Community Development


3. Community expectations from resource development

The essence of community development is that communities must speak for themselves. As the International Council on Mining and Metals (ICMM), the world’s leading mining industry association, has said:

“Community development is the process of increasing the strength and effectiveness of communities, improving people’s quality of life and enabling people to participate in decision making to achieve greater long-term control over their lives.”

When others determine what communities need, this is not community development, and is unlikely to work well.

Too often, the parties concerned look for easy answers: something that can be done quickly, at minimal cost, so that all can move forward and get the project in operation.

The ‘giveaway' approach is one such quick and easy response. The company appears with new football uniforms for the local team, a boat or a pickup truck for the community leader, or food and drink for a party. This tends to ‘damp down' community opposition temporarily. But these benefits are not sustainable.  When the short-term feeling of satisfaction fades, the underlying grievances remain, and conflict tends to resurface.

This can lead to a vicious cycle: the community causes ‘trouble’ for the project by such means as blocking roads. The company responds with a ‘giveaway’. When the good feelings subside, local people again resort to protests, to which the company responds with another grant.

If we all look at this problem with the objective of sustainable development, the accumulated experience of communities, projects, and places suggests that “what the community wants” amounts to sustainable development, with lasting benefits.

The essence of ‘what communities want' can be understood as three things:

1. Active management of the adverse impacts of development. Development of a major natural resource project unleashes a profound process of change. There are, very often, very powerful social, environmental and economic impacts. The adverse effects can be mitigated, but that requires the government, the company, or another party to devote resources and take an active ongoing role in managing them.

2. Equitable sharing of the benefits of development. Development creates opportunities. Some are in a better position to take advantage of those opportunities than others. Unless someone with capacity and resources actively manages the process and ensures maximisation of development opportunities, these opportunities can be lost.

3. A recognised role in making the decisions that affect them. Through the project life thousands of decisions will be made. These may profoundly affect peoples' homes, families, livelihoods, and cultures. Affected people or communities want a say in the decision-making process.  They want to participate with some authority in the decision process.

Community expectations from resource development (1): Active management of impacts

The range of possible environmental, social or economic impacts of mining on communities is very broad and defining all of the possible impacts of an operations prior to its inception is challenging. Hence, managing impacts requires active ongoing attention and a good deal of flexibility, as not all of them will be known in advance.

Experience teaches that local people are the experts when it comes to judging what affects them and whether the affect is positive or negative. Those best suited to judge are the community or person on whom the impact falls.

A table that can be accessed here sets out some of the challenges that require careful consideration in development programmes and are common issues that arise at extractives operations. These issues require careful, sophisticated and well-resourced management if conflict is to be avoided.

Some of these problems are worth drawing out because they occur frequently or are so problematic:

  • Water Quality. Any development that changes the amount of water available to a community, the timing of when water is available, or that threatens the long-term security of access to water is a great concern. Even where there are no changes in water quantity, real or perceived changes in water quality trouble people greatly. The perception that water is no longer clean or healthy to drink or use frequently causes grave worry and conflict. If people start worrying that there is “something bad” in the water their children are drinking or that is irrigating their crops, they will not be content. It may be very hard to convince them that there is no problem. Where there is a lack of trust, even repeated reassurances from scientists may not be accepted. See the case study on the OK Tedi Mine in Papua New Guinea later in this section.

  • Social Stratification and Conflict. Some community members may find ways to take advantage of opportunities created by resource development while others do not. So, some may achieve an economic status unprecedented in the history of the community, while others may become worse off. It is also likely that the prices of goods in local markets will increase, making it harder for people to buy necessities. Changes brought by development can have very different impacts for men and women, or old and young, creating divisions within the community, which can in some cases undermine traditional authority.

Displacement, Relocation, and Resettlement

People forced to leave their homes because of development must be treated with utmost concern. Relocation displacement and resettlement include loss of buildings, as well as loss of access to land and resources. Far too frequently such effects are not recognised or anticipated, which is a frequent cause of human rights violation and conflict. Even where displacement is acknowledged and recognised, many resettlements are inadequately executed, leaving the displaced people in a precarious position. The effect on displaced people is the same, even if they do not have legal title. Arguably, people with questionable land title are likely to feel threatened by displacement since it is not clear that the value of their property will be recognised. Even where there is cash compensation for property taken, it will rarely leave recipients in the position to support themselves on a sustainable basis.

Mass Immigration 

Arrival of large numbers of job seekers or other economic migrants is a frequent effect of resource development projects. Immigrants may lack cohesion, or bring with them crime, drug use or other problems that the receiving community cannot cope with.

Ecological changes

Some projects can make enormous changes in the landscape or the hydrologic regime. If they attract large-scale immigration, this can lead to further deforestation and loss of game species. Ecological changes can drive loss of biodiversity, which can affect peoples’ livelihoods very directly. If the fish do not swim down the river, people cannot catch them.

Case study: The impacts of the Ok Tedi mine tailings

The Ok Tedi mine in Papa New Guinea (PNG) is one of the mines where riverine disposal caused significant environmental and socio-economic consequences. The Star Mountains region of PNG was one of the last regions in the country to develop. At the time the ore body was discovered, local villagers lived a subsistence life style based on traditional farming and hunting. In 2002 all mine waste (waste rock and tailings) were being placed into the headwater of the Ok Tedi River, having significant impacts on the Fly River system.

The environmental impacts of the Ok Tedi mine are visible and controversial. The risk assessment commissioned by Ok Tedi Mine Limited (and undertaken in 1999 14 years after commencement of production) confirmed that the environmental impacts were far greater than initially anticipated. Ok Tedi’s profile reflects the scale of the mine’s environmental and social impacts, with an estimated1,350 sq km of rainforest expected to suffer dieback as a result of overbank deposition and consequent disruption to local communities. Up to 80,000 tons of waste rock and 120,000 tons of tailings are disgorged from the Ok Tedi/Fly River system - every day. In addition, 30 million tons of tailing ‘fine sand’ are discharged annually into local rivers.

Affected livelihoods

Up to 30,000 people living to the south of the mining site along the Ok Tedi and Fly River systems have been affected by the environmental impact of the mine. 

Declining fish stocks

In the past, Ok Tedi’s reports revealed that fish stocks in the upper Ok Tedi had declined between 50% and 80% from pre-mining levels. The Australian Conservation Foundation (ACF) reported in the early 1990s that the first 70 km of the river was "almost biologically dead and species diversity over the next 130 km had been dramatically reduced. Fertile river bank subsistence gardens, plantations and approximately 8 km of forest have been destroyed.

Community expectations from resource development (2): An equitable share of benefits

Development of a natural resource project creates opportunity. Some may achieve much higher standards of living. Where the process is not carefully managed, many benefits may be missed and benefits may flow to the few rather than the many.

Where people see a powerful economic engine being built before their eyes and bringing wealth, they want to participate in that success. Where this process has disrupted their lives, or caused negative impacts, they feel entitled to some share of the benefits as compensation for the changes they have experienced.

It should be possible for local people to find the means to share in project benefits. But this does not just happen. Valuable opportunities will be lost unless there is an active effort to identify and maximise potential benefits and make them available to local people.

One possibility is that the project will generate revenues. Depending on the legal system and characteristics of the project these revenues can reach the community in one of several ways.

Employment

People typically want employment at what they see as decent salary levels, and hope that projects can provide this.

At one time, mining and oil and gas operations did provide a significant number of semi-skilled jobs, which people could fill with minimum training. But that is now much less the case. Mechanisation has been dramatic in the resource industries, and it seems this trend will continue unabated. To the extent that there are still job opportunities for local people, they are limited by at least three factors.

First, the absolute number of jobs is much less than it once was.

Second, the jobs that are available tend to require extensive training.

Third, some of the jobs are short term. They may be available while the pipeline or the mine is in construction, and end when it goes into operation.

Many countries now require that companies meet a target for employing local people, for example a certain percentage of local employment at the outset of a project that increases over time as people train and gain skills.

Skills development

Investment in human capital can be a rewarding strategy for development. Consciously designed skills training programmes are necessary if a resource development project is going to maximise local employment and reach its full potential as a motor of development.  Skills training programmes need to be backed by both government and industry. They need to start early in the project cycle so that all the jobs are not already occupied when trainees emerge.

"Extractives companies share an interest with governments regarding employing local workers, but the overlap of interests is not perfect. Governments want to maximise local employment to boost local economic development. For extractives companies, sourcing local workers is typically cheaper than sourcing foreign workers, but quality has to be broadly in line with international benchmarks.

To reconcile these interests, it is important that government play a facilitating and coordinating role. This involves working with industry at an early stage of each project to identify the necessary skills and competencies for each stage.  Governments can also influence companies' investment in training through fiscal incentives, such as tax deductions on skills training, co-funding of coordinated investments in the technical and vocational education and training (TVET) system, and facilitating the establishment of industry-wide training facilities.”

Source: African Development Bank And The Bill And Melinda Gates Foundation, “Leveraging Extractive Industries For Skills Development To Maximize Sustainable Growth And Employment”, 2015, p5. Available at http://www.gatesfoundation.org/What-We-Do/Global-Policy/Natural-Resources/Background-Papers.

Local content

Local content emphasises that the project obtains the goods and services it needs from the local economy rather than importing them. Local content development has the potential to stimulate the creation of local businesses that will multiply the employment and other economic benefits of the extractive project. The most important element surrounding the development of local content is to define in as much detail what constitutes local content and what does not.

Policy in Practice: Local content rules in Brazil

“In the decade since Brazil – a giant in the offshore oil industry – passed its local content rules, approximately 875,000 jobs have been created and the value of equipment and supplies purchased in the domestic market has reached around $14 billion. But the policy is not without its faults – from capacity bottlenecks to allegations of corruption and graft. The setbacks stem from a mismatch between an industry’s demands and the constraints of a local market and can serve as a cautionary tale for countries that are in the early phases of managing natural resources.” Source: Devex Impact, "A look at local content rules and the case of Ghana", 2016.

Entrepreneurship training and support

As in the case of direct employment, local people will often fail to compete successfully for these opportunities unless training and support are made available. This needs to include a system where the company advertises local opportunities for vendors. But it needs to go further and help local entrepreneurs understand quality standards, delivery schedules, and other requirements companies expect from vendors.

There are also benefits in combining efforts to support local entrepreneurs with micro-lending or other small-scale credit programs that may provide the necessary financial resources to start or expand local businesses.

Infrastructure

One of the most important avenues for development may be the potential for major natural resource projects to create a local infrastructure, which also benefits local people and businesses. In the old "colonial" model, companies built their own railroad from the mine to the sea or a potable water system for their own employees. There was little benefit to anyone except the company, and once the project ended, no ongoing benefit to anyone. There is no limit to the list of the kinds of infrastructure that could in some circumstance support broader development opportunities in the project area. Telecommunications infrastructure such as cell phone towers, potable water systems, roads, railroads, ports, and electrical power all can make the company’s operations possible while supporting regional or local development.

Beneficial results are not going to happen by accident. They require government leadership, company cooperation, and local participation, all backed by some resources.

Social Investment

At many sites, there are social investment programs intended to foster community development. They may support education, or health, or make resources available for development projects brought forward by local organisations. The obvious questions about such programmes are where the resources come from to achieve these goals, and who manages them.

Community expectations from resource development (3): A role in decision making

Communities affected by natural resource development want to see some effort to prevent or minimise negative impacts they may experience from development. They want to share in the benefits of development, not simply watch as others do well.

These are in some ways less problematic than the third subject: affected people want some role in decision making as projects go forward. This can be unsettling to business interests who see themselves as the owners of the project, with an entitlement to develop it according to their own ideas. It can also be unsettling to government, where officials see themselves as having sole legal authority to make certain decisions.

However, having a role in decision making is required for community development. As far back as 1948, the United Nations stated:

"Community Development is a process designed to create conditions of economic and social progress for the whole community with its active participation and fullest possible reliance upon the community's initiative."

The community desire for a role in making decisions is natural as we look at the diverse and sometimes catastrophic consequences project development can have for local people. People want to have a say in answering questions like "where are we going to live?" Or "is this compensation for your property adequate?" Or "how are we now going to make a living?"

The Right to Participate

Most people would agree that people experiencing the impacts of development are entitled to a voice in major decisions about their fate. Failing to consult them, or to involve them more deeply in the decision-making, can result in violations of basic human rights. The Declaration on the Right to Development adopted in 1986 by the United Nations General Assembly makes this clear. As leading author Bogumil Terminski says:

“Due to its irreversible nature, implementation of development projects leads to serious social consequences. Poorly implemented resettlement plans, unaccompanied by adequate compensation for lost assets and mechanisms of social support, lead to long-term or even irreversible deterioration in the conditions of large communities. Those responsible for the planning, preparation, and implementation of resettlement, and for the further adaptation of resettled people, therefore carry heavy individual responsibility for their decisions. Despite its clearly humanitarian context, development-induced displacement is still a marginalized and underrated problem in the area of human rights and humanitarian protection and assistance for vulnerable groups.” Source: Bogumil Terminski, "Development-Induced Displacement and Resettlement: Causes, Consequences and Socio-Legal Context", 2014, p42.

Having a local voice is also critical when it comes to local participation in the benefits of development. Good development practice recognises that local participation in the decision-making improves development results.

Environmental Impact Assessment

There are probably no more widespread requirements for major projects than environmental impact assessment (EIA), which necessarily involves some level of public participation.  Most countries have EIA requirements in their national law; even in the few cases where they do not, lenders require it under the International Finance Corporation (IFC) Performance Standard, or the Equator Principles, or companies require it under internal policies.

Excerpt from the Rio Declaration on Environment and Development:

The United Nations Conference on Environment and Development: June 1992

Principle 17

Environmental impact assessment, as a national instrument, shall be undertaken for proposed activities that are likely to have a significant adverse impact on the environment and are subject to a decision of a competent national authority.

Principle 10

Environmental issues are best handled with participation of all concerned citizens, at the relevant level. At the national level, each individual shall have appropriate access to information concerning the environment that is held by public authorities, including information on hazardous materials and activities in their communities, and the opportunity to participate in decision-making processes. States shall facilitate and encourage public awareness and participation by making information widely available. Effective access to judicial and administrative proceedings, including redress and remedy, shall be provided.

Participation needs to be more than a one-time event at the beginning of the project, but an ongoing process, as many more decisions are made through the life of the project.