9.6 Challenges and Special Issues

As noted elsewhere (Chapter 5), good practice involves the elaboration both up front, and later as necessary, of an overall EI sector policy framework. An important part of that framework should concern social and environmental impacts and an indication of how they will be dealt with. Challenges and specific issues arising in that context might comprise, non-exhaustively, the following:

ASM. Artisanal or small scale mining (ASM) has many potential social and environmental impacts. Positive impacts include contributions to local employment and income and poverty reduction, where often few alternatives exist. Recognized downsides include environmental degradation, conflict and smuggling. 

Defining ASM, Leon Gerber, CEPMLP
 

Identification of Impacts. Identification of the likely or actual impacts of an EI project is clearly one of the first orders of business, involving many of the specific considerations listed below. Some impacts may be readily defined, while others are less known or are contingent on what may actually occur in the affected areas. Identifying impacts is generally more straightforward for environmental than social issues because they are better understood. Social impacts are more complex and elusive.

Evaluation of Distributional Impacts. Project impacts are likely to be unevenly distributed.  Definition of appropriate responses in such cases will require evaluation of distributional impacts across regions, communities, and even generations.

The Poorest and Most Vulnerable. Even when a mining or oil/gas project has support from the community leadership and brings benefits to them, all too often such projects make life worse rather than better for the disadvantaged and the most vulnerable sections in the community.  But impacts of mining, oil and gas projects on the poorest and most vulnerable are generally not part of the regular monitoring or reporting and all too often occur out of sight of the government, the oil, gas or mining company, financiers and aid agencies including the World Bank. Thus proactive interventions are needed to gauge the impact on the poorest and most vulnerable and take corrective measures. Community leaders can make sure that representatives of the poorest, (not just the elite), and community women, (not just men), have a voice in community decision-making. 

Poverty Alleviation and Gender Bias. Unfortunately, the negative impacts of EI projects, where they occur, often fall disproportionately on the poorest and most vulnerable including women, children and the elderly. This is especially true for mining operations, where benefits (employment and income) accrue mostly to the more affluent and men, but may also apply to many petroleum operations.

Resettlement. Involuntary resettlement of populations to allow a project to proceed “for the greater good” raises ethical issues and can have significant harmful effects for the local community if not managed well.  Good practice argues that it should be avoided or at least minimized where feasible by exploring all viable alternative project designs and mitigation strategies. Where it is unavoidable, it should take place according to applicable laws, guidelines and agreements in an acceptable manner to those being resettled with acceptable forms of replacement or compensation for lost land, dwellings, crops and livelihoods and government approved compensation standards for lost assets including land.  A key aspect involves protecting the interest of the poorest and most vulnerable regarding land tenure and use.  This means ensuring that not only land owners are compensated but also providing compensation to land users and those whose dwellings or livelihood depends on the land including customary land owners and users,  who may not have formal rights according to the modern day legal system.  All too often providing solely cash compensation is not sufficient. An additional requirement is the provision of viable alternative livelihoods and replacement land and structures for dwellings.

Indigenous Peoples. The rights of indigenous peoples in the context of resource development pose special moral and political issues for investor and government alike. The issues derive from the perception that indigenous peoples have inherent rights derived from their distinct ethnic and cultural identities and their close and special attachment to ancestral lands.  Ideally the rights and customs of indigenous peoples should be fully protected by law.  But even in countries where this is not the case, investors should respect the rights and culture of  indigenous peoples and only undertake exploration or mining activity if they have well documented evidence that their activities have broad support of the concerned indigenous peoples.

Dependency. Many communities become overly dependent on EI projects in their area and without advance measures to address this issue, may suffer contraction or even collapse when production ceases.  Thus, social aspects and their associated costs should be included in decommissioning and closure plans and initiatives should be taken from the earliest days of production to develop economic activities in the community that are independent of the oil, gas or mining activity and that will be able to survive when production ceases.

Compensation.  Negative impacts raise complicated issues related to compensation – what form should it take, e.g., non-monetary, or monetary, and when should it apply? Under   generally accepted good practice, compensation should preferably consist of non-monetary reparation including replacement of assets and rehabilitation measures. Where non-monetary reparation is not possible monetary compensation should be provided based on consultation with affected communities and peoples.

Protected Areas. Governments may wish to specially protect certain areas of land or sea based on considerations of physical beauty or uniqueness, maintenance of biodiversity, protection of game, or cultural heritage. Petroleum or mining activities may be prohibited, or permitted in protected areas, subject to rules and conditions of access.  

Climate Change. Climate change is one of the most important global environmental issues. Petroleum operations, more than mining, may be major emitters of greenhouse gases, particularly through the flaring of natural gas. Concerned governments have responded in a variety of ways, including taxes and penalties and mandatory flare reduction, or “flares out” requirements. 

Institutional Constraints. Good policies and good project-specific decisions may be ineffective in the face of limited institutional capacity to pursue or enforce them.

Develop or Not? Based on all the forgoing considerations, governments will have to take a decision on whether to allow EI developments or not. The decision normally would be guided by a comprehensive cost-benefit assessment incorporating best estimates of the social and environmental externalities of development, both positive and negative.

Box 9.2: Environmental Impacts – Special Issues

There are a number of special environmental risks and hazards that require very close attention which include protection of air and water quality, protection of bio diversity and unique habitats (including identification of no-go zones) and safe handling, transportation, storage and use of hazardous materials. 

For mining and mineral processing, the management of mine waste and tailings requires particular attention along with emissions and waste disposal from smelters and transportation. 

Consideration is also needed for potential sea bed mining environmental issues.  For oil and gas, particular attention is needed to refinery safety, potential oil spillage throughout the production chain including offshore oil platforms and possible gas leaks from transmission or storage facilities.  Carbon capture and storage facilities also require specific consideration. 

A well designed environmental protection regime will

  • Cover not only the mineral or hydrocarbon operation but also all related infrastructure;
  • Require environmental permits covering key impacts such as water use and wastewater discharge quality; waste  storage and disposal; atmospheric emissions; and noise; 
  • Provide for community hearings open to the public where all data collection, impact assessments and management plans are subject presented as part of the approval process.  Final, approved documents should be provided to communities;
  • Provide for participatory community monitoring that can help reduce community concerns; 
  • Identify assets for handover at an early stage and set up arrangements for them to be jointly operated and maintained by the community agency or organization that will receive them; 
  • Include the establishment of financial assurance mechanisms that are needed to ensure that sufficient funds are in place for plant removal and disposal and land reclamation and rehabilitation at the time of closure and decommissioning.   Require that reclamation and restoration be built into the production plan to take place on a progressive basis in which case there is less to do during closure and decommissioning; 
  • Clearly stipulate the penalties for violations of requirements and compliance standards and specify compensation to harmed parties  where needed – all commensurate with the seriousness of the violation; and  
  • Include environmental audits and surveys of any legacy issues from past operations, identify environmental risks and set action priorities and mobilize needed funding.

A well designed environmental protection regime will also require closure and decommissioning planning

  • To start as early as the feasibility stage (design with the end in mind) and continue on a regular basis throughout the life of the operation;
  • Be completed with arrangements in pace for any environmental hazard post closure site maintenance or environmental monitoring that might be needed after closure is completed; 
  • Include planning for the decommissioning and removal of plant and equipment, long term land reclamation and stabilization and restoration to an alternative use; and
  • Provide for  handover to the community of any remaining useful social or productive assets. 

 

Additional Reading

  • Shemberg, A., Stabilization Clauses and Human Rights, A Research Paper Conducted for the IFC and the United Nations Special Representative of the Secretary-General on Business and Human Rights, May 27, 2009; link to summary document and to full text; and

 

 

Within This Chapter

Mining Specifics

Oil & Gas Specifics

Africa

Latin America

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  • roberto agostini: Hi, everyone. Just to note further to Daniel's useful comment below, that Equatorial Guinea's Model Production Sharing Agreement is uploaded to the site - see… read more
  • daniel gilbert: I have been keen to stimulate debate on issues of sustainable development through the Source Book. Equatorial Guinea is a good candidate for such a debate, see below: Equatorial Guinea has the highest GDP per capita in Africa (estimated at… read more