A study of the royalties of petroleum : impacts on social indicators in the municipalities of Rio de Janeiro.

Abstract

The main objective of this study is to evaluate the impact of the revenues of royalties related to the exploration and production of petroleum and natural gas received by 59 municipalities in the State of Rio de Janeiro, in the period of 1996-2001, on the living conditions of the local population, expressed by social indicators traditionally used in the literature. It also analyzes the changes occurred in the institutional environment involving the oil industry, starting with Law no. 2.004/53 which created Petrobras and oil royalties to Law no. 9.e478/97 (the Petroleum Law) which had, among other consequences, a meaningful increase of the collection of royalties for the municipalities. With emphasis on those revenues, the legal textdefines royalties as a compensatory instrument for the impacts caused by the oil industry.Following this analysis, and based on the theory of economic and mineral land rent, the economic fundamentals of the royalties are presented, specially that which assures equivalent rent to future generations, being oil a nonrenewable resource. The theoretical framework supports the idea that one way of warranting intergenerational equity is the increase of the production capacity of society, which can be understood as improvement in education and health, that is, investment in human capital. This empirical study used econometric models to evaluate whether royalty revenues have had a significant statistical effect on the social indicators of education and health in the beneficiary municipalities.