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Policies of Sustainable Management of Natural Resources

Expert opinion prepared by Tzruya Shevach with the guidance of Dr. Vered Blass and Valerie Brachya

Past developments: Israel is poor in terms of natural resources and raw materials and is therefore dependent on imported resources. Israel, like the British Mandate that preceded it, granted rights to companies for extraction of minerals and aggregates – phosphates, oil shale, Dead Sea minerals – with royalties going to the state in exchange for the rights granted. Management of natural resources took the form of the granting of prospecting permits and mining permits by the authorities overseeing oil and mining, respectively, without taking into account the social and environmental consequences. Planning permission was allocated for the exploitation of mineral resources after an assessment of the environmental consequences (following the 1982 regulations requiring environmental impact assessment) and guidelines were established for rehabilitation of disused mines and quarries.. Payments for the rehabilitation of areas damaged by mining and extraction were directed to funds dedicated to these purposes: the fund for quarry rehabilitation (aggregates), the fund for phosphate rehabilitation, and the fund for Dead Sea rehabilitation.

Current trends: The portion paid to the state from income for extraction of natural resources is small, in direct contrast to the prevalent trend among developed countries today. The situation has changed for Israel with respect to resources in light of the discovery of a new natural resource with significant economic value (natural gas). Today there is concern that Israel could experience the “Dutch disease” – harm to the state’s economy because of extraction of natural resources with economic value. The government is demanding royalties from the income generated by extracting the resources, without defining the use of the funds. Simultaneously there is an increasing public demand for equitable distribution of the natural resources that belong to the state, not only with respect to natural gas.

“Business as usual” scenario: Management of natural resources by the business sector because of the lack of any clear government policy regarding management of natural resources that belong to the state, has resulted in random decision making regarding Dead Sea resources, phosphates, natural gas fields, oil shale, other industrial minerals, aggregates, marine sand, and mineral water. There is no clear process concerning the distribution of the benefits of natural resources in accordance with business decisions because of the absence of any policy regarding distribution of royalties received by the state; and lack of transparency with respect to processes and income.

Recommendations for the future:

Scenarios for use of income:

Creation of an sovereign wealth fund along the Norwegian model for investment of revenues received from national resources; setting objectives for investments of income for the sake of long-term national objectives; adoption of international standards (EITI – Extractive Industries Transparency Initiative) and OECD guidelines for management of income from natural resources.

 

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