NEW YORK – More than a decade before becoming President of the United States, Herbert Hoover, a mining engineer, observed that, among the branches of property law, the distribution of mining rights most elegantly reflects the vicissitudes of social and political relations. According to Hoover, mining rights were a “never-ending contention,” as old as economic and civil conflict, among four principal classes – overlord, state, landowner, and miner. “Somebody,” he concluded, “has to keep peace and settle disputes.”
Today, with the prices of major natural-resource commodities – including oil, coal, copper, gold, and iron ore – doubling, tripling, or rising even faster, the extractive industries are rapidly expanding. Profitable investments in the sector could lift millions of people out of poverty in the developing world.
But the risks are as real as the potential rewards. Resource industries are persistent sources of corruption, conflict, and degradation. Mineral and hydrocarbon deposits are often located in less-developed countries that suffer from pre-existing governance constraints, political instability, and major developmental and environmental challenges.
Transparency – full disclosure of everything from contracts to management of revenues and environmental commitments – is crucial for realizing the sector’s economic potential, and avoiding conflict and collapse.