Unpacking the Local Resource Curse: How Externalities and Governance Shape Social Conflict

Abstract

Natural resource extraction is economically important in many developing countries, but social conflict can threaten the viability of the sector. This article examines why polluting extractive industries sometimes generate social mobilization but often do not. First, I distinguish acute, highly visible environmental externalities from chronic, less observable pollution, showing that only the former generate social mobilization. Second, I explore how high-quality local governance can mitigate the local resource curse dynamic by both reducing pollution and improving compensation in mining-intensive areas. The analysis uses microlevel data on extractive commodities, water pollution, children’s and livestock health, local government quality, and mining-related social conflict in Peru to demonstrate the full causal pathway of the local resource curse.