<p>Most of the terms you mention are not mutually exclusive.</p>
<p>Commodity is not a specialized term and it just denotes some (mostly) fungible economic good (see <a href="https://www.merriam-webster.com/dictionary/commodity" rel="nofollow noreferrer">here</a> or <a href="https://www.economist.com/the-economist-explains/2017/01/03/what-makes-something-a-commodity" rel="nofollow noreferrer">here</a>). So water is a commodity.</p>
<p>Natural resources can be defined as (<a href="https://stats.oecd.org/glossary/detail.asp?ID=1740#:%7E:text=Definition%3A,for%20economic%20production%20or%20consumption." rel="nofollow noreferrer">OECD 2005</a>):</p>
<blockquote>
<p>Natural resources are natural assets (raw materials) occurring in nature that can be used for economic production or consumption.</p>
</blockquote>
<p>So water is also a natural resource.</p>
<p>In terms of economic classification water (tap or bottled) is <em>private good</em> because it is both rival and excludable (see Mankiw Principles of Economics pp 226). However, here it also depends which water we are talking about. I assume you mean tap or bottled drinking water. An argument could be that water in rivers, lakes and seas is non-excludable (in the case of lakes it would also depend on size of the lake). If we would be talking about water in a sea it would <em>common resource</em> because of non-excludability.</p>

CC BY-SA 4.0
2022-04-25T20:48:15.927Z
+1  I would just add that while clean fresh water  is clearly both a commodity and a natural resource, it would be difficult to argue that salt water is a commodity if commanding a price is part of the definition of a commodity.  There is just too much in the oceans for there to be any issue of scarcity giving rise to a price.  On the other hand salt water is a natural resource, eg as an input to desalination plants producing fresh water, and for use as a coolant in coastal nuclear power stations.
Adam Bailey
CC BY-SA 4.0
2022-04-26T18:08:29.897Z
+1 I also would like to add that it falls under "land" in LLK: Land, Labor, (K)Capital.
RegressForward
CC BY-SA 4.0
2022-04-25T09:10:48.957Z
2022-04-25T09:10:48.957Z
1muflon1
<p>How should one classify water in economic terms?</p>
<p>Is it a commodity, a natural resource, can it be both? Does it depend on how it is being used (e.g., as input/raw material in some process)? I was curious about all the ways water could be characterized economically (e.g., as a rival good, a commodity etc.) and would be grateful for some pointers.</p>

<definition><resource-economics>
What is the economic nature of water?
flen
# What is the economic nature of water?

(Asked by: username_0 on 2022-04-25)

How should one classify water in economic terms?

Is it a commodity, a natural resource, can it be both? Does it depend on how it is being used (e.g., as input/raw material in some process)? I was curious about all the ways water could be characterized economically (e.g., as a rival good, a commodity etc.) and would be grateful for some pointers.

**Tags:** definition, resource-economics


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## 1 answers

### Answer by username_1 on 2022-04-25. Score: 4 | Accepted answer

Most of the terms you mention are not mutually exclusive.

Commodity is not a specialized term and it just denotes some (mostly) fungible economic good (see [here](https://www.merriam-webster.com/dictionary/commodity) or [here](https://www.economist.com/the-economist-explains/2017/01/03/what-makes-something-a-commodity)). So water is a commodity.

Natural resources can be defined as ([OECD 2005](https://stats.oecd.org/glossary/detail.asp?ID=1740#:%7E:text=Definition%3A,for%20economic%20production%20or%20consumption.)):

> Natural resources are natural assets (raw materials) occurring in nature that can be used for economic production or consumption.

So water is also a natural resource.

In terms of economic classification water (tap or bottled) is *private good* because it is both rival and excludable (see Mankiw Principles of Economics pp 226). However, here it also depends which water we are talking about. I assume you mean tap or bottled drinking water. An argument could be that water in rivers, lakes and seas is non-excludable (in the case of lakes it would also depend on size of the lake). If we would be talking about water in a sea it would *common resource* because of non-excludability.

> **Comments:**
> **username_2**: +1  I would just add that while clean fresh water  is clearly both a commodity and a natural resource, it would be difficult to argue that salt water is a commodity if commanding a price is part of the definition of a commodity.  There is just too much in the oceans for there to be any issue of scarcity giving rise to a price.  On the other hand salt water is a natural resource, eg as an input to desalination plants producing fresh water, and for use as a coolant in coastal nuclear power stations.  
> **username_3**: +1 I also would like to add that it falls under "land" in LLK: Land, Labor, (K)Capital.  

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