"The Resource Basis of Human Activity" by Partha Dasgupta in 'The Economics of the Environment'

 All our activities are dependent ultimately on resources found in Nature. Whether it is consumption or production, or whether it is exchange, the commodities and services that are involved can be traced to constituents provided by Nature. Thus, the ingredients of a typical manufactured product are other manufactured products, labor time and skills, and resources found in Nature. Each of the constituent manufactured products is in turn a complex of yet other manufactured products, labor time and skills, and resources found in Nature. And so on. This means that the manufactured product with which we began is ultimately a combination of labor time and skills, and resources found in Nature. But labor, too, is a produced good. Even raw labor is an output, manufactured by those resources that sustain life; resources such as the multitude of nutrients we consume, the air we breathe, and the water we drink. It follows that all commodities are traceable to natural resources.

In many instances, natural resources are of direct value to us as needs or as consumption goods (e.g. breathable air, drinkable water, and fisheries); in others, they are of indirect value (e.g. plankton, which serve as food for fish, which we, in turn, consume); sometimes they are both (e.g. drinking and irrigation water). The "value" I am alluding to may be utilitarian (e.g. the resource may be a source of food, or a keystone species in an ecosystem), it may be aesthetic (e.g. the resource in question could be a landscape), or it may be intrinsic (e.g. a living animal); indeed, it may be all these things at once.

Resource stocks are measured in different ways, depending on their character: in mass units (e.g. biomass units for forests, cow dung, and crop residues), in numbers (e.g. size of an animal herd), in indices of "quality" (e.g. water- and air-quality indicators), in volume units (e.g. acre-feet for aquifers), and so forth.

There is a small tribe of economists, known as resource economists (I happen to belong to this tribe), who tend to view the natural environment through the lenses of population ecology. The focus in population ecology is the dynamics of interacting populations of different species; so it is customary there to take the background environmental processes as given and not subject to analysis. The most well-known illustration of this viewpoint is the use of the logistic function to chart the time path of the biomass of a single species of fish enjoying a constant flow of food. Predator-prey models (e.g. that of Volterra) provide another class of examples; as do the May-MacArthur models of competition among an arbitrary number of species. Depending on the context, the flow of value we derive from a resource stock could be dependent on the rate at which it is harvested, or on the size of the stock; in many cases, it would be dependent on both. For example, annual commercial profits from a fishery depend not only on the rate at which it is harvested, but also on the stock of the fishery, because unit harvesting costs are typically low when stocks are large and high when stocks are low. The valuation of resources and the rates at which populations are harvested in different institutional settings are among the resource economist's objects of inquiry (Dasgupta and Heal, 1979; Dasgupta, 1982).

There is another small tribe of economists, known as environmental economists (I happen to belong to this tribe as well), who, in seeming contrast to resource economists, base their studies on ecosystem ecology.

There, the focus is on such objects as energy at different trophic levels and its rate of flow among them, and the distribution and flows of biochemical substances in soils and bodies of water, and of gases and particulates in the atmosphere. The motivation is to study both the biotic and abiotic processes underlying the services ecosystems provide for us. As is now well known, these services are generated by interactions among organisms, populations of organisms, communities of populations, and the physical and chemical environment in which they reside. Ecosystems are the sources of water, of animal and plant food, and of other renewable resources. In this way, ecosystems maintain a genetic library, sustain the processes that preserve and regenerate soil, recycle nutrients, control floods, filter pollutants, assimilate waste, pollinate crops, operate the hydrological cycle, and maintain the gaseous composition of the atmosphere.

The totality of all the ecosystems of the world represents a large part of our natural capital-base, which, for vividness, I will refer to as our environmental resource-base.

Environmental problems are thus almost always associated with resources that are regenerative, but that are in danger of exhaustion from excessive use. It makes sense then to identify environmental resources with renewable natural resources.

The valuation of ecological services and the patterns in which they are available under different institutional settings are among the environmental economist's objects of inquiry. Economic studies of global warming, eutrophication of lakes, the management of rangelands, and the pollution of estuaries are examples of such endeavor (Costanza, 1991; Mäler et al., 1992; Walker, 1993; Nordhaus, 1994).

In a formal sense, population and ecosystem ecology differ only by way of the variables ("state variables", as they are called) that are taken to characterize complex systems. In the former, the typical variables are population sizes (or, alternatively, tonnage) of different species; in the latter, they are indices of various services. As noted earlier, it is often possible to summarize the latter in terms of indices of "quality", such as those for air, soil, or water. Each such index should be taken to be a summary statistic (reflecting a particular form of aggregation) that enables the analyst to study complex systems by means of a few strategically chosen variables.

The viewpoint just offered, that of distinguishing population and ecosystem ecology in terms of the state variables that summarize complex systems, allows us to integrate problems of resource management with problems of environmental pollution and degradation. It reminds us that resource economics and environmental economics are the same subject. It also suggests that the environmental resource-base should be seen as a gigantic capital stock. Animal, bird, and fish populations (including the vast array of micro-organisms), water, soil, forest cover, and the atmosphere are among the components of this stock. Hence, it would be convenient to refer to both resource and environmental economics by the overarching name, ecological economics.