16 Sep 2010

Environmental goods vs natural resources

I've often defined environmental goods (clean air, water in a wetlands) as things we like that cannot be priced (or cannot be objectively priced), while natural resources (oil, water in a well) can be priced.

Now I am wondering if this dichotomy fits within the traditional 4-way division of all goods, i.e., via wikipedia:
Excludable Non-excludable
(natural resources?)
Private goods
food, clothing
Common-pool goods
fish stocks, timber, coal
(environmental goods?)
Club goods
private park, irrigation infrastructure
Public goods
air, rainbows

Does this make sense? Is it merely an artifact of my definition? I KNOW that water can move from one to another (club good aquifer can turn into common pool good among those who share it or a [public good] wetlands that turns into a [club or common pool] reservoir), but I am trying to understand these definitions for water IN USE.

Your thoughts?

Addendum: I can see how water can move from non-rival (price = 0) to rival (price > 0) as an increasing rate of consumption turns water from a renewable to a non-renewable resource (within a relevant timeframe).

Addendum (2016): Environmental are non-excludable!


  1. Dave, the point about environmental goods versus natural resources is something that I've been pondering lately (albeit from a different direction: "environment", "nature", and "natural resources").

    The conclusion (tentative though it is right now) that I've come to is this: all of these concepts are socially constructed and mean different things in different cultures. True, but what's wrong with just making a definition that works within field X? Well, many cultures have their own definition of these words, and the "further away" one goes from the original coiner's understanding of the concepts, the less comprehensible the concept gets; better to just make a new set of terminology that won't create confusion (i.e., by having to normalize your new definition with their own cultural one).

    For example, in Cambodia, the concept of "environment" didn't exist. Sure, "nature" existed (in its own culturally constructed way, independent in many ways from the US concept of "nature"), but even in English, "environment" and "nature" are not fully synonymous (although the Environmental Movement brought "environment" and "nature" closer). When creating environmental legislation, the World Bank had to help define the concept of environment, but how different that concept might be with yours, I can't say.

    Indeed, looking at Spanish, there is no direct translation that captures the etymology and breadth of the term "environment". The translation dictionary comes up with "medio ambiente", which works to talk about the post-Environmental Movement American definition of "environment" (i.e., the one that cleaves closer to "nature"), but it doesn't have the generalized meaning of "surroundings" (and would therefore be somewhat odd if used in the phrase, "economic environment"). (As a side note, there IS a verb in Spanish, "envirar", which seems to have a VERY TENUOUS connection with the Old French verb "environner" but even if the etymology of "envirar" and "environner" are the same, they took divergent linguistic trajectories.)

    Also, there is the other point about exclusive and shared disciplinary jargon. In the field of ecology, the "environment" contains many of the things that would be labeled as "natural resources" in your table. Of course, by changing the concept to "environmental goods", one could argue that one is defining it in a exclusive disciplinary manner, and who cares about the ecological implications of the root word. (Which is totally valid; as an aquatic ecologist, I use a different definition of "base flow" than environmental engineers.)

    Finally (and before I continue, I will state up-front that I am not an economist), there is the problem that what one thinks of as being "public" could be "private." Such is the case with communal lands versus private lands; riparian-based versus prior appropriation water rights; etc. In addition, one could argue that air quality, is actually closer to a club good (with certain people being able to be excluded from getting good air quality due to the cost of no-VOC paint, proximity to forests, proximity to airports, etc., which have strong economic correlations, especially in urban areas). In an extreme case, some public goods can even become private goods (think about a scuba breathing apparatus -- when your tank nears empty, you realize how private that air was).

    In sum, once words are codified, they seem to gain power as a concept. However, if the concept is problematic (due to misunderstandings stemming from language, social culture, academic discipline, etc.), then it will likely suffer from misunderstanding. (The paragraph about what constitutes as being excludable is somewhat tangential.)

  2. ... shorter version of above. I think that "rival" versus "non-rival" is better as a generalizable concept. Especially since they are well-used in the literature already (right?).

  3. @umlaud -- Thanks, that's helpful. I'll add some caveats on language. (I am trying to avoid jargon in the book, but there's a cost and benefit to jargon.) Confusion over "public" good (as well as "public utilities," which are really investor owned) is also common.

    Damned language.

  4. As the manager of a private piece of property owned by a public university that has public access hours really plays havoc with how people understand access to the property. That it is also a "forest" also plays a part in how people feel that they should be allowed access, even though it is technically supposed to be equivalent (in many ways) to a science lab at the university (not open to the public, unless the public are invited).

    What I've come to realize is that people approach "natural" landscapes in different ways and that the concept of "nature" (and -- thanks to the Environmental Movement -- "environment") is one that links to strong social norms, and when these norms are not shared (i.e., I grew up in Japan and Taiwan, not Michigan), tensions arise.

  5. ... and yes, "Damned language" indeed. As a person who works to try and help international graduate students with their academic English language writing, I'm exposed to so many different academic tropes, all of them "correct" within the discipline. Layered on top of that, there is also a need to occasionally decipher the cultural meaning of a particular wording. Needless to say: language has a damnable way of fluidly shifting from defined and tangible to ambiguous and ineffable.

    Still, it's the medium with which we have to work (in its multitudinous cross-cultural minefields).

  6. Things should be as simple as they need to be, but no simpler.

    Water is complicated. A stream carries water from its source to the person who has a right to its beneficial use. In the meantime, it provides navigation, recreation and habitat. Sewage is a cost to the jurisdiction that has to treat it, but return flows are highly valuable. Excess irrigation / leaky ditches are a waste of water, but those same flows can recharge valuable aquifers.

  7. DW emails: "Pricing environmenal externalities have gotten alot of study by the California Public Utilities Commission and the California Air Resources Board. Check out studies on their websites."

  8. You can't have the public good of fish stocks without water.


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