Mining for Peace,

Abstract We study the feasibility of opening new mines in ethnically diverse countries without escalating the risk of conflict. We propose a theoretical model in which ethnic groups can organize themselves to fight at the national or the local level. Our model yields two key insights. First, peace cannot be guaranteed in the presence of ethnic segregation and spatial resource inequality. Second, once the peace-maximizing policies are implemented, local conflict risks depend on local resource rents and local ethnic groups as well as the country’s entire ethnic and mining geography. We validate key concepts from our model using granular spatial data from Sierra Leone and the rest of sub-Saharan Africa and employing a shift-share identification strategy. We then apply these concepts to simulate the potential impact of planned mining projects in Sierra Leone and confirm that projects in the right locations can promote peace. We offer policy recommendations for making the mining industry a facilitator of peace and prosperity.