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Alternative Investments: CAIA Level I, 3rd Edition by CAIA Association, Hossein Kazemi, Keith H. Black, Mark J. P. Anson, Donald R. Chambers

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CHAPTER 10 Natural Resources and Land

Real assets are economic resources that create or add to the consumption opportunities available to people. All consumption ultimately originates from real assets. Financial assets are the counterpart to real assets. Financial assets serve as conduits of value rather than as direct creators of consumption opportunities.

This chapter discusses institutional-quality investments in two types of real assets: natural resources and land. Natural resources are real assets that have received no or almost no human alteration. Commodities are often categorized as natural resources, but since they are typically processed or otherwise altered, they are discussed in later chapters. Undeveloped land and timberland are almost always classified as natural resources.

10.1 Natural Resources Other Than Land

Examples of natural resources include oil, natural gas, coal, ore, land, water, wind, and other inputs to production that largely remain in a natural state and location. Most natural resources are related to facilitating energy consumption because energy is such a major input to the world economy. For example, energy consumption tends to represent approximately 8% to 10% of gross domestic product in the United States. Other substantial sectors of natural resources include land and metal ores and other minerals.

10.1.1 Economic Roles and Vehicles of Natural Resources

A large portion of natural resources is under the earth's surface. In most jurisdictions, ...

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