Subnational Governance of Extractives: Fostering National Prosperity by Addressing Local Challenges

Since 2008, NRGI has conducted research and implemented interventions to better understand and respond to local impacts of the exploitation of oil, gas and minerals. These efforts have been aimed at distilling practical governance solutions to maximize the benefits from the use of non-renewable natural resources while mitigating the negative impacts for the people living closest to extraction sites. NRGI’s interventions engaged local actors—such as local governments and councils, civil society organizations and media—and national policy makers. Learning from these projects, as well as subsequent projects and research undertaken by others, NRGI produced seven policy papers that touch on a range subnational extractive governance issues, from whether there is a subnational “resource curse” to optimizing natural resource revenue sharing regimes. (See below for a list and links to all the papers.)

This paper summarizes what NRGI has learned from eight years of work and should serve as a high-level summary for national and local policy makers seeking to make the most of natural resources. Foundationally, the paper argues that a national perspective on natural resource management is necessary, but not sufficient to ensure long-term sustainable development for all in a resource-rich country. Using the framework of the Natural Resource Charter, the paper then offers a subnational perspective on the natural resource decision chain. For each element of the decision chain, the paper articulates whether and how governance challenges differ on the subnational level from the national level. It then provides policy recommendations for national and subnational governments to address the specific challenges that emerge at the subnational level of governance. Finally, it offers observations on areas where additional research is necessary to advance the impact of engagement at the subnational level.

This synthesis paper was informed by the following series:

• Is There Evidence for a Subnational Resource Curse?
• It Takes a Village: Routes to Local-Level Extractives Transparency
• Assessing Mineral Licensing in a Decentralized Context: The Case of Indonesia
• Local Content Initiatives: Enhancing the Subnational Benefits of the Oil, Gas and Mining Sectors
• Natural Resource Revenue Sharing
• Subnational Oil, Gas and Mineral Revenue Management
• Direct Social Expenditures: A Monitoring Guide for Civil Society Organizations