The Art and Science of Benefit Sharing in the Natural Resource Sector

The purpose of this paper is to contribute to theunderstanding and discussion of how the costs andbenefits of natural resource development are sharedacross society. This paper presents how IFC, as both aninvestor and a development organization, det...

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Bibliographic Details
Main Author:	International Finance Corporation
Format:	Working Paper
Language:	English en_US
Published:	Washington, DC 2016
Subjects:	CAPITAL GAIN AUCTION HOLDING EQUIPMENT ACCOUNTING LOCAL CAPACITY LEGAL AGREEMENTS LOCAL ECONOMY VALUATION WITHHOLDING TAX INTEREST RATE OF RETURN PUBLIC INVESTMENTS REMITTANCE GOVERNMENT REVENUES OPTION DEVELOPING COUNTRIES REVENUES PORTFOLIO CAPACITY BUILDING TAX PROVISIONS RENEGOTIATION EQUITY RETURNS TREATIES CASH FLOWS INSTRUMENTS FOREIGN INVESTMENT FLOWS POLITICAL RISKS LONG-TERM COST CONVERSION FOREIGN INVESTOR EQUITY CAPITAL OIL PRICES LEVEL OF RISK CURRENCY GOVERNMENT POLICY MARKET VALUES CAPITAL GAINS LOCAL INVESTORS FINANCES TAX REGIME EXCHANGE RATES INVESTMENT FUNDS MONETARY FUND FINANCIAL INSTITUTIONS DEBT MARKETS LANDHOLDER LOCAL GOVERNMENT FINANCIAL FLOWS SETTLEMENT INCOME LEVELS INVESTMENT OPPORTUNITIES DUE DILIGENCE COMMODITY PRICE FUTURE CASH FLOWS INVESTMENT DECISIONS GOVERNMENT BUDGETS TRANSACTIONS INVESTMENT FLOWS CASH ECONOMY EMERGING MARKETS AUCTIONS DEBT FINANCING SHARE OF EQUITY GOOD TRANSPARENCY INTERNATIONAL INVESTMENT PRIVATE INVESTOR FUTURE MARKET PRICES OFFSHORE CENTERS LAND VALUES FOREIGN DIRECT INVESTMENT COMMERCIAL TERMS CONFLICTS OF INTEREST FOREIGN INVESTMENT CAPITALIZATION FINANCIAL PERFORMANCE PRICE CHANGES TAX RATES EQUITY STAKE OFFSHORE FINANCIAL CENTERS SHARES LOCAL CURRENCY EQUITY INVESTMENT MUNICIPAL INVESTMENT TREASURY CREDIT RISK SHAREHOLDERS INSURANCE GOVERNMENT POLICIES ECONOMIC DEVELOPMENT GOVERNMENT OWNERSHIP HOST GOVERNMENT ACCOUNTING STANDARDS PRICE RISKS RATES OF RETURN HOST COUNTRY HOST GOVERNMENTS DISCOUNTS PRIVATE INVESTORS DEVELOPMENT FINANCE FINANCIAL STRUCTURE AMOUNT OF DEBT LONG-TERM INVESTORS RATES OF INTEREST COMMODITY PRICES FISCAL DECENTRALIZATION INTERNATIONAL MARKETS OUTSIDE INVESTOR LEGAL RIGHTS CASH FLOW POLITICAL RISK HUMAN DEVELOPMENT INVESTING INVESTMENT DECISION LIVING STANDARDS TARIFFS REGULATORY FRAMEWORK OIL PRICE FINANCIAL MANAGEMENT FOREIGN INVESTORS CORPORATE TAX RATE INFORMATION TECHNOLOGY TAX FRAMEWORKS GOVERNMENT SPENDING EXCHANGE DISCOUNT RATE LOCAL GOVERNMENTS TAX COLLECTION REAL INTEREST GOVERNMENT CAPACITY DISCOUNT TAX SYSTEMS TAX CASH TRANSFER INCOME TAX BUDGETING LONG-TERM INVESTMENT BENEFICIARIES INFLATION INTERNATIONAL BANK FOREIGN INVESTMENTS DEVELOPING COUNTRY ENABLING ENVIRONMENT INTERNATIONAL FINANCE ARBITRATION LEGISLATIVE FRAMEWORK LOCAL INVESTOR TELECOMMUNICATIONS HOST COUNTRIES PRICE VOLATILITY CONTRACTS LOCAL BUSINESS INTEREST RATES OPTIONS NATURAL DISASTERS PRIVATE INVESTMENT RETURN LENDERS RISK CAPITAL INVESTOR RETURNS DIRECT INVESTMENT LOANS RESERVES OFFSHORE FINANCIAL CENTER FINANCE TAX POLICIES PUBLIC INVESTMENT TAXES ACCESS TO INFORMATION EXPENDITURE INFRASTRUCTURE INVESTMENT EQUITY INCOME TAXES TRANSACTION INVESTORS TAX RATE FINANCIAL STRUCTURES GOVERNANCE ISSUES MARKET PRICING RETURNS BUDGETS TAX REGIMES LOCAL BUSINESSES CONTRACT REPAYMENT EXPENDITURES BIDS POTENTIAL INVESTMENT MARKET MARKET VALUE BANK ACCOUNTS LEVY LAND TITLE RENEGOTIATIONS DISCOUNT RATES INFRASTRUCTURE INVESTMENTS EXPROPRIATION INTERESTS GOODS CORPORATE DEBT INVESTOR LANDOWNERS LOCAL ECONOMIES SECURITY DURABLE INVESTMENT INVESTMENT PORTFOLIO SHARE INVESTMENT CLIMATE TAX SYSTEM POVERTY OFFSHORE BANK BID DECENTRALIZATION REVENUE TAX POLICY PROFIT INTERNAL RATE OF RETURN INVESTMENTS RISK MANAGEMENT DEBT REPAYMENT INSTRUMENT COMPETITIVE BIDDING PROFITS COMMON LAW COMPETITIVE AUCTION GUARANTEE WITHHOLDING TAXES GOVERNMENT INTERVENTION CORPORATE GOVERNANCE
Online Access:	http://documents.worldbank.org/curated/en/2016/06/26514200/art-science-benefit-sharing-natural-resource-sector-discussion-paper http://hdl.handle.net/10986/24793

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Summary:	The purpose of this paper is to contribute to theunderstanding and discussion of how the costs andbenefits of natural resource development are sharedacross society. This paper presents how IFC, as both aninvestor and a development organization, determineswhether benefits and costs are shared reasonably, and how this assessment influences IFC’s decision to invest ina particular natural resource project. the goal of the paper is to promotea broad, constructive dialogue across stakeholders—governments, investors, civil society, and others—around benefit sharing. The paper draws on IFC’s experience and presents anoverarching framework for multi-stakeholder benefitsharing, providing analysis and guidance for a range ofcomplex topics. The paper is intended to provide entrypoints for stakeholders of varying levels of familiarity with the issues to benefit-sharing assessment. The paper is not a definitive manual for all the issues coveredfor which more detailed, high-quality and excellentreferences and literature exists. This paper is organized along these broad areas of impact that IFC considers in the benefit sharing assessment:fiscal, economic, environmental, and social. The approaches IFC uses to evaluate benefit sharing arepresented in each area, along with some lessons learned. This is complemented by a discussion of key issues thatare topical in the field. Each chapter opens with a list of questions that can be used as a guide to assess the potential benefits and costs of an investment. As a result, there is a spectrum of what can be considered reasonable overall. However, there may be particular features of a benefit-sharing arrangement that stand out and can signal a risk to its legitimacy. Our aspiration is that this paper will complement as well as stimulate work by others that can enhance the collective knowledge and encourage dialogue.

The Art and Science of Benefit Sharing in the Natural Resource Sector

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