Can a Resource-Based Economy Achieve Sustainable Development?
An analysis of sustainable development in Russian regions within a resource-based economy. Environmental and economic efficiency, institutional innovations, and prospects for transitioning to nature-like technologies.
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Russia's economic growth in the 21st century was based on a commodity-driven model, which created risks of inequality and environmental problems. Through institutional innovations and redistribution of natural resource rents, relatively sustainable development was achieved in a number of regions. However, the transition to a new growth model requires the implementation of advanced environmentally efficient technologies, access to which is limited by sanctions.
Russia's economic growth in the new century has largely been built on exploiting natural resources—a model that risks generating excessive inequality and environmental hazards, amplified by climate change. Yet a series of innovations, including institutional ones, have enabled relatively sustainable spatial development and efficiency in several regional economies. Improving environmental and economic efficiency requires adopting advanced technologies that are less accessible under external constraints.
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In the new millennium, Russia's economy has predominantly relied on a commodity-based growth model, largely dependent on exports of oil, gas, and other minerals along with their primary processed products1. Can such growth be called sustainable for all regions of the country—that is, self-sustaining over the long term while balancing care for nature and future generations? And aren't the risks of this model too high going forward? Against the backdrop of temporarily higher prices and possible easing of sanctions on Russian hydrocarbons (resulting from conflicts in the Middle East), debates about future growth drivers have intensified.
In the new geopolitical environment, environmental and climate issues may seem less pressing, but they remain relevant. After all, developed countries will likely impose growing long-term environmental restrictions on exports of products with significant carbon footprints, while declining habitability for humanity still demands new global approaches to development economics.
For Russia's development, environmental and ecological changes pose significant threats that vary by region:
thawing permafrost in the North and mountains is destroying infrastructure, especially in oil and gas extraction areas;
an increase in dangerous natural phenomena is causing human suffering and economic damage2, as recent flooding in Dagestan confirms;
growing territorial inequality in access to a clean and safe environment increases the risks of social instability.
It's no coincidence that a separate block of Russia's national development goals through 2030 is tied to environmental well-being3, which also includes monitoring climate-active substances and implementing climate change adaptation programs.
What are sustainable development and environmental-economic efficiency?
In international academic literature, following the work of Russian-born Nobel laureate Simon Kuznets (1901–1985), an approach long dominated in which economic growth was considered the primary criterion of a country's success. Over time, however, it became clear that growth in gross domestic product (GDP) is often accompanied by rising inequality and environmental pollution, which undermines the opportunities of future generations4. And the planet's resources and the capacity of natural ecosystems turned out to be finite5. This gave rise to the concept of sustainable (self-sustaining) development6, which entails:
balanced economic growth based on more efficient use of resources, including natural resources;
harmonious social development7: equal and fair access to benefits for both current and future generations;
addressing environmental challenges: preserving natural ecosystems and reducing pollution.
With these principles in mind, the UN has developed Sustainable Development Goals (SDGs) through 2030.8 Most countries have declared their commitment to the SDGs, though their breadth and the lack of effective tools to compel countries to act make the entire agenda rather vague. Selecting goals and indicators remains a complex task and is often criticized.
Eco-economic efficiency is one possible indicator. An economy is considered more environmentally efficient if it produces more "clean" output with fewer resource inputs9 and reduced environmental damage. To calculate this, the author10 proposes using the ratio of non-commodity goods and services output to resource inputs (labor, capital, raw materials) and future costs (pollution). In this framework, the combination of economic growth and eco-economic efficiency can be considered an indicator that a sustainable development model (scenario) is being implemented.
Analysis of Long-Term Trends in Russia's Regions
In most regions, eco-economic efficiency has been rising since 2003, with the exception of crisis years. This is linked to the growing share of the services sector, which has a smaller environmental footprint, as well as the closure or modernization of a number of outdated facilities. Moreover, recent years have seen the implementation of projects to reduce polluted wastewater discharge and atmospheric emissions. Economic crises (2008, 2014, 2020) led to declining economic efficiency: output fell faster than resource inputs were reduced.
Leading the way in efficiency gains were Moscow, St. Petersburg, Sverdlovsk, Tomsk, Belgorod, and Kaliningrad regions—areas with a high share of knowledge-intensive services with low carbon footprints, well-developed environmental monitoring systems, and strong investment appeal for newer, more modern enterprises. In a number of northern and Siberian regions, efficiency declined due to the high share of extractive industries.
The sustainable development model was implemented in Russia in select years (2003–2007, 2010, 2012–2013, 2016) and was characteristic of a quarter of regional cases. In a third of cases, an extensive growth model was observed: GDP grew while efficiency declined.
In 43 out of 81 regions examined, the sustainable development model was implemented more frequently than other scenarios—for instance, for at least 11 years in St. Petersburg, Leningrad, Tula, Lipetsk, Vologda, Tambov, and Oryol regions.
Recommendations for implementing sustainable development policy
Based on the results of econometric analysis to identify factors for improving environmental and economic efficiency11, several measures can be proposed:
improve investment attractiveness and stimulate business activity in non-resource sectors by expanding preferential regimes, introducing regional and local investment standards, and prioritizing measures;
support the development of circular economy and bioeconomy, including the introduction of nature-based technologies, by prioritizing support measures and improving extended producer responsibility mechanisms;
as part of the strategy to achieve carbon neutrality by 2060, improve the energy efficiency12 of buildings and reduce the resource intensity of production by refining environmental standards, introducing eco-audits and new financial instruments: green bonds, emissions trading markets, etc., and applying the experience of the Sakhalin experiment to other regions;
expand the use of automated and independent environmental monitoringsystems, especially in cities, and develop hydrometeorological observation systems to prevent dangerous natural phenomena;
support the development of new technologies renewable energy sources and their deployment, especially in a number of remote territories: wind, solar, tidal, geothermal energy and others, including in partnership with Chinese partners;
in major cities, stimulate the development of public electric transport: fleet renewal, dedicated lanes, bike paths, charging stations, and more;
improve and expand the system of nature conservation areas and initiatives while expanding their educational function (ecotourism).
Conclusion: Nature-like Technologies—the Key to a New Growth Model?
Russia is a unique country, possessing the world's largest raw material reserves and, thanks to the scale of its natural ecosystems, exerting considerable influence on global climate processes. This makes it impossible to completely exclude the country from the global agenda and imposes certain constraints on the choice of its development scenarios.
The experience of several countries (Venezuela, Bolivia, Iraq, and others) shows that pursuing a commodity-based growth model without properly diversifying the economy and management systems to account for social and environmental-climate risks can lead to excessive wealth concentration, environmental degradation, and declining quality of life in certain territories (the "resource curse"). In Russia during the first quarter of the 21st century, such risks of spatial inequality were mitigated through specially created fiscal institutions aimed at accumulating and redistributing natural resource rents among regions and sectors. Such institutions include stabilization funds, intergovernmental transfer systems, development institutions, preferential regimes, and others. As a result, many regions have implemented a sustainable development model that combines economic growth with improved environmental efficiency. The most significant driver of the latter has been the launch of new enterprises in non-commodity sectors with more advanced technologies; environmental measures have also played their part.
Most territories still have significant potential for improving environmental-economic efficiency, while in several resource-based centers it has been steadily declining. Transitioning to a new development model requires a whole set of technological solutions, which have become less accessible under external constraints. China's example makes it increasingly clear that low-carbon economic transformation, including the development of nature-like technologies, can become a driver of economic growth, while falling behind in this global technology race poses threats to economic security13.
To answer the main question: sustainable development of a commodity economy is possible but limited, requiring additional efforts, while the risks of such a model are high and growing. "The Stone Age didn't end because we ran out of stones", and so the oil era will one day pass with the changing of technologies. The future depends on whether countries and regions can make the development and implementation of environmentally efficient technologies and corresponding supportive institutions an effective part of their long-term strategy—that is, combine economic progress with care for future generations.
