It's Time to Take Environmental Costs Into Account

The dangers of fiscal opacity in the extractive sector are well known: corruption, mismanagement and waste. Resource revenues might be poured into pet projects rather than to where society needs it most, while companies underpay on their taxes. But what happens when environmental information remains hidden? The results are no less dramatic, and no less harmful.

Environmental effects lie at the heart of whether a community -- and indeed country -- benefits from extraction. They also affect whether a project will yield profits or problems for companies and investors. Fears and miscommunication around environmental effects and information contribute to conflict. In Peru, 85 percent of conflicts are tied to energy and mining projects and two-thirds of these are linked to environmental issues.

Peru has twice had to declare a state of emergency this year due to extractive conflicts -- last spring in Tia Maria and last month at the Las Bambas mine in Apurimac. At least eight people were killed this year in Tia Maria and at the Las Bambas. These conflicts result in a tragic and unnecessary loss of life and undermine citizens' trust in government and authorities. Production stoppage created by conflicts also harms investors and companies. According to the University of Queensland, a large-scale operating mine could lose up to $20 million a week during suspended production.

In Kyrgyzstan, citizens living near the Talas mine were never told about the environmental or social effects that the mine could cause. As a result, communities became very suspicious and attributed almost every mishap, including the mutation of sheep, to the effects of the mine. It was when Kalia Moldogazieva from PWYP Kyrgyzstan educated communities about the impacts of the mine that -- paradoxically -- citizens became less concerned about the effects as they knew there were certain things, such as animal and infant mutation in the immediate term, that could not have been caused by the mine. Hiding potential effects of extraction only fuels suspicion -- it is in the interest of companies to share information. Extraction projects will inevitably have some impact of the environment, if a company communicates these clearly these effects are more likely to be mitigated and conflict less likely to occur.

It is therefore not surprising that there is a high demand for environmental information. In consultation meetings with extractive communities, the Foro Nacional por Colombia found that what communities were most interested in was social-environmental information. In an EITI conference in Lima last June, government representatives cited time and again the usefulness of social-environmental information. The Colombian Vice Minister of Mines and Energy, María Isabel Ulloa, stated the importance of extractive transparency in building trust while the German Ambassador to Peru said, "Transparency is an indispensable step to resolving social and environmental problems." The Peruvian Vice Minister of Energy, Raúl Pérez-Reyes Espejo, emphasised how the publication of extractive information through EITI created an effective and efficient space to reduce misinformation and increase trust.

Environmental information covers a range of issues -- from the consumption of water by mines, to the contents of environmental impact assessments, to environmental fines paid by extractive companies. At its heart, environmental information is about costs. The impact of extraction on the environment is not an inevitable consequence to be regretted but not addressed. Environmental impacts are costs -- costs of opportunity if land becomes unfit for agriculture for a century, costs to locals if they have to travel further to get water because of mining operations, and social, financial and human costs when conflicts lead to states of emergency. Without counting the cost of health impacts, there is a loss of biodiversity as well as climate change implications. As such, environmental information is indispensable if citizens, governments, investors and companies are to ascertain the true cost of a project and make better decisions about the social and environmental viability of extractive activity. We cannot ensure a responsible management of natural resources if the impact of extraction is not clear, and if a lack of information allows mistrust and suspicion to suspend collaboration and promote conflict.

Environmental organisations around the world sent a letter to the EITI Board and Secretariat, calling for the standard to take into account the climate risk. This is another example of how environmental information is becoming increasingly important for and demanded by various sector of society.

It is for these reasons that Publish What You Pay and the Latin American Network on Extractive Industries (RLIE) have joined forces to campaign for better disclosure of environmental information. We are very excited to be hosting a panel discussion during the OGP civil society day that will explore these issues. Why are so many communities calling for environmental information? How can civil society respond to this demand and make more data available? How will the availability of this information help change extraction so that local communities are protected from negative impacts? If you'd like to join in the discussion of these important issues, come join us on OGP civil society day!

PWYP and RLIE will be hosting a panel at 15:30 on the OGP Civil Society day, "Transparency in Latin America's extractive sector, how to obtain better social-environmental data." Speakers from Colombia, Peru and Mexico will share their experiences and conduct a debate on how to improve mechanisms for accessing information on the environmental, social and cultural impacts of mining activities. The session will be in English only.

This post is part of a series produced by the Huffington Post and the Open Government Partnership (OGP) surrounding OGP's 2015 Global Summit, which is taking place in Mexico City from October 27-29.