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Should Government Regulate Natural Resources?
Government and Natural Resource Exploitation
Natural resource exploitation, extraction and/or distribution are best left to local governments instead of markets. Because all areas differ in their available natural resources and distances from other markets and production centers, self-regulation of the market could be dangerous for local economies and social welfare. Governments, on the other hand, have more access to information and can regulate and zone land resources to ensure that any resources are used in the most efficient and productive way for the local economy. Government regulation can also better insure working safety levels and more sustainable preservation of environmental systems and resources.
For example, if a local town were to experience a freshwater shortage, government could regulate against the extensive production of agriculture or water-intensive products to help preserve water and also to help save the local economy from needing to raise crop prices. Instead, the town could focus on producing goods that require less water and importing water-intensive commodities at a lower price from a different location where freshwater reserves are abundant.
In an unregulated market, however, certain producers may be fixed to a certain piece of land and have to continue producing regardless of sustainability conditions; they may even ignore environmental conditions altogether. Lack of government regulation is dangerous for the sustainability of markets with heavy-emphasis placed on natural resources.
Especially in the case of natural resource commodities like oil and gas, government regulation is highly important for safety reasons. If there were less government regulation, one could argue that there would be more oil spills and pipe bursts, both of which cause serious damage to the environment and the markets that rely on those environments’ resources.