CFEM AND SUSTAINABILITY: AN ANALYSIS IN LIGHT OF INTERGENERATIONAL PRINCIPLES

Abstract

The Financial Compensation for the Exploitation of Mineral Resources (CFEM) is an important revenue mechanism aimed at mitigating the impacts of mining and promoting the development of mining municipalities. However, its application has predominantly focused on current expenses, lacking a sustainable planning approach that considers the intergenerational challenges resulting from resource depletion. This paper aims to analyze CFEM from a tax and economic perspective, examining its origins, legislative evolution, and the challenges faced by mining municipalities. It discusses the intergenerational equity framework proposed by Edith Brown Weiss (1989, 2007), emphasizing the need for a strategic allocation of CFEM funds to ensure fiscal stability and economic diversification in the long term. As an alternative for more efficient management, the study explores the implementation of municipal sovereign funds, drawing on successful cases such as the Revenue Equalization Fund (FER) of Niterói (RJ) and international models, such as Norway’s sovereign wealth fund. The findings indicate that the lack of structured policies for CFEM utilization may lead mining municipalities into severe economic crises, reinforcing the need for a regulatory framework that supports fiscal and economic sustainability in these regions. As a contribution, the study suggests the creation of institutional mechanisms that promote intergenerational savings and the diversification of local economies, ensuring continued development even after the depletion of mineral resources.