Petroleum, Fiscal Federalism and Environmental Justice in Nigeria

Abstract

This paper analyses the issue of fiscal federalism in Nigeria from an environmental justice perspective, using the case of the oil‐producing Niger Delta region. Within Nigeria, this is the region most affected by oil—certainly in terms of its environmental impact. In spite of this, areas of the country that do not produce petroleum—the majority—derive increasing benefits from financial flows and development consequent on oil production and refining. This situation raises issues of environmental justice. Two conflicting schools of thought have emerged. One, championed by governments and people in the oil‐producing area, with the active support of environmental NGOs, argues that considerably more financial resources from oil revenue should be allocated to the area in order to compensate for environmental risk and damage. The cliche´ ‘resource control’ is commonly associated with this school. The opposing school, made up mainly of the central government and the governments and people of the northern states, asserts that the current level of compensation is adequate. The establishment of environmental justice is impeded by several factors, chief of which is the command nature of federalism in the country.