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Sustainable economic development: on the coexistence of resource-dependent and resource-impacting industries

ABSTRACT This paper studies the interactions between harvesters, whose income depends on a renewable natural resource as a key factor of production (e.g., fisheries) and industries that can have important impacts on the renewable resource, but whose production does not depend on it (e.g., off-shore oil extraction) in the context of a growing economy. We examine these issues for a closed economy focusing on how the co-existence between these two sectors affects sustainable development and the well-being of the poor, i.e., the harvesters. We show that under certain conditions the existence and expansion of a resource-impacting industrial sector may be consistent with sustainable development. However, if these conditions are not met, growth of the resource-impacting sector leads to further resource depletion and may even threaten the feasibility of sustainable development.