and hope we can learn something from each other.

*Professor Craig Bond is an up-and-coming resource economist from the United States, currently visiting the University of Stavanger Business School for the main purpose of teaching natural resource economics to the master students in the course MØA350: Environmental and Resource Economics. His academic webpage can be accessed here.

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