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Economic risk and mineral taxation on Indigenous lands

Author

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  • O’Faircheallaigh, Ciaran
  • Gibson, Ginger

Abstract

Mining generates risk of environmental and social harm for Indigenous peoples but can also generate substantial revenues for them, creating opportunities for community development in a context where economic and social disadvantage is the norm. Especially as mining revenues should, in part, compensate for mining’s negative social and environmental impacts, it is vital that mineral taxation on Indigenous lands reflect a careful assessment of appropriate tax mechanisms and a matching of these with community priorities. Yet little has been written that could serve as a guide for Indigenous decision makers. This article contributes to an understanding of the issues and choices facing Indigenous communities in designing mineral taxation regimes, by focusing on the question of economic risk. Risk arises as a key variable in choosing or designing a mineral taxation regime in three ways. Different approaches to mineral taxation are inherently more or less risky, in the sense that they are more or less certain to generate tax revenues. A second aspect of risk involves the degree of economic certainty or predictability associated with different types of commodities and projects. Third, the risk tolerance of Indigenous peoples and communities can vary significantly. We show how Indigenous groups can integrate and address these different dimensions of risk, by recognising the ‘risk consequences’ associated with different approaches to mineral taxation and choosing an approach that reflects, as fully as possible, the group’s risk tolerance.

Suggested Citation

  • O’Faircheallaigh, Ciaran & Gibson, Ginger, 2012. "Economic risk and mineral taxation on Indigenous lands," Resources Policy, Elsevier, vol. 37(1), pages 10-18.
  • Handle: RePEc:eee:jrpoli:v:37:y:2012:i:1:p:10-18
    DOI: 10.1016/j.resourpol.2011.12.009
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    References listed on IDEAS

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    1. Grable, John & Lytton, Ruth H., 1999. "Financial risk tolerance revisited: the development of a risk assessment instrument," Financial Services Review, Elsevier, vol. 8(3), pages 163-181.
    2. Garnaut, Ross & Clunies-Ross, Anthony, 1983. "Taxation of Mineral Rents," OUP Catalogue, Oxford University Press, number 9780198284543.
    3. O'Faircheallaigh, Ciaran, 1998. "Indigenous people and mineral taxation regimes," Resources Policy, Elsevier, vol. 24(4), pages 187-198, December.
    4. James Otto & Craig Andrews & Fred Cawood & Michael Doggett & Pietro Guj & Frank Stermole & John Stermole & John Tilton, 2006. "Mining Royalties : A Global Study of Their Impact on Investors, Government, and Civil Society," World Bank Publications, The World Bank, number 7105.
    5. James Otto & Craig Andrews & Fred Cawood & Michael Doggett & Pietro Guj & Frank Stermole & John Stermole & John Tilton, 2006. "Mining Royalties : A Global Study of Their Impact on Investors, Government, and Civil Society, Appendixes," World Bank Publications, The World Bank, number 7136.
    6. Anthony Bebbington & Leonith Hinojosa & Denise Humphreys Bebbington & Maria Luisa Burneo & Ximena Warnaars, 2008. "Contention and Ambiguity: Mining and the Possibilities of Development," Brooks World Poverty Institute Working Paper Series 5708, BWPI, The University of Manchester.
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    Cited by:

    1. repec:spr:minecn:v:30:y:2017:i:3:d:10.1007_s13563-017-0123-x is not listed on IDEAS

    More about this item

    Keywords

    Indigenous; Mineral taxation; Economic risk; Community development; Mining; Resource development;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • L78 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Government Policy
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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