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Unburnable Wealth of Nations
Article

Unburnable Wealth of Nations

Successful action to address climate change would diminish the value of fossil fuel resources in many of the world’s poorest countries

James Cust, David Manley and Giorgia Cecchinato
Finance & Development Magazine, 2017
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Recommendation

The effects of climate change hurt developing countries disproportionately – but so do the policies that seek to curb the rise in global temperatures. Developing countries that rely on their fossil fuel wealth will suffer badly. In this article from the International Monetary Fund’s Finance and Development magazine, three economists from the World Bank and the United Kingdom’s Natural Resource Governance Institute shed light on a rarely discussed consequence of successful climate change action. getAbstract recommends their analysis to development experts and policy makers.

Summary

Developing countries whose economies strongly depend on their fossil fuel wealth are vulnerable to a low-carbon future for three reasons: First, decreasing demand for oil and gas will shrink a major source of revenue for governments – money that could fund education, health care and infrastructure projects. Secondly, fossil fuel–rich developing countries are unable to turn their reserves into cash fast enough to accumulate sufficient assets to develop new economic sectors. Third, the political and economic structures of fossil fuel–rich countries often favor fossil fuel consumption and development. Governments...

About the Authors

James Cust works in the World Bank’s Office of the Chief Economist for Africa. David Manley is a senior economic analyst and Giorgia Cecchinato a data associate at the United Kingdom’s Natural Resource Governance Institute.

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