Countries referred to as "banana republics" are those whose economies rely on the short-sighted and cheap sale of their natural resources. Once these resources are depleted, economic crises and poverty inevitably follow. Typically, such nations are former colonial territories where the economy and politics were largely controlled by corporations from the colonial power.

Now, in pursuit of quick, easy and short-term profits, Estonia has fallen into the same trap with its economic policy development.

For about a decade now, Estonia has been overharvesting its forests. Our forest reserves are shrinking, biodiversity is declining and the carbon stored in trees and soil is being released into the atmosphere. The European Union's carbon fines, which could reach into the hundreds of millions of euros, may ultimately wipe out the profits — profits that have primarily lined the pockets of private enterprises. However, the costs will have to be borne by society as a whole.

The state has granted tens of thousands of hectares of peatlands for mining. A large share of these mining companies is owned by foreign investors and over 95 percent of the extracted peat is exported. Estonia charges just €2.15 per ton for monetizing this resource, while the potential societal cost in carbon fines — based on current carbon market prices — stands at €70 per ton. The loss of natural habitats, the depletion of freshwater reserves and the diminished capacity to mitigate climate change will all be burdens shouldered by the Estonian people.

History has shown that the banana republic economic model — where the profits from natural resource exploitation go to a few businesses while the damages are left to local communities — is a disastrous choice. Against this backdrop, it is deeply concerning to read that Prime Minister Kristen Michal (Reform), who recently ousted the Social Democrats from the government, now plans to stimulate the economy by expanding the exploitation of natural resources even further.

The first steps in this direction have already been taken: Climate Minister Yoko Alender (Reform) recently traveled to Canada to promote Estonian phosphorite, even though we have yet to complete even the baseline studies or the strategic environmental impact assessments — let alone make any decisions about mining.

For the benefit of Estonia's economy, we should take the opposite approach. We must foster innovation and support knowledge- and technology-intensive small-scale production. The wealth of the Estonian people can only be increased by advancing industries that create high added value, based on our strong education system, scientific expertise and hard work — not by exploiting our natural resources.

Instead of building factories and mines that consume vast amounts of natural resources, we should focus on sectors that create long-term prosperity and preserve our environment for future generations.

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