Making natural resource revenue sharing work

10 Sep 2016 by Andrew Bauer, Senior Economic Analyst, Natural Resource Governance Institute , Uyanga Gankhuyag, Economist, UNDP and Sofi Halling, Policy Analyst, Extractive Industries, UNDP

Revenue sharing systems can compensate producing regions for environmental damage associated with mineral extraction. Photo: UNDP
Despite a peace agreement signed last year, Libya remains embroiled in violent conflict. At the heart of the conflict is oil, which accounts for more than 90 percent of government revenue. The vast majority is produced in the country’s east and south, while the commercial and administrative capital, Tripoli, is in the west. Just like in other parts of the world suffering from natural resource-fueled conflicts, disagreements over how national and subnational authorities should share the revenues from non-renewable resources are threatening the nation’s stability and future. Natural resource revenue sharing—the legal right of different regions to either directly collect some taxes from oil or mining companies or for the central government to distribute resource revenues to different regions according to a formula—has been proposed as one means of ending the Libyan war. Beyond their potential for bringing peace, revenue sharing systems can compensate producing regions for environmental damage and loss of livelihoods associated with oil, gas and mineral extraction. They can also serve as an acknowledgement of local claims over resource wealth, even in regions without conflict. … Read more

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