An excellent report has just been published by the Natural Resource Governance Institute, (NRGI) authored by María Lasa Aresti.
In 31 pages, it presents careful documentation and explanation of how mineral revenues are fed down to the sub-national level, providing data from 2005 to 2014, the figures being taken from government web sites.
It explains accurately the whole system of transfers and how they are conditioned by central government decree, how the system has evolved over time, and it shows what we now know very well: how uneven is the system of ‘derivation’ (paying by far the greater part of the transferred revenue to the provinces and districts where the mining centres are located).
It shows that the main beneficiaries of mining revenue transfers from the central government are municipal governments. Between 2005 and 2014, these received 75% of mining canon transfers and almost 85% of royalty payments (p9). The paper explains that the government does attempt to compensate by increasing non-mining-related transfers to places with little or no mining.
However, it fails to show how far that inequality is compensated or how irrational (or not) the results are. Not surprisingly, the report is weakest on the issue of the impact of the devolution of revenues, given limited local capacities to spend, plan and organise. But original research on this was not part of the remit of the report. The study cites the only studies so far done as demonstrating ‘mostly negative impacts’ (Crabtree 2014, Epifanio Baca, Propuesta Ciudadana, 2015; Javier Arellano-Yangues 2013). It ends rightly with a plea for more