DP15680 The Effect of Nature's Wealth on Economic Development: Evidence from Renewable Resources
We study the causal effect of short-run variations in nature’s wealth on human and economic development. We focus on the ocean as a naturally occurring source of food and study early-life exposure to exogenous variation in the wealth of marine life near human settlements. Analyzing data on 36 low- and middle-income countries between 1972 and 2018, we estimate impacts by analyzing 0.5 million adult women and 1.5 million births. Negative shocks have a significant effect on mortality early in life, and long-lasting negative impacts on human capital and economic well-being. These effects operate through mild nutritional deprivation, in absence of contemporaneous changes in individual behavior and aggregate income. Both short- and long-run effects are amplified by overexploitation of marine resources, highlighting the role of nature’s wealth in insuring against short-run shocks. Aggregate estimates reveal that persistent negative shocks lead to considerable life loss in the long run.