International Waters learning Exchange & Resource Network

8. Economics of natural resource management

Natural resource management is an interdisciplinary approach to organising human use of natural resources to optimise their contribution to human welfare. Natural resources are materials and energy sources that occur naturally, such as timber, fish, water, oil, gas and wind. As such, natural resource management encompasses both biotic (natural capital and ecosystem services) and abiotic resources.

Natural resource management draws on knowledge and expertise from physical, biological, economic and other social sciences to make the best use of available natural resources. Natural resource management specifically focuses on the interaction of biophysical and socio-economic systems to understand resource use and enable better stewardship. In particular, it examines the dynamic relationships between resources, use and human welfare.

There is a long history in marine and fisheries economics to view marine and coastal systems as dynamic systems in which biological and human systems interact (Anderson 1977). The biological system dynamics involve both temporal and spatial dimensions. What economics brings in addition is the human system connected to the biological system. For example, when a fisheries sector harvests fish, the fish population declines and its future growth changes. Using ecological principles, one can determine the maximum sustainable yield for a fishery (the maximum total catch per time period that can be taken without long term depletion of the stock); and by using economic principles, one can determine the economic optimal yield (the total catch that maximises net benefits in the fishery).

A useful recent review and comparison of integrated ecological-economic fisheries models (IEEFMs) is provided by Nielsen et al. (2017). IEEFMs can be used to evaluate the impacts and sustainability of potential management actions and understand ecological, economic and social dynamics at a range of scales from local to national and regional. The review examines the nature of the advice that can be provided by such models and the impact on decisions taken by managers.

Natural resource management shares several key elements with the ecosystem-based approach (EBA) to managing natural systems. EBA builds on the recognition and understanding of complete ecosystems, including all their interlinked components, processes and relationships, be it of environmental or anthropogenic nature, or transboundary in jurisdiction. The EBA is at the core of LME management and is addressed in other toolkits. See the Strategic Approach Toolkit section 2 on the ecosystem based 5-module approach and section 5 on ecosystem based management; the Governance Toolkit section 3.2.1 on the ecosystem approach to fisheries management; the Marine Spatial Planning toolkit section 5.6 on understanding the ecosystem based approach; and the Capacity Development Assessment Guide section 3 on ecosystem-based management and its needed capacity.