19, October, 2012

Rent Distribution and Extractive Industry Conflict: The Latin American Approach

Can rent distribution reduce extractive industries conflict? A focus on the Peruvian case helps highlight how and if these schemes could prove to be effective.

Given the surge in socio-environmental conflicts that extractive industry activity has generated in Latin America, particularly in the last decade, it is only natural that countries in the region have begun to consider how different rent distribution schemes could be used to prevent or mitigate such struggles.  By taking a panoramic look at the distribution systems in place across the region, two different distribution logics can be identified:   distribution for development vs. distribution for compensation. This Brief focuses on the case of Peru, a country struggling with visible and violent conflicts, and examines one particular aspect of their compensatory distribution scheme, the Law of Canon. The Brief presents an overview of the law, and some reflections about the reasons why it seems to not be as effective as was hoped in reducing Peru’s conflict. Finally, underlying contextual and enabling factors of Latin American experiences are identified, along with lessons learned that may prove useful for countries in other contexts.

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Key Lessons:

  • Latin American cases show how rent distribution alone does not diminish conflicts.
  • To increase the likelihood of success of a particular rent distribution system, compensation mechanisms should be linked with broader development goals and be implemented by decentralised units that have the necessary institutional capacities.
  • (Español) Aunque la compensación en sí es un objetivo importante, su fortaleza radica en estar directamente vinculada a la consecución de objetivos de desarrollo más amplios. Puede que no importe tanto la cantidad que un municipio puede obtener a partir de las actividades extractivas, si es que no existe un plan — elaborado en base a consensos — al que deba tratar de ajustarse para cumplir con sus fondos.

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