Natural Resources, Development Models and Sustainable Development

Environmental Economics Programme Working Paper No. 03-01

25 Pages Posted: 25 Jul 2003  

Richard M. Auty

Lancaster University - Geography

Date Written: June 2003

Abstract

This paper starts out from the optimistic assumption that the basic policies for environmental economic development are known but uncertainties surround the speed of their adoption. In many developing countries the key obstacle is poor governance: consequently, renewable resources continue to be mined, non-renewable resources are depleted irresponsibly, and reductions in pollution intensity lag. Recent research identifies resource abundance as an important cause of policy failure. This is because the primary sector remains large in relation to GDP so that differences in the scale of natural resource rents (and in their socio-economic linkages) condition macro policy in important ways. Most developing countries are resource-rich, a condition that engenders predatory political states that deploy resource rents in ways that cumulatively distort the economy so it falls into a staple trap, which undermines economic growth and environmentally sustainable policies. Sound macroeconomic policy is critical to the success of microeconomic measures like much of environmental policy, a fact often neglected by environmental reformers. There are two implications of this. First, in the long term, improved governance will enhance environmentally sustainable management of: renewable resources (by taking account of the total economic value of resources); finite resources (guided by the need to maintain genuine saving); and the global pollution sinks (by flattening the environmental Kuznets curve). Second, until such improvements occur, environmental policies are likely to underperform unless they are adapted to take account of flawed macro policies. Environmental reformers therefore need to support efforts by the international financial institutions to improve macroeconomic management.

Keywords: Resource curse, sustainable development, natural resources, renewable resources, finite resources, resource abundance, policy failure, governance

JEL Classification: Q00, Q01, Q28, Q32, Q38

Suggested Citation

Auty, Richard M., Natural Resources, Development Models and Sustainable Development (June 2003). Environmental Economics Programme Working Paper No. 03-01. Available at SSRN: https://ssrn.com/abstract=424082 or http://dx.doi.org/10.2139/ssrn.424082

Richard M. Auty (Contact Author)

Lancaster University - Geography ( email )

Lancaster Environment Centre
Lancaster University
Lancaster, LA1 4YB
United Kingdom

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