Legal empowerment for local resource control

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3.2. CONSULTATION AND BENEFIT-SHARING TOOLS
3.2.1. Introduction
A second set of tools concerns legal requirements for investors to consult
local resource users and to negotiate with them benefit-sharing
arrangements. Broadly speaking, these tools seek to address the mismatch
that large-scale investment projects may produce, whereby much of the
benefit accrues to the government and/or the country as a whole (e.g. in
terms of taxation and royalties, and of contribution to the national GDP)
while costs are mainly borne by local resource users (e.g. in terms of loss or
damage to property). These tools seek to reduce this mismatch by enabling
local resource users to participate in the benefits generated by the
investment project. For instance, Ghana and Mozambique have adopted
legislation that specifically regulates consultation and/or benefit-sharing
arrangements in investment projects. Relevant provisions are also included
in the legislation of the other focus countries (e.g. Tanzania).
Consultation and benefit-sharing tools present some degree of overlap with
other tools examined here. For instance, local consultation may be required
not only as a stand-alone process but also as part of broader social impact
assessment processes (see below, section 3.3.2). Benefit sharing is
conceptually distinct from compensation, as it aims to go beyond
reparation for loss or damage suffered and is a continuing rather than a
one-off mechanism; but, in some cases, the border line between
compensation and benefit-sharing is in practice blurred (on this, see below,
section 3.3.3.)
3.2.2. Mandatory consultation processes
A first type of tool is for the law to require the government and/or the
investor to “consult” local resource users as part of the process to approve a
proposed investment project and/or to allocate resource rights to foreign
investors. Consultation requirements may be embodied in sectoral
legislation – such as mining and forestry legislation. As a result, the
application of such requirements may vary not only across countries but
also across sectors within the same country.
In Tanzania, for instance, when the president decides to transfer part of
village-held land to “general land” under the direct control of the central