Seven things to consider when managing non-renewable natural resources

19 Mar 2015 by Degol Hailu, Senior Advisor, Sustainable Development

Golding mining in DRCGold mining in the Democratic Republic of Congo, where production is booming but many diggers live in abject poverty. Photo: Benoît Almeras-Martino/UNDP DRC
Natural resource wealth offers enormous potential for achieving development goals. But without effective management, the wealth can be squandered. UNDP works with governments, the private sector and civil society to minimize the risks associated with building an oil, gas and mineral economy and optimize the benefits. Here are seven tips on how the development impact of these finite resources can be enhanced. Know your wealth. Most of the oil, gas and mineral resources in developing countries are yet to be discovered. Consequently, foreign companies that carry out exploration activities have pertinent geological information before governments do, creating bargaining asymmetry during contract negotiations. As the African Mining Vision notes, governments need to fully know their resource wealth to be able to negotiate as equals. Establish comprehensive legal frameworks. Several contracts and mining codes have been revised in recent years, usually when governments realize, sometimes under pressure from civil society, that tax rates are low, environmental protection is weak and re-settlement schemes are inadequate. Participatory and consultative measures are indispensable when drafting key legislation. Maximize revenues for development. The income earned from taxing resource extraction can be low, first, because of weak contract negotiating capacity, and second, due to lack of transparency and … Read more

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