Resource rents and infrastructure investment

It is often argued that national natural resource wealth is like “manna from heaven” and that resource rents should thus accrue to all citizens of that nation from an ethical perspective. Yet in reality the rents from exploiting national resources are often concentrated in the hands of a few. We look into the possibility of taxing resource rents and thus raising public money that could then be used to cover the population’s infrastructure needs, such as access to electricity, water, sanitation, communication technology and roads, which all play important roles in a nation’s economic development process. In a similar vein, climate change mitigation and economic development can be brought into accordance by using the revenues from pricing carbon or from abolishing fossil fuel subsidies to close the above-mentioned infrastructure gaps or to attain other development goals.

Relevant Material

Fuss, S., Chen, C., Jakob, M., Marxen, A., Edenhofer, O. (2015). Could Resource Rents Finance Universal Access to Infrastructure? A first exploration of needs and rents. FEEM Nota di Lavoro #83.

Jakob, M., Chen, C., Fuss, S., Marxen, A., Edenhofer, O. (2015). Development incentives for fossil fuel subsidy reform. Nature Climate Change 5: 709–712.

Jakob, M., Chen, C., Fuss, S., Marxen, A., Rao, N., Edenhofer, O. (2015). Using Carbon Pricing Revenues to Finance Infrastructure Access. FEEM Nota di Lavoro #94.