Impact Assessments and Benefit Sharing

October 20, 2016

The Communications and Transport Secretary in Mexico has proposed a regional rail project, the Tren-Transpeninsular (TTP), to connect major beach resort areas and several major archeological sites in the Yucatan Peninsula. The capstone class is working with a local non-profit in Mexico, Foro para el Desarrollo Sustentable, who has been hired to conduct a preliminary assessment of the potential social impacts of the TTP. Students in the capstone will identify best practices on the implementation of informed consent protocols—which are increasingly used in infrastructure projects– and create a literature review of similar infrastructure cases to understand the process of consultation with indigenous communities. Free, prior, and informed consent protocols aim to assess the wide-ranging impacts that projects will have in communities, including economic, environmental, social, and cultural. A group of students will be traveling to the Yucatan Peninsula over spring break to meet with members of the indigenous communities that will be affected. The paper we wish to present at the 2014 Center for Latin American Studies Conference will be a compilation of our initial findings. The following report is an example of what may be included in our final report to Foro.

Introduction

One of the primary concerns that arises during the proposal of a large development project that could be potentially harmful to indigenous communities is whether peoples affected by these projects will be compensated, and whether the mechanisms behind this compensation are fair and comprehensive. Two processes that are essential to ensure that the culture, rights, and material well-being of indigenous communities are not adversely impacted by development projects are the Environmental and Social Impact Assessment (ESIA) and the Impact Benefit Agreement (IBA), both of which are directly linked to the larger procedure of Free, Prior, and Informed Consent (FPIC). This paper will discuss how indigenous communities in particular can work towards ensuring that a credible ESIA is carried out during the FPIC process, and also how indigenous communities can use the IBA as a tool to garner benefits from development projects such as the Tren-Transpeninsular (TTP) once the FPIC is conducted.

Impact Assessments

ESIAs are needed for projects that have potentially severe impacts on air, water, wildlife, plant life, and the people that rely on these natural resources.  They include mining, logging, infrastructure, development of tourist areas, hydroelectric dams, and projects affecting protected areas.1 The proponents of these projects include government agencies, private companies, state-owned companies, banks, international financial institutions such as the World Bank, or entire countries. The purpose of conducting an ESIA is to predict the impacts of a proposed project on the environment and people reliant on that environment. ESIAs and the consultants that are hired to conduct them have potential to be troublesome because they are financed through the proponent, who prefers that the project advance. However, ESIAs can predict and mitigate the negative effects of a project on the local environment and communities, and are an essential instrument for indigenous communities to exercise their rights under national laws such as the Mexican Constitution, and international convention such as the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), the UN Convention on Elimination of All Forms of Racial Discrimination, and the UN Convention on Biological Diversity.1 Other “levers” that can induce the proponent to include indigenous groups in the process include: international treaties (if the home country is a signatory), best practices and codes of conduct established by companies and industry associations, best practices for consultants and experts conducting the ESIA, and the rules of banks and donor countries.1 The following table details some examples of negative impacts that can be mitigated by a credible ESIA.



Type of Impact

Examples

Environmental

Water pollution, harm to wildlife/plant life, diversion of waterways

Social

Division of communities, increased crime, lower school attendance, sexual exploitation of indigenous women by workers

Cultural

Some forget about patrimonio as result of new income in construction or tourism, construction occurs in sacred religious space

Political

Upsets balance of power at level of municipio and ejido, concessions decrease hopes of registering traditional lands, community members working with TTP may have diminished power with local leaders

Economic

Food shortages as people work in tourism and construction rather than farming, disruption of agricultural lands, underpaid/exploitive labor practices

Health

Accidents, pollution, increased incidence of drug and alcohol abuse

Adapted from Markussen-Brown and Simms to address potential effects of TTP to Mayans

ESIAs form an essential part of the FPIC process, most closely related to the “informed” qualifier by going beyond the minimum of the proponent handing a large technical document to indigenous community members for their review. For indigenous communities to take full advantage of this opportunity to leverage their status as a protected group under the aforementioned statutes, it is essential that they are involved with the ESIA from the beginning, playing proactive roles in both the initial screening phase (Is an ESIA for this project required? What type of ESIA is required?) and the scoping phase, which determines the design of the project. The indigenous community may have to push for the construction of an ESIA, which should be done hand in hand with the economic feasibility (cost benefit) analysis, and typically take about two years.1 It is crucial that the community in question is involved during these phases, before the actual project begins, so that they can decide whether the potential of adverse impacts is too high for the project to proceed.1 Ideally, the indigenous community will be mentioned in each section of the ESIA: the executive summary should mention their rights under national and international law, the project description should give detailed demographic and cultural information about the community, the project alternatives should give weight to the indigenous opinion, the impact assessment should consider impacts important to the community, and the follow up of the project should provide for mechanisms of indigenous monitoring and continuous communication with all stakeholders.1 If the ESIA is conducted without consultation with indigenous communities, or if the provisions of the negotiated ESIA are not carried out, or if the indigenous communities need to strengthen their position of negotiation, they can pursue several avenues of grievance. These include establishing a letter box in their community, having a hotline for those communities with telephones, submitting monthly reports to the proponent regarding opinions on progress, using email, and petitioning for one company/proponent member to be the assigned community liaison. Particular limitations to benefits derived from the ESIA that communities should be prepared for are unexpected, underestimated, or unintended impacts, lack of attention the cumulative effects of multiple projects, lack of due diligence from ESIA consultant, exclusion of indigenous groups in meetings, and improperly designed or implemented mechanisms of prevention, mitigation, and reparation.1

Benefit Sharing

The negotiation of the Impact Benefit Agreement (IBA) forms an essential part of the FPIC process. Negotiation does not mean consent.3 The power of an IBA is that it does not just say “yes” but says “yes, with the following conditions and mechanisms for sharing benefits…”2 IBAs are contracts between a community and a company that set out the benefits that will be received, the compensation mechanisms for negative impacts (which is why ESIAs discussed above are crucial), and how indigenous communities will be involved throughout the project.2 As a community goes ahead with the negotiation of the IBA, they will be able to determine if a credible FPIC protocol is being carried out by paying attention to the following: deadlines imposed upon the indigenous community, intimidation or attempts by the company to manipulate the process and people, respect for the decision making institutions and leaders, respect for the indigenous decision making process, and the equitable sharing of all information in the proper timeframe in accessible formats, including indigenous languages and audiovisual materials.2

The legal framework that guides the benefit negotiation process between proponents of a project and indigenous communities is the same as with FPIC and ESIAs. Specific clauses from the UNDRIP include the right to self government on local matters (Article 4), that the State should work to develop redress and repayment if cultural, spiritual, and intellectual property is taken without consent (Article 11), the right to participate in decision-making (Article 18), fair compensation (Article 20), the right to decide on priorities and strategies to develop land and the duty of States to provide remedies and lessen negative impacts, (Article 32) and that States have to respect agreements entered into with Indigenous Peoples (Article 37), among others.

Before communities negotiate, they need to be prepared and to know how to gain leverage. In preparing for negotiations, it is essential that communities allocate money, time, and resources to the process. This money can be sourced from a community fund, NGO, or the company involved in the negotiation (in this case, the money should be paid in a lump sum with no strings attached). The negotiation team should be balanced, and include a strong leader, a technical worker, an indigenous expert, elder and spiritual leaders, a youth representative, and outside experts.2 The negotiation team should gather as much information as possible before negotiations begin, including: project plans (gathered from the company website, advocacy organizations), the company (investors, track record, position on environmental and social responsibility), permit information (from company documents and public maps), project impacts (from the ESIA and CBA draft, local knowledge of projects, and visits to communities with similar projects, and agreements (how much money the project makes, the timeline, associated risks).2

There are two lines of approach when gaining leverage in an IBA negotiation: the soft approach and the hard approach.2 The soft approach involves making proponents and stakeholders aware of indigenous rights, finding levers for community involvement (like the ESIA), using village rules and customs as leverage, appealing to Corporate Social Responsibility initiatives, industry codes of conduct, contact with NGOs and local groups to raise your profile and public awareness, and finding out about previous agreements and methods used with other indigenous communities. The hard approach, a last resort, involves blocking access to the work site, killing electrical access for construction, and filing suit in court.

Principles of the negotiation process that will maximize the probability that an indigenous community will be able to share in the benefits of a project include agreeing on roles, setting first principles, shaping the agenda, starting with easy issues to build confidence, holding meetings in indigenous territory rather than a company office, allying with NGOs, documenting all meetings, and managing offers. Indigenous communities ideally will put together a proposal and share it with the company, rather than have the company make an offer, which will frame the negotiations and make it clear what the desired objective are while avoiding unfair offers.2

When leverage and information on the project are both high, it is time to negotiate.3Below find clauses in the IBA that indigenous communities can negotiate for and examples of benefit sharing.



Types of Benefits

Examples

Economic Benefits and Safeguards

Cash payments as percentage of revenue from project, business development (agreement by companies to use local businesses for materials and food, employment (commensurate to what rest of labor is being paid), education, training

Social and Cultural Benefits

Creation of programs for drug and alcohol abuse, protection of local use of language on signs and documents, protection of sacred places, health programs

Environmental Safeguards

Strong environmental standards and management

Access

Access to project area, making hunting and sacred areas off limits, compensation of lost use, access to infrastructure and company facilities

Process and Implementation

Communication, performance bonds and insurance, grievance mechanisms, ownership transition, monitoring and evaluation, built in fines, expectations of employee behavior

Adapted from Gibson and Simms

Conclusion

Essential to the overall success of conducting a FPIC protocol for indigenous communities that will be affected by development projects is the participation of these communities in a credible ESIA and IBA. These two mechanisms have the potential to ensure that the consent is fully free, prior, and informed. Although the ESIA and IBA are different procedures, they have the same goal of raising the leverage and position of indigenous communities so that projects only proceed when they agree to let them proceed under certain conditions. Though this brief report detailed specific strategies when becoming involved in an ESIA and negotiating an IBA, there are two main strands that run throughout the literature on these processes: the absolute necessity for a community to be clear in communicating their goals, and the need to have the organization and dedication necessary to stay united and plan collectively.3 Following these procedures and keeping these two strategic goals in mind will maximize the chance that indigenous communities will have a say in what happens and how it happens on their land, which is essential for the preservation of these invaluable cultures.

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Works Cited

1) Practical Guide: Environmental and Social Impact Assessment, by Annetta Markussen-Brown and Meaghen Simms, January 2011. The North South Institute. http://www.nsi-ins.ca/publications/indigenous-guyana-assessment/

2) Practical Guide: Negotiating Impact and Benefit Agreements, by Dr. Ginger Gibson and Meaghen Simms, January 2011. The North-South Institute. http://www.nsi-ins.ca/publications/negotiating-impact-benefit-agreement/

3) Ginger Gibson and Ciaran O’Faircheallaigh. “IBA Community Toolkit: Negotiation and Implementation of Impact and Benefit Agreements.” March 2010. Commissioned by the Walter and Duncan Gordon Foundation.http://www.ibacommunitytoolkit.ca/pdf/IBA_toolkit_March_2010_low_resolution.pdf

 

About Author(s)

Eamonn Berry
Eamonn Berry is a 2nd year graduate student at University of Pittsburgh's Graduate School of Public and International Affairs, where his major is International Political Economy and he is seeking a certificate in Latin American Social and Public Policy. He previously attended the University of Vermont, where he majored in Political Science and minored in Spanish. Eamonn has political and legal experience, and is pursuing a career in public policy.