Conclusion

mineral wealth). Bauxite and nickel wealth were also affected by negative unit price effects, but all the other mineral resources showed growing wealth due to price increases (see Hoekstra 2021 for details). The implication is that the mineral wealth of countries will be dependent on the type of mineral in question. Depending on the prospects for unit price, unit cost, production, and discoveries, countries can assess the prospects for declining or increasing mineral wealth. Some minerals, such as lithium and cobalt, are likely to benefit from a low-carbon future, while others may suffer.

Although nonrenewable natural capital accounts for just 2.5 percent of total wealth in the world, in monetary terms it is equivalent to more than one-third of the world’s GDP. Many economies rely heavily on nonrenewable natural capital for export earnings and government revenues, a scenario sometimes referred to as resource dependence. Countries with high levels of dependence on nonrenewable natural capital already face several macroeconomic challenges associated with managing those assets and the volatile revenues they generate. However, they also face longer-term challenges—such as the global low-carbon energy transition—that might jeopardize the future value of their wealth.

Over the past two decades, many countries have taken advantage of high commodity prices and increased the depletion rates of their nonrenewable natural capital. However, despite high levels of production, and significant revenues generated by this production that could be invested in other forms of wealth, nonrenewable wealth remains a significant share of total wealth in many countries. In fact, despite being a depleting resource, 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, however, has proven risky. Price drops since 2014 have seen nonrenewable wealth crash by 35 percent in just four years—down from US$46 trillion to US$30 trillion by 2018. In addition, unit costs have increased because extraction of nonrenewable natural resources has become more difficult. Nonrenewable resource–rich countries have failed to diversify their asset base; instead, many have seen a rising concentration in their wealth accounts. This may prove challenging as countries face new risks on the horizon.

The low-carbon transition may significantly alter the demand for and prices of fossil fuels that emit carbon dioxide. It may also alter the demand for metals and minerals required for low-carbon technologies such as batteries and wind turbines. There may be falling rents available to fossil fuel–rich countries in the future and uncertainty in the demand for different minerals and metals as new technologies are adopted or become obsolete. This means there is an even greater premium on a diversified asset portfolio designed to increase resilience to future risks and the ability to achieve sustainable prosperity.