Resource economics

Capital pains

The world’s wealth is looking increasingly unnatural

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 fuels—or 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 “curse” 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 Singapore’s wealth consists instead of traditional capital: infrastructure, buildings, plant and equipment. The rest is the “human capital” 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…