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Does natural capital depletion hamper sustainable development? Panel data evidence

Charan van Krevel

Resources Policy, 2021, vol. 72, issue C

Abstract: This paper addresses growing concerns that the global decline in natural capital hurts wellbeing in the long-run. We examine empirically how natural capital depletion affects sustainable development as measured by a positive change in the United Nation's Inclusive Wealth indicator. Drawing on panel data for 140 countries between 1990 and 2010, within-country analysis reveals that many countries convert their depleted natural capital sufficiently into human- and produced capital such that the comprehensive stock of wealth grows. However, some developed economies are struggling to harness their natural wealth for sustainable development. The policy implication is that there is no universally applicable recipe for the effective management of countries' natural resources. Countries that are poorly endowed with human- and produced capital, in particular, may have a window of opportunity in which natural capital depletion is temporarily able to foster rather than hamper sustainable development.

Keywords: Inclusive wealth; Natural capital; Sustainable development; Human- and produced capital (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:72:y:2021:i:c:s0301420721001021

DOI: 10.1016/j.resourpol.2021.102087

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