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The Role of Natural Resources in Economic Development
Author(s) -
Barbier Edward B.
Publication year - 2003
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/1467-8454.00198
Subject(s) - natural resource , economics , economic rent , environmental degradation , resource depletion , natural capital , human capital , kuznets curve , capital accumulation , resource (disambiguation) , natural resource economics , welfare , capital (architecture) , economic system , economic growth , market economy , ecology , geography , ecosystem services , computer network , archaeology , ecosystem , computer science , biology
Economists now recognize that, along with physical and human capital, environmental resources should be viewed as important economic assets, which can be called natural capital . Three recent debates have emerged over the role of natural capital in economic development. First, as many ecological services are unique, does the environment have an “essential” role in sustaining human welfare, and if so, are special “compensation rules” required to ensure that future welfare is not worsened by natural capital depletion today? Second, the environmental Kuznets curve (EKC) hypothesis has fostered empirical estimations of an “inverted U” shaped relationship between a variety of indicators of environmental pollution or resource depletion and the level of per capita income. Does the existence of such EKC relationships suggest that environmental degradation will eventually decline with growth? Finally, recent economic theories and empirical evidence have questioned whether lower income economies that are endowed with abundant natural resources develop more rapidly than economies that are relatively resource poor. Is it possible that resource abundant economies are not reinvesting the rents generated from natural resource exploitation into productive assets, or that resource booms actually divert economic resources from more productive and innovative sectors?