Study about the efficiency of natural resources such as the net benefit of forest, quality of fresh water, quality of air, quality of land, and the benefit of fossil fuel and other renewable energy resources in terms of natural resource economics is more complicated than study about the efficiency of other economic goods although both of them are the same purpose, efficiency. Study in economic goods is considered only a value based on whether it should produce or not at that time by using the market mechanism. Its system is relied upon the significant cost called opportunity cost. In other word, a production of economic goods will happen whether or not depended upon opportunity cost. Therefore, Efficiency of economic goods relies on both an economic value and an opportunity cost at that period of time.
Regarding to natural resources, although they use the same tool, opportunity cost, to consider efficiency, a form of its consideration is different from a form of economic goods as the benefit happened in natural resources did not have only a value at that time. When you consider the value of natural resources, you have to consider various aspects. As a result, you can categorize the value of natural resources into three vital groups. As follow:
1.Use Value: it is the consideration of a tangible value of the natural resource benefit. It can divide into two kinds of benefits: direct use(the benefit is directly to use such a natural resources) and indirect use(the indirect benefit from the use of natural resources)
2.Nonuse value: it is the consideration of a benefit from good feeling when you knew that natural resources is well even though you didn’t receive both a direct benefit and a indirect benefit at that time. You can group into two groups: existence value(the benefit of people who aware that natural resource is well.) and bequest value(the benefit of people when you aware that they are well enough to put aside for next generations.)
3.Option value: it is the consideration of a value which didn’t happen right now both use value and nonuse value, but it is likely to use such a resources in the foreseeable future.
In sum, the consideration of entire benefit of natural resources in term of natural resource economics is a combination among use value, nonuse value, and option value. Pertaining to entire cost of natural resources, you have to consider the whole opportunity cost from each of value mentioned above.
Regarding to natural resources, although they use the same tool, opportunity cost, to consider efficiency, a form of its consideration is different from a form of economic goods as the benefit happened in natural resources did not have only a value at that time. When you consider the value of natural resources, you have to consider various aspects. As a result, you can categorize the value of natural resources into three vital groups. As follow:
1.Use Value: it is the consideration of a tangible value of the natural resource benefit. It can divide into two kinds of benefits: direct use(the benefit is directly to use such a natural resources) and indirect use(the indirect benefit from the use of natural resources)
2.Nonuse value: it is the consideration of a benefit from good feeling when you knew that natural resources is well even though you didn’t receive both a direct benefit and a indirect benefit at that time. You can group into two groups: existence value(the benefit of people who aware that natural resource is well.) and bequest value(the benefit of people when you aware that they are well enough to put aside for next generations.)
3.Option value: it is the consideration of a value which didn’t happen right now both use value and nonuse value, but it is likely to use such a resources in the foreseeable future.
In sum, the consideration of entire benefit of natural resources in term of natural resource economics is a combination among use value, nonuse value, and option value. Pertaining to entire cost of natural resources, you have to consider the whole opportunity cost from each of value mentioned above.
Total Benefit(Total Willingness to Pay) = Use Value+Nonuse Value+Option Value