sharing in governance of extractive industries

The present controversy in the US surrounding the proposed Keystone XL pipeline highlights a challenge that many countries face as the global search for oil, gas, and other natural resources continues to expand its reach. Governments facing oil and mining development decisions are forced to weigh their desire to promote energy security against the need to protect local water sources and other natural resources critical to the lives and livelihoods of the communities that will be impacted by these projects. Whatever decision they make, one thing is clear—it is in governments’ own best interest to prioritize local community participation in decision-making and ensure the provision of reliable, independent information to affected communities and their representatives.

Governments and companies alike should recognize that securing the approval of project-affected communities is not just best practice, but frequently a prerequisite for successful project implementation.

In the US, the proposed Keystone XL pipeline (which would bring oil from the tar sands in Canada to the Gulf Coast) has faced opposition from many Nebraskans and their elected leaders due to concerns about potential environmental impacts to the environmentally sensitive Sandhills region. Responding to environmental concerns raised by Nebraskans and others, last week the US State Department decided to delay their decision on whether to approve the project. It appears local opposition is having at least some impact, as last week project operator TransCanada agreed to reroute the pipeline to avoid the Sandhills.

In Peru—a country highly dependent on the export of minerals and other natural resources—earlier this year, the government cancelled a $1 billion mining project run by Southern Copper after mass protests that resulted in violence and three deaths. Peru’s mining ministry rejected the company’s environmental impact assessment as a result of the conflict. In fact, Peruvian President Ollanta Humala stated recently that a key focus of his administration would be on improving the relationship between the government, mining companies, and communities impacted by mining projects.

By committing to securing the Free, Prior, and Informed Consent (FPIC) of communities affected by oil, gas, and mining projects, governments and companies can take an important step towards preventing social conflict and promoting a stable climate for investment. When adequately implemented, FPIC ensures that communities have the opportunity to approve or reject projects. FPIC is a basic right for indigenous peoples under international law, and as a principle should also be applied to other communities whose land and natural resources stand to be impacted by oil, gas, or mining projects.

FPIC also requires that communities receive adequate and timely information about the potential social and environmental impacts of these projects. A recent study by Oxfam suggests, for example, that when implemented effectively high-level, independent expert panels can be one helpful way of identifying risks and opportunities around oil and mining projects and bringing new information into the public realm.

Regardless of the specific strategies that governments choose to employ to meet their energy needs, they should keep in mind that engaging the affected communities in deciding whether and/or how oil and mining projects move forward must be an essential step in the process.



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