are the best shot that many of the countries of the bottom billion
have at prosperity. Ethical behaviour is that as natural assets are
depleted, at least their equivalent value should be passed on to the
future. This is a more pragmatic environmentalism that is not
intrinsically at loggerheads with development.
Harnessing natural assets for prosperity
The history of exploitation of natural assets in the poorest societies
is evident. Rather than let natural assets be plundered, it would be
better to leave nature undisturbed. But history need not repeat
itself. In order to harness natural assets a chain of economic
decisions must hold. The chain starts with the discovery process: to
date, contrary to popular perception, far fewer natural assets have
been discovered in low-income societies than in rich societies,
because the search process has been mismanaged. The next link is
to ensure that the local inhabitants in the area of extraction are
properly protected and compensated. To date this usually does not
happen. But the rights of local communities should not usually
extend to ownership. The Niger Delta should not own the oil
beneath it: the revenues from oil should benefit all the children of
Nigeria rather than privileging only those who happen to live
closest to it.
The next link in the chain is to tax revenues from resource
extraction so that the benefits accrue to society as a whole rather
than to the few. In many countries at present this is going
spectacularly wrong, but tax systems could be much better designed
and enforced. The fourth link is to save and invest a high
proportion of these revenues. This is the ethical responsibility to
the future. To date, in most poor societies natural assets have been
depleted for consumption rather than investment. But the
investment should be domestic: the Norwegian model of a future
generations fund held in foreign financial assets is usually
inappropriate for poor societies. Unlike Norway, they are short of
capital and need to invest at home. Unfortunately, many poor
societies are now setting up Norway-style funds: fifty governments
have asked Norway for advice. The final link in the decision chain is
to improve the process of domestic investment. Currently, although
these societies are short of capital, their investment processes are so