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Sustainable development in a natural resource rich economy: the case of Chile in 1985–2004

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Abstract

Searching for practical means to assessing economic growth’s sustainability, we extend a standard theoretical model to calculate “true” income measures for Chile, during the 1985–2004 period, and use estimates of natural capital depreciation to obtain genuine national saving measures. We found that, for the period, Chile’s economic growth was sustainable, even when approximately 2.5% of the income recorded by national accounts corresponded to depreciation of natural resources plus costs of atmospheric pollution. This performance can be partially explained by policies implemented to force fiscal responsibility and to assure wise public investment and expending during a natural resource driven growth. This evidence reinforces recent findings contradicting the natural resource curse, and the indirect negative effect of resource abundance over growth that would operate through the quality of institutions.

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Notes

  1. The average share of natural resource exports in total exports amounted to 70% in the 1998–2005 period.

  2. This assumes that population is constant. Otherwise, the condition should be modified to allow for the total stock of capital per capita be at least zero.

  3. They derived their UVP for valuing mineral resources on the ground under alternative, more general, assumptions than those of the HVP that justify invoking the HVP and using average instead of marginal costs to estimate the net price.

  4. In Chilean pesos of 1986.

  5. In US$ of 1998.

  6. In US$ of 2000.

  7. Chile established a new Water Code which enabled water markets to work, and commercial exchanges of water rights exchanges have occurred both where demand is driven by highly-valued uses and where transaction cost have been lowered by institutional and infrastructural developments of the sort that has taken place in the Limarí Valley (Southgate and Figueroa 2006).

  8. An ITQ system was introduced in the main fisheries of Chile. This reform has had an immediate impact on the operation of the industrial fleet, reducing the number of vessels active in the fisheries.

  9. See for example, Sachs and Warner (1977, 2001) and Bulte et al. (2005).

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Acknowledgement

The research reported in this paper was partially supported by “PI2-Economic Valuation of Ecosystem and Biodiversity Services” of the Domeyko Research Project in Biodiversity (PDBD), Vice-presidency of Research and Development (VID) of the University of Chile.

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Authors and Affiliations

  1. Department of Economics, University of Chile, Diagonal Paraguay 257, Room 1604, Santiago, Chile

    Eugenio Figueroa B.

  2. Center of Environmental and Natural Resource Economics (CENRE), University of Chile, Santiago, Chile

    Eugenio Figueroa B.

  3. School of Business, Diego Portales University, Manuel Rodriguez Sur 253, Santiago, Chile

    Enrique Calfucura T.

  4. Department of Economics, McGill University, Montreal, QC, Canada

    Enrique Calfucura T.

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  1. Eugenio Figueroa B.
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  2. Enrique Calfucura T.
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Correspondence to Eugenio Figueroa B..

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Figueroa B., E., Calfucura T., E. Sustainable development in a natural resource rich economy: the case of Chile in 1985–2004. Environ Dev Sustain 12, 647–667 (2010). https://doi.org/10.1007/s10668-009-9217-0

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