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Energy Research & Social Science
journal homepage: www.elsevier.com/locate/erss
Beneﬁt sharing in the Arctic energy sector: Perspectives on corporate
policies and practices in Northern Russia and Alaska
Maria S. Tysiachniouk
, Andrey N. Petrov
Environmental Policy Group, Wageningen University, Hollandsweg 1, Wageningen, The Netherlands
Centre for Independent Social Research, Ligovsky 87, St. Petersburg, 197022, Russia
ARCTICenter and Department of Geography, University of Northern Iowa, Cedar Falls, IA 50614-0406, United States
Oil and gas
Many transnational energy companies are engaged in the exploration and development of oil reserves in the
Arctic, and are facing policy challenges in respect to beneﬁt sharing with the local communities. Beneﬁt sharing
arrangements between oil and natural gas companies and indigenous communities were investigated in Nenets
and Khanty-Mansi Autonomous Districts, Irkutsk and Sakhalin regions in Russia and the North Slope of Alaska.
We argue that Indigenous communities are not equally beneﬁtting from oil and gas extraction, and no one
beneﬁt sharing policy model seems to ensure a sustainable local development. This may stem from the mismatch
between beneﬁt sharing policies and local institutional frameworks. Thus, as a part of beneﬁt sharing obliga-
tions, companies and the state must work with Indigenous peoples and other aﬀected communities to build local
capacities and human capital. There is an urgent need to improve our knowledge base about beneﬁt sharing in
the Arctic energy sector, and we urge the Arctic Council Sustainable Development Working Group and/or the
Arctic Economic Council to conduct a synthesis study aiming at ﬁnding best practices, identifying lessons
learned, and initiating an inclusive, multi-stakeholder process of developing guidelines for companies on beneﬁt-
sharing in the Arctic.
Since the last century, the Arctic has become an important arena for
energy resource extraction, and this activity is expected to grow in the
decades to come [1,2]. Many transnational energy companies (TNC) are
actively engaged in the exploration and development of oil and natural
gas reserves in the high latitudes, and are facing serious policy chal-
lenges in respect to dealing with the local communities and state actors.
Oil and natural gas extraction in remote regions, including the Arctic,
brings opportunities for development, but also inﬂicts costs to local
communities and Indigenous peoples. It aﬀects the subsistence
economy and removes land from traditional resource use. The costs of
resource extraction to local communities may outweigh the beneﬁts,
which, in turn, aﬀect the social and environmental security in the Arctic
The majority of oil and gas companies in the Arctic have declared
their commitment to beneﬁt-sharing arrangements that assist local and
Indigenous communities and protect local and Indigenous rights to land
and traditional resources . Beneﬁt sharing generally refers to an
exchange between actors granting access to a particular resource and
actors providing compensation or reward for its use , as well as the
distribution of the monetary and non-monetary beneﬁts produced by a
resource-based project .
The implementation of these commitments varies considerably
among the regions, companies, and communities. Large surveys of lit-
erature have been undertaken in respect to beneﬁt sharing in mining
industry (see [7–9]), including remote regions [10–13], but only re-
cently the discussion has evolved to focus on the energy extractive
sector in the Arctic and sub-Arctic regions [14–18]. The analysis and
systematization of Arctic experiences is still in its beginning stages,
although there is enough empirical material and case studies to present
a classiﬁcation and initial assessment of the beneﬁt sharing modes and
policy models, as we attempt below.
The review of beneﬁt sharing arrangements in diﬀerent Arctic
countries and regions is based on our ﬁeld case studies in Russia and
Alaska, as well as, on literature review. Field work took place
2014–2017 in Nenets Autonomous District, Khanti-Mansi Autonomous
District, Sakhalin Island, Irkutsk Region, and the North Slope of Alaska.
Qualitative methodology using semi-structured interviews, participant
observations, and document analysis has been used. In addition,
Received 10 July 2017; Received in revised form 13 October 2017; Accepted 13 October 2017
Corresponding author at: Environmental Policy Group, Wageningen University, Hollandsweg 1, Wageningen, The Netherlands.
E-mail addresses: firstname.lastname@example.org (M.S. Tysiachniouk), email@example.com (A.N. Petrov).
Energy Research & Social Science 39 (2018) 29–34
2214-6296/ © 2017 Elsevier Ltd. All rights reserved.
literature on the topic of beneﬁt sharing has been analysed. Research
indicates that there is seemingly no ideal blueprint, or a single set of
best practices leading to beneﬁt sharing conditions satisfactory to local
and Indigenous-nomadic communities. By examining the typology of
beneﬁt sharing governance modes and corresponding company policy
models, we argue that some modes are more advantageous for meeting
community needs and fostering sustainable development in remote
regions. Concurrently, we explain why, despite company-community-
state cooperation dating back to at least the 1970s, we have not seen
the emergence of a successful beneﬁt sharing model. We analyse what
elements of Alaskan and Russian experiences could be used to build
more locally-responsive and sustainable Arctic beneﬁt sharing frame-
works. Finally, we present our policy perspective and suggest new re-
search directions to ﬁll existing knowledge and policy gaps.
The concept of “fair and equitable beneﬁt sharing”represents a
legal phenomenon, which originates from several international con-
ventions, e.g. the biodiversity, international human rights, law of the
sea and human right to science (;). It became a normative concept
in connection with natural resources. Despite the International Labor
Organization (ILO) Convention 169, which speciﬁes Indigenous peo-
ples’rights, is not directly using beneﬁt sharing terminology, experts
are widely exploring it  to frame beneﬁt sharing principles that
would close the gap between extractive industries, global beneﬁciaries
and local residents ([21–23]).
Beneﬁt sharing is deﬁned as the distribution of monetary and non-
monetary beneﬁts generated through a resource extraction activity (e.g.,
[6,9]). Beneﬁt sharing is understood to be a part of the ‘social license’to
operate, i.e. of a societal acceptance of company’s activities in addition
to and in concert with fulﬁlling obligatory licensing and permit re-
quirements for resource extraction .
Diﬀerences in beneﬁt sharing arrangements depend on international
expectations imposed on the companies by investors, existing legisla-
tion, prevalent practices, regional contexts, and the level of empower-
ment of Indigenous and local communities . Beneﬁts from oil and
natural gas extraction can be shared by energy companies with local
communities in a number of ways: taxes, community investment, in-
frastructure development, jobs creation, sponsorship, compensation for
damage, dividends, socioeconomic agreements, etc. [25,9]. For ex-
ample, compensation payments may take a form of cash transfers,
subsidies, purchases, and in-kind support directed at the local in-
dividual or collective beneﬁciaries. Community investment may include
grants to local businesses and organizations, support for schools, and
social services, etc. Dividends may be paid to local beneﬁciaries from
investment funds created as a result of the extractive activity. Ideally,
the concept of beneﬁt sharing has to incorporate fairness, equitability
(procedural, i.e. an ability to participate in beneﬁt-related decision
making, and distributive, i.e. ability to receive equitable beneﬁts) and
justice, which extends beyond compensations for loss [26,19,20] and
increase well-being and fate control of local communities .
Recent literature on beneﬁt sharing, including our past research, has
focused on the energy companies and local communities in the Russian
North and the North Slope of Alaska [17,18,28–31]. Multiple ﬁeld
studies showed mixed types of beneﬁt sharing arrangements in these
regions, resulting in diﬀerent outcomes for local communities and In-
digenous peoples. Several Arctic and sub-Arctic beneﬁt sharing gov-
ernance modes have been identiﬁed (e.g., [17,18]).
In this paper, we identify, describe, and compare beneﬁt sharing
modes and corresponding beneﬁt sharing policy models found in the
energy sector in the Russian and U.S. Arctic. In this context, a mode
refers to a general manner or approach in which beneﬁt sharing is
executed, while a policy model represents a speciﬁc institutional ar-
rangement that supports a given mode. We discuss their advantages and
shortcomings in respect to the two key points of this paper: (1) the (in)
ability to meet community needs and foster sustainable development,
and (2) potential characteristics of and impediments to a successful
beneﬁt sharing policy model for the Arctic.
3. Evaluating modes of beneﬁt sharing in the Arctic
Below we describe four modes of beneﬁt sharing. This classiﬁcation
emphasizes governance and distribution mechanisms and divides all
beneﬁt sharing arrangements into paternalistic, company centered so-
cial responsibility (CCSR), partnership, and shareholder modes [17,18].
Although we introduce these “ideal”types and provide their stylized
descriptions using examples from the ﬁeld, we must note that in all case
studies we see a mix of several modes. Most regions of interest have two
co-existing modes, with Alaska bolstering three. To reﬂect this com-
plexity we created a mixed mode category for Alaska. Another cau-
tionary note is that in some instances it is challenging to clearly identify
the mode as beneﬁt sharing arrangements as it may incorporate fea-
tures from two modalities. We attempted to distill the examples we are
using here to illustrate our point most vividly. Finally, we discuss not
only features and pitfalls of each mode, but try to connect them with
policy models and sustainability process and outcomes. The latter is
done using the notions of procedural and distributional equity of ben-
eﬁt sharing .
3.1. Paternalistic mode
The state usually dominates in this mode: it deﬁnes, monitors, and
intervenes in companies’policies and practices. In some cases in Russia
it represents both sides of stakeholders: a state-run company and a re-
gional government. The company either (partially) takes a role of the
state or contributes signiﬁcantly to some elements of state support to
local communities and Indigenous peoples. The latter parties have a
very limited ability to control the nature, types, and delivery of bene-
ﬁts. In Russia, the paternalistic mode is rooted in the Soviet legacy and
often results in the Indigenous people’s dependency on energy com-
panies, which sometimes de facto represents the state. Since the 1990s,
the Russian Arctic has been undergoing a transition from state pa-
ternalism to corporate paternalism . In Alaska, paternalism is per-
ceived by scholars and Indigenous people as rooted in colonialism, but
it also is embedded in some distributional practices by municipal and
For example, the paternalistic mode of beneﬁt sharing arrangements
can be exempliﬁed using communities in the Nenets Autonomous
District . As a part of the socio-economic agreements between oil
companies and the regional government, the oil-generated funds were
distributed to Indigenous communities without control by Indigenous
people. Non-transparent negotiation and top-down execution of the
programs resulted in substandard services, such as inadequate housing
provided to Indigenous reindeer herders.
In addition to the regional-level agreements, prior to 2013 the direct
socio-economic agreements were also concluded between energy
companies and Nenets reindeer herding enterprises. The amount and
nature of the included beneﬁts depended on reindeer herders’leader-
ship negotiation skills, but most were in-kind. If the management of
funds was delegated to the Indigenous enterprises, they were obliged to
submit reports on their spending. In addition to colonialism, de-
pendency, and ineﬃciency in respect to local communities, according
to our observations, such top-down system is prone to persisting in-
equity based on the unequal access to distributed beneﬁts.
After partial transition from socio-economic agreements to com-
pensations in 2013, increased self-suﬃciency of reindeer herding en-
terprises and depletion of state resources diminished the level of pa-
ternalism in the Nenets region. Concurrently, strengthening local
institutions represented by reindeer herding enterprises were able to
partially capitalize on compensation payments to become more eco-
nomically mature, self-suﬃcient, and independent compared to the
M.S. Tysiachniouk, A.N. Petrov Energy Research & Social Science 39 (2018) 29–34
early post-soviet years. This marked a shift from paternalistic to pre-
dominantly company-driven mode of beneﬁt sharing arrangements (see
Similarly, the North Slope Borough of Alaska distributes multiple
beneﬁts to Indigenous people using money coming from taxes on oil
infrastructure in a paternalistic way. The Borough is the largest regional
employer, has its own hospitals and police, builds houses, and funds
schools. The Inupiat residents often expect multiple beneﬁts, such as
housing and infrastructure given for granted.
As part of their beneﬁt sharing policy model, oil companies
(Surgutneftegaz and Lukoil) in the Khanty-Mansi Autonomous Districts
sign annual socio-economic cooperation agreements with the regional
government and municipalities. These agreements normally include
support for social infrastructure in towns and villages, such as schools,
kindergartens, recreation centers, road construction etc. The decisions
are made based on the determination of local needs by the authorities
without much consultation with residents. De facto this means that the
companies assume some government functions and expenses creating
another instance of the state-company paternalist model. Additional
compensatory payments to Indigenous groups without designated tra-
ditional territory, are simply allotted by companies to local adminis-
tration that, in turn, distributes it with only few consultations with the
locals and little transparency.
A major ﬂaw of the beneﬁt sharing policies based on paternalistic
mode is their failure to ensure the satisfaction of local residents. Beneﬁt
sharing policies are typically associated with relatively weak local in-
stitutions that do not provide a fertile environment for community
development. Paternalistic mode creates a situation when residents
express exceedingly high, unrealistic expectations of energy companies
or of beneﬁt-distributing local authorities, as they are perceived to re-
place functions abandoned by the national, regional, or local state, but
often receive limited, unsatisfactory, or misdirected beneﬁts in return.
On the other hand, the companies fall victim to the various levels of
government (usually national and regional), which, in turn, place un-
reasonable expectations on companies to help them in delivering ser-
vices to communities. Under paternalistic mode both procedural and
distributional equities are typically low.
3.2. Company centred social responsibility (CCSR) mode
Here we refer to a “narrowly deﬁned”corporate social responsibility
mode where a company plays a central role in setting beneﬁt sharing
arrangements by adopting globally developed standards or standards
imposed by various international organizations, funding agencies, or
legislation. Companies pursuing the CCSR mode rely on global stan-
dards and local practices, but frequently tend to fulﬁl only a bare
minimum required by both local and global stakeholders. In many cases
the CCSR-based beneﬁt sharing programs are designed to please the
investors and shareholders and to address the needs of local commu-
nities only to the extent needed for earning the ‘social license’to op-
erate. Company’s contributions to local communities under this mode
often take forms of compensations or targeted investments.
For example, in the Khanty-Masnsi Autonomous District of Russia,
in cases where Indigenous people reside on oﬃcially designated tradi-
tional territories, Surgutneftegaz and Lukoil conclude standardized
compensatory household agreements with the registered Indigenous
family enterprises. The content of a standardized agreement is sug-
gested by regional authorities. Thus, little attention is typically given to
the individual household needs and to what extent their traditional land
is damaged by oil operations. Resultantly, heavily and lightly aﬀected
households receive the same beneﬁts.
In the case of Nenets Autonomous District, since 2013, the ad hoc,
limited-term agreements have been substituted by formal compensa-
tions for damage to the pasture lands calculated using federally ap-
proved methodology. With this new arrangement, the amount of money
channelled to Indigenous peoples increased as much as 5–10 times.
However, both socio-economic agreements and compensations are ne-
gotiated by the local leaders leaving most Indigenous herders in an
inequitable position outside the negotiating table. In the case of the
villages of Verkhnemarkovo, and Tokma in Russia’s Irkutsk region, the
regional Irkutsk Oil Company adopted standards prescribed by com-
pany’s creditors, the European Bank of Reconstruction and
Development (EBRD), and the Russian legislation. In Verkhnemarkovo,
the company primarily follows national standards by arranging pay-
ments to the municipal governments and, occasionally, local organi-
zations. In Tokma, with a large Indigenous population, the EBRD
standards are followed and a compensatory agreement is negotiated
with the local Evenk hunting enterprises (although only leadership is
The CCSR mode is driven by companies, although often is mediated
by outside entities, such as banks, shareholders, investment funds, and
the state. In the cases we surveyed, the companies, however, im-
plemented rather limited beneﬁt sharing practices, sometimes only to
meet a required or expected minimum. The CCSR mode is a business
strategy that is prone to external control and changing rules following
the decisions made by the companies (or investors, or international
organizations), not the local residents. Although the agency of local
stakeholders is elevated compared to the paternalistic mode, both the
process and distribution of beneﬁt sharing may be highly inequitable.
Procedural and distributional equities could vary depending on com-
pany and regional context, but in our cases, with the exception of North
Slope, they are medium or low.
3.3. Partnership mode
This type of beneﬁt sharing builds tripartite partnerships among the
energy companies, government, and Indigenous communities. In
theory, the partnership mode is better positioned for promoting de-
velopment and self-reliance in the Indigenous communities. Such
partnerships have been a characteristic of oil extraction on the Sakhalin
Island. Sakhalin Energy and Exxon Neftegaz Limited operating in the
region developed partnerships with the regional state and Indigenous
peoples through tripartite agreements, which set up procedures for
distributing funds to Indigenous communities, organizations, and fa-
mily enterprises . The success of beneﬁt sharing practices in the
two cases in highly dependent on the corporate policies and on whether
loans from global investment institutions were received .
Sakhalin Energy, through loans and investments, is inﬂuenced by
the standards of international ﬁnancial institutions (such as the World
Bank and the International Finance Corporation) in respect to dealing
with the environment and Indigenous people. Sakhalin Energy adopted
global standards, including free prior and informed consent, and annual
third party evaluations . The company’s Indigenous Minorities
Development Plan includes the participation of Indigenous people in
decisions about allocating grant funding to NGOs and indigenous family
enterprises. Although this approach was initially popular, it generated
tensions and conﬂicts among community members around the dis-
tribution of funds.
Exxon Neftegaz Limited was not signiﬁcantly inﬂuenced by inter-
national ﬁnancial institutions. The beneﬁt sharing arrangement in-
corporated grant funding available to communities where drilling oc-
curred, but not for other island communities. Implementing beneﬁt
sharing programs at a smaller scale than Sakhalin Energy , Exxon
distributed funds only to organizations, not individual households. In-
digenous residents also receive occasional employment from oil com-
panies. Both beneﬁt sharing policies utilized the investment mechanism
(e.g., Sakhalin Energy’s“development plan”), that is not designed to
directly address or compensate the damages (environmental degrada-
tion and cultural losses) suﬀered because of oil extraction. More so, the
partnerships exclude non-Indigenous local stakeholders, who remain
outside of the current beneﬁt sharing arrangements.
Although the partnership mode seemingly leads to more desirable
M.S. Tysiachniouk, A.N. Petrov Energy Research & Social Science 39 (2018) 29–34
beneﬁt sharing processes and outcomes, it still lacks granting
Indigenous people full control over funding. While civil society and
local institutions in Sakhalin Indigenous communities substantially
strengthened as the partnership was unfolding, this beneﬁt sharing
arrangement was not devoid of considerable problems, such as internal
tensions among beneﬁciaries. Under this mode, procedural equity is
relatively high, but distributional equity remains at a lower level.
3.4. Shareholder mode
Shareholder mode involves dividend funds, shares from regional
and village corporations. Under the shareholder mode in the North
Slope of Alaska there are several “layers”of beneﬁt sharing. First of all,
every Alaska resident receives the Permanent Fund dividends.
Secondly, the Indigenous people of the North Slope are almost always
shareholders of the for-proﬁt Arctic Slope Regional Corporation (ARSC)
and usually hold shares of one of the village corporations, thus re-
ceiving dividends from both. ASRC contracts with many oil companies
and receives royalties from oil extraction on Native-owned land. Village
corporations own the surface title to the land, receive royalties through
surface-use agreements, and contract oil ﬁeld services from oil com-
panies. However, not all village corporations are equally successful.
Although Alaska Natice Claim Settlment Act (ANCSA) created
strong Indigenous institutions, such as regional and village corporations
[32,33], the shareholder mode has a number of serious limitations .
The main shortcoming is the distribution of shares. There are multiple
conﬂicts in the North Slope communities around beneﬁt sharing.
Shareholder eligibility requirements often exclude younger Indigenous
residents creating a bitter inter-generational conﬂict. Therefore, ten-
sions occur between those who are born before and after 1971. ASRC
and several other native corporations give fewer rights to “afterborns,”
while others distribute dividends only for those born before 1971, or
who have inherited shares, or received them as a gift. Tensions continue
within Indigenous families around gifted and inherited shares.
In addition, dividends are collected by beneﬁciaries who may not
reside in the community creating a leakage of capital. Lastly, by di-
versifying their investment portfolios Alaska native and village cor-
porations contribute to reducing resource dependency, but create an
outﬂow of capital, partially oﬀset by the inﬂow of dividends. Despite
tensions, it is important to acknowledge that income from oil extraction
is shared between companies and Indigenous communities, and
Indigenous peoples have broadened opportunities for economic devel-
opment. The shareholder mode leads to elevated procedural equity, but
may not improve distributional equity (medium).
3.5. Mixed modes
Table 1 summarizes our discussion and indicates the levels of pro-
cedural and distributional equities [35,26] and economic beneﬁts ex-
perienced by local communities under each mode. Equity and economic
opportunity are two of the key pillars of sustainable development, and
Table 1 illustrates the degree to which each mode promotes sustain-
Although the four stylized modes of beneﬁt sharing represent a
convenient classiﬁcation framework for systematizing various ar-
rangements, in most regions we found two to four co-existing modes.
The Alaska North Slope represents the most vivid example of a mixture
among the three beneﬁt sharing modes. The shareholder mode exists
alongside with CCSR and paternalistic arrangements. In addition to
state, regional, and village corporation dividends, companies, such as
Conoco-Phillips, provide support to communities, which may include
fuel, scholarships to students, sponsorship of events, and community
infrastructure. Multiple beneﬁts come to Indigenous people through the
State of Alaska and the North Slope Borough, both of which receive
taxes from oil infrastructure. They subsidize hospitals and police, build
houses, and fund schools. Conoco-Phillips and Exxon-Mobil beneﬁt
Beneﬁt sharing arrangements.
Nenets District Knanty-Mansi District Sakhalin Island Irkutsk Region Alaska North Slope
Paternalistic Socio-economic agreements with regional
governments and reindeer herding
enterprises (before 2013)
with regional and municipal
with regional and municipal
Distribution of tax dollars by North Slope Borough
Compensatory payments through NPR-A
Procedural equity: low Procedural equity: low Procedural equity: low Procedural equity: low
Distributional equity: low Distributional equity: low Distributional equity: low Distributional equity: high
Company centered social
Compensation payments to indigenous
reindeer herding enterprises calculated
using government approved methodology
Standardized agreements with
registered indigenous family
–Compensatory agreements with
indigenous communities, ad hoc
Companies provide support to communities (fuel,
scholarships, infrastructure and events
Procedural equity: low Procedural equity: low Procedural equity: low Procedural equity: high
Distributional equity: medium Distributional equity: medium Distributional equity: low Distributional equity: high
Partnership ––Tripartite partnership between companies,
state and indigenous communities.
Investment in communities via grants/
Procedural equity: high
Distributional equity: low
Shareholder ––– –Alaska Permanent Fund dividends, ANCSA
regional and village Native corporations distribute
dividends to eligible shareholders, investment in
Procedural equity: high
Distributional equity: low/medium
M.S. Tysiachniouk, A.N. Petrov Energy Research & Social Science 39 (2018) 29–34
sharing arrangements meandering between the CCSR and partnership
modes. The shareholder mode appears to be the most dominating part
of the mix, although it also experiences multiple pitfalls due to internal
tensions and the lack of distributional equity among Indigenous re-
Compensation payments are also a part of the mix. In Alaska, the
Northeastern National Petroleum Reserve Regional Mitigation Strategy
was negotiated by the Bureau of Land Management with Conoco-
Phillips in 2015 as a compensation for adverse impacts of oil and gas
extraction at the newly opened Greater Mooses Tooth Unit One project
. In 2016 ﬁrst $7 million were allocated. This strategy will become
a new policy tool used as a template for further compensation agree-
ments for new extractive projects in the Reserve .
Tensions emerge between the city administrations, tribal govern-
ments, village and native corporations around the distribution of funds
as these three entities have diﬀerent interests. Tribal governments are
not beneﬁtting from oil extraction directly and tend to be more en-
vironmentally oriented. They are often not in favour of future oil de-
velopment. The city government is usually neutral or pro-development,
while regional and village native corporations are typically pro-devel-
4. Policy perspective
Beneﬁts shared by extractive energy sector operating in the Arctic
are highly variable and depend on institutional, ﬁnancial, political, and
geographical settings. Notably, experiences from Russia, which evolved
substantially in the last two decades, present a number of useful lessons
and good practices to be considered. In Russia, we observe an evolution
of local institutions and increase in their ability to negotiate and
manage more community-driven, equitable beneﬁt sharing arrange-
ments. As noted, underdeveloped institutions and weak civil society
may derail most well-intended beneﬁt sharing policies. A ‘mismatch’
between the capacity of institutions and requirements of beneﬁt sharing
frameworks will likely lead to dysfunctional relationships between
companies and communities. Therefore, as a part of beneﬁt sharing
obligations, companies and the state must work with Indigenous and
other aﬀected communities to build local institutional capacities and
human capital. This will ensure that beneﬁt sharing policies are
nuanced, responsive, empowering, and contribute to sustainable de-
velopment of Arctic communities in a just and equitable manner.
Another missing link in some locations, especially in the Russian Arctic,
is the lack of a mandatory social-economic impacts assessment and
monitoring that could greatly assist in developing appropriate beneﬁt
Thus, it is apparent that we need to signiﬁcantly improve our
knowledge base about beneﬁt sharing in the Arctic energy sector, and
we urge the Arctic Council Sustainable Development Working Group or
the newly formed Arctic Economic Council to conduct a synthesis study
with the aim of ﬁnding best practices, identifying lessons learned, and
initiating an inclusive, multi-stakeholder process of developing guide-
lines for companies on beneﬁt-sharing arrangements in the Arctic.
Given the complexity of legal, institutional, natural, and cultural set-
tings, this work could be conducted by expert groups embedded in both
the energy industry and communities across the Arctic. This process
could go concurrently with and be a supplement to the emerging Arctic
Investment Protocol .
There is little doubt the beneﬁt sharing policy for Arctic regions is
essential, as it impacts the livelihoods of thousands of Arctic residents
who depend on land, sea, and access to natural resources. It is im-
portant that the energy sector shares a portion derived from the re-
source extraction with the local inhabitants in an equitable, trans-
parent, and just way, allowing all stakeholders to be a part of the
process and outcome of beneﬁtsharing. In other words, beneﬁt sharing
arrangements must contribute to sustainable development in Arctic
Among the four modes of transnational corporations TNC beneﬁt
sharing arrangements, none appear to be ideal. However, some modes,
and corresponding TNC policy models, are more advantageous for
meeting community needs and fostering sustainable development in
remote regions. Beneﬁt sharing must go beyond compensations for loss
and top-down paternalist interventions. Partnership and shareholder
modes seem to bring more desirable results, but they are not devoid of
shortcomings. While based on the overall principles, such as distribu-
tional and procedural justice, the successful beneﬁt sharing models in
the Arctic energy sector should be locally nuanced and embedded. An
Impact and Beneﬁts Agreement (IBA) model widely used by extractive
companies in other jurisdictions and sectors (e.g. in Arctic Canada) is
another opportunity to tailor beneﬁt sharing to speciﬁc community
needs, while establishing contractual relationships between the com-
panies and communities .
This research was supported by the NWO, the Netherlands
Organization for Scientiﬁc Research, Arctic Program (‘Developing
beneﬁt sharing standards in the Arctic’, No. 866.15.203), the Finnish
Academy Arctic Program (‘Oil Production Networks in the Russian
Arctic’, No. 286791) and National Science Foundation Arctic-FROST
project (PLR #1338850).
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