The Management of Public Natural Resource Wealth

Revista brasileira de políticas públicas, 2013

Ohio State Public Law Working Paper No. 191

75 Pages Posted: 20 Feb 2013 Last revised: 1 Dec 2015

See all articles by Paul Rose

Paul Rose

Ohio State University - Moritz College of Law; Bocconi University - BAFFI Center on International Markets, Money, and Regulation; Tufts University - The Fletcher School of Law and Diplomacy; Fundación Instituto de Empresa, S.L. - IE Business School

Date Written: February 18, 2013

Abstract

As improved but often more environmentally-obtrusive technologies such as hydraulic fracturing facilitate the extraction of billions of dollars in natural resource wealth, more states are now faced with a welcome but exceedingly complex set of problems: Who should benefit from natural resources extracted from public lands? If the state retains much of this wealth in the form of tax receipts, how should these funds be spent? What do states owe to the communities from which these resources were extracted? What do states owe to future generations? While these are questions of first impression for a few, fortunate states, a number of states have been trying to address these issues for decades, and have enacted a variety of responses that have crucial implications for the states, their citizens, and their natural environments.

This article proceeds by providing in Part I historical background on the crucial legal developments which allowed state public natural resource funds to develop. In Part II, the article turns to the first of the two central questions by introducing the principal policy justifications of state public natural resource funds through a review of the stated objectives of the funds, the funds’ governance and distributions mechanisms, the role the funds play in state policy making and budgeting, and the aspects of federalism implicated by the state funds. Part III then analyzes the operations of the funds in light of the policy justifications identified in the article. The article concludes by showing how governance weaknesses often limit the effectiveness of funds in achieving their policy goals, and suggests ways in which states can create appropriate legal and governance structures to enhance their funds’ effectiveness.

Keywords: public finance, sovereign wealth, severance tax, natural resources, public funds

JEL Classification: K2, K20, K29, K32

Suggested Citation

Rose, Paul, The Management of Public Natural Resource Wealth (February 18, 2013). Revista brasileira de políticas públicas, 2013; Ohio State Public Law Working Paper No. 191. Available at SSRN: https://ssrn.com/abstract=2220218 or http://dx.doi.org/10.2139/ssrn.2220218

Paul Rose (Contact Author)

Ohio State University - Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

Bocconi University - BAFFI Center on International Markets, Money, and Regulation ( email )

Milano, 20136
Italy

Tufts University - The Fletcher School of Law and Diplomacy ( email )

Medford, MA 02155
United States

Fundación Instituto de Empresa, S.L. - IE Business School ( email )

Calle Maria de Molina 12, Bajo
Madrid, Madrid 28006
Spain

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