Quantifying Equity with Messrs. Markov, Lorenz and Gini: Retaining and Distributing Benefits in Natural Resource-dependent Communities

Abstract

In this paper, a modified version of the Gini coefficient and social network-based Markov chains are combined to quantify the distribution of benefits in natural resource-dependent communities. This distribution includes both the width and the depth of the circulation of economic benefits from resource extraction. The modified Gini coefficient is used to calculate the share of benefits each party receives (width) while the social network analysis-based Markov chains are used to map the local economy and calculate the average number of times a dollar circulates in that economy (depth). These two values are combined to create an "equity" factor that considers localization and other financial benefits to the community. This combination allows resource managers to optimize resource access based on quantified values other than highest bid/lowest cost. Keywords: equity, community, management, resources, benefits