**Reinvesting the revenues from natural resources into other forms of productive capital requires a strong policy framework grounded by clear policy commitments.**<sup>**43**</sup> These should include (i) efforts to promote efficient resource extraction with a view to maximize resource rents; (ii) a fiscal regime for the resource sector that enables the government to recover an equitable share of resource rents; (iii) well-designed investment policies that use resource rents to generate sustainable returns over the long term; and (iv) an appropriate legal and institutional framework to promote efficient and sustainable land use, which is particularly important in countries such as Mauritania, where land tenure is often governed by traditional systems and informal arrangements.<sup>44</sup> In this respect, it should be highlight that, with the support of the World Bank, the Ministry of Economic Affairs and Development (MAED) of Mauritania has recently (2013-14) committed to adhere the Inclusive Green Growth model, with the objective of making economic growth more efficient, environmentally friendly, resilient, and equitable.

**New resource discoveries or improvements in extractive technologies will positively impact current wealth estimates; this underscores the importance of promoting further exploration by mining and oil and gas companies.** Thus it is also necessary to establish an appropriate trade-off between short-term rent extraction and long-term promotion of the sector. Using strategic planning to maximize the long-term value of natural resources will remain a central policy challenge in Mauritania. Given its high degree of external vulnerability and the persistence of high poverty rates despite strong recent growth, the responsible exploitation of natural-resource wealth coupled with appropriate re-investment policies should be among the government’s top development priorities.

**In this context the Hartwick rule can provide a set of useful parameters for understanding how naturalresource rents can be invested in other forms of capital in a way that maintains the total stock of national wealth intact.** However, despite their usefulness as policy tools it is essential to avoid mechanistically applying indicators like the ANS or the Hartwick rule without considering the specifics of the country. Re-investment in physical and human capital _per se_ is not always ‘the’ optimal use of resources. Important considerations which go beyond the scope of this paper include the absorption capacity, as well as the fact that new physical capital often requires significant ongoing expenditures to keep it functional, and increased education investment often

> 43 Cf. “World Bank (2013) “Priority Policy Linkages and Workplan: An Update on Progress” Wealth Accounting and Valuation of Ecosystem Services (WAVES) Partnership, Washington DC: The World Bank.

> 44 <<If those who farm lack secure rights to land, they have less incentive to exert effort to use [land] productively and sustainably, or to carry out land-related investments. [...]Secure and unambiguous property rights also allow markets to transfer land to more productive uses and users. Cost-effective systems of land administration facilitate agricultural investment and lower the cost of credit by increasing the use of land as collateral, thus reducing risk for financial institutions.>> Extract from “The World Bank, World Development Report 2008: Agriculture for Development”, Washington, DC: The World Bank, 2007

> <u>http://siteresources.worldbank.org/INTWDR2008/Resources/WDR_00_book.pdf</u> , Chapter 6

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