In some regions of natural resource extraction, embedded local populations receive transfers that compensate them for environmental consequences of extraction; while in others, these populations receive no benefits and endure negative environmental externalities, which can lead to violent protest. This article develops a formal model of the strategic dynamics among a government, a natural resource extraction firm, and a local population in an extractive region to understand the variation in extractive outcomes. The model specifies the conditions under which firms will provide promised transfers to a local population, distributive conflict will occur, and how the government will respond.