Nature's bounty is not easy to count, partly because she was kind enough not to bill us for it. Some economists, however, have attempted to put a dollar figure on the value of the world's land, forests, fisheries, minerals and fossil fuelsâor what is left of them. Their work has fed into the Inclusive Wealth project, initiated by the United Nations, directed by Managi Shunsuke of Kyushu University and advised by Sir Partha Dasgupta of Cambridge. They estimate the world's natural capital amounted to over $91trn in 2014, or over $13,000 per person. (The estimates use 2005 exchange rates and prices.) New Zealand has more natural capital per person ($380,000) than oil-rich Kuwait ($362,000) or Saudi Arabia ($180,000). Gabon has more than anywhere else.
Many researchers now think of natural resources as a âcurseâ that erodes competitiveness and breeds corruption-economies which are heavily dependent on exporting raw materials are often dominated by small, rapacious elites. For example, Congo, which relies on mining, has about 25% more natural capital per person than the global average, but remains desperately poor. Conversely, countries like Singapore enjoy a high gdp per person despite an utter lack of God-given resources. About two-thirds of Singaporeâs wealth consists instead of traditional capital: infrastructure, buildings, plant and equipment. The rest is the âhuman capitalâ reflected in its people and their skills.
On average, however, countries with more natural capital also tend to have a higher gdp per person. So is it a curse or a blessing? Some economists argue that natural bounty raises the level ofÂ gdpÂ but slows its growth rate: it provides an additional, steady stream of income that grows less quickly than the rest of the economy.
One reason may be that resources become harder to extract as they are depleted. According to the Inclusive Wealth Report, 47% of the worldâs natural capital comprises fossil fuels (oil, natural gas and coal) and minerals (copper, gold, iron and so on) that took an eternity to form and will not be replaced. From 1990 to 2014, the stock of natural capital per person fell in 128 out of the 140 countries in the report.
Will that trend continue? Together with Yogi Sugiawan, formerly of Kyushu University, and Robi Kurniawan of Tohoku University, Mr Managi has calculated the future trajectory of natural capital under a variety of scenarios. In a future of continued high energy demand, carbon emissions can be expected to grow by 7% in high-income countries and by 44% in the rest of the world over the next two decades.
In such a scenario, the world will continue to grow wealthier, but natural assets will diminish rapidly as a share of its portfolio. A typical person in one of todayâs high-income countries will have 21% less natural capital at their disposal in 2040 than they do today. In other, poorer countries they will have 17% less.
According to these projections, only 12 countries will increase their stock of natural capital per person over the next two decades. And in 39 countries, including resource superpowers like Brazil, Russia and Saudi Arabia, the stock will fall by over 30%. Financial capital tends to accumulate. Natural capital seems destined to do the opposite.Â â
Sources: Yogi Sugiawan, Robi Kurniawan, Managi Shunsuke; Inclusive Wealth Report 2018; The International Institute for Applied Systems Analysis; World Bank; UN;Â The Economist
This article appeared in the Graphic detail section of the print edition under the headline "Capital pains"