ECON 4113: SPECIAL TOPICS IN ECONOMICS

RESOURCE ECONOMICS
(Road Widening)

Apostol, Thrisia Mae S.

Balanlay, Mary Jane V.
Brillo, Ellen Joy V.
Macaraeg, Marilou DC.
BSBA ECON 4

October 15, 2021

I. ORIGIN OF THE BRANCH OF ECONOMICS

Resource economics is a subfield of economics that studies how to allocate natural

resources so that the maximum benefit is obtained for the welfare of humans. Natural
resource economics is the study of the supply, demand, and allocation of the Earth's natural
resources. According to its creators, a better understanding of the function of natural
resources in the economy is the ultimate goal of this project. Natural resources play an
essential role in society, and understanding their significance helps develop more sustainable
means of managing resources and ensuring that they are preserved for future generations.
The ultimate goal of natural resource economics is to establish a productive economy that is
both efficient and long-lasting.

Natural resources have played a significant influence on economic philosophy

throughout history. In the mid-eighteenth century, French physiocrats Francois Quesnay
(1694–1774) and Anne Robert Jacques Turgot (1721–1781) believed that agriculture (land)
provides all value and supports the industrial and service sectors of the economy. In classical
political economy, land played an important role, particularly in English political economists
Thomas Malthus and David Ricardo. Later in the nineteenth century, English economist
Stanley Jevons (1835–1882) focused on coal as a critical natural resource for Great Britain's
industrialization and prosperity.

Natural resource economics and environmental economics rely significantly on the

neoclassical approach to economics, including neoclassical welfare analysis models and
techniques. Natural resource and environmental economics are increasingly entwined, and
the two are frequently treated as a single field. However, because of historical distinctions in
the evolution of these subjects, they are commonly examined independently. This is true of
this module, which does not cover many of the topics covered in environmental economics
classes.

Natural resource economics has traditionally focused on raw materials, treating them
as inputs in a production function and investigating related input and output markets and the
efficiency and welfare implications of various resource exploitation methods.
 Land economics, the predecessor of natural resource economics, originated in the
United States in the early decades of the twentieth century, addressing economic concerns
relating to agriculture and agricultural land. Since the 1930s, economists have produced
fundamental theories in resource economics.

The publication of Hotelling's model of exhaustible resources in 1931 was one of the
most seminal works in natural resource economics (Hotelling 1931). Although Hotelling and
others were developing economic models for natural resource extraction, natural resource
economics did not have a high profile until the 1970s, a period marked by increased concern
about the environment and the growth constraints posed by a finite supply of oil and other
critical resources.
II. PRINCIPLES YOU ARE TO TACKLE RELATED TO YOUR RESEARCH

1. ECONOMIC DEVELOPMENT THEORY

Economic development is the process of creating wealth from which benefits to

the community can be realized. Rather than simply creating jobs, it is an investment in
the growth of the economy as well as in improving the wealth and quality of life for
everyone in the community. Infrastructure and economic growth have developed a close
link; countries with better infrastructure levels have a lower poverty rate because
infrastructure enhances the quality of human resources and capital efficiency, hence
boosting economic growth (Srinivasa, 2013).

2. POLITICAL THEORY

Political philosophy, often known as political theory, is the philosophical study of

governance, covering topics such as the nature, extent, and validity of public agents and
institutions and the interactions between these agencies and institutions.

The Department of Public Works and Highways (DPWH) carries out the State's
objective of continuing to develop technology in order to ensure the safety of all
infrastructure facilities and to provide the highest efficiency and appropriate quality of
construction for all public works and highways. In the long run, the benefits of such
massive public investment initiatives will help the local or poor population at large. This
would very probably lead to a development in the level of well-being at the household
level, since the partial influence of a road or its widening eventually leads to a
development in the level of well-being, particularly for the poorer people who live near
the highway.

3. SOCIO-ECONOMIC THEORY

Social economics is an economics discipline that studies the relationship

between social behavior and economics. Social-economic theories frequently include
elements outside the scope of standard economics, such as the impact of the
environment and ecology on consumption and wealth. It describes how a specific
social group or socioeconomic class behaves in society. Moreover, New roads can
provide significant economic and social benefits in the right situations and locations.
 The economic benefit of road construction is theoretically derived from lower
transportation and travel costs. It allows for various processes to take place, all of
which can contribute to poverty reduction.

4. ENVIRONMENTAL ECONOMICS

Environmental economics is a branch of neoclassical economics that

investigates two interconnected issues: the problem of environmental externalities
and determining the best price of a resource to minimize the externalities associated
with the usage of natural resources. Every aspect of road construction, operation,
and maintenance, as with many human activities, has some relationship with the
surrounding environment. Moreover, people and the environment can be affected
both positively and negatively by roads. On the plus side, roads allow people and
products to move about and transfer themselves. On the negative side, highways
take up valuable areas and provide barriers for animals. They can also have
negative consequences for natural water resources and discharge zones.
III. LITERATURE REGARDING THE PRINCIPLE

Economic Development Theory

According to Osiobe (2019),

A path of sustainable economic growth that

incorporates environmentally sound development is a
more critical macroeconomic goal because it ensures
the continuity of renewable resources and the optimal
use of nonrenewable resources.

These models' common recommendations are for an economy to invest in its

educational system, fight poverty, create more opportunities for labor market participation
and economic growth, and facilitate socioeconomic development. The logic goes that if a
country spends more money on education, the country will experience long-term economic
growth.

According to Berg (2015),

Roads are the arteries that carry the blood of the

nation's economy. Roads are essential to any
development strategy because they connect
producers to markets, workers to jobs, students to
school, and the sick to hospitals. In the decade since
2002, the World Bank has built or restored more than
260,000 kilometers of roads. More money is loaned
for roads than is loaned for education, health, and
social services put together.

Many governments want to stimulate economic growth and construct road

infrastructure in economically disadvantaged areas. It is because road infrastructure is
essential for efficient people and commodities movement and access to a wide range of
business and social activities.
Political Theory

As stated by De Guzman (2019),

The Department of the Interior and Local Government

(DILG) is following the directives issued by President
Rodrigo Duterte at the State of the Nation Address.
Soon after, the Department of Interior and Local
Government (DILG) issued Memorandum Circular
2019-121, in which the department ordered all local
government officials to "reclaim public roads that are
being used for private purposes and, in the process,
remove illegal structures and obstructions from them.

DILG Undersecretary and Spokesperson Jonathan Malaya said that the national
government wants the country's mayors to take control of ensuring that barangay captains in
their respective cities or municipalities comply with the order. He stated that this must be
done regardless of whether or not the captains and mayors are members of the same
political party. Mayors should penalize or suspend barangays that refuse to comply with the
order to clear public highways of any unlawful buildings, according to DILG's Malaya.

Socio-Economic Theory

As stated by Lankanari (2020),

Road traffic fatalities (RTF) are the world's eighth

leading cause of death. It would be critical to
reexamine our understanding of the determinants of
RTF after the end of the Decade of Action. The goal
of this study is to evaluate RTF-related parameters on
a worldwide scale.

Road crashes should be considered a socioeconomic concern by policymakers.

They can make arrangements in this regard to lower RTF over time by focusing on
improving the three components of the human development index, primarily education.
However, using RTF and various time-trend techniques, it is necessary to explore the
causation pathway between these three components. Infrastructures like land-use planning,
road layout, designing for road function, and vehicle safety are crucial in reducing RTF, but
too much emphasis has been placed on the traits and actions of road users.
Environmental Economics

According to Walia (2017),

Highway expansion improves the quality of existing

roads while also improving connectivity between
major economic centers. Highway expansion is
necessitated by increasing traffic and the need to
boost the area's economic capability. Furthermore,
the accession activity disrupts the ecosystem and
causes numerous changes in the surrounding
landscape.

Highway expansion has an impact on both abiotic and biotic components, both
directly and indirectly. Thus, Environment Impact Assessment of National Highways is
required to understand and predict the impact on the environment and socio economic
conditions of residents. As a result, this paper examines the impact of highway expansion on
air, water, and soil quality, as well as the natives' socioeconomic conditions and health
status.
IV. USE OF THE PRINCIPLE

Economic Development Theory

Improvements in the quality of infrastructure services will help in lowering the cost of doing
business, attracting further investment, and boosting productivity throughout the country.
"Wider roads and bridges will not only bring more convenience to the traveling public but
also speedier delivery of local commodities in the area," said Basir Ibrahim of the DPWH
regional office XII. It benefits industries since it provides the quick and easy transportation of
raw materials, equipment, finished goods, and other products. Additionally, when the road
system improves, the need for motor, cars, and other such vehicles grows as well.

Political Theory

The "Build, Build, Build" initiative is the Duterte administration's ambitious infrastructure
development plan, which includes hundreds of projects around the country. Throughout
2016 and 2020, the Department of Public Works and Highways' "Build, Build, Build" program
completed P2.5 trillion worth of public infrastructure projects, increasing from P820.4 billion
in 2011 to 2015 with a growth of 209 percent or P1.7 trillion in projects. Additionally, the
DPWH was able to produce up to 6.6 million employment nationally as a result of the
increased infrastructure investment. Furthermore, DPWH built, widened, refurbished,
replaced, and retrofitted 5,950 bridges nationwide, with 2,905 in Luzon, 1,411 in Visayas,
and 1,634 in Mindanao.

Socio-Economic Theory

The Department of Public Works and Highways (DPWH), in collaboration with local
government entities, is committed to helping to reduce traffic congestion throughout the
country, which has long been a hindrance to our development. It also helps to minimize
commuters' travel time, particularly during rush hours on the way to their workplace.
Moreover, improved roads also enable greater economic activity to be carried out in the
province's villages and cities, contributing to the success of the country's improved
community development program.
Environmental Economics

Field workers from the Department of Public Works and Highways (DPWH) are replanting
trees that have been uprooted as a result of road widening operations. According to an
agreement made with the Department of Environment and Natural Resources (DENR), the
DPWH is obligated to replace 50 trees for every felled tree grown on private or forest land
and 100 trees for every naturally grown tree affected by road construction. Furthermore,
DENR designated 9.69 hectares for the planting of replacement trees in infrastructure
projects completed in the year 2018.
V. ADVANTAGES AND DISADVANTAGES

Socio-Economic Theory

Road infrastructure is essential because it provides mobility for efficient movement of people
and commodities and access to a wide range of commercial and social activities. It increases
the satisfaction of people in terms of wealth in using public roads. As for employment, it gives
the opportunity to construction workers to have a job for a certain period of time. However,
when the road widens, it gives a lot of space for vehicles to make overtakes even onto their
right side, which is prohibited. It creates chances of accidents by recklessly driving that can
cause much danger for the passengers.

Political Theory

Road widening reduces common traffic violations such as unsafe lane changing, following too
closely onto other vehicles, loading, and unloading in prohibited areas. Widening traffic lanes,
especially on straight sections, can also reduce sideswipe crashes and improve traffic flow. It
leads to safer traveling while reducing possible problems along the roads that sometimes
cause traffic violation fines. Somehow, the government tries to take advantage of the budget
allocated for such projects, leading to possible corruption, which is not good, especially for
infrastructure purposes. It needs precise budget allocation for better improvement.

Economic Development Theory

Providing wider roads gives a lot of opportunities, especially to business entities. It can boost
business productivity because buying raw materials for making goods can be on time or even
faster than their expected arrival time in different places. Saving time on roads gives a
chance to earn additional time on producing goods or providing services. It will be seen
effectively on the increase in sales of the business. On the other hand, environmental
expenses result in higher productivity, which leads to increasing pollution and congestion,
lowering living standards. However, the development will lead to non-renewable resource
consumption, which will increase the burden oncoming generations.
Environmental Economics

Wider roads will reduce pollution from motor vehicles by arriving at their destination faster,
resulting in less pollution from the cars. A study explains how automobiles contribute to acid
rain, greenhouse gases, and other environmental concerns. However, expanding the road
will reduce the possibility of acid rain, the greenhouse effect of cars, and other environmental
issues because vehicles would use less gas because they will be able to reach their
destination much faster. Rather than burning gasoline and letting gas escape while waiting
for traffic to move. However, before road widening, clearing operations totally remove trees
on affected areas. In the environmental aspect, it opens the possibility for other areas to
experience landslides because trees have been cut out and there are no roots below the
road for holding it up. It can cause soil erosion that can cause danger for passengers and
vehicles crossing the area.The shade upon the highways has also been removed and
created open vision for drivers.
 REFERENCES

LAKANKARI (2020). Economic and legislative factors and global road traffic fatalities. Retrieved
from
https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-020-09491-x

LORENCIANA, C., (2021). Road improvement in Cebu town to help farmers' market access.
Retrieved from https://www.pna.gov.ph/articles/1132696

MANILLA BULLETIN (2021). 'Build, Build, Build’: 5-year infra dev’t highlights Duterte’s last
SONA. Retrieved from
https://mb.com.ph/2021/07/28/build-build-build-5-year-infra-devt-highlights-dutertes-l
ast-sona/

MENIANO, S. (2019). DPWH plants 51.7K replacement trees in Southern Leyte. Retrieved from
https://www.pna.gov.ph/articles/1082159

NATIONAL RESEARCH COUNCIL (2005). Assessing and Managing the Ecological Impacts of
Paved Roads. Retrieved from https://www.nap.edu/read/11535/chapter/5

OSIOBE (2019). A literature review of Human Capital and Economic Growth. Retrieved from
https://www.researchgate.net/publication/337144224_A_Literature_Review_of_Hum
an_Capital_and_Economic_Growth

PATINIO, F., (2019). DPWH begins road widening projects in Koronadal City. Retrieved from
https://www.pna.gov.ph/articles/1081107

WALIA (2017). Environmental Impact Assessment of Highway Expansion. Retrieved from

https://www.researchgate.net/publication/322200463_Environment_Impact_Assessm
ent_of_Highway_Expansion-A_review_Article_History