1. No category

DEVELOPING NON-OIL DEPENDENT ECONOMY THROUGH EXPLORATION AND
MARGINAL UTILISATION OF DIVERSE NATURAL RESOURCES
PROFESSOR AKANFE KOLAPO IGE
PROFESSOR OF ECONOMICS AND ECONOMETRICS
WEST COAST UNIVERSITY, PANAINA, BELIZE CENTRAL AMERICA
[email protected].
1
“From Policy to regulation, from networks to content and for understanding the needs of the very
diverse natural resources, supporting the entire ecosystem to improve quality of life is essential
for sustainable development”-Ige
INTRODUCTION
Natural resources, both renewable and non-renewable, and ecosystem services are a part of the
real wealth of nations. They are the natural capital out of which other forms of capital are made.
They contribute towards fiscal revenue, income, and poverty reduction. Sectors related to natural
resources use provide jobs and are often the basis of livelihoods in poorer communities. Owing
to this fundamental importance of natural resources, they must be managed sustainably.
Government plays the essential role in putting into place policies that ensure that resources
contribute to the long- term economic development of nations, and not only to short- term
revenue generation. Non-oil dependent countries can utilize various natural resources to develop
their economy and plan for the future, also turn the so-called –resource curse into an opportunity.
While being the foundation economic activity and development, natural capital (encompassing
natural resource stocks, land and ecosystems) is often undervalued and mismanaged. This
imposes costs to the economy and society, which may sometimes be considerable, shaving off
several digits of annual increase in the gross domestic product of a country. Limited possibilities
of substitution between natural and physical capital and the fact that the quality of natural capital
can change abruptly also introduces the potential for bottlenecks which can sustainably reduce
growth. Sustaining renewable resources largely concerns conserving the stocks of resources and
their quality, as well as maintaining a quantity of steady flows over an indefinite period of time.
Even though non-renewable resources cannot be sustained because of their finite stocks,
2
countries using these resources can achieve sustainability by investing the revenues derived from
hem into other forms of capital.
Many nations have experienced a resource- curse associated with poor development outcomes,
though the causes have differed. Poor economic performance in many natural resource- rich
economies may have been caused by weak resource management institutions and imperfect
structures of ownership and control in particular. Besides economic repercussions, the resource
curse may also lead to governance problems by manifesting itself through rent seeking and
corruption. Proper valuation and accounting of natural resources are necessary for robust
development planning. Just as necessary are transparent institutions and good governance.
Decision- making that is inclusive helps provide not only legitimacy for resource management
policies, but also ensures that the range of knowledge and social interests and values are
considered in policy- making. Managing natural resources generally entails also managing
competing demands and multiple resources and values as well as providing for environmental
protection, which requires an integrated approach. High- quality institutions that promote
economic growth are at the heart of good governance. This includes regulatory authorities that
are reliable and free of corruption, transparent and accountable; reliable property rights and
functioning markets; the absence of harmful subsidies that interfere with sustainable resource
use; the rule of law and adequate legal recourse.
II.THE ECONOMIC SIGNIFICANCE OF NATURAL RESOURCES
The economic significance of natural resources depends on the magnitude of two basic variables:
current flows of income and potential future flows of income. The first is largely a function of
production costs and market demand, and the second of natural resource endowments and
3
management planning. In order to understand the true importance of natural resources, both
current and future flows of income must be taken into account. The former can be a deceptive
indicator of how natural resources will contribute to economic development over time if income
is derived from the depletion of the natural capital. Managing natural resources sustainably- in
case of renewable resources- and as sources of revenue for investment in future growth- in the
case of non-renewable resource- allows resource rich countries to establish the foundation for
long term development and poverty alleviation.
III. CONTRIBUTION TOWARDS FISCAL REVENUE, INCOME AND POVERTY
REDUCTION
The wealth embodied in natural resources makes up a significant proportion of the wealth of
most nations, often more than the wealth embodied in produced capital, therefore making natural
resources management a key aspect of economic development. Many countries have seen
significant rises in revenue from natural resourced due to rise in commodity prices. Natural
resources such as oil, gas, minerals and timber are expected to continue to play a significant role
in resource abundant economies, as demand form rapidly growing economies increases, and as
supplies of non-renewable resources decline and renewable resource harvests approach
maximum sustained yield levels. Not surprisingly, countries richly endowed with natural capital
have the potential to derive significant current income from resources. In addition to providing
revenues to resources rich countries, natural resources can play a central role in poverty
reduction efforts. The poor generally depend upon natural resources directly for their livelihoods,
especially the rural poor. Consequently, policies that improve natural resources management can
have immediate and meaningful poverty reduction impact. Pro- poor natural resource
management policies include, among others
4
 Projects that improve the capacity of community based organizations to manage
resources;
 Assuring access to resources by providing clear land tenure and resource use right;
 Promoting tools such as participatory rural appraisal, strategic environmental
assessment, and poverty and social impact assessment.
Natural resources and intact, functioning ecosystem provide a – safety net for the poor,
particularly in times o financial crisis, providing food in the form of plant and animal wildlife
and fertile soils for subsistence agriculture, and fuel wood. In order to benefit be able to rely on
such- safety nets the poor must have access to resources and should also be involved in resource
management decision- making, thereby gaining a stake in the resources sustainably and avoiding
tragedies of the commons. Moreover, the revenues from natural resources, can contribute to the
development of human capital through investments in education and job training. Especially
during times when commodity prices are high, countries have the opportunity to use a portion of
the additional profits realized from the sale of natural resources to support pro-poor policies and
investments.
Employment and job creation potential
Policy makers must generally choose between competing values in designing policies for
natural resources management. If jobs are the highest priority, allocating quotas or harvesting
rights to a large number of small harvesters may be the preferred option. If maximizing exports
are the highest priority, a strategy of maximum sustained yield with a smaller number of large
firms may be preferable. This trade-off often occurs with fisheries, where larger but fewer boats
5
may be more efficient for harvesting fish for export, while a larger fleet of smaller boats will
employ far more fishermen.
In such situations, social considerations such as the value of communities and rural
livelihoods must also be taken into consideration. Natural resources generally form the backbone
of rural economies in low and middle income countries and, if managed wisely through sound
policies and institutions, can be used to generate growth that benefits the most vulnerable parts of
the population. Growth of rural economies can be promoted by governmental policies aimed at
supporting small and medium sized enterprises, based in many places on use of local natural
resources. A synthesis of objectives- growth, employment and long-term economic stability- can
be found in adopting policies that put countries on the path towards green growth. Natural
resources have the potential to provide a significant number of jobs. Even while the number of
people employed in traditional extractive industries has declined steadily around the world due to
mechanization and economies of scale, employment\in the renewable energy sector has risen and
has the potential to continue to rise over the long-term. In Germany alone, for instance, jobs in
the renewable energy sector has risen from 66,600 in1998 to 259,100 in 2006. In 2007,
renewable energy related industries provided nearly a million jobs. According to some estimates,
environmental protection in Germany employs 1.8million workers. Similarly, Sweden have had a
large and rapidly growing environmental industry for over a decade, which employed about
1.5% of the country’s labour force already in 1998.
Green jobs in agriculture are also on the increase, with studies showing that organic farms
provide more jobs per unit of production and sales than conventional farms. Sustainable, organic
agriculture requires smaller scale farms and less reliance on machines, and therefore generates
more employment. And while the prospects for job growth in the forestry sector are more mixed,
6
forestry provides steady employment for some 1 to 2% of the world’s workforce, while over a
billion people derive their livelihoods from forests. Afforestation initiatives linked to increasing
demand for wood fibre as well as carbon sequestration to mitigate climate change will provide
jobs in the coming decades.
History shows us how many countries can use natural resources to jumpstart their economies and
invest in the infrastructure, institutions, and quality public services needed to translate growth
into human development. Unfortunately, the role of natural resources in advancing sustainable
development is not so straight forward. Many studies suggest that countries endowed with
natural resources actually- on –average- grow more slowly than countries without such
resources. Many reasons are given; let me refer to two of them: widespread corruption and
patronage is widely recognized as an important reason. Corruption only denies countries and
people much need revenue- but can also undermine the legitimacy of governing systems and the
stability of societies. Evidence suggests that where there is no public taxation and rents are used
to ‘buy public support’- state- citizen compacts can fail to take root. The second reason to
highlight is the lack of capacity and difficulty of adding value to natural resources exploitation.
Where countries rely on its primary value, it can preclude the development of a wider production
base for growth. This has also been associated with growth that fails to impact the lives of
people- as fewer jobs are created and the poverty impact is muted. As natural resources play an
essential role in supporting the livelihoods of the majority of the world’s poor, improvements in
managing and extracting natural resources and practices can have huge repercussion on
ecosystems, the environment they rely on, as well as a country’s potential to meet MDGs. Of
course, it’s not all gloom and doom. What has been labeled a resource ‘curse’ is not
7
insurmountable. History suggests that being rich in natural resources is, in fact, not “a curse” at
all- but rather an opportunity that carries a risk- a risk that can be managed.
Natural resources undoubtedly play an important role in the economy of many countries.
Whether their contribution to development is positive or negative is, however, a contested and
difficult question. Arguably, countries like Australia, Botswana and Norway have gained
enormously over long period from their natural resources, others like Azerbaijan, Kazakhstan
and Russia have gained in economic growth terms but maybe at the expense of institutional
development, while in some countries, such as Angola and sierra Leone, natural resources have
been at the heart of violent conflicts with devastating effects for society. With many developing
countries being highly resource dependent, a deeper understanding of the sources and solutions
to the potential problem of natural resources is highly relevant.
“Having natural resources takes away incentives to develop other areas of the economy which
are potentially more important for long run growth”; “Natural resource- income can cause
corruption or be a source of conflict”, etc.
Looking at some of the starkest cases, the ”benefits” of resources can indeed be questioned. Take
the Democratic Republic of Congo for example. It is the world’s largest producer of Cobalt (49%
of the world production in 2009) and of industrial diamond (30%). It is also a large producer of
gemstone diamonds (6%), it has around 2/3 of the world’s deposits of coltan and significant
deposits of copper and tin. At the same time, it has the world’s worst growth rate and the 8 th
lowest GDP per capita over the last 40 years. The picture for Sierra Leone and Liberia is very
similar- they possess immense natural wealth, yet they are found among the worst performers in
terms of both growth and GDP per capita. While the experiences of countries such as Bolivia and
8
Venezuela are not as extreme, their resource wealth in terms of natural gas and oil respectively
seem to have brought serious problems in terms of low growth, increased inequality and
corruption.
At the same time, there are numerous countries that provide counterexamples to this idea. Being
the second largest exporter of natural gas and the fifth largest of oil, Norway is one of the richest
world economies. Botswana produces 29% of world’s gemstone diamonds and has been one of
the fastest growing countries over the last 40 years. Australia, Chile, Malaysia are other
examples of countries that have performed well, not just despite of their resource wealth, but, to
a large extent, due to it. Given these examples, the relevant question becomes not “Are resources
good or bad for development?” but rather “Under what circumstances are resources good and
when are they bad for development?” The interesting question is why some resource rich
economies are successful while others perform badly despite their immense natural wealth.
The most well- known economic explanation of the resources curse suggests that a resource
windfall generates additional wealth, which raises the prices of non- tradable goods, such as
services. This, in turn, leads to real exchange rate appreciation and higher wages in the services
sector. The resulting reallocation of capital and labour to the non- tradable sector and to the
resource sector causes the manufacturing sector to contract (so- called “de- industrialization”).
This mechanism is usually referred to as “Dutch disease” due to the real exchange rate
appreciation and decrease in manufacturing exports observed in the Netherlands following the
discovery of North Sea gas in the late 1950s. Of course, the contraction of the manufacturing
sector is not necessarily harmful per se, but if manufacturing has a higher impact on human
capital development, product quality improvements and on the development of new products,
this development lowers long- run growth. Some theories focused on the problems related to
9
increased volatility that comes with high resource dependence. In particular, it has been
suggested that irreversible and long term investments such as education decrease as volatility as
volatility goes up. If human capital accumulation is important for long run growth this is yet
another potential problem of resource wealth. The empirical support for the Dutch disease and
related mechanism is mixed. Some authors a resource boom causes a decline in manufacturing
exports and an expansion of service sector. But even the studies that do find evidence the Dutch
disease mechanism, usually do not analyze its effect on the growth rate. In principle, Dutch
disease could be at work without this hurting growth. Another problem is that the Dutch disease
theory suggests that natural resources are equally bad for development across countries. This
means that it cannot explain why some countries fail and others succeed at a given level of
resource dependence. The same goes for the possibility that natural resources create
disincentives for education.
Greater attention has been developed to the political- economic explanations of the resource
curse. The main idea in recent work is that the impact of resources on development is heavily
dependent on the institutional environment. If the institutions provide good protection on
property rights and are favorable to productive and entrepreneurial activities, natural resources
are likely to benefit the economy by being a source of income, new investment opportunities,
and of potential positive spillovers to the rest of the economy. However, if property rights are
insecure and institutions are “grabber- friendly”, the resource windfall instead gives rise to rentseeking, corruption and conflict, which have a negative effect on country’s development and
growth. In short, resources have different effects depending on the institutional environment. If
institutions are good enough, resources have positive effect on economic outcomes, if institutions
are bad, so are resources for development. In resource- rich countries with bad institutions
10
incentives become geared towards “grabbing resource rents” while in countries where
institutions render such activities difficult resources contribute positively to growth. If a
country’s institutions are bad, “appropriable” resources (i.e., resources that are more valuable,
more concentrated geographically, easier to transport, etc.- such s gold or diamonds) are more
“dangerous” for economic growth. The effect is reversed for good institutions- gold and
diamonds do more good than less appropriable resources. In turn, better institutions are more
important in avoiding resource curse with precious metals and diamonds than with mineral
production. If one concludes that natural resources differ across institutional environments it is
an obvious possibility that natural resources have an impact on the chosen policies and
institutional arrangements. For example, access to resource rents may provide additional
incentives for the current ruler to stay in power and to block institutional reforms that threaten
his power, such as democratization. Several papers show that in bad institutional environment
natural resources increase corruption.
Various literature points to economic as well as political connected to natural resources. Even if
some issues remain contested it seems clear that many of the economic problems are solvable
with appropriate policy measures and in general that natural resources can have positive effects
on economic development given that right institutional setting. However, it seems equally clear
that natural resource wealth, especially in initially weak institutional settings, tends to delay
diversification and reforms, and also increases incentives to engage in various types of rentseeking. In autocratic settings resources incomes can also be used by the elite to strengthen their
hold on power. Successful examples of managing resource wealth, such as the establishment of
sovereign wealth, funds that can both reduce the volatility and create transparency and also
smooth the use of resources incomes over time, are not always optimal or easily implementable.
11
Using the money for large investments could be perfectly legitimate and consumption should be
skewed towards the present in a capital-scarce developing settings but no matter what we think
we know about the optimal policy it still has to be implemented and if the institutional setting is
weak the problems are very real. This is just because of potentially corrupt governments but also
due to difficulty to make credible commitments even for perfectly benevolent politicians. Many
political leaders in resource rich countries have pointed to the hopelessness of their situation and
have expressed a wish to rather without to be without their natural wealth. Such conclusions are
unnecessarily pessimistic. Natural resources have a tendency to impede good institutional
development, there are possibilities. Some countries have succeeded in using their resources
wealth to develop and arguably to strengthen their institutions. Even if it is often noted that
Botswana had relatively good institutions already at the time of independence, it was still a poor
country with no democratic history facing the challenge of developing a country more or less
from scratch. And at the time of independence they also discovered and started mining diamonds
that have since been an important source both of growth and government revenue. This
development has to a large part been due to good, prudent policy. There is nothing inevitable
about the adverse effects of natural resources but resource-high developing countries must face
the challenges that come with having such wealth and use it wisely. A first step is surely to
understand the potential problems and to be explicit and transparent about how one intends to
deal with them.
12
IV. SUSTAINABLE DEVELOPMENT AND ENVIRONMENTAL ISSUES
As a reading of the literature makes evident, the policy and research focus on urgent
environmental issues has been marked by fluctuating patterns over the past few decades. The
first wave of massive environmental concern in the 1990s, mainly called attention to negatives
externalities and their social costs in the form of environmental pollution, and resource depletion
(notably on the fields of energy resources, minerals and fisheries) connected with the industrial
structure of our economies. This interest was further intensified by the heightened public
awareness of the deleterious consequences of various specific chemical processes, technologies
and forms of household consumption (for example, smoking and automobile use).
In the past decade, however, a shift has taken place from partial environment analysis to a focus
on, first, global-regional interactions and, second, economic-ecological interactions of
environmental problems. There is an increasing recognition that a more coherent approach is
needed in dealing with environmental issues, including land use, urban development, common
property resources, spatial inequality, and intergenerational equity.
Global-level environmental interactions have been marked by two features. One is the
globalization of environmental impacts. The other is the regionalization of an often hardly visible
but quite substantial decline in the quality of global environmental resources.
The global effects of environmental decay- reflected among other things in alarming phenomena
such as ozonization, desertification, and acid rain- came in most cases as scientific surprises and
were hardly addressed in actual policymaking until recently. But especially since the publication
of the report of the Brundtland Commission (World Commission on Environment and
13
Development, 1987 [WCED]), we have witnessed a significant increase in interest in global
environmental problems.
In addition to global issues, a large number of small-scale and marginal changes at the local or
regional level have clear global dimensions. A wide variety of incremental pollution phenomena
(for example, persistent micro-pollutants), seemingly, hardly important by themselves, have
severe accumulative and synergetic environmental impacts. All such impacts call for more
coherent local environmental planning. In this respect, local land use is becoming one focal point
of concern for policymakers and researchers.
The spatial issue can thus be examined from the viewpoint of local trends causing global effects
and global trends leading to local effects. An illustration of the first type of problem is poor
natural resource management in some countries, which threatens both the physical basis of these
countries and also destroys the vulnerable ecosystem of the planet to an unprecedented extent.
Other illustrations of local-to-global influence are cases of overgrazing and deforestation that
may lead to wider soil-erosion, sedimentation, flooding, and salinization.
The second type of problem concerns the local-scale environmental effects that emerge from
global trends. Acid rain, erosion desertification, destruction of the ozone layer, eutrophication,
ocean pollution, and resource extraction are taking place on a worldwide scale, but their effects
can clearly be observed at a local or regional scale. Thus, the global-regional interdependence of
environmental problems confronts us not only with quantitative changes but also qualitative (or
structural) long-term changes at all places on earth (see Bartelmus 1986). This calls for a new
view of spatial-economic-environmental problems and policy issues.
14
The economic-ecological interactions arise in general because concerted socio- economic
development requires a compromise between material growth and environmental constraints,
including environmental quality and vital natural resources. Albeit in different countries, the
conditions under which a balanced development may come about will show much variation, the
conflicting nature of the above objectives is evident in all countries. Especially in the short-run,
the conflict between material growth and environmental quality may be rather severe; in the
long-run, a mitigating effect may emerge, because continued economic growth needs a sound
resource base, and structural protection and upgrading of environmental quality in turn
presuppose economic growth. Such a coevolutionary development (Norgaard 1984), in both the
developed and developing world, takes for granted that economy and ecology ultimately do not
conflict with one another. But such a coevolution- even one that is also based on equitable
development options for present and future generations- does not necessarily require mutual
positive spillover effects between the economy and ecology. It is this latter idea that is more
recently echoed in the motion of ecologically sustainable economic development.
Given the growing prominence of environmental problems, it is no surprise that sustainable
development has become a key catch phrase in economic planning and resource management.
According to the Brundtland report (WCED 1987), the idea of sustainable development reaches
far beyond environmental protection, as it means a process of change in which exploitation of
resources, direction of investments, orientation of technological development, and institutional
changes are made consistent with future as well as present needs. Consequently, sustainable
development is not a fixed state of harmony but rather a balanced and adaptive process of
change. This would then be characterized by a dynamic Pareto-optimal trajectory in which
15
progress in one system-that is, either the economic or the ecological- would not be to the
detriment of the other systems.
Sustainability takes for granted a balance between economic development; all quantitative and
qualitative changes in the economy that offers positive contributions to welfare- and ecological
sustainability- all quantitative and qualitative environmental strategies that serve to improve the
quality of an ecosystem and hence also have a positive impact on welfare. It is noteworthy that
the concept of welfare has to be understood here in broad sense as the individual or collective
utility derived from the availability or use of scarce commodities, including environmental
goods, whether such utility attributes can be measured in monetary terms or not (see Nrjkamp
and Soeteman 1988). Consequently, toxic materials, ionizing radiation, the beauty of the
landscape, well-preserved monuments, traffic safety, wholesome food, and availability of shelter
all may be regarded in principle as arguments in a welfare function.
For example, in the framework of agricultural land use, the welfare gains from agriculture should
be measured by income or production generated in the agricultural sector, but they should also
incorporate negative effects on the landscape, species diversity, or eco-stability. Clearly, various
changes in land use patterns may be caused by factors outside the agricultural system itself, such
as the climate.
The fact that both convention at economic factors and environmental goods may contribute to
welfare, must also be traded off against each other, does not of course imply that in an extreme
case one of the two systems might be completely depleted. Both economic environmental
systems need a certain minimum threshold value to survive. We advocate the use of a minimum
bequest value in strategic environmental policies, in particular calling for the establishment of
16
safe minimum standards for conservation by avoiding overexploitation of critical zones of the
environment by limiting human activities that make it uneconomical to halt or reverse depletion.
Thus, the idea of sustainable threshold levels for both economic and environmental systems.
It is clear from the above remarks that sustainable development issues are manifesting
themselves in various forms. Am extremely important form is land use and uses of land-related
resource. For example, deforestation in Nigeria or in Brazil may be necessary for agriculture or
energy supply in a regional economy, but it is extremely detrimental to global ecological
stability. Housing construction in densely populated areas may be necessary from the viewpoint
of a growing population and a decline in family size, but at the same time it may impair the
visual beauty of an ecologically vulnerable area. Thus, to a large extent, land use may be
regarded as a focal point of sustainable development policies in a special setting. This leads to
the necessity to specify more precisely the interactions between different resource and land use
options in a given area and spillover effect from, and to, other areas. Such a more local and
regional orientation is mandated not only by the character of the economic and environmental
interactions but also by the special orientation of policies concerned with land use.
Our study focuses attention on non-oil dependent economy through exploration and marginal
utilization of natural resources. In other words. We discussed the issue of sustainable
development in the context of regional resource use affecting land use.
V. SUSTAINABLE RESOURCE USE
The broad recognition of resources and land use as an issue of scientific research is quite new in
economics. Apart from the physiocrats, who regarded the productive capacity of the natural
environment (mainly land) as the major source of welfare, economic thinkers until recently
17
rarely paid due attention to land as an important production factor. For example, in classical
economic, capital and labour, not land, were regarded as the main welfare generators. It is
interesting to note, however, that the classical economists were aware of the possibility that an
economy might stagnate as a result of lack natural-mainly agricultural-resources.
In this context, planning regions may allow for the attainment of certain planning objectives in
the most efficient way.
A region is a geographical area that meaningfully may be regarded as a coherent entity from the
viewpoint of description, analysis, administration, planning, or policy. Various types of regions
are distinguished in the literature-for example, homogeneous or functional regions. Functional
environmental regions are often based on intensive interaction within particular regions between
environmental resources such as ground water, river, and meteorological systems. Homogeneous
environmental regions are usually based on existence of common resources in the area
concerned. Another typology distinguishes natural (ecological or environmental) regions,
economic regions. And administrative (or political) regions. Regional development is often
critically dependent on the regional supply of resources. Many types of regional economic
dependence on the resource base can be distinguished (see Van den Bergh and Nijkamp 1990).
Some examples follow:

A regional economic system may be directly dependent on the resources in the region.
Usually in such the dependence is on resources that may serve as essential and cheap
productive inputs to economic activities- for example, energy resources. Concomitantly,
the environmental capacity as a sink for waste materials and pollution can restrict
economic activity.
18

Some regions may be dependent on export of resources as a main source of income- for
example, energy-exporting hometowns in the province of Port Harcourt Nigeria.

A regional resource sector may have many effects on other activities in a region, among
other things as a result an increased demand for public services, utility, and infrastructure,
demand for labour, capital and space, and spinoffs to other private sectors. Thus, the
development of a resource sector may generate shift in sector allocation, income levels
and distributions, and exchange rate.
In the regional sustainable development analysis, the economic sector also has to be considered,
economic activities that are directly dependent on the ground water resource include agricultural
and municipal water supply. Other activities in the region are timber production, recreation, and
natural conservation. Agriculture especially contributes significantly to regional income. For
some activities a further subdivision is useful. For example, timber production is based on two
three species- pine and Douglas fir, both of which are produced in plantations. Agricultures
include livestock rearing (cattle, pigs and poultry) and crop cultivation (for livestock and human
consumption). Livestock rearing can be intensive (for example, bio industry for meat and egg
product) or extensive (for example diary and meat).
The spatial distribution of activities in the region also affect their interaction and relationship
with available resources. For example, ground water extraction for agriculture is shallow and
widespread, whereas that of municipal supply occurs at a small member of sites and involves
deeper.
In view of the foregoing observation on regional sustainable development, the most important
critical success factors associated with these resources may be summarized as follows:
19

Maintaining the groundwater level. High water tables have been feature of the peel area
and, together with the sandy soil and generally nutrient poor conditions; have led to the
unique ecological communities. Widespread drainage of the land and increasing use of
the groundwater resource (for irrigation and municipal supply) has lowered these water
tables.

Curtailing nitrogen pollution. Agricultural activities using fertilizers and producing
excessive amount of manure are causing nitrate enrichment of soil and groundwater,
leading to changes in the remnant fen and heat land vegetation as well as to decreasing
suitability for human consumption. Agriculturally oriented ammonium emissions, in
addition to nitrogen and sulphur oxides form various sources within and outside the
region, affect the vegetation directly and contribute to the acidification of soils resulting
in changes in natural vegetation and forest vitality.

Regulating competitive demand for land. The present and expected future demand for
land by the agricultural sector, nature conservation, and urban (including residential,
industrial and tourist attractions) interest groups is conflicting and less sustainable.
The analysis of regional system interactions in this area has resulted in the design of an
explanatory dynamic simulation model. The sub-modules describe groundwater, nitrate, forestry
and natural vegetation, agriculture and regional economic activities. The sub-modules that
describe the economic activities record the profit overtime for each sector on the basis of
development of quantities, cost, prices and technology.
The time paths for quantities are most sectors based on changes in production capacity except for
recreation, where demand for recreational activities determines the quantity. The development of
20
the economic system is to a large extent determined by exogenous variables, for which the time
paths were chosen on the basis a relevant development scenario.
Models that include many interactions between sectors (for example, inter-industry supply, or
competition
On factor and final markets) usually have an economy wide rather than a regional orientation.
DYNAMIC SIMULATION MODEL
Based on the above discussion, the dynamic simulation model for the natural resources
utilization (NRt) produces csf associated with the resources. The corresponding regional system
interactions EA:
XRtEA = csf NRtEA ε (rsd,csf) ………………………………………..(1)
Where EA represents ecionomic activities. The economic activities are expected to record profits
overtime for each sector on the basis of development of quantities, costs, price and technology.
Csf is the Critical Success Factors associated with maintenance of ground water level and the
curtailment of nitrogen pollution over the period.
CSFt = ƩcRsDc, c ε(RCDL) …………………………………………… (2)
This is the level at which the exploration and marginal utilization of natural resources are
regulated. The regulating policy of competitive demand for land is set equal to regional
sustainable development, hence,
RCDLT = RSDct ε(EAt) …………………………………………………..(3)
Where EA represents activities occurring within the economy over the time period.
VI. THE ECONOMIC DECISION CHAIN FOR TURNING NATURAL RESOURCES
INTO SUSTAINED PROPENSITY.
Successful resource management requires consideration of board range of issues when
transforming natural assets into sustainable financial, physical and human assets. These issues
create a decision chain that government must carefully navigate. This chain roughly follows the
value chain of extractive and land-based industries, from the deal, to development, extraction or
use, to downstream vale added activities, and through to project closure and rehabilitation: all
21
points at which government must act to capture and maximize values as well as to regulate on
behalf of their citizens. The responsibility of government, however, extends beyond the industry
values chain into how revenues are transformed into physical, social and human capital for
sustained propensity of current and future generations. At the same time, governments alone
cannot unlock the full development benefits of mining. The composition of effective governance
in the resources sector illustrates how the common features of good governance are impacted by
the presence of large-scale mining. There are roles and responsibilities for all concerned:
governments, particularly at the subnational level, local communities, companies, and
development agencies. Pending the establishment of effective local capacity, such partnership
can both tackle the negative impacts identified and enhance the positive impacts. For example,
the multi-stakeholder. Extractive industries Transparency initiative is a global coalition of
government, companies and civil society working together to improve open and accountable
management of revenue from natural resources. Economic and social benefits at the subnational
level ban be enhanced by linkages. In Chile, joint action by the regional government and the
mining companies resulted in economic diversification that contribute to poverty falling by half
between 1990-2003 and by over 60% in the Antofagasta Region, Chile’s mining region.
VII. RESOURCE- BASED DEVELOPMENT PLANNING
Resources governance and development is challenging across all the links in the decision chain,
and one weak link can undermine a country’s ability to benefit from its natural resources. From
example, in the extractive industry, if exploration is limited, perhaps due to misallocation of
exploration rights, a country may never know the extent of its wealth. Even if abundant wealth
has been discovered, poorly structured concessions may yield little revenue. Similarly,
government may raise large amount of revenue but then squander it on poorly selected projects
22
or by subsidizing uncompetitive industries. Government should thus carefully consider all stages
of the decision chain. Good governance of natural resources starts with the development of a
shared national strategy or vision, with clear and realistic goals, timeline and indicators of
achievement. Long term planning is particularly relevant in countries rich in gas and solid
minerals, since extractive industry activates often span several decade with each stage of the
project lifecycle-exploration, construction, production, beneficiation closure- having district
implication for the host country and community, both in term of impact (environmental, social,
economic, and otherwise) and opportunities for spill overs benefits (including infrastructural
expansion and training). A national strategy is more likely to be successful if it is the product of
inclusive planning process that that are transparent and participatory. A plan forged in open
public debate will exposed policy error sooner, constrain self-dealing and corruption, and make
inevitable course corrections less disruptive. Furthermore, a clear understanding of the
challenges and opportunities asset government in transcending politically driven short-termism,
managing expectation better and planning for legacy for the next generation.
Such a shared national strategy or vision is premised on:

Comprehensive understanding of the resources sectors full economic and social impactpositive and negative quantitative and qualitative national and local as well as the
existing sector governance frame work

A vehicle to communicating (beyond the narrow project impact assessment) among all
shareholders in all a country so that the success factors and failings underlying those
impact- including governance factor are well understood.

A platform for development partners, and civil society organization to address capacity
gaps and enhance inclusive sustainable development outcomes.
23
These comprehensive plan should:
1. Cross sector, extending beyond resources issues alone. They should lay out the board
objective for natural resources use, including how revenue will captures, managed and
used, and who are the intended beneficiaries.
2. Be emended in the boarder planning and budgeting tools of the government.
3. Create and institution framework for engaging and coordinating line ministries donors the
private sector, labour and CSOs, which is focused on priority objective, velar
accountabilities, and shared responsibility for outcome of all parties.
4. Including a public investing program to identify and cost strategic public investing
projects and alum them with financing options (including through linkages with the
industry or anticipated revenue flows).
5. Seek to utilize transparent budgeting and financial management tools that are; based on
financial modelling of anticipated revenue flow over the medium and long term: tied to a
strong and medium- term expenditure framework: and driven by development needs and
coasted investment programs, as well as tools to improve budget execution.
VIII. ACCOUNTABILITY STRUCTURES AND TRANSPARENCY
Effective management of resources and resources revenge depend critically on decision making
by government. Good decision are encouraged and sustained in an environment of accountability
and scrutiny, supported by transparency and availability of information. Transparency
throughout the decision chain facilitate government accountability to stakeholder. For
transparency to lead to effective accountability, citizen- the ultimate beneficiary’s owners of a
24
country natural assets must have the opportunity to use available information to monitor their
government actions. Government should therefore create mechanism for meaningful engagement
with stakeholders, monitoring of resources use, and for bringing claims regarding any negative
impact of large-scale resources project. Strengthening relations with communities and civil
society can have the added benefits of managing expectations more effectively. Access to
information throughout project life cycle can ensure that government remains c=accountable to
their citizens and investors, and companies to their stakeholders and other stakeholders and other
shareholders. Improved information structures also assist all stakeholders in ‘following the
money’, helping to ensure that resources are used efficiently. For transparency to be effective,
information must be provided across the whole chain of decision, with a complete
complementary set of information _ for instance, revenue data might be accompanied by
information on the appropriate tax rates, production volume and taxable income), and at
appropriate level of
disaggregate (such as location, project and product type). There is
increasing evidence that disclose contacts, particularly biddable contracts, creates a race to the
top instead of a race to the bottom. For example, since Peru adopted a transparent, public bidding
system requiring disclosure of winning hydrocarbon contract, there has been a consistent
increase in royalty rates bid by the companies. Keeping the contract confidential exacerbates the
asymmetry of information between companies and government since company have access to
contracts and fiscal regimes around the worlds through their network of experts, data bases,
consultants and law firms and use those agreement as template for negotiation. Keeping the
contract opaque generate mistrust, increase conflict at local level and pressure to renegotiate dues
at the national level.
25
GOOD GOVERNANCE OF LAND RESOURCES
Land is but a natural resource that attracts investments itself and one that is significantly affected
by other natural resource projects, such as those in the extractive industries. In many developing
countries, lend possess complex problem. It is integral to the livelihood of hundreds of millions
of people, including small holder farmers, pastoralist and individuals who depend on forest
resources. Yet highly insure tenure rights, coupled with the fact that some government own the
majority of land within their territories, means that many individuals who depend on land have
no legal claim to it, and are thus vulnerable to dispossession at any time. Government should
work proactively to ensure that the governance of land resources is allied with national SDGs. To
this end, transparency in the land tenure system is essential including transparency over what
types of large-scale tenure rights transactions are permitted and transparency in the decision
making process regarding extracting or land investment that will affect the tenure rights.
Government decision processes related to investment and their on land tenure should incorporate
opportunities for citizen’s consultation and participation. Displacement from land can devastate
livelihoods, so government must take steps to protect tenure righty holders that may be affected
by investment. Given the outsized risked posed by large-scale land transactions, including for
extractive projects governments should consider implementing. Explicit safe guards to protect
land users whose interest may be affected. Among other measures, government should require
robust due diligence by investors, while also permitting independence assessment of a proposed
project potential impact on existing asset to land. Government should use these information in
determining whether to grant contentions, and in planning how to minimize or avoid
displacement form land when contention are granted. When displacement is necessary,
government must compensate those affected according to accepted international human right
26
norms, cash is not an acceptable form of compensation for forced eviction. Rather, individuals
should be provided to land that is equal to that is better than the land taken in terms of quality,
size and value. Land is a particularly important natural resource, serving as the foundation of
many individuals’ livelihood strategies and food security. Good governance of land resources
thus requires more than avoiding eviction; it also requires proactive efforts to improve tenure
security many of the world poorest countries are facing the challenge of harnessing natural
resources for suitable development. For developing countries rich in extractive resources, the
revenue or rent available for resources extraction far exceed current or likely aid flows. The
extent to which countries succeed in negotiating good deals, regulation them effectively, and
allocating revenue appropriately will define their ability to achieve a sustainable development
goals. Government face a complex set of interrelated decisions, form the design of legal and
fiscal frame works that ensure that the benefit of resource based projects are realized and shared
equitably, to the implementation of integrated rural development plans. Getting the basics and
politics right- the rules the institutions and citizens’ accountability- can be as critical as making
the right decision. A transparent and participatory environment, including an informant citizenry
and opportunity for redress of grievance, ensure that decision makers are held accountable,
policy choices are debated, and opportunities for populism or rent seeking are mitigated. While
government play the most critical role in assuring the good governance of natural resources,
inclusive social and economic transformation depends on all stakeholders playing their part. In
particular, companies must act responsibly, earn and retain their social license to operate at the
local, national and international levels. To do so, companies must take seriously their human
right and environmental responsibilities as well as their commitment to be partners in
development process with the countries and community in which they are operating. The
27
international community also must uphold its end of the bargain by creating enabling
international frameworks for good governance including the SDGs. Among other steps, he
international community must coordinate to reduce and repatriate limited assets and illicit flows,
and strengthen and institutionalize standard for transparency throughout the extractive and land
sector. Strengthened International legal frameworks are necessary for moving forward
effectively on suitable development goals. We therefore underscore the importance of
transparent, corporative, equitable and sustainable policies and practices related to investment in
extractive or land resources. Government and their private sector partners need to commit to the
effective and transparent management of resources in order to support inclusive economic
development and the achievement of all SDGs. Such effect resources management includes
consulting with affected communities; strengthening governments regulatory and negotiation
capacity to obtain fair deals; seizing opportunities for resources based industrialization; long
term planning for leveraging the anchor investment to support inclusive development;
maximizing opportunities for skill transfer; and establishing transparent platform for public
participation, accountability and decision making. Strong governance of natural resources will
facilitate more inclusive economic development and will be paramount to achieving the
sustainable development goals.
CONCLUSION
This paper has focused attention on developing non-oil dependent economy through exploration
and marginal utilization of diverse natural resources. Conceptualizing and analyzing sustainable
development is clearly important at a regional level. Various advantages of resource- based
28
development planning as well as the economic decision chain for turning natural resources into
sustained prosperity have been spelled out, for example, in relation to effect of environmental
problems, the local character of economic processes, interregional interactions, and the
possibility of operationalizing sustainable development on a regional scale. Sustainable resource
use was presented as an important element of Regional Sustainable Development for adequate
utilization of diverse natural resources.
In discussing a regional resource base we argued that the present and potential dependence of
regional activities on the resource base as well as the specific characteristics of the resource base
should be assessed.
Various lessons and issues for further research can be drawn from the above exposition.
Regional Sustainable Development refers to a systematic view of interacting regions of our
world economy, not only in terms of economic linkages but also in terms of environmental
interactions. Thus space and time are the two essential dimensions of Regional Sustainable
Development.
The openness of a spatial system evokes the question of environmental sacrifices in space and
time. The issue of the substitutability of environmental decay (in other periods of time, in other
regions) is at stake here; the related concept of weak and strong sustainability requires further
exploration on the basis of a thorough investigation of underlying welfare concepts (and
associated collective welfare functions).
In order to find a balanced equilibrium of resources in space and time, much attention would
have to be given to regional resource accounting. Efficiency, equity, and externality aspects of
resources can be given due emphasis, while attempts at valuing un-priced resources may provide
29
a sound basis for project appraisal. Geographic information systems may be helpful here to
visualize all relevant policy aspects.
Environmental externalities should be looked at only from the viewpoint of market failures (or
signal failures) but also from the viewpoint of intervention (or response) failures.
References
Aweto, A.O. 1990. Plantation forestry and forest conservation in Nigeria. The Environmentalist.
10 (summer): 127-34
Bartelmus, P. 1986. Environmental and Development. London: Allen& Unwin.
Bhattarai, M., and M.Hammig. 2001. Institutions and the environmental Kuznets curve for
deforestation: A cross country analysis for Latin America, Africa and Asia, World
Development29 (6): 995- 1010.
Capistrano A., and C. Kiker. 1995. Macro-scale economic influences on tropical depletion.
Ecological Economics 14: 21- 29.
Capistrano. A. D. 1994.”Tropical Forest Depletion and The changing Macroeconomy 1967- 85”.
In The causes of Tropical Deforestation. The Economic and Statistical Analysis of Factors
30
giving rise to the loss of Tropical Forest, ed. K. Brown and D. Pearce. London: UCL Press.
65-85.
Ginsburgh, V. and M. Keyzer. 2002. The structure of applied general equilibrium models.
Cambridge, Massachussetts: The MIT Press.
Nijkamp, Peter, and Frits Soeteman. 1988. “Ecologically Sustainable Economic Development.”
International Journal of Social Economics 15, no ¾: 88- 102.
Norgaard, R. B. 1984.” Co- evolutionary Development Potential.” Land Economics 60, no.2:
160- 73.
Van Der Bergh, Jeroen, and Peter Nijkamp. 1990” Ecologically Sustainable Economic
Development in a Regional System: A case study in Agricultural Development Planning in
the Netherlands.” Research Memorandum, Department of Economics, Free University of
Amsterdam (Netherlands).
WCED (World Commission on Environment and Development). 1987. Our common Future.
New York: Oxford University Press.
31