Natural Resources Classification: How are Natural Resources classified?

In this article, we cover details about the Classification of Natural Resources based upon various parameters. We have covered details about the Investments in Natural Resources through Mutual Funds and ETF or Exchange Traded Funds in the following articles: Natural Resources Mutual Funds: Investments & Risks and Natural Resources Mutual Funds & ETF List: Investments, Trading. In this article, we'll introduce you to the basics of Natural Resorces and how they are classified.

How are Natural Resources Classified?

There are several parameters or basis on which the natural resources can be classified. Here, we list some of them which are commonly observed:

Classification of Natural Resources based on Origin:
As we all know, natural resources occur "naturally". However, their origin can lead to different forms. Some of them are living while some are considered non-living. Looking at it from the point of what benefits the human race, every natural resource which can be exploited for some or the other reason can be called a "resource". So, if someone kills an animal like goat or bird like chicken for food, then its a resource for him/her. These fall under living resource category.

Then, there are some which do not fall in living category, like the ocean, the minerals, metals, etc. Hence, on the basis of origin, the natural resources are classified as follows:
Biotic Natural Resources : All Living Natural resources like birds, animals and some classified minerals which are formed by decay of living matter (like petrol and coal)

Abiotic Natural Resources: All non-living resources like ocean full of water, wind energy, sun, metals like iron, aluminium, gold, etc.

Classification of Natural Resources based on Renewability:
As we all are aware, resources can be categorized as renewable or non-renewable. Renewables are those which can be replenished easily without any extra efforts. Say for e.g. sunlight is available everyday during daytime, so if you miss charging your solar lantern today, then you can easily get it tomorrow (although weather sometimes play a role there). The same goes with ocean currents, wind energy, etc. So this parameter or renewability forms another basis for classification of Natural Resources:

Renewable Natural Resources: which can be replenished or reproduced in a speedy, fast and easy manner - like sunlight comes everyday.

Non - Renewable Natural Resources: Resources which are not easy to refurbish and take a long of time to replenish. The examples include formation of gold, coal, petrol, etc. which take ages to be created.

Classification of Natural Resources based on Development Stage:
A resource can be called a resource only if it is ready to use. So, you may find Bauxite ore, but unless you have the technology to extract Aluminium metal from the Bauxite ore, you cant really use it. So it can be said that Bauxite is the "Potential" Natural Resource. On the other side, once we have Aluminium metal extracted from the Bauxite ore, it becomes usable. Hence, Aluminium can be called "Developed on Actual Natural Resource". This usability leads us to the following classification:

Potential Natural Resources: Natural Resources which require further development like the Bauxite example cited above or extracting petrol from the crude oil

Actual or Developed Natural Resources: Natural Resources which are ready to use