A shared inheritance from natural resources?

How should we share natural resources with future generations? On #EarthDay, a group of global activists lay out their argument for the need for a shared inheritance.

By Simon Taylor, co-Founder & Board member of Global Witness, and co-Founder of Publish What You Pay; Saswati Svetlana, National Coordinator, Mineral Inheritors Rights Association, India; Mike McCormack, Director, Policy Forum Guyana; Patrick Bond, Distinguished Professor and Director of the Centre for Social Change, University of Johannesburg; and Rahul Basu, Research Director, Goa Foundation, India.

What kind of planet and society are we leaving our children and future generations?

Despite a 2023 United Nations climate summit commitment to phase out fossil fuels, there are no signs that society will stop consuming oil and gas. Moreover, for the sake of the energy transition, greater quantities of minerals are being extracted.

In the process, oil and mining companies run rough-shod over local communities, indigenous peoples and the environment. The current system is clearly unfair and relates to a deeply moral issue: what kind of planet and society are we leaving our children and future generations?

Everyone finds mining objectionable

Almost everyone finds some mining objectionable, be it the mine in our village or all coal mines in the world; mining from the oceans or extracting in protected areas.

Yet aside from the obvious need to halt the vast majority of fossil fuel combustion, almost no-one demands a complete stop to all extraction planet-wide. Because it would mean no more phones or cars, no iron or gold, and everyone would be living in houses made from plants. This is quite unimaginable, and many people’s living conditions still need to improve.

In mineral-rich countries, two visions exist simultaneously. At the local level, anti-extractivist communities rightly object to mines in their areas, while at the national level, there is hope that selling minerals would help eliminate poverty and bring prosperity (“resource nationalism”).

Consider some approaches to reconciling these perspectives.

Natural resources as a shared inheritance

First, where extraction does go ahead, all stakeholders must be treated fairly: extractors, employees and contractors, governments, local communities, the environment, etc. But a key stakeholder is usually forgotten: the owner of the minerals before extraction.

Nation states have permanent sovereignty over their natural resources. Ownership of minerals is usually assigned to some level of government representing a collective (state/province, tribe, etc.). In effect, minerals are held on behalf of the people that constitute the collective. And since the collective is a perpetual, multi-generational entity, the natural resources are the right of all future generations as well.

So second, since natural resources are a shared inheritance, from the mineral owner’s perspective, extraction is the conversion of mineral wealth into other forms of wealth.

We then have two choices:

Either the anti-extractivist way: leaving the minerals where they are, our children will inherit them like we did..

Or the resource nationalist way: extracting and reinvesting to ensure our children inherit total assets (including better education and new machinery) that are at least as valuable as the extracted minerals.

If extraction is essentially the conversion of wealth, then the extractor is merely an outsourced wealth management service provider who should be managed, regulated and paid accordingly.

The goal of the mineral-owning representative government should be zero loss in value in the conversion process. Unfortunately, huge losses are common place, and what is received is treated as income and consumed.

Between the extractor (and the global resource ‘value chain’), the politicians and their cronies, greed causes widespread human rights and environmental abuses.

Is “fair” mining the way forward?

Present and future generations are being cheated, and moreover, resource wealth stolen from them is being used to sustain the corrupt system.

In order to achieve fair mining, beyond zero loss when selling mineral wealth, the entire mineral sale proceeds must be invested in assets that retain value over generations. Norway’s oil fund, for example, is an endowment fund with inflation-proofing.

And the income from such funds should be distributed equally to the general population as a commons dividend. Future generations will inherit the fund and benefit from it.

Crucially, the dividend creates a link between the entire population and their fund and mineral inheritances.

From an economic standpoint, it is easy to show that this is superior to current best practice. And most of all, it is fair.

But extraction impacts other inheritances, so fair mining requires them to be properly addressed as well:

  1. To protect the environment and local communities, under the Precautionary Principle, we must create no-go areas, guarantee local communities’ Free, Prior and Informed Consent (FPIC), ensure strong environmental regulations, and prohibit potentially high-risk practices. We must cap extraction across multiple projects to limit cumulative damage.

Under the Polluter Pays Principle, we must require the Mitigation Hierarchy – avoid, restore, offset, compensate. We should leave future generations with more forests, clear streams, etc. than we have. Mining projects should improve the environment and leave the community better off, not simply avoid harming them.

Some minerals like fossil fuels have trans-national impacts, and this again requires both capping extraction globally as well as compensating for loss and damage.

  1. The jobs and income that extraction creates are also inherited opportunities that deplete with extraction. This understanding drives the widespread demands for local content, local procurement and local employment. Mineral owners must have the first right to these opportunities. Further, extraction must be capped to ensure future generations can also benefit from the income from extraction.
  2. Similarly, the opportunity to use minerals for useful things is a valuable one-time inheritance. This understanding drives some countries to designate some of their minerals as strategic reserves for future generations to use while importing minerals for their current needs.
  3. Another inheritance is the opportunity to use extraction to develop other aspects of the society. Some countries compel a new mine to create shared-use infrastructure at low incremental cost. Other countries insist on domestic value addition, with the eventual goal to create core competencies. As these are one-time opportunities, it is essential to capitalize on them.

What could this mean for civil society?

Protecting great inherited wealth against theft, loss or waste requires a mindset of stewardship to ensure we fulfil our duty to ensure future generations inherit at least as much as we did. This suggests potential global campaigns for civil society.

First, in order to prevent theft during the extraction process, the trustee/manager must implement a first-rate control system. This includes a high security mineral supply chain system, best practices from outsourcing contracts, system auditors, a whistleblower reward and protection scheme, etc.

Second, thieves should not be entrusted with humankind’s wealth, and minerals are a regular part of money laundering/terrorism finance. Fit and Proper Person Tests (and Integrity Due Diligence more generally) are essential for all involved in handling our wealth.

Third, we each have a duty to future generations to ensure that our shared inheritance is intact. Therefore, the people, as the real owners, should be empowered to verify that their duty to future generations has been fulfilled. This requires Radical Transparency including open access to the public to all data in real time at no cost. Extractors should be required by law to disclose all extraction information without exception. (This goes far beyond the Extractive Industries Transparency Initiative standard.)

To truly achieve intergenerational equity and sustainability, and avoid cheating future generations, the shared inheritance approach is a vital strategic underpinning for managing mineral wealth and extractives.

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