Evidence from a Natural Experiment on the Development Impact of Windfall Gains: The Camisea Fund in Peru

Abstract

work is licensed under a Creative Commons IGO 3.0 AttributionNonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose, as provided below. No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license.Following a peer review process, and with previous written consent by the Inter-American Development Bank (IDB), a revised version of this work may also be reproduced in any academic journal, including those indexed by the American Economic Association's EconLit, provided that the IDB is credited and that the author(s) receive no income from the publication. Therefore, the restriction to receive income from such publication shall only extend to the publication's author(s). With regard to such restriction, in case of any inconsistency between the Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives license and these statements, the latter shall prevail.Note that link provided above includes additional terms and conditions of the license.The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent. AbstractWe study the economic effect of windfall gains by examining a Peruvian natural experiment. The Camisea Fund for Socioeconomic Development (FOCAM) is an inter-governmental fiscal transfer scheme that allocates natural gas royalties generated by the Camisea Gas Project to eligible subnational governments. We exploit the rules governing FOCAM allocation to identify the effect of the transfers on municipal accounts, local infrastructure, and economic development. Using a newly constructed districtlevel dataset for the years 2005 and 2012, we find evidence of positive impacts on municipal capital expenditures and local infrastructure. However, we also find evidence of a negative impact on municipal current expenditures. More specifically, we find that municipalities with low absorptive capacity coped with the increased administrative burden of FOCAM transfers by reallocating administrative effort toward (away from) executing capital (current) expenditures.

El efecto del gasto público en el déficit de vivienda en el Perú a nivel municipal

“…Por ejemplo, el Instituto Mexicano del Fondo Nacional de Vivienda (Instituto del Fondo Nacional de la Vivienda para los Trabajadores) requiere la formalidad de los trabajadores para 10 Estos resultados se alinean bien con los hallazgos observados por Loayza y Rigolini (2016), quienes documentaron cambios positivos estadísticamente significativos de un consumo 9 por ciento mayor en los municipios que explotan minerales en comparación con los municipios no productores. Nuestros resultados también se alinean con lo que Corral et al (2016) descubrieron en las ganancias inesperadas de la explotación petrolera conocida como el Fondo Camisea para el Desarrollo Socioeconómico, también en Perú. Encontraron un aumento en los gastos de capital y una mejor infraestructura (por ejemplo, internet y carreteras principales) en los municipios productores.…”

Between Care and Conflict: Relations of Resource Extraction in the Peruvian Amazon

“…When Camisea became active in 2004, Atalaya province (in Ucayali Region) was not to benefit from the Fondo de Desarrollo Socioeconómico de Camisea (FOCAM, Camisea Fund for Socioeconomic Development) because the site is in Cusco Region, on the upper Bajo Urubamba. FOCAM is a government scheme to transfer funds from natural gas royalties to subnational jurisdictions, which was required by the Inter‐American Development Bank, who financed Camisea, after pressure from indigenous organisations and their NGO allies so that comunidades would benefit from the extractive venture (Corral, Henderson and Miranda, 2016; see Ross, 2009 on the civil society pressure). Following a process that included input from the indigenous Matsigenka comunidades adjacent to Camisea and their organisations, it was decided that the funds would prioritise work in the comunidades in the project's area of impact; however, these elements were not respected in FOCAM's implementation.…”

“…Camisea became active in 2004 and paid US$6.3 billion in royalties in its first decade of activity – almost 50 percent of the royalties that Peru received from extractive ventures that decade (Corral, Henderson and Miranda, 2016). Its impact on the Bajo Urubamba's communities and ecosystems was criticised from early on (Ross, 2009; Feather, 2011).…”