Main Messages

9

The Nonrenewable Wealth of Nations

James Cust and Alexis Rivera Ballesteros

Main Messages

• Nonrenewable assets make up a significant share of total wealth in many countries: for example, 31 countries have more than 5 percent of their total wealth in nonrenewable natural capital. • Despite being a depleting asset, the nonrenewable wealth of nations more than doubled between 1995 and 2018, from US$13 trillion to US$30 trillion. • Overreliance on nonrenewable natural capital has proven risky. Price drops since 2014 have seen nonrenewable wealth decline by 35 percent in just four years— down from US$46 trillion to US$30 trillion by 2018. Nonrenewable natural resource–rich countries have failed to diversify their exports. A focus on diversification of their asset base may help promote resilience and sustain economic growth. • Nonrenewable wealth forms an inverted-U shape, similar to the Environmental

Kuznets curve. This means it often forms a low but rising share of wealth at lower income levels, and a higher but declining share for countries with higher levels of national income. • The low-carbon transition may significantly alter the demand for and prices of fossil fuels, posing additional risks. Countries abundant in metals and minerals that are important for low-carbon technologies, such as batteries and wind turbines, may see growing demand.