A Washington state official wrote to me recently expressing dismay and concern that I and a group of about 70 economists from the Pacific Northwest had published a report arguing that the decline in extractive economic activity such as logging and mining did not mean that the regional economy was steadily slipping into permanent depression that could only be reversed by higher levels of extraction of natural resources. We economists had argued that quite the contrary, the decline in our reliance upon natural resource industries was simply a part of healthy economic development that was moving us beyond the booms and busts of a primitive frontier economy. Reducing the environmental degradation associated with extractive activity, we argued, protected the region’s future economic base, its attractiveness as a place to live, work, and do business, rather than undermining it.

This state official was appalled that a group of economists, of all people, did not recognize that "all wealth comes from the earth" and that, therefore, the region’s wealth and well-being were unavoidably tied to continued expansion of our natural resource industries.

This seems intuitively obvious enough. Without food to sustain us, fiber to cloth and shelter us, fossil fuel and sunlight to energize our industry, and other raw materials out of which all of our goods are produced, we clearly would have no economy at all. In fact, we would have not human beings or other living things. Those natural resources are the fundamental material building blocks upon which all human life and activity rely. In that sense, all wealth, like all human creations, flows from the earth. Except for direct divine intervention, there is no other source for our lives and livelihoods.

Despite this primary reliance upon the fruits of the earth for all economic activity, it is shocking for many people to discover that economists lend little support to the cultural belief that "all wealth flows from the earth." A little reflection will indicate why. Because all human life depends upon the availability of potable water, sunshine, oxygen in the air, and a variety of trace chemicals such as Vitamin C, one could argue, just as well, that all wealth flows from any one of these. Since we all need oxygen, oxygen must be priceless and the source of all economic wealth. Or we could try to build a theory of economic value around Vitamin C. This is unlikely to get us very far. Air and oxygen are not usually sold at a high price; nor is Vitamin C. Water and sunshine are also available relatively cheaply. The economic value of none of these makes up more than a minuscule fraction of the costs of producing most of the things we want.

Or consider countries that are "rich in natural resources." That is a phrase that is usually applied to poverty stricken underdeveloped countries. It reflects our confusion about why they are poor despite the presence of such "natural resource wealth." Meanwhile we have to puzzle over the wealth and economic strength of Japan, Taiwan, South Korea, Hong Kong, and Britain, despite the poverty of their natural resource bases.

The problem is that knowing that we need something to survive or in order to engage in a particular type of economic activity tells us nothing about its relative economic value. That will be determined not by the fact that it is "necessary" in some sense but by its relative availability compared our need for it. If it is readily available in surplus quantities, it will have low or no economic value no matter how crucial it is to our survival. That is why sunshine and air are not regularly bought and sold. On the other hand, if some thing is of trivial importance to our biological survival but is rare, it may have an astronomical economic value: consider rare gems and art pieces.

Our economic wealth and well-being do not primarily flow from developing raw materials. They flow from our cultural values, social institutions, and human creativity and caring. If we did not value hard work, disciplined organization, individual initiative, new ideas, the status of our fellow citizens, and cooperative efforts and if we had not crafted social institutions that supported all of these, all of the natural resource wealth imaginable would do us little good.

This is not to say that we can or should take our natural resource base for granted. Quite the opposite. That natural resource base is increasingly seen as the source of crucial and valuable environmental services as well as spiritual and cultural richness. Nature is not just a warehouse of extractable commodities. Our natural landscapes are the environmental base in which the quality and richness of our lives are embedded. The shift taking place within the regional economy reflects this much broader economic role of natural resources in protecting and enhancing our well-being. Longing for a return to the days of yore when logging and mining reigned supreme may reflect understandable nostalgia, but it is lousy economics.

Thomas Michael Power is Professor of Economics and Chairman of the Economics Department at the University of Montana. He is author of two recent books that develop the themes in this article: Lost Landscapes and Failed Economies: The Search for a Value of Place (Island Press, 1996) and Environmental Protection and Economic Well-Being: The Economic Pursuit of Quality (M.E. Sharpe Publishers, 1996)