Climate action is poised to punch a $9 trillion hole in petrostates’ budgets

Climate action is poised to punch a $9 trillion hole in petrostates’ budgets

The “resource curse” was coined in 1993 to describe a phenomenon British economist Richard Auty observed around the world: Countries richly endowed in natural resources often descended into grinding poverty.

Oil is a primary culprit. With few exceptions, economies sitting above rich reservoirs of fossil fuels develop anemic economies beset by corruption. Of 23 countries earning at least 60% of their export revenue from oil and gas—including Angola, Venezuela, and wealthy Middle Eastern countries like Saudi Arabia—only one is a democracy, Larry Diamond, a Stanford University political science researcher, writes in his book The Spirit of Democracy.

Now even that source of wealth is in jeopardy. A recent study by the Carbon Tracker Initiative, a nonprofit energy and financial think tank, found the 40 countries most reliant on fossil fuel income could see oil revenues fall by an average of 46%—a total of $9 trillion—over the next 20 years due to international initiatives to meet the Paris Agreement’s emission targets. Most of that pain will be borne by 19 countries home to 400 million people, about half of them in Nigeria and Angola.

But there’s plenty of budget pain to go around. Small nations such as South Sudan and Bahrain derive more than 70% of their revenue from petroleum and face comparable future shortfalls, while huge players that include Saudia Arabia (69% of government revenue from oil and gas), Russia (23%), Iraq (89%), and Mexico

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