Latin American countries must review and strengthen the institutions and instruments in order to maximize the contribution of natural resources to regional development, particularly in the current cycle of high prices.
That is the thrust of a report released this week by the U.S. Economic Commission for Latin America and the Caribbean.
The report “Natural resources within the Union of South American Nations: Status and trends for a regional development agenda” was presented by Antonio Prado, deputy executive secretary of the United Nations regional commission, at the Conference of the Union of South American Nations in Caracas, Venezuela.
In the document, the commission analyzes the issue of natural resource governance in the region, which refers to the set of national policies over ownership and allotment of natural resources and the distribution of productivity gains arising from their exploitation.
Latin America and the Caribbean has 65 percent of the world’s reserves in lithium, 42 percent of silver, 38 percent of copper, 33 percent of tin, 21 percent of iron, 18 percent of bauxite and 14 percent of nickel. It also has large oil reserves: a third of world bioethanol production, almost 25 percent of biofuels and 13 percent of oil.
The region has around 30 percent of the world’s total renewable water resources, which represents over 70 percent of the water throughout the Americas, as well as having 21 percent of the planet’s forests and plentiful biodiversity.
However, the region has major weaknesses, such as low investment in infrastructure and poor performance in innovation, science and technology.
According to Prado “Historically, the region has been unable to translate the boom periods of exporting its resources into long-term economic development processes. The challenge for the countries of the region is to generate and efficiently invest extraordinary revenue from the current price cycle with social and environmental sustainability”.
In the new report, the commission describes the various legal and economic instruments that Latin American and Caribbean States have at their disposal to appropriate and distribute the revenues from the exploitation of natural resources relating to mining, water and hydrocarbons.
Between 2000 and 2010, the region’s oil exports did not follow the upward trend of prices, unlike the pattern in the rest of the world. Despite this, estimated income of the hydrocarbons sector during the boom of 2004-2009 was double the average recorded between 1990 and 2003.
The Commission describes the region as facing the challenge of achieving homogenization and integration in energy consumption, with a view to narrowing the subregional divides that still persist, namely: the heterogeneity of natural resources, supply structures and energy consumption, and the need to achieve institutional consolidation and establish the basic conditions for renewable energy promotion and penetration policies.