Environmental Management


2. Review of extractives sector environmental and social impacts

This chapter provides a summary of the environmental and social impacts of petroleum extraction and mining. It also discusses extractive industries' environmental footprint at the different stages of project development - from exploration and processing to decommissioning, reclamation and closure. 

Environmental Impacts 

Air Quality

Air quality can be damaged throughout all stages of extractives sector development due to emissions from machinery used. Overall, air pollutants include carbon monoxide, methane, nitrogen oxide, sulphur dioxide, volatile organic compounds (VOCs) and dust from vehicles and equipment.

The degree of impact also depends on climatic conditions, such as wind speed, rain precipitation and humidity, as well as the cause of these pollutants becoming airborne in the first place. For example, the flaring and venting of excess gas, the burning of diesel fuel to produce power for a mine, or the removal of overburden, exposing highly mobile particles to the air - are all examples of common extractives operations that in unfavuorable weather conditions can have an alarming impact on air quality. Additionally, the impact of fugitive dusts containing toxic particles is often overlooked and difficult to mitigate.

Decommissioning of petroleum facilities and ongoing tailings treatment following mine closure also involve potentially significant quantities of harmful emissions from clearing installations and moving machinery.

Ecological resources: biodiveristy loss and deforestation

Petroleum and mining operations can cause biodiversity loss and irreversible damage to ecosystems.

Ecological resources such as flora and fauna may not suffer a great impact at the exploration stage due to the relatively limited scale of activities. However, in cases where exploration takes place in fragile ecosystems, such as sites close to freshwater lakes, this stage can also carry risks to local ecological resources and human health. For example, flora could be impacted by the introduction of non-native invasive vegetation as vehicles and machinery traffic work on exploration sites. Likewise, the effects of the seismic surveys could impact fauna. 

In the event of commercial discovery and a decision to proceed with extraction, the environmental impact of drilling and mining is likely to be of far greater magnitutde than at the exploration stage. Activities such as land clearance, deforestation and machinery traffic are expanded to meet the requirements of the operation. Drilling, blasting, construction of wells and pipelines for petroleum projects and the toxic materials used in the beneficiation process of mining pose significant risks to surrounding ecological resources. 

Extraction near coastal reefs, wetlands and mangroves also carry considerable risks as these are dynamic areas, comprised of diverse ecosystems, including microscopic organisms, insects, fish, mammals and birds, as well as a diversity of vegetation. Oil spills due to faulty pipeline or explosion can be expected to alter wetland and coastal microbial processes, resulting in biodiversity loss. The effects of chemical and biological changes are irreversible and could have permanent effects on food chains, affecting animals and the livelihoods of people.

Oil cleanups - as a result of accidental oil spills or during decommissioning - require specialised knowledge and expertise. For instance, manual removal of oil can break plant shoots, which may do more harm to the vegetation than the oil itself, or may push oil further into the soil.

Tailings, waste deposits from mining, have a potentially greater impact on the environment than decommissioning. The management and disposal of tailings present high, long-term risks of soil and water contamination due to the amount of waste generated during the life of a project. 

Soils  

The development stage of both mining and petroleum extraction require intensive operations that often induce large-scale deforestation, which in turn results in land degradation. Apart from deforestation, there is also land-use change, for example vegetation and topsoil removal for the development of well pads, access roads, pipelines, and other facilities. This leads to the loss of wildlife habitat, reduction in plant diversity, potential for increased land and soil erosion, and likely introduction of invasive or noxious weeds. Furthermore, poor waste management can lead to irreversible soil contamination. The risk of wildfires is also a potential consideration.

Water resources

On the one hand, water in itself is a crucial input for both mining and oil and gas extraction. On the other hand -  nearly every stage of development of an extractives project has an impact on water quality. 

Drilling and blasting may cause sedimentation, salinity and turbidity, modifying the quality of nearby waters, and making them unfit for human and animal consumption. Furthermore, there are major risks of water contamination due to cooling water discharges, leaks from storage waste tanks and release of drilling fluids. Such toxins have a high pH and salt content which if discharged in fresh water poses a risk to aquatic life and human health. The effects on water quality imply a reduction of the quantity of water available, which - as history has demonstrated - could give raise to conflict and civil unrest. According to the global map of water conflicts, water scarcity has led to civil unrests on every continent but Antarctica. 

During decommissioning, the closure of wells and boreholes requires specialised and high attention in order to avoid oil leakages into lakes, rivers and groundwater. In mining, terrestrial storage facilities for dispolsal of tailings must be considered as a top priority at the start of operations in order to avoid the eventual riverine discharges of tailings.

Negative impacts on water resources can influence the termination and closure of operations, translating into economic costs for governments and investors alike. Chevron in Ecuador, Pac Rim Cayman in El Salvador, Bear Creek Corporation in Peru, are examples of companies that have abandoned extractives projects due to pressure by local communities with regards to water rights.

Social Impacts 

Public health 

It is important to note that environmental threats and their respective costs such as air quality, water pollution, soil erosion, destruction of ecosystems and biodiversity loss are social costs and have a direct impact on human health and life. 

Toxic emissions and other substances - such as mercury and metal particles - have a significant impact on air, water, soil and in turn human life. Handling hazardous substances and chemicals constitutes a potential risk to health. They contribute to increased mortality rates, and can cause the spread of diseases, which may not be observed during the project lifetime. 

Livelihood and community

Degradation of water sources, land and forests would affect fishing, agriculture and traditional hunting activities, hence the ability of local communities to meet basic needs. Communities settled close to extractive sites are exposed to even greater potential loss of livelihoods, especially in cases where local economies are already fragile.

In the context of water resources, relationships between communities and investors are pivotal to the success of development projects. Some studies suggest that when communities do not express a free and informed consent for investors’ operations, the risk of failure significantly increases. 

Different communities may also have competing interests. While some communities can benefit from job creation and enjoy improved infrastructure and livelihoods, neighbouring communities may see their access to natural resources diminished with negative impacts on their livelihoods. Such grievances can escalate into conflicts, making the project difficult to run and eventually lead to its closure.     

Gender impacts

Extratives operations can cause or enhance pre-existing gender inequality. Women are generally more exposed to significant disturbances and increased burdens due to environmental degradation. Female workers often have less access to jobs in mining, in part due to the physically hard labour involved, thus are deprived of some of the benefits of the sector. At the same time, women are traditionally the food growers and water suppliers of a given household, thus making them more prone to the consequences of environmental hardship. Gender-based violence (GBV) is another concern associated with the sector.

The World Bank’s Gender and Extractive Industries programme (SEGOM) recognises that women often bear a disproportionate share of social, economic and environmental risks of extractives sector investment. As a result, mining and petroleum projects have increasingly started adopting a gender sensitive approach to management with the overarching aim of strengthening sustainable development of the sector. 

For more information, see the related topic material on Gender & Extractives.

Degradation of cultural artefacts and resources

Destruction of cultural heritage is often unavoidable during petroleum extraction and mining. Blasting and drilling vibrations have the potential to negatively affect historical ruins. Additionally, large projects can sometimes require the relocation of nearby sacred sites and cultural landmarks. 

Case study: San Cristobel in Bolivia

In some cases, governments, local communities and investors have worked together to protect cultural sites of important significance. In early 2000 San Cristobal S.A., a mining company starting operation in the village of San Cristobal in Bolivia, agreed with the local community to protect a 1600 Church with Andean characteristics of ‘well chapels’. The Chapel, built of stone and vaulted, contained a variety of canvases and murals and fine works of silver. It was declared a national monument in 1967. The extractives company safely, and in accordance with international standards, relocated the Church and the cemetery away from the mining operation before it started. This example illustrates that community engagement in the negotiation of mining agreement can create ownership and facilitate cooperation with investors. The role of corporate social responsibility constitutes an important element conducive to the success of an operation.