Devalued Money and Depleted Resources: The Ecological Consequences of Monetary Policy in North Africa

Introduction

In October 2025, tens of thousands took to the streets in the Tunisian coastal city of Gabes after the country’s General Labour Union (UGTT) called for a general strike to protest what locals have called an “environmental assassination”. The crisis was triggered by the pollution produced by the city’s giant phosphate complex. Once celebrated as a symbol of Tunisia’s industrial modernity, the complex is today condemned for polluting the region’s air, plants and water, and for driving a sharp increase of cancer and respiratory diseases rates. In the weeks preceding the protest, more than 200 people in Gabes were hospitalized for respiratory conditions due to the plant’s emissions of phosphogypsum and gas residues. “Even Gabes’s pomegranates now taste like smoke”, said a local resident describing the situation in the city.^[1]

These types of localized environmental and health harms proliferate not only across North Africa but the whole of the global south. Take for example the cement industry in Egypt. Residents of Wadi al-Qamar neighborhood in Alexandria have for years been exposed to the toxic emissions produced by the Titan Cement factory located meters from their homes. This led many residents to suffer from chronic respiratory illnesses. After years of filing complaints to official environmental authorities yielded no results, victims had no choice but to seek redress in the courts. Hearings on their case began nearly a decade ago. Just recently, they did win compensation for the health damages caused by the plant’s pollution. Alas, the victory was more exception than rule, testifying to the severity of the environmental harm rather than to the judicial system’s general willingness to protect the victims of industrial excess. And despite the court ruling (which Titan Cement initially appealed), the company continued to drag its feet in making the payments owed.^[2] 

All this proceeds against a backdrop begging questions as to the actual objectives of the global north’s greening agenda. Recent investments made by multilateral lenders in North Africa point to a significant misalignment between the north’s goals and the south’s needs. This is exemplified by a recent IFC-issued credit line for solar-powered phosphate projects in Morocco^[3] and the EBRD’s backing of hydrogen-based cement upgrades in Egypt.^[4] Focused solely on carbon metrics, both financial arrangements seek only to replace fossil energy with renewables during the respective production processes. As such, the loans do not address the other ecological harms associated with phosphate and cement production–e.g. water pollution and depletion, air pollution, ecosystem damage. They also do nothing to alter the fundamental character of the relation binding the economies of Europe to those of North Africa. Today as in the past, this is a relation premised on extraction and unequal exchange. Europe’s near-shoring of much of its heavy industry to the southern shores of the Mediterranean testifies as much. Done with an eye on supply chain security and cleaning up the homeland, near-shoring is leading to a substantive transfer of ecological damage to countries like Egypt, who, desperate as ever for hard currency,  have stepped in as key partners in this European initiative. The surge of high polluting, energy-intensive exports presently departing Egyptian ports for Europe, in fact, has been large enough to even gain notice at Reuters. As the news agency reported a few months back, “the higher (industrial) output in Egypt has emerged just as production of the same commodities has decreased in Europe, and highlights a growing trend in the re-shoring of smokestack sectors away from high energy-cost locations and areas with pollution controls”.

If markets, classes and nations are bound in dialectical unity, what governs this unity in the era of the green transition? Surveying evidence gathered in the Environmentally Extended Multi-Regional Input–Output (EEMRIO) database, we will propose that the green transition is being governed by forms of exchange more environmentally destructive to the global south than those practiced in colonial times: In the colonial period, after all, extremely polluting industries–such as coal mining, steel and textiles–were still concentrated in the global north.

We put forth this proposition in view of differentials both in the ecological intensity of exports and currency valuations. Adopting a per-monetary-unit approach rather than a total volume of resource transfer approach–the latter being favored by most scholars working on ecologically unequal exchange^[5]–our research offers a precise determination of the ecological losses embedded in each unit of commercial exchange. It also clarifies the extent to which discrepancies in currency values mediate the spread of ecological loss.

Unequal Exchange in the Modern Day: Monetary Dynamics and the Distribution of Ecological Pain

One of the organizing principles of global capitalism and as such, of the green transition, is unequal exchange. Playing an essential role here is the hierarchy of national currencies. By dint of this hierarchy’s discriminatory logic, countries in the global south, inclusive of North Africa, are today absorbing, and systematically so, disproportionate ecological burdens in engaging in international trade. 

For the likes of Egypt and Tunisia in particular, monetary dynamics have weighed on proceedings as follows. Under the pressure of financial markets and the guidance of international financial institutions (IFIs), policymakers and capitals have persistently sought external competitiveness through a familiar two-step: undervaluing local currencies and leveraging comparative advantages in the production of low-price and resource-intensive commodities. Abiding by the terms of classical trade theory promoting specialization and an International Division of Labour (IDL), this is a strategy meant to resolve structural trade deficits. In reality, however, it has begotten resource depletion and ecological degradation while doing little to alleviate recurring strains on the current account. Effects on resource depletion and ecological degradation derive in part from currency devaluation: Devaluation makes it more attractive for foreign and local capitals to develop polluting and resource-intensive production in devalued economies. To understand why, consider that with the currency weakened, the relative costs of investment and labor compensation is cheapened just as the competitiveness of outputs on international markets for commodities and simple manufactures is heightened.

However, the weakening of the currency also has the effect of raising the price of imports. Moreover, with time, the terms of trade (TOT) and real (i.e. accounting for inflation) and sometimes nominal exchange value of the commodities being produced tends to decline. This is due to a handful of structural properties baked into the international trade system–specifically, oversupply, extreme competitiveness for lower value-added goods and services, and  differences in the price and income elasticity of demand for non-essential capital-intensive versus essential resource-intensive  goods and services. Hence, the strategy being adopted tends not to ease trade deficits just as it requires that more land, water, and energy be extracted to maintain the same levels of hard currency revenues.

Nor is this the only way that currency dynamics facilitate unequal exchange. Also factoring is the spatial relativity of currency value. This can be observed through mapping the geographic unevenness of a currency’s Purchasing Power Parity (PPP). Specifically, it is almost always the case that the purchasing power of currency issued by a high income country (HIC) will be far greater when spent within a lower middle income country (LMIC) rather than at home. Substantively, this value disparity constitutes a subsidy for HIC firms operating abroad–and presents obvious opportunities for arbitrage. For LMICs, contrarily, the disparity creates a ‘distortion factor’ which serves to systemically suppress domestic wages and commodity prices, as Josef Köhler has documented.^[6]

And also pushing in that same direction of wage and commodity price repression, of course, is the very structure of global value chains (GVCs). With few exceptions, GVCs evince monopolies and monopsonistic properties on the buyer side. A handful of firms from the global north hoard intellectual property and with it, a claim to the lion’s share of value generated in the production process. Through branding and marketing power, these same firms also control access to final consumers. The latter especially weighs on the producers of primary goods such as Egypt and Tunisia. Its effects are visible in the staggering differentials separating the price that an exporter receives for its product and the one consumers pay for that product at the retail level in the importing country. For a sense of scale, the example of Egyptian oranges may be instructive: In some instances, the price received by the Egyptian exporter of an orange has been reported as being as low as 10% of the retail price in the importing country.^[7] Materially, this means that the capital accumulated through the sale of an orange is almost entirely captured in the importing country, split between a coterie of importers, transporters, retailers and governments (via value-added taxes in the latter case). It also means the Egyptian exporter must increase the volume of his/her sales and with it, the ecological footprint of production, in order to grasp at profitability.

Undervaluing the environment

Beyond the orange example, the empirics demonstrate quite clearly how unequal exchange more generally taxes the ecologies of North Africa. In the first instance, one sees that a sizable portion of the region’s total exports are made up of commodities characterised by high ecological intensity and low value such as crops, cement, phosphates, and textiles. With an export basket biased in this manner, commercial exchange engenders enormous ecological losses. Evaluated in terms of water-dollar terms, North Africa’s average monetary return on freshwater use is about $10 per cubic meter. This figure is consistent with the average yields observed in middle income countries. Contrarily, high income countries (HIC) earn on average $57 for every cubic meter of water withdrawn.^[8] And cavernous though this gap is, it does not tell the full story: Egypt’s agricultural exports have a return of about $0.5 for every cubic metre of water used, less than 1% of the average monetary return on water in HICs .^[9]

Homing in on the Monetary Domain

Per our thesis, the empirics also affirm that these differentials in the pollution generated through trade are highly impacted by differentials in currency values. This is most easily tracked across Egypt’s contemporary history.

With the International Monetary Fund serving as the handmaiden of devaluation, between 2016 and 2024, the Egyptian pound fell from an exchange value of EGP 7 to EGP 50 per USD. As would have been anticipated by Fund economists, the currency’s weakening did boost export volumes for agricultural goods, which became relatively cheaper for importers largely based in Europe and the Gulf.^[10] However, growth in volume came at enormous cost: With the per unit hard currency revenues being generated through agricultural exports falling lower due to the EGP’s descent, export volumes needed to be significantly scaled to derive the same pre-devaluation dollar yield.

To see the moving parts, let’s return to oranges. First consider that the average export price per ton of Egyptian oranges for the years preceding the 2016 devaluation (2008–2016) was $513 per ton, compared to $473 per ton for the post-devaluation period (2017–2023).^[11] And things got much worse thereafter: In 2024, the price per ton reached $150, despite the dollar itself shedding exchange value last year. Moreover, with the dollar’s own purchasing power declining markedly for more than a decade–a dollar today only fetches about 70% of what it did in 2012–the real return generated by orange exports is even less than these distressing numbers suggest. If the likes of Egyptian oranges managed to capture an unprecedented share of the European market last year, then, it was only because the export price had collapsed to an unsustainable $0.15 per kilogram.^[12]

Ecologically, the consequence of intensifying extraction to cancel out the effects of currency loss were substantial. After all, citrus cultivation is among the most water-intensive agricultural activities, and Egypt is already a profoundly water-stressed country. In growing more oranges just to sell them for a pittance, Egypt ended up earning 100 times less on every 1000 litres of water embedded in its agricultural exports (about $0.5^[13]) than high-income countries earn on an average export. Leaving aside costs in terms of energy, labour, associated environmental degradation, the trade can only be conceived as a dreadful loser.

Nor is the case of Egypt exceptional within North Africa. This monetary-ecological dynamic is well at work in Tunisia, too. The depreciation of Tunisia’s dinar which commenced in the mid-2010s has not only been followed by worsening trade deficits^[14]: it has coincided with the increased exports and declining hard currency yields (on a per unit basis) for resource intensive commodities such as olive oil.^[15] The last fifteen months have been especially bad in this regard, with the prices fetched by olive oil producers tanking by huge margins.  As this has come during a time of long term drought in the Maghreb region and Southern Europe, Tunisia’s redoubling of olive cultivation has required the deployment of waters sourced from scarce groundwater.^[16] The long-term ecological effects of this are certain to be pronounced.

Zooming out, it bears mentioning that agricultural commodity prices have been on a downslope since 2011^[17], a period when many LMICs  experienced currency devaluations as part of IMF structural adjustment programmes.^[18]

Towards a just ecological revaluation

With global carbon emissions barrelling past tipping points, ecological sustainability coming into question in many parts of North Africa, and balance of payment strains rendering austerity a fixture of the policy regime in Egypt and Tunisia, it is critical that the system of exchange driving these outcomes finally be addressed. In the global south, this will minimally require that policymakers abandon policies of competitive devaluation and instead promote strategies that reflect the true ecological cost of production. The latter will entail identifying where points of leverage exist in the trade system and coordinating with regional peers to most durably exploit them. 

Concerning points of leverage, the low Price Elasticity of Demand (PED) for key North African exports offers policymakers a real opportunity.^[19] With Europe especially having few immediate alternatives for certain crops and minerals, a coordinated strategy supply management arrangement might allow for reductions to export volumes without incurring meaningful drops in export revenues. This is because planned cuts to supply should generate positive price effects for the goods in question. The duration of the effect could vary by good: It is possible that a meaningful jump in the price of phosphates would make extraction from the huge deposits discovered in Norway commercially viable and in so doing, potentially risk North Africa’s access to the European market. Nevertheless, this in and of itself would not be the worst outcome: a drop in demand offset by a spike in prices would provide ecological relief to countries like Egypt without eating into hard currency revenues. Indeed, the price outlook for a supply cut is strong, if slightly less for products like olive oil where there are close substitutes (butter, rapeseed oil) on the market. Were commodities producers in Sub-Saharan Africa, southern Europe, West Asia and North Africa  integrated into the coordination framework, the potency of restricting supply would be even more enhanced. Ultimately, in managing the supply of primary goods, North Africa could not only reduce the social and ecological footprint of its existing export basket: it could, through wise investment of the revenues gained, open a window to capture more of  of  global value chains (i.e. investing in processing, branding, transportation infrastructure, etc.).

This would hardly be the first time that such an intervention in the marketplace was attempted. Managing commodity supply through coordinated export or production controls has, in fact, long been a lever through which states and firms influence global prices. Early in the twentieth century, private corporate alliances such as the U.S.-based Copper Export Association,^[20] and several international aluminium cartels, sought to regulate output and sustain prices for their respective commodities.^[21] In the wake of the Great Depression, the Roosevelt administration institutionalized this approach through the Agricultural Adjustment Act of 1933, which mandated production cuts across major crops to stabilize collapsing agricultural prices.^[22] Post-war decades, meanwhile, saw the proliferation of international commodity agreements covering commodities such as tea, rubber, sugar, coffee, and copper, which attempted to influence supply through export restrictions and production quotas.^[23] And we have abundant examples from the present day, too. The Organization of Petroleum Exporting Countries’ (OPEC) management of oil supplies is perhaps the most obvious. But we can also consider Indonesia’s 2020 ban on nickel exports, which led to a sharp rise in global nickel prices and strengthened the country’s bargaining position in the fast-growing battery supply chain.^[24] Likewise, India’s temporary suspension of non-basmati rice exports in 2022–2023 led to a spike in world rice prices. The latter two cases show the power that even a single large producer can exert on global commodity markets. A commodity alliance containing within it multiple major exporters of the same commodity should certainly be able to do the same.^[25] In coupling price gains with ecological premia, such an alliance could be the start of a more sustainable and resilient  tomorrow for North Africa.

Downstream from the brass tacks of trade, policymakers across the global south should also demand that ecological costs be integrated into international trade accounting. This means moving beyond conventional trade statistics to report the environmental load per export dollar, making exports’ ecological costs transparent and quantifiable. This would provide a tool for conducting more effective Environmental Impact Assessments (EIAs) for export and investment decisions that go beyond narrow carbon metrics.

Conclusion

In putting differentials in the per unit ecological cost of exchange front and center, the link between systemic currency undervaluation and the accelerating degradation of North Africa’s natural and ecological capital becomes unmissable. As our research shows, North African exports embed dozens of times more resources, labour and localised ecological harm than their HIC counterparts. This stark imbalance is not an outcome of inefficiency but the designed result of a global price regime that systematically undervalues the region’s commodities, labour, and natural resources.

The repeated implementation of currency devaluation policies, exemplified by the collapse of export prices for water-intensive commodities such as Egyptian oranges and Tunisian olive oil, is currently compelling the region to deplete its finite and precious resources at fire-sale prices merely to satisfy debt obligations and achieve marginal trade balance improvements. A pivot must be made for the region to have the future it deserves. As we contended in the previous section, such a pivot should entail an end to competitiveness-minded currency devaluations–and the embrace of a coordinated strategy for ecological revaluation. Philosophically speaking, it might also entail redefining our notions of success and prosperity. As is becoming increasingly clear, the welfare of nations is not measured in its volume of exports but in its capacity to regenerate the resource base rather than deplete it, thereby providing a healthy environment, social security and leisure  to its citizens. Fighting for a global pricing system that accurately reflects the ecological and labour cost of production is essential for North Africa to make welfare gains of the second kind. It may also be the region’s last chance to avoid turning into a ‘sacrifice zone’–a place forsaken to sustain what are ultimately unsustainable global consumption patterns.

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This publication has been supported by the Rosa-Luxemburg-Stiftung. The positions expressed herein do not necessarily reflect the views of Rosa-Luxemburg-Stiftung.

Photo Credit: Jbdodane “Port for Phosphate Export from the Bou Craa Mine”, Flickr (2013)

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^[1] Al Jazeera. “General Strike Shuts down Tunisia’s Gabes over Pollution Crisis.” Al Jazeera, October 21, 2025. https://www.aljazeera.com/news/2025/10/21/general-strike-shuts-down-tunisias-gabes-over-pollution-crisis.

^[2] Egyptian Initiative for Personal Rights (EIPR), “بعد معركة قضائية دامت 10 سنوات: تيتان تبدأ تعويض ضحايا انتهاكاتها البيئية” [After a 10-Year Legal Battle, Titan Begins Compensating Victims of Its Environmental Violations], March 12, 2025, https://eipr.org/press/2025/03/بعد–معركة–قضائية–دامت-10-سنوات–تيتان–تبدأ–تعويض–ضحايا–انتهاكاتها–البيئية.

^[3]  International Financial Corporation (IFC). “IFC and OCP Group Partner to Build Solar Plants, Green Fertilizer Production in Morocco.” IFC, 2023. https://www.ifc.org/en/pressroom/2023/ifc-and-ocp-group-partner-to-build-solar-plants-green-fertilizer-production-in-morocco.

^[4] European Bank for Reconstruction and Development (EBRD). “EBRD and EU Foster Energy Efficiency in Egypt’s Cement Industry.” European Bank for Reconstruction and Development (EBRD), 2025. https://www.ebrd.com/home/news-and-events/news/2025/ebrd-and-eu-foster-energy-efficiency-in-egypt-s-cement-industry.html.

^[5] Ecologically Unequal Exchange (EUE) refers to a field of study in political ecology and world-systems theory that examines how high-income countries systematically appropriate more biophysical resources such as land, energy, and materials through an International Division of Labour and trade, effectively outsourcing environmental costs of production to lower-income countries. It argues that structural inequalities in global trade allow wealthier nations to sustain consumption and growth by externalizing ecological degradation and labor intensity to the Global South. Key contributions include Bunker (1985), Hornborg (1998), and more recent empirical work by Dorninger et al. (2021) and Hickel et al. (2022), which quantify the total material and energy flows embodied in traded commodities.

^[6] Gernot Köhler, “Estimating Unequal Exchange: Sub-Saharan Africa to the World.” Accounting for Colonialism, 2023, 297–315. https://doi.org/10.1007/978-3-031-32804-6_14.

^[7]  East Fruit. “Prices for Oranges in Egypt Have Fallen to 15 Cents per Kg – How to Find New Markets Urgently?! .” East Fruit, April 22, 2024. https://east-fruit.com/en/news/prices-for-oranges-in-egypt-have-fallen-to-15-cents-per-kg-how-to-find-new-markets-urgently/.

^[8] Our World in Data. “Water Productivity, GDP per Cubic Meter of Freshwater Withdrawal.” Our World in Data, 2025.https://ourworldindata.org/grapher/water-productivity?mapSelect=MAR~TUN~EGY~LBY~DZA~OWID_HIC~OWID_UMC~OWID_LMC

^[9] Osama Diab, “التكلفة المرتفعة للأسعار المنخفضة: صادرات الزراعة المصرية,” Almanassa, November 2025, https://almanassa.com/stories/27968.

^[10] Daily News Egypt. “Egypt’s Agricultural Exports Surpass 7.2 Million Tonnes in 2025.” Dailynewsegypt, September 22, 2025. https://www.dailynewsegypt.com/2025/09/22/egypts-agricultural-exports-surpass-7-2-million-tonnes-in-2025/.

^[11] Omnya Ahmed Saad El-Azazy and Samy Ghenmy. “An Economic Study of the Competitiveness of Egyptian Oranges in the Markets of the Gulf Cooperation Council Countries.” Alexandria Journal of Agricultural Sciences 70, no. 4 (2025): 390–434. https://doi.org/10.21608/alexja.2025.390715.1143.

^[12] East Fruit. “Prices for Oranges in Egypt Have Fallen to 15 Cents per Kg – How to Find New Markets Urgently?! .” East Fruit, April 22, 2024. https://east-fruit.com/en/news/prices-for-oranges-in-egypt-have-fallen-to-15-cents-per-kg-how-to-find-new-markets-urgently/.

^[13] Osama Diab, “التكلفة المرتفعة للأسعار المنخفضة: صادرات الزراعة المصرية,” Almanassa, November 2025, https://almanassa.com/stories/27968.

^[14] Ben Sik Ali, Ameni. “Understanding the Devaluation of the Dinar.” https://www.economie-tunisie.org/, 2023. https://www.economie-tunisie.org/sites/default/files/fiche_reforme_devaluation_eng.pdf.

^[15] See: International Olive Council, “Olive oil statistics June/July 2025”, Report (Madrid, Spain).

Milling Middle East & Africa Magazine . “Tunisia’s Olive Oil Export Volumes Increase as Revenues Decline amid Global Price Crash .” Milling Middle East & Africa Magazine , August 26, 2025. https://millingmea.com/tunisias-olive-oil-export-volumes-increase-as-revenues-decline-amid-global-price-crash/.

^[16] Knaepen, Hanne. “Climate Risks in Tunisia.” Cascades, February 2021. https://www.cascades.eu/wp-content/uploads/2021/02/Climate-risks-in-Tunisia-Challenges-to-adaptation-in-the-agri-food-system-1.pdf.

^[17] IndexMundi. “Commodity Agricultural Raw Materials Index Monthly Price – Index Number.” IndexMundi, 2025. https://www.indexmundi.com/commodities/?commodity=agricultural-raw-materials-price-index&months=.

^[18] IMF Monitor. “Conditionality.” IMF Monitor. Accessed October 21, 2025. https://www.imfmonitor.org/conditionality.

^[19] See: Christian Bogmans, Andrea Pescatori, Ivan Petrella, Ervin Prifti, and Martin Stuermer, “The power of prices: how fast do commodity markets adjust to shocks”, Working Paper 24/77: International Monetary Fund (2024).

Thibault Fally and James Sayre, “Commodity trade matters”, Working Paper 24965: NBER Working Paper Series (2018).

^[20] Rausser, Gordon & Stuermer. “A Dynamic Analysis of Collusive Action: The Case of the World Copper Market, 1882-2016.” MPRA Paper, February 2, 2020. https://ideas.repec.org/p/pra/mprapa/104708.html.

^[21] Bertilorenzi, Marco. “Business, Finance, and Politics: The Rise and Fall of International Aluminium Cartels, 1914–45.” Business History 56, no. 2 (April 3, 2013): 236–69. https://doi.org/10.1080/00076791.2013.771337.

^[22] Bowers, Douglas, Wayne D. Rasmussen, and Gladys L. Baker. History of Agricultural Price-Support and Adjustment Programs, 1933–84. Washington, DC: U.S. Department of Agriculture, 1984. https://www.ers.usda.gov/publications/pub-details?pubid=41994

^[23] Radetzki, Marian. “Price Formation and Price Trends in Exhaustible Resource Markets.” In Trade, Competition, and the Pricing of Commodities, edited by Frédéric Jenny and Simon Evenett. London: CEPR Press, 2012. https://cepr.org/publications/books-and-reports/trade-competition-and-pricing-commodities.

^[24] Palaon, Hilman, and Robert Walker. “A Glimpse into Indonesia’s Nickel Policy.” Lowy Institute, August 23, 2024. https://www.lowyinstitute.org/the-interpreter/glimpse-indonesia-s-nickel-policy.

^[25] Nes, Kjersti, K. Aleks Schaefer, and Jisang Yu. “Economic Impacts of the Indian Ban on Non-Basmati Rice Exports.” Food Policy 134 (July 2025). https://doi.org/10.1016/j.foodpol.2025.102893.