Natural resources, development models and sustainable development

This paper starts from the optimistic assumption that the policies required for environmentally sustainable economic development are known but difficulties surround their implementation. The paper argues that in the low-income countries differences in the natural resource endowment are an important and hitherto neglected cause of tardy environmental policy improvements. This is because the primary sector remains large relative to GDP in such countries so that the scale and socio-economic linkages generated by the natural resource rents condition the aims of governments in important ways.Most developing countries are resource-rich and natural resource abundance tends to foster predatory political states that use the rents to relax market discipline and buy political support, distorting their economies in the process so that competitive economic diversification falters and growth collapses. Recovery is protracted and may take generations to accomplish. Meanwhile, macro policy failure damages micro policies, including those aimed at environmental improvement, by distorting prices and incentives, depressing genuine saving rates and shortening time horizons to secure immediate survival.The author concludes that environmental policy makers and their advisers can benefit from a fuller awareness of how macro policy failure adversely impacts on environmental policies. They need to adapt environmental policies to the macroeconomic limitations and to recognise that some past policies may have failed because of those limitations rather than through systemic flaws in the policies themselves. He argues that they also need to be more supportive of the efforts of the IFIs to ease the constraint of maladroit macroeconomic management. The strengthening of sanctions against anti-social governance can help here. This will improve the design of sound environmental policies guided by total economic value to price in externalities, green accounting to achieve positive genuine saving, and cost-effective pollution abatement measures. In this way, developing countries can leapfrog the environmental learning curve of the advanced economies and limit the mismanagement of natural resources and minimise the damage to environmental services. [Adapted from author]