In this paper, a two-period general equilibrium model on the relationship between natural resources and civil conflict has been developed. Unlike existing literature, both resource extraction and wage rate are considered as endogenous during the conflict. The main purpose of the paper is to examine policy options for international community to limit the conflict intensity. It has been found out that a current international sanction will reduce civil conflict if the wage rate is fixed. However, when the wage rate is endogenous, the effect of current sanction is uncertain. Productivity improvement in agricultural sector may also subside the conflict. The study results also suggest that a bilateral piece-meal reduction in war efforts is the most effective policy for conflict reduction.
Key words: Natural resources, civil conflicts, general equilibrium, sanctions.