Equitable Allocation For Future Generations Research Papers Example

Type of paper: Research Paper

Topic: Government, Development, Politics, Economics, Money, Future, Generations, Taxes

Pages: 5

Words: 1375

Published: 2020/10/19

Natural Resources: distribution of revenues for wellbeing of citizens and equity between present and future generations, as basic tenet of sustainable development

Introduction

The current challenges facing governments both in the developed and developing countries are based the on inability to distribute revenues for wellbeing of citizens effectively. Natural resources imbalances not only pose a challenge in relation to ensuring transparency and equality in the distribution of such resources but have been a source of corruption with the gap between the rich and the poor still widening. Governments should decide effectively on how to allocate resource from resource extraction. Some of the possibilities attached to such undertakings should not be limited to; effective allocation of revenues directly into the sub-national or national budgets. Using the natural resources for tax reductions or even transferring payments such as the subsidies or welfare payments or “resource dividends leads to contribution to the pension funds or the natural resource funds. The paper will discuss the distribution of revenue and the equity between the present and future generations while basing on sustainable development (Allen, 2006).
Promotion and equity through enacting the respective choices towards investing revenues achieves the optimal and equitable outcomes for the current and the future generals, though major overriding objectives should be considered. They are; promoting equality between both generations and across society, and efficiently using revenues aimed at maximizing welfare.

The notion attached to such concepts depicts how the first goal, of promoting equity, is through government strategies aimed at deciding the amount of revenue that should benefit the citizens in the present and also in the future generations. Thus, the challenge to every government is based on the reasonable amount estimated on resource revenue it spends or saves and on the growth of the country. Imbalances, in spending the depicted amount, is likely to have marginal implications on the current or the future generations that immediate spending aimed at improving the welfare of the current citizens required. A precaution on weighing the capacity economy to absorb potentially large increase in the amount of spending should be considered while enacting some of the depicted decisions. Country with much lower expected rates of the income growth is likely to have a smaller gap existing between the incomes of the future and the current generations. Based on such implications, it is apparent that the government ensures less revenue is consumed by the current generation with more invested towards maintaining equality between generations (World Bank, 1997).

Challenges

There are different challenges including the nature of the resource revenues tend to complicate the issue of the equality distribution towards enhancing the well-being of the citizens. The other issue is the equity between present and future generations, as a basic tenet of sustainable development.

These challenges include (Auty, 6);

The fact that nonrenewable resource extraction is essentially unsustainable hence the need for the company to effectively plan for a period when these available revenue streams are likely to decline. Where the decline in the natural assets calls for actions aimed at accumulating equitant productive assets especially human capital. However, failure to address such an issue is likely to create an imbalance where the government empowers the well-being of the current generation while to the future generation is open to possible poverty. The decision by the government on handling the large amount of money in relation to the overall economy size determines the general outcomes (Revenue Watch Institute 2013).
Resource revenues depict large booms as the extraction projects at the full capacity and later followed by long decline as the revenues are depleted hence need to ensure the government balances the large among of money. Under such cases, the government should consume less that it earns as the need to save is diverse towards addressing some of the future generation issues.
Commodity prices tend to change hence the resource revenues becoming volatile on a year to year basis. Such aspects depict the essence of policy tools or instruments aimed at ensuring that the short-term revenue changes do not disrupt the government spending
Revenue generated into the economy should offer adverse macroeconomic outcomes. Thus the large flows of the money into the economy alongside a higher demand for the goods that are non-tradable plus the services is likely to cause a decline of business producing goods for the export potential causing “Dutch disease” phenomenon. In addition, the economy is likely to lack the absorptive capacity in relation to handling the large increase in the domestic investment hence causing inflation (Auty, 10)
In conclusion, failure to effectively manage the natural resources towards improving the wellbeing of citizens and equity between present and future generations leads to trouble. A basic tenet of sustainable development is likely to lead to a conflict in case the citizens perceive that the benefit of the resource extraction is distributed fairly. However, through the identification of the depicted challenges based on the resource revenue nature complication. The government can enact some of the proffered policies towards ensuring conflicts likely to arise when the public perceive that the benefits of the revenue extractions are not fairly distributed (Griffin et al, 2010).
In addition, such activities should be aimed at improving the well-being of the current and the future generations through equitable allocation for both the current and the future generations. Additionally, there is a need for some of the current expenditure of revenues to indicate the effectiveness of the public spending towards cementing public support on the long-term resource management plans. This depicts the essence of managing the respective expectations via open and inclusive national planning and communicating the facts hence limiting the demand and subsequent overspending. The effectiveness of such undertakings can be monitored via an explicit fiscal rule that dictates among spent, and that saved annually by the government aimed at guiding the long-term decision to save. Such undertakings can be used to protect the public against possible cases on the government temptation on reneging on the depicted rule. Hence, the need to ensure the rule itself and the respective amounts spend and save annually are made public. Supplemented by a strong oversight emerging from the civil society plus the independent authorities with such governance structures helping to keep the government committed to its decision. It helps the authorities to ensure effective distribution of revenues for wellbeing of citizens and equity between present and future generations, as a basic tenet of sustainable development (Allen & Dimitar 12).

Equity amongst today’s citizens

The government provides a caution in relation to allocating revenues to ensure and consider equity among the current citizens. This depicts the need for a careful consideration and also intervention aimed at balancing the distributional equality of the benefits based on the social group, income level, and gender (Griffin et al..45). The essence, of enacting strategies by the government on resource revenues towards supporting today's citizen, could be based on elevating the living in relative or extreme poverty. Some of the ways in which the government can use these resources is via different channels while balancing the tradeoffs between the most efficient channels and those reaching a greater number of targeted groups.
However, based on the fact that the implementation of a system facilitating unconditional lump sum transfers is likely to benefit the poor more relatively compared to the rich. Justifications on such direct transfers should be based on countries having high level of poverty and credit constraints. Through the direct cash transferring strategies, the citizens can help in relieving household spending bottleneck, the capacity, individual credit constraints, and also the capacity constraints. In addition, they are likely to generate public interests based on how the revenues are spent hence boosting the desire to hold accounts with the government. However, lack of a system regulating such transfers is likely to cause misappropriations. The direct cash transfers are likely to cause conflict with the government goals of using resource revenues to invest effectively (Aghion & GarcmHa 57)
There are other undertakings that the government can enact to ensure effective distribution of revenues for wellbeing of citizens and equity between present and future generations. As a basic tenet of sustainable development such as through ensuring, investment is efficient. The objective of such aspect is aimed at ensuring effective resource allocation towards offering greatest social return. Thus, the government can consider more than the pure financial benefits but also on the economic and the social benefits of the job creation and the skills transfer (Gylfason 847).

Thesis

Environment and natural resources attract a number of arguments based on the extensive aspects attached to the monetization of the ecosystem services. Although the aspect seems hard to prove, it is possible to place an accurate value effectively on the certain environmental amenities thus leaving $0 in the equation. Thus, a question on whether $0 is likely to have a best policy decisions raises intriguing and continuing debate. However, the value of the environment and natural resource is diverse as reflected in the diverse concerns on the essence of preserving such assets. Distribution of revenues of natural resources forms a significant entity in relation to creating a significant policy addressing such aspects. There are valuations on the literature retaining information on direct distribution. For instance, DDMs refers to the mechanisms used in the transferring of a nation’s income from the natural resources directly to the citizens hence reducing the discretion of the respective state.
However, the intriguing analogy attached to the depicted case on direct redistribution aligns with the assumption that although some of the resource wealth offers a massive opportunity for boosting the economy. Historical records of some of the resource-rich countries depict weak outcomes. It is evident basing on the fact that some of the resource-rich countries have leveraged their resource wealth in approaches boosting economic development making a difference towards the wellbeing of the populations. Countries such as Canada, Botswana, Australia, and Norway are the famous examples of using their resources. There are other undertakings that the government can enact to ensure effective distribution of revenues for wellbeing of citizens and equity between present and future generations. The objective of such aspect is aimed at ensuring effective resource allocation towards offering greatest challenge. The equity between the current and the future generations is largely defined by the government strategies.
The redistribution, inequality, and growth avails findings based on the economic power of the respective nations. The lack of policies monitoring economic distribution, and equality and facilitating growth has largely facilitated such outcomes. However, through increasing quality education accessibility around the globe growth and development can be register in the respective settings. Thus, education plays a significant role in facilitating growth and development, addressing redistribution and equality.
Transparency in the public finance has not been fully achieved due to the failure of the government to offer the public with comprehensive budget information. The essence of extra-budgetary funds and the operations is normally based on ensuring that the government pension schemes are designed towards saving and investing the revenues from the exhaustible natural resources for the future generations. The failure of the government to keep such budgets is likely to raise issues among the public. Thus, the essence of transparency on public funds is vital towards increasing growth and development.
Sustainable development should be centered on everyone’s mind based on the ways of living. It is important for acting now based on the fact that the future generations are likely to be faced with issues propelled by current activities. Thus, in relation to balancing the economic, social, and environmental goals, the major tenet of the sustainable development should be based on the essence of balancing the current and also the future generations. The civil society and the government must work together towards transitioning from the current traditional development model of sustainable to a more dynamic system embracing the respective aspects in the society. Thus, such parties should initiate changes toward transforming the economy.

Works cited

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Allen, Richard and Dimitar Radev. Managing and Controlling Extra-budgetary Funds. IMF Working Paper WP/06/286. Washington, D.C.: International Monetary Fund. 2006. http://www.imf.org/external/pubs/ft/wp/2006/wp06286.pdf
Allen, Richard and Dimitar Radev. Managing and Controlling Extra-budgetary Funds. IMF Working Paper WP/06/286. Washington, D.C.: International Monetary Fund. 2006. http://www.imf.org/external/pubs/ft/wp/2006/wp06286.pdf
Auty, R.M. (Ed.) forthcoming. Resource Abundance and Economic Development. Oxford University Press, Oxford and New York. 2012
Bardhan, Pranab. Corruption and development: A review of the issues. Journal of Economic Literature 35, 1320}1346. 1997
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Griffin, C. et al. (2010). Lives in the Balance: Improving Accountability for Public Spending in Developing Countries (esp. pp. 34-37). Washington, D.C.: Brookings Institution Press. 2010.
Guide to Transparency in Public Finances Looking Beyond the Core Budget. Accessed at http://internationalbudget.org/wp-content/uploads/Looking-Beyond-the-Budget.pdf
Gylfason, Thorvaldur. “Natural resources, education, and economic development.” European Economic Review 45(4): 847-859. 2001.Print.
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