In 1990, Nicaragua created elected municipal governments. Reforms to the municipalities law in 1997 granted local officials important responsibilities for managing their territories in general, including natural resources. However, local governments were not given control over most income-generating aspects of natural resources, such as the right to enter into contracts for logging, mining, and fishing.
These rights are reserved for the central government. Municipal governments have the right to express their opinions prior to central government approval of resource exploitation requests, including both requests for concessions on national lands, and extraction permits on private lands. Up until recently, however, the central government did not always request local government opinion. In addition, a dissenting opinion by local government is not binding and can simply be ignored.
The central government has also failed to transfer sufficient funds to allow local governments to meet their obligations to constituents. In the case of forests, the law mandates that 25 percent of forest license revenues be returned to the municipal jurisdiction in which the logging takes place, but the central government only began to comply with this obligation in 2000, and some communities still claim that they do not receive their full share (Larson 2003b).