Meld. St. 25 (2012-2013)

Sharing for prosperity

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5 Management of natural resources

Many developing countries have abundant natural resources. Sound management of these resources can create a basis for fair distribution and sustainable growth. The sale of natural resources can generate large revenues, but these revenues do not guarantee long-term economic growth and increased prosperity. There are particular challenges relating to non-renewable natural resources. On average, resource-rich countries have experienced lower growth and greater inequality than countries without such resources. These countries are also often characterised by instability and a high conflict level. This phenomenon is known as the resource curse.

Figure 5.1 Many developing countries have abundant mineral resources. Sound management of these can create a basis for fair distribution and sustainable growth.

Figure 5.1 Many developing countries have abundant mineral resources. Sound management of these can create a basis for fair distribution and sustainable growth.

Photo: The Ministry of Foreign Affairs/Stine Horn.

Chile, Botswana and Norway are often mentioned as countries that have avoided the resource curse. All three have succeeded in securing national ownership of the resources, while at the same time establishing good management regimes and distribution mechanisms and ensuring a high degree of transparency while minimising corruption.

Sustainable management of agriculture, forestry, fisheries and other renewable natural resources forms the basis for better food security and more employment opportunities, which, in turn, form the basis for more fair distribution and economic development. Renewable energy is discussed in more detail in Chapter 4.4.

The workforce is the most important resource in any country. In order to increase prosperity and ensure fair distribution over time, the workforce must be mobilised and utilised as efficiently as possible.

Norway’s expertise in the field of natural resource management is in demand internationally. The Government will increase the assistance provided in this area to countries that wish to implement measures to ensure that their natural resources are soundly managed and extracted in a way that is not harmful to people or the environment and that the revenues are used in the best interests of the population as a whole. Through an active distributive policy, the authorities can ensure that increased tax revenues can be spent on welfare measures such as health and education, and on infrastructure.

5.1 Non-renewable resources

Exports of non-renewable natural resources, in particular petroleum and minerals, are the principal source of income for many developing countries. Much of Africa’s economic growth in recent years has been driven by the demand for such natural resources.

The sale of non-renewable natural resources can generate large revenues for a period of time. In order to ensure a lasting increase in prosperity, the revenues must be used effectively and not be an obstacle to growth in other sectors. Good institutions that can manage the revenues, prevent corruption and ensure that extraction takes place in an acceptable manner are important in order to avoid the resource curse. With good institutions in place, the revenues can benefit the population as a whole.

On average, however, resource-rich countries have experienced lower growth and greater inequality than countries without such resources. For many countries, increased revenues from non-renewable resources have been accompanied by a higher conflict level, more corruption and environmental destruction.

There are many reasons for this. A lack of democracy, accountability and transparency often results in inequitable distribution that favours the rich and powerful. The extraction activities can pollute the air, soil and water and have harmful health effects. Natural resource extraction and increased public spending can result in other sectors, such as industry and agriculture, losing out in the competition for labour, which can weaken the basis for economic growth and increased prosperity. Fluctuations in commodity prices can cause great upswings and downturns in economic activity, and unless public budgets are detached from fluctuations in revenues, it will be difficult to develop sustainable welfare systems. The combination of large revenues and weak government institutions also increases the risk of corruption, irresponsible borrowing and inefficient use of resources.

The resource curse can be avoided and the revenues can benefit the majority of the population, but this is contingent on good governance and long-term planning. Parallel development of infrastructure, governance, legislation, direct and indirect taxation, civil society and transparency is a precondition for promoting development and fair distribution.

Oil for Development

Norway has more than 40 years’ experience of managing petroleum resources, and we have gradually developed a management regime that has attracted international attention. Norway’s experience is in high demand. Norway has provided petroleum-oriented assistance since the early 1980s, with the Norwegian Petroleum Directorate as the most important actor. The Oil for Development programme (OfD) was established in 2007 as a continuation of an initiative from 2005. The purpose of the OfD programme is to “share Norwegian experience so that developing countries can manage their petroleum resources in a way that contributes to lasting poverty reduction and ensures that due consideration is given to the environment.” So far, the programme has been based on three pillars: resource management, revenue management and environmental management. Support is also given to civil society and other actors that contribute to holding the authorities accountable.

The OfD programme is in higher demand than any other Norwegian aid programme. It has attracted international attention, and is an area in which Norway can make a great difference to development in poor countries. The potential revenues the authorities can earn from sound natural resource management far exceeds the amount a country would receive in aid. Sound management of natural resources can contribute to fair distribution and to reducing a country’s long-term need for aid.

Three sub-goals have been defined for the programme: 1) to establish a legal and management framework for the petroleum sector, 2) to develop the management expertise required to carry out tasks responsibly, and 3) the authorities must be held accountable for the management of petroleum resources.

The main emphasis has been on sub-goals 1 and 2, while sub-goal 3 has been addressed through support for civil society. The Government wishes to increase support for actors that endeavour to hold the authorities accountable, so that this support can to a greater extent keep up with cooperation between government agencies. Otherwise, there is a risk that the assistance could contribute to increasing the competence gap between those in power and civil society actors, the media and the parliament, whose job it is to hold those in power accountable. The efforts to combat corruption, promote gender equality and train members of parliament and media representatives will be strengthened.

Figure 5.2 The Oil for Development programme contributes to sound management of petroleum resources in partner countries.

Figure 5.2 The Oil for Development programme contributes to sound management of petroleum resources in partner countries.

Photo: Georg Osodi/Panos/Felix Features.

The Extractive Industries Transparency Initiative (EITI) is a key tool for increasing transparency about financial flows from petroleum and mining activities, cf. Chapter 8. If the authorities are to be held accountable for the collection and use of public revenues, information has to be accessible to civil society actors, and they must be capable of using it.

An important part of Norway’s petroleum policy has been to utilise cooperation with international companies to develop Norway’s competence, both directly in petroleum extraction activities and in related activities. The petroleum sector has thereby not only been a source of revenue, it has also had local ripple effects in terms of competence and employment. The development of local business and industry related to the petroleum sector and of education adapted to the petroleum sector’s needs is incorporated into several of the OfD country programmes, and this area will be strengthened in the years ahead.

The OfD programme was evaluated in 2012.1 The report concludes that the programme contributes to providing the partner countries with a better basis for managing their petroleum resources, and describes it as a Norwegian development policy flagship. The report finds the pillar philosophy (resource, revenue and environmental management) to be too rigid, and recommends that the different components are seen more in conjunction with each other. It points out that the safety aspect should have a more prominent place in the cooperation, as warranted by the programme’s mandate. The report emphasises that the three pillars have been unevenly weighted, and that a strengthened OfD programme must place more emphasis on revenue management, safety and the environment. It also recommends expanding the cooperation with civil society, international organisations and other relevant actors. It is particularly important that the programme places more emphasis on overall good governance in its cooperation with recipient countries.

This evaluation also looked at the programme’s gender equality perspective. Much of the programme targets the public sector, where developments in gender equality work are generally positive. The challenges are greater in the international extraction companies and the supplier industry, which are often male-dominated. It is a major challenge that traditional female-dominated sectors are being outcompeted by the expansion of the extractive industries.

Textbox 5.1 Oil for Development

The Oil for Development programme is led by a steering committee consisting of the Ministry of Foreign Affairs, the Ministry of Petroleum and Energy, the Ministry of the Environment and the Ministry of Finance. The Ministry of Foreign Affairs has formal responsibility for the programme, while the other ministries and the Ministry of Labour are responsible for the content of the programme within their areas of expertise, and for quality assurance and provision of the expertise used. The programme secretariat in Norad is responsible for coordination and aid-related quality assurance, while the embassies are responsible for administering the individual agreements.

The programme currently cooperates with 18 countries, most of them in Africa. More countries have requested support. With Norwegian assistance, a petroleum act was adopted in South Sudan in July 2012. The act sets out strict requirements for transparency and facilitates the efficient exploitation of natural resources. Norwegian assistance has played a key role in the establishment of a well-functioning health, environment and safety system in the petroleum sector in Vietnam. The biggest OfD programme is currently in Uganda.

Textbox 5.2 Norwegian aid through the Continental Shelf Initiative secures the right to control over own natural resources

Pursuant to the UN’s Convention on the Law of the Sea, the continental shelf of a coastal state automatically extends to a distance of 200 nautical miles from the baselines. If the outer edge of the continental margin is outside the 200-mile limit, the coastal state’s continental shelf extends to that outer edge. Coastal states that wish to establish the outer limits of their continental shelf beyond 200 nautical miles, must submit the matter to the Commission on the Limits of the Continental Shelf in New York together with underlying technical and scientific data. Many developing countries find it challenging to prepare the necessary documentation. This was the reason why the Norwegian Continental Shelf Initiative was launched in 2008. The initiative is intended to assist coastal states in Africa in securing access to natural resources in accordance with the provisions of the Convention on the Law of the Sea. This will be an important contribution to economic and social progress in the countries in question.

Several studies have also concluded that women are more concerned than men with areas that underpin the sustainable development of a country’s petroleum resources, such as the environment, health and fair distribution. It is important, therefore, to strengthen the rights of women and their participation at all levels of society and to encourage increased participation by women in governing bodies and decision-making processes in the petroleum sector.

The evaluation will be considered and followed up in the normal manner. Many of the findings are consistent with the measures that the Government wishes to improve in the programme. One important conclusion is that more weight should be given to democratic development and distributive policy when deciding which countries to cooperate with, and that efforts to promote good governance should be a clear priority in the cooperation.

The Government also wishes to involve the Ministry of Labour more closely in the OfD programme, particularly in connection with the safety aspects.

The OfD programme’s main model is based on long-term institutional cooperation through formal agreements between the respective ministries in Norway and in the partner countries. The Ministry of Petroleum and Energy, the Ministry of the Environment and the Ministry of Labour normally delegate responsibility to their subordinate agencies: the Petroleum Directorate, the Directorate for Nature Management, the Norwegian Climate and Pollution Agency and the Petroleum Safety Authority. So far, the Ministry of Finance has used its own staff and the Petroleum Tax Office as revenue management advisers.

Up until now, resource management has been the most important component by far, with extensive cooperation over time with a large number of countries, while fewer results have been achieved in financial and environmental management.

Environmental management was the last component to be introduced, and has also been implemented in fewer countries. Demand for this component is lower than for the other two. This is due, among other things, to the fact that the national institutions tasked with addressing environmental considerations in the individual countries often are underdeveloped and have low status. The result is often that an environmental framework for petroleum activities is not in place from the beginning. Cooperation on improving environmental management must therefore be built up over time based on a long-term perspective. The Government will place more emphasis on including the environmental component in OfD cooperation with individual countries. This requires a more active dialogue with the recipient country, as well as a clarification of the fact that the OfD programme forms an integral whole. It is also necessary to increase Norway’s capacity in this area.

Textbox 5.3 Oil for Development has contributed the establishment of a petroleum fund and improved management in Timor-Leste

When Mari Alkatiri became prime minister of Timor-Leste in 2002, he asked for Norway’s help to develop a petroleum management system based on Norway’s experience. Ten years later, Norway has contributed more than NOK 100 million in assistance. Most of the funds have been spent on strengthening the country’s petroleum management by providing expertise and through capacity-building measures, including education in petroleum-related subject areas.

With Norwegian support, Timor-Leste has developed:

  • relevant management institutions

  • a national petroleum fund to ensure transparent management of revenues under parliamentary control

  • procedures for the announcement of licences

  • regulations governing all aspects of exploration, extraction and taxation, including environmental management.

The Norwegian Government Pension Fund Global served as the model for Timor-Leste’s petroleum fund. As of the end of May 2012, the petroleum fund was worth more than NOK 60 billion. Timor-Leste has secured good contracts with international extractive companies, good tax revenues and full transparency about petroleum revenues. The OfD programme in Timor-Leste has produced a substantial return.

The petroleum cooperation with Timor-Leste began when the country was planning to develop institutions to manage its resources. Being brought in at an early stage made it easier to establish good management tools for the sector. The weak institutional basis helped to make the aid more effective, because there were no strong established power structures in the petroleum administration as there are in countries that have produced oil over a longer period. There was therefore less opposition to reform. A lesson that can be learned from Timor-Leste is that a five-year perspective, which is the normal time frame for long-term aid cooperation, is too short to achieve lasting results when the starting point is so weak.

Revenue management is only part of the long-term cooperation with two countries, Timor-Leste and Uganda. Several other countries have requested such assistance, but Norway’s follow-up capacity is limited. The Government will therefore consider various measures to increase capacity, such as using staff from the Petroleum Tax Office, Norwegian experts with relevant experience and experts from the International Monetary Fund (IMF) through an agreement between the IMF and Norad.

While the need for a comprehensive approach is underlined, the OfD cooperation will continue to be demand-driven. It is a fundamental precondition for achieving results that the partner country is in the driving seat. Donor countries will never be able to force through a policy that goes against the wishes of the partner country. The Government will therefore be stricter in its prioritisation when selecting partner countries in the OfD programme.

The interests and political room for manoeuvre of authorities in partner countries can vary over time. If parts of the programme are no longer in demand, the advantages and disadvantages of continuing the cooperation will be assessed. Such assessments will also be necessary if a partner country chooses solutions that clearly go against Norway’s advice. One of the most important lessons to be learnt from aid in general, and in relation to capacity-building in particular, is the importance of long-term involvement. A setback in the cooperation is therefore not necessarily an indication that it should be discontinued.

When choosing partners for the OfD programme, greater importance will be attached to whether the national authorities wish to combat poverty, improve governance and promote transparency and democracy.

Tax for Development

The Tax for Development (TfD) programme was established in 2011. At the core of the programme is the institutional cooperation between the Norwegian Tax Administration and the tax authorities in Zambia, Mozambique and Tanzania. Taxation of extractive companies, in both the petroleum and mining sectors, is a key element. Institutional cooperation and other forms of capacity-building in individual countries are seen in a broader context that includes international efforts to combat illicit financial flows and tax havens, research and knowledge development and support through civil society. The state-building perspective is emphasised, as is the cultivation of a culture for tax payment in cooperation with civil society and the tax authorities.

While Oil for Development sees petroleum taxation as part of an overall resource management system, Tax for Development sees the taxation of non-renewable resources as an important part of an overall taxation policy and tax administration system. Their perspectives and approaches differ, but the main principles are the same, and the two programmes complement each other. Like OfD, TfD takes Norway’s experience from the petroleum sector as its point of departure, but it extends its engagement to also include the mining sector and tax administration in general.

The need for a good national taxation policy is discussed in Chapter 6, and the fight against tax havens in Chapter 8.

Figure 5.3 Gold mine in Ghana. Gold remains an important source of income for Ghana, the country once called “the Gold Coast” by the British colonial powers.

Figure 5.3 Gold mine in Ghana. Gold remains an important source of income for Ghana, the country once called “the Gold Coast” by the British colonial powers.

Photo: Georg Osodi/Panos/Felix Features.

Renegotiation of contracts

Following pressure from international financial institutions, the extractive industries were privatised in many developing countries in the late 1990s after 20-30 years of state ownership. This change was intended to improve the balance between the state and the market. However, many changes took place too quickly and without giving due consideration to long-term sustainable management, such as tax revenues, employment and environmental impact. The privatisation process was intended to secure the industry’s position and address the need for new investments, increased production, jobs and export revenues.

In most countries, agreements were negotiated that included exploration and production licences for the extractive industries, but other activities and sectors were also affected. The terms and conditions were designed with a view to revitalising the industry, and the agreements often included extensive exemptions from the ordinary legislation that applied to areas like taxation, the environment and labour laws. Many of the extractive industry agreements also included extensive stability clauses that guaranteed low taxes in the future even if commodity prices increased strongly.

The privatisation in the 1990s took place during a period when metal and mineral prices were low. This situation is now greatly changed. Real prices have increased by several hundred per cent in a short time. So far, the production response has been uneven and delayed for many metals and minerals, because it takes a long time to increase production.

In this situation, there has been pressure on the part of developing countries to renegotiate mining contracts. Such demands often stem from civil society, opposition politicians, academics, trade unions and, to an increasing extent, from the government administration itself. The value of mining exports from Zambia increased from the equivalent of NOK 2 billion to NOK 50 billion from 1998 to 2011. Increased production can only account for slightly less than 10% of this increase. The tax potential is poorly exploited, however, despite Zambia having changed its tax regime with Norwegian support, a change that increased tax revenues by more than NOK 1.2 billion in 2011. This means that most of the income from Zambia’s non-renewable natural resources is being taken out of the country. The situation is even worse in other countries.

There has been a strong increase in illicit financial flows in the wake of higher commodity prices. Several studies indicate that the practice of internal profit shifting that is widespread in the extractive industries and multinational corporations, among other things in the form of abusive transfer pricing, is behind a significant proportion of these financial flows, cf. Chapter 8. This challenge will grow in the years ahead, since developing countries have the greatest untapped potential for discovering and exploiting natural resources.

It is important that developing countries are given an opportunity to renegotiate unfair agreements with the mining industry. Norway has experience of supporting efforts of this kind in Zambia as part of the more extensive work to strengthen resource and revenue management in the mining sector.

Several international institutions and initiatives also offer assistance in this field. The African Development Bank has established a regional centre with experts that provide legal assistance in contract negotiations, and a pro-bono lawyers’ project has also offered its assistance.

The Government will take the initiative for the establishment of an independent group of experts for the renegotiation of natural resource contracts for developing countries. It is important that principles derived from previous experience of such cooperation are adhered to. It is particularly important that the primary relation must be between the client (the national authorities) and independent international experts. The independence of the advisers must be indisputable. The goal is to assist developing countries in assessing whether grounds for renegotiation exist, and to assist them during the negotiations and the implementation of the new contract.

5.2 Renewable resources

Agriculture

On average, agriculture accounts for 34% of the gross domestic product (GDP) in developing countries, 65–80% of all jobs and approx. 40% of export revenues. There are great regional variations in these figures.

Food security is a challenge that will require major investments in the agricultural sector. The World Bank has estimated that growth in the agricultural sector is several times more effective in reducing poverty than growth in other sectors. The vast majority of poor people in the world depend on agriculture for their livelihood. Climate change, increasing pressure on agricultural land and water resources and the loss of biodiversity threaten this livelihood and hamper economic growth. Improved food security will depend on integrated land use management that safeguards the rights of the poor. Growth in the agricultural sector must be socially, environmentally and economically sustainable.

Agriculture is a business activity, whether it is carried out by smallholders or large entities. The agricultural value chain goes from the smallholder in the field and then via commercial actors. These actors include banks that furnish credit, actors that sell input goods and that buy and market the farmers’ produce, as well as the food industry. Agricultural development depends on the ability of these actors to increase value creation in a sustainable manner. Public and private investments must benefit the poorest people if development in this sector is to contribute to improving food security. The position of small-scale producers in the value chain is strengthened through farmers’ organisations and cooperatives.

Asian and Latin American agricultural production has increased considerably during the past 50 years, while Africa is lagging behind. As shown in Figure 5.4, cereal yields per unit area have hardly increased at all in Africa in the past 50 years, while they have more than doubled in Asia and Latin America. One reason for this is lack of access to input factors like fertiliser, pesticides and credit. Lack of infrastructure, access to local markets, storage capacity, access to technology and education and, not least, systematic discrimination against women, are other obstacles to agricultural development. There is a great need for agricultural reform and better organisation of the agricultural sector.

Figure 5.4 Africa is lagging far behind in terms of agricultural productivity, here measured as cereal yield per unit area.

Figure 5.4 Africa is lagging far behind in terms of agricultural productivity, here measured as cereal yield per unit area.

Source Africa Human Development Report 2012: Towards a Food Secure Future.

Africa’s female smallholders account for between 70 and 80% of the production that makes up the local food supply. Strengthening the position of women in agriculture is a precondition for increasing production, and for ensuring that the income from production will benefit households to a greater extent. Women’s rights to property and inheritance and their access to input factors, education and markets are therefore among the most important areas to focus on.

In large parts of Africa, women only have access to land through marriage or via male relatives. There are also established patterns whereby women have less control than men over income from agricultural production.

Women’s participation in farmers’ organisations and cooperatives can also be hindered by traditional gender roles, whereby women are often marginalised in matters relating to money, power and decision-making. Women’s organisations have an important role to play in supporting and promoting the needs of female smallholders.

According to the Food and Agriculture Organisation of the United Nations (FAO), equal access to productive resources and equal opportunities for women and men could increase local yields by up to 30%. In order to succeed in developing climate-resilient agriculture, which increases productivity and reduces poverty, women must be afforded real rights.

Figure 5.5 Quality control at a tea plantation in Kenya. Thanks to modern quality control systems, Kenyan tea has achieved a good position in the international market.

Figure 5.5 Quality control at a tea plantation in Kenya. Thanks to modern quality control systems, Kenyan tea has achieved a good position in the international market.

Photo: Sven Torfinn/Panos/Felix Features.

There is a great need for investment in African agriculture, both in small-scale farming and large-scale agriculture. Private investments will have to play a substantial role. The authorities’ ability to facilitate sustainable investments and enter into public-private partnerships will be crucial. Many African countries are poorly equipped to facilitate investments that promote sustainable development. This is due to inadequate distributive policies, poor governance and weak regulation of commercial land investments. The interests of smallholders and the rest of the local community are often not addressed.

This is particularly important in connection with purchases or leasing of large areas of land. In many places, foreign investors have taken over large areas at a very cheap price. Purchase or leasing contracts are often entered into without the public having access to information and without transparency. Consultation processes are frequently deficient, and people’s lack of access to information is often exploited. Such investments, which hardly benefit the local authorities and population at all, are referred to as “land grabbing”.

Norway has good land management systems, with well-developed title registers and legislation. In the hydroelectric power sector, we have experience of sharing investment goods with affected local communities. This expertise will increasingly be used in our development cooperation. The work will be based on the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security drawn up by the Committee on World Food Security (CFS), which emphasise supporting indigenous peoples and local communities.

Improving infrastructure requires major investments, and it may be a good solution to concentrate efforts in certain geographical areas. Agricultural growth corridors are being developed in Tanzania and Mozambique to strengthen all the links in the value chain and attract private investment. These corridors are limited geographical areas with a potential for increased production. They are also linked to ports, and this is intended to facilitate both access to imported input goods and the export of finished products. Through increased investment in infrastructure and commercial farms, these corridors can be developed into centres of economic growth that smallholders can also benefit from, for example though contract farming, market access and agricultural advice.

Africa is highly vulnerable to climate change. Many African countries also have little capacity to adapt to these changes. This is particularly true for countries where rural poverty is widespread and where large groups of people lack both the necessary resources and knowledge about adaptation to future climate change. Poor smallholders are among the most disadvantaged groups. Even small increases in temperature are expected to reduce agricultural productivity.

Over the past 15 years, Norway has contributed to developing technology for use in climate-resilient agriculture in Africa, and during the past 5 years it has also played an active role in climate-smart rice production in Asia. The Norwegian Institute for Agricultural and Environmental Research (Bioforsk) has contributed to the development of climate-smart rice production in India, and the cooperation is being expanded to Bangladesh and Vietnam. Zambia and Malawi are both good examples of the nascent restructuring of African agriculture. There is still a great need for further development of knowledge and technology.

Climate-resilient cultivation methods must be continuously supplemented with more climate-resilient plants and seeds. This is contingent on smallholders, scientists and breeders being ensured access to the genetic diversity of agricultural plants through international cooperation. Norway is an active contributor to international cooperation on the preservation and sustainable use of plant genetic resources under FAO’s International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA). The Treaty’s multilateral system for exchange of plant genetic resources for food and agriculture regulates access to these resources, as well as the fair distribution of benefits that arise through their use. Through the Treaty’s Benefit-sharing Fund, Norway helps to support the preservation and further development of important traditional plant varieties locally in farmers’ fields. The Treaty is an important precondition for the Global Seed Vault that Norway has established on Svalbard and for Norwegian-supported initiatives like the Global Crop Diversity Trust (GCDT) and the Consultative Group on International Agricultural Research (CGIAR).

Fisheries and aquaculture

Figure 5.6 Fish will continue to be an important source of nutrition and food security in the future. However, this requires sustainable management.

Figure 5.6 Fish will continue to be an important source of nutrition and food security in the future. However, this requires sustainable management.

Photo: Ken Opprann.

Fish resources represent a valuable renewable resource in terms of nutrition, food security, employment, income generation and export revenues. Sustainably managed, African fisheries can play an important role in the efforts to meet the need for safe and healthy food for a growing population.

Some of the world’s marine resources are not harvested in an optimal or sustainable manner, however. According to the FAO, 13% of the world’s fish stocks can be exploited more, 57% are fully exploited, while 30% of stocks are overexploited or recovering.

Textbox 5.4 Many live off and in forests

According to the UN, more than 1.4 billion people depend on forests for their livelihood. Many of them belong to vulnerable and marginalised segments of the population. The traditional role of women and their use of forest resources make them particularly vulnerable to changes in forest cover, climate change, lack of transparency and poor capacity in local forest management. The Government is therefore making determined efforts to involve women and local communities in this work. Indigenous peoples often live directly off nature and are particularly vulnerable to the consequences of deforestation. They are therefore an important target group. Cooperation with a number of local and Norwegian NGOs is one of the strategies employed to reach these groups.

The Government supports the work of multilateral organisations to help countries to develop national strategies or action plans for REDD+ (Reducing Emissions from Deforestation and Forest Degradation). They are based on transparency and participatory processes. Processes that result in better control of the utilisation of natural resources and strengthening of democratic decision-making are supported through the emphasis on good governance, transparency as regards revenues and the allocation of the funds, institution-building and local participation.

Textbox 5.5 WWF Norway's wildlife management programme in Namibia

WWF Norway supports an extensive wildlife management programme in Namibia that started in the early 1990s. The programme is called Community Based Natural Resource Management, and it contributes to improving the living conditions of the local communities involved, while at the same time protecting the fauna and nature through the sustainable use of resources. The legislation gives local communities rights to income from sustainable hunting, photo tourism and hotel and tourism activities. The scheme provides incentives for long-term, sustainable and democratic wildlife management. The local communities keep all the income and decide for themselves how to spend the money, for example on schools, health services, the development of tourism or cash payments. The principles for local management and distribution are highly relevant and have clear transfer value to other countries and areas, such as forest management/REDD+, fisheries management, renewable energy and oil/gas extraction.

Illegal, unreported and unregulated (IUU) fishing weakens the resource base and limits poor people’s access to income and food. These activities have destructive long-term effects on sustainable resource utilisation, the local economy and development in affected coastal communities. Measures must target commercial vessels that deliberately exploit poor monitoring capacity as well as local fishermen who use illegal fishing gear and operate in such large numbers that it weakens the resource base.

Climate changes in the form of more extreme weather, ocean acidification and changes in water and ocean temperatures affect the fisheries and aquaculture sector. Climate change adaptation is important. For example, the risk of escape and spread of infection must to a greater extent be taken into consideration when aquaculture facilities are established. Changes in the migration patterns of fish stocks as a result of climate change can affect national fisheries.

Norway has expertise about the whole value chain in the fisheries sector, and Norwegian advice can help to make fisheries and aquaculture an important growth factor in developing countries. Such advice is in demand, also in the fields of fisheries supervision and coast guard duties. Access to capital is often a strongly limiting factor for the aquaculture industry in developing countries.

In order to improve coordination on Norway’s part, the Ministry of Foreign Affairs and the Ministry of Fisheries and Coastal Affairs will establish an expert group to provide quality assurance of future aid in the area of fisheries, marine resources and aquaculture.

In December 2012, the Government presented a strategy for increasing aid aimed at strengthening food security in a climate perspective.

Forests

A reduction in deforestation and forest degradation will help to reduce greenhouse gas emissions. In addition, it will preserve biodiversity as well as the habitats and livelihood of large population groups. Sustainable harvesting of forest resources is an important source of materials, fibre, energy, food, clothing and medicines. It was agreed in the 2008 Climate Settlement in the Storting that Norway shall make active efforts to ensure international support for measures aimed at combating deforestation in developing countries, with sustainable forest management as an important element.

Sustainable forest management is necessary if forests are to contribute to development and fair distribution for population groups that depend on forest resources for their livelihoods. Wood is the most important source of energy for more than two billion people, and in many areas, forests are of fundamental importance to food security, water supply and erosion protection.

Norway’s International Climate and Forest Initiative is described in detail in Report No 14 (2010-2011) to the Storting Towards greener development.

Wildlife management

For many countries with extensive wildlife resources and a rich natural diversity, tourism has become an important industry that creates many jobs and brings in foreign capital. However, the sector is often developed without taking account of the local population’s needs and participation, or of their economic and cultural rights. Investors make big profits, while the local communities benefit little from the activities.

When national parks are established as an important part of the development of the tourist industry, conflicts of interest often arise with the local population that has traditionally had hunting as a source of food and income. Their traditional way of life is redefined as poaching, and thereby criminalised, even though it differs fundamentally from activities engaged in to earn large sums of money from the illegal sale of skins, ivory and rhinoceros horns. Wildlife management agencies in more and more countries realise the value of cooperating with the local community instead of shutting it out. In such cooperation, it is important that local infrastructure is upgraded and that as many jobs as possible and a share of the profits go to local residents. It is also necessary to facilitate the marketing of products made by small local enterprises, such as handicrafts and local food products.

Norway has supported wildlife management in Zambia since 1990. This cooperation has produced good results and considerably increased Norway’s expertise in this kind of aid.

5.3 Organised crime and natural resources

International organised crime linked to drugs, arms trafficking, piracy, human trafficking and natural resources is an ever increasing global challenge. Criminals steal common resources, create insecurity for individuals and society, and threaten to undermine stability and development in many countries. They buy protection from the authorities and use ruthless methods to secure market shares and power.

Calculations made by UNEP and Interpol indicate that illegal logging generates between NOK 180 and 600 billion every year. For fisheries, the amount is probably close to NOK 180 billion a year. Of the total proceeds of criminal activities, probably less than one per cent is confiscated.

Insufficient capacity in the criminal justice sector in developing countries and failure to share information and evidence across national borders limit states’ ability to effectively prosecute those involved in organised crime. Through the UN, Norway supports the work of the United Nations Office on Drugs and Crime (UNODC) to combat money laundering and organised crime. UNODC’s mandate includes assisting countries in their efforts to prevent and fight organised crime and terrorism, and it has become an important actor in the UN’s work in this field.

Over the past decade, Interpol, UNODC and UNEP have all highlighted the increase in organised natural resource crime. This type of crime has become more widespread, and it involves cartels from other areas of crime, for example drug cartels. They are attracted by the low risk and potential for high profits associated with illegal activities relating to fishing, logging, oil bunkering and the dumping of waste. These activities sometimes also involve forced labour and human trafficking.

Figure 5.7 Illegal logging contributes to deforestation, undermines sustainable development and drains large revenues from the country of origin.

Figure 5.7 Illegal logging contributes to deforestation, undermines sustainable development and drains large revenues from the country of origin.

Photo: Sofi Mardiah/CIFOR.

In the case of illegal fishing and logging, the timber and fish must be integrated into the legal value chain, i.e. laundered. Criminal networks therefore have connections with companies, investors and individuals, including in industrialised countries. Information and evidence in a case will therefore normally have to be obtained from multiple agencies and several countries. This is made more difficult by the fact that much of the documentation is hidden in tax havens, a phenomenon that is discussed in more detail in Chapter 8.

The Government will focus especially on the extensive illegal fishing, particularly off the coast of West Africa, where the problem is especially prevalent. Norway will implement an EU regulation on trade in timber and timber products in 2013. The aim is to prevent illegally logged timber from being traded in the EEA. Enterprises that put timber and timber products on the market for the first time in the EEA must assess the risk of the product originating from timber that has been illegally logged, also outside the EEA. The regulation will make it more difficult to sell products if it cannot be verified that they originate from legal sources.

The criminal networks’ extensive involvement in illegal logging and deforestation undermines the objectives of the Government’s International Climate and Forest Initiative, and Norway will intensify its efforts in this field.

The extensive loss of resources, particularly timber and fish, undermine international climate agreements and drain developing countries of substantial resources, while also undermining sustainable development. UNEP, GRID-Arendal and Interpol are now collaborating on the development of a platform for fighting forest crime. Norway supports this project, which is called Law Enforcement Assistance to Forests.

The collaboration between Interpol, UNODC, CITES (the UN’s Convention on International Trade in Endangered Species of Wild Fauna and Flora), the World Bank and the World Customs Organization (WCO) – known as the International Consortium on Combating Wildlife Crime (ICCWC) – is important in order to prevent organised natural resource crime, globally as well as in individual countries. The Government wishes to further develop this collaboration, and to develop it into an effective programme for both fisheries and timber.

The exchange of information between states is also necessary in order to uncover organised natural resource crime. In Norway, Kripos (the Norwegian National Criminal Investigation Service) assists the Norwegian administration and shares information with other countries via Interpol.

As regards fisheries in Norway, the Government has established the Norwegian National Advisory Group against Organised IUU Fishing (FFA). The FFA is an effective inter-agency initiative aimed at combating illegal fishing through active information gathering in order to analyse and assess which objects to target in monitoring, control and surveillance work. This method can also be used to improve the control of other flows of goods, and it could play an important role in countries whose control capacity is more limited than Norway’s. The inter-agency collaboration that the FFA represents can serve as a model for other countries. By strengthening the FFA cooperation, relevant information from the advisory group can be shared via Kripos/Interpol or bilaterally with a view to stopping illegal activities in fishing, logging, oil bunkering and dumping of waste in developing countries.

Many African countries have expressed a wish to establish similar forms of inter-agency collaboration. The Government will support such cooperation and enforcement structures with a view to strengthening the control of fishing and logging, among other things.

The Government will:

  • attach greater importance to offering its Oil for Development (OfD) programme as a whole, including resource management, environmental management, safety management and financial management, in combination with support for civil society, parliaments and independent media

  • be stricter in its selection and prioritisation of partner countries in the OfD programme, placing greater emphasis on democratic development and an active distributive policy

  • strengthen the OfD programme by increasing capacity in the secretariat, and consider measures to increase the capacity of other partners as well

  • expand OfD-related cooperation with relevant international actors

  • increase its allocations to civil society and other actors that promote transparency in the petroleum sector in countries where Norway is engaged in OfD cooperation

  • further develop its Tax for Development (TfD) programme

  • increase capacity in the TfD secretariat and include more countries in the programme

  • initiate the establishment of an international independent group of experts to provide assistance to developing countries that wish to renegotiate natural resource contracts

  • spearhead efforts to achieve more sustainable management of marine and terrestrial natural resources at both the national and local level

  • systematically raise and support demands for formal rights from smallholders and women farmers in particular

  • increase funding for developing agriculture and enhancing food security by NOK 500 million over a three-year period (2013–15)

  • support the United Nations Environment Programme (UNEP), the United Nations Office on Drugs and Crime (UNODC), Interpol and civil society’s efforts to fight natural resource crime

  • contribute to international exchange of information and cross-sector cooperation in the fight against natural resource crime

  • strengthen efforts to combat organised forest crime within the framework of Norway’s International Climate and Forest Initiative.

Footnotes

1.

Norad Evaluation Department, Facing the Resource Curse: Norway’s Oil for Development Program, Report 6/2012 (Scanteam).
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