Resource Depletion Damages Third World - World Bank

On precisely the same day both the World Bank and the United Nations Environment Programme have come out with reports which attempt to "revalue" natural (including mineral) resources, against the negative consequences of their continued depletion, and consequent environmental damage. Sceptics might consider it a bit ripe for the Bank to tout conservation while continuing to back projects that destroy "natural capital". Perhaps better late than never - but is it already too late?

The World Bank report can be read in pdf format here.

Resource Depletion Damages Third World - World Bank

Story by Ed Stoddard, Planet Ark

September 15, 2005

JOHANNESBURG - Resource depletion and surging population growth are draining the net "savings" of the world's poorest countries and could cripple future generations, according to a new World Bank study.

It said a new measure of wealth -- which goes beyond the traditional gross domestic product yardstick -- showed many developing countries were sinking deeply into the red.

"Accounting for the actual value of natural resources, including resource depletion and population growth, shows that net savings per person are negative in the world's most impoverished countries, particularly in sub-Saharan Africa," it said.

Entitled "Where is the Wealth of Nations?", the study looks at resource extraction and other variables not commonly used. "Current indicators used to guide development decisions -- national accounts figures, such as Gross Domestic Product (GDP) -- ignore depletion of resources and damage to the environment," the World Bank said in a statement.

"Where is the Wealth of Nations? ... offers new estimates of total wealth, including produced capital, natural resources, and the value of human skills and capabilities, which show that many of the poorest countries ... are not on a sustainable path."

Swiss on top, Ethopia bottom

The study offers a ranking of 118 countries, with Switzerland topping the list with wealth per capita of $648,241. At the bottom is Ethiopia at $1,965.

Also near the bottom is the Indian Ocean island of Madagascar, which has rapid population growth, rampant deforestation and is losing much of its soil through erosion.

Densely populated and ecologically stressed Burundi -- also a powder-keg of ethnic conflict -- is second from the bottom. The study says natural capital -- the value of minerals, energy, forests, pastureland, cropland and protected areas -- is a much higher share of total wealth in low-income countries than produced capital at 26 percent compared with 16 percent.

Produced capital is defined as machinery, structures and urban land.

The study looks at "intangible capital", which it says is calculated as the difference between total wealth and the sum of produced and natural capital.

There are bright spots in the developing world where resource wealth is being saved rather than squandered.

"Mauritania has improved its development prospects through better management of fishery resources, while Botswana has successfully used diamond resources to finance the schooling, health care, and infrastructure which have supported its high rate of growth," says the World Bank.

"(A) sound combination of macroeconomic and natural resource management has permitted Botswana to avoid the 'resource curse' that has afflicted many oil producers," it says.

Many African economies are heavily dependent on resources and critics say the cash generated in boom times are often wasted, leaving little for the busts of the commodity cycle.

Spending on Environment Yields Big Returns - Report

September 15, 2005

Story by Alister Doyle, Environment Correspondent, Planet Ark

OSLO - Spending to protect the environment, from coral reefs to forests, can bring big returns to aid a worldwide assault on poverty, a UN-backed report said on Wednesday.

The study, coinciding with a summit of world leaders in New York, even suggested that forests may be more valuable when left standing rather than being cleared for crops because trees can absorb the heat-trapping gases widely blamed for global warming.

"The environment...is not a luxury good, only affordable when all other problems have been solved," said Klaus Toepfer, head of the UN Environment Programme (UNEP) which was among 30 international groups behind the report.

The study estimated that annual investments of $60-$90 billion in the environment over 10-15 years were needed to reach a world goal of halving the proportion of humanity living on less than a dollar a day, currently more than a billion people.

A further $80 billion a year was needed to limit global warming, widely linked to gases from burning fossil fuels in factories, cars and power plants, over the next 50 years.

Once invested, it said that every dollar spent on clean water and sanitation in the Third World, for instance, could bring $14 in benefits ranging from lower health care costs to higher work productivity and school attendance.

"Conservation of habitats and ecosystems are also cost effective when compared with the short-term profits from environmentally damaging activities" including dynamite fishing, mining or deforestation, it said.

Every dollar invested in fighting land degradation and desertification, like building terraces to stop hillside erosion, could generate at least $3 in benefits, the Poverty Environment Partnership report estimated.

Corals beat dynamite

And every dollar invested in protecting coral reefs could generate $5, ranging from scuba-diving tourism to renewable fish stocks. Forests could play a role in slowing climate change because trees absorb carbon dioxide, the main greenhouse gas.

"The carbon storage or 'sequestration' potential of forests ranges between $360 and $2,200 per hectare which makes them worth far more than if they are converted to grazing or cropland," UNEP said.

And the study said that it becomes far more cost effective to conserve forests than to clear them once carbon prices exceed $30 a tonne.

In a European Union market, launched this year as part of a UN plan to curb global warming, carbon dioxide emission allowances trade at about 22 euros ($27.03) per tonne.

The report also pointed to other ways to place a value on the environment. Brazilian farmers in parts of the Amazon turned to forest nuts and berries when their crops failed, for instance, making the forests a "nature-based insurance policy."