The Impact of Renewable Versus Non-renewable Natural Capital on Economic Growth
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The Impact of Renewable Versus Non‑renewable Natural Capital on Economic Growth Farid Gasmi1 · Laura Recuero Virto2,4 · Denis Couvet3 Accepted: 16 July 2020 / Published online: 9 August 2020 © Springer Nature B.V. 2020
Abstract In a dataset on 83 countries covering the years 1960–2009, we find a negative indirect effect of the share of renewable natural capital in wealth on economic growth transmitted through demographic factors, more specifically, population fertility. In contrast, in countries with lower income inequality and higher institutional quality, the share of nonrenewable natural capital in wealth has a direct positive impact on growth. We also find that countries with higher income per capita, human development, and institutional quality have a higher share of renewable natural capital per capita, but a lower share of renewable natural capital in wealth. Renewable natural capital is thus valuable for the population and of primary concern for empowered countries, even though it contributes less to wealth and economic growth. Our results raise serious questions about the way wealth and growth are defined in economics when one investigates the impact of natural capital and point to the importance of preserving natural capital, particularly, in less developed countries. Keywords Natural capital · Renewable · Non-renewable · Economic growth JEL Classification O10 · O13 · Q20 · Q30 · Q32
* Laura Recuero Virto laura.recuero‑[email protected] Farid Gasmi farid.gasmi@tse‑fr.eu Denis Couvet [email protected] 1
Toulouse School of Economics, University of Toulouse Capitole, Toulouse, France
2
Museum National d’Histoire Naturelle, Ministère des Affaires Etrangères et du Développement International, Paris, France
3
Museum National d’Histoire Naturelle, Paris, France
4
Present Address: Center for Research in Economics and Statistics (CREST), Ecole Polytechnique, Paris, France
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1 Introduction The concept of “natural capital” aims to emphasize the role of nature in supporting the economy and human well-being (Pearce et al. 1989). In this article we distinguish between two types of natural capital resources depending on whether or not they are renewable and their social contribution. Renewable natural capital includes biodiversity, ecosystems, and their associated services, mainly providing non-market services, and also air and water. Non-renewable natural capital includes mineral deposits and fossil fuels, which provide financial rents but do not generate direct services.1 Both types of natural capital provide people with exploitable resources (Petersen and Gocheva 2015). In this article, we use data on some renewable and non-renewable natural capital variables to develop a comparative analysis, based on cross-country estimations (World Bank 2006), of the impact of these two types of natural capital on economic growth. Renewable natural capital variables concern timber and non-timber forest resources, protected areas, cropland, and pastureland, and non-
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