Redefining Natural Resources in Economic Research

Natural resources and their rents have become critical as explanatory factors in economic research, most popularly with measures made available by the World Bank. However, the used definition of natural resources seems to miss out on the two natural resources: water and fertile land. This paper argues the importance of these two natural resources, with an emphasis made on the natural resource “land”. The paper argues how land could be seen as a natural resource yielding economic rents through “real-estate land”, “land as energy” and “land in conflict”. It then shows how the calculation of population density can be improved upon by using improved measures of land instead. This is applied to a world sample and shows how the original measure of population density can be misleading if a deeper understanding of usable land is not employed. The disparity in population density measures is most severe in island nations and MENA (Middle East and North Africa) countries. As a result of this paper, we recommend that researchers and policy makers be more aware of what passes as natural resources and natural resource rents, and to integrate a more accurate measurement of the latter into their empirical models.