Blog post from The Baines Report: Policy in Perspective blog, from the Lyndon B. Johnson School of Public Affairs.
The last installment of this piece framed the situation Shipibo communities in Peru's Loreto province face in their coexistence with oil company Maple Gas. This week's follow-up focuses on the human side of the problem, its implications for policy makers and potential policy solutions.
After arriving in the small Amazonian town of Contamana, my Peruvian guide, Lizardo, and I set out for Canaan de Cachiyacu, a Shipibo community located about half an hour away by motorized canoe. Upon our arrival we tramped up a steep hill to the heart of the village, and I met a group of community leaders who have been participating in advocacy around extractive activities since the early 1990s. When asked about environmental contamination, they smiled. "Of course we deal with contamination," they said. "Ten years ago we had to split apart a layer of oil on top of the river in order to find water for bathing." In this sense, they said, Maple Gas is a far more responsible company than the government-run companies that preceded it.
Nonetheless, two days later I traveled further down the river to a small Shipibo community of 200 residents called Nuevo Sucre. After a brief hike inland from the Ucayali, Lizardo and I wandered into town and sought out the community assembly place. Under the shelter of a high-peaked banana leaf roof, 60 community members sat and waited for us. In the middle of the assembly sat a plastic-wrapped electric generator purchased with this year's right-of-way payments from Maple Gas, financial compensation for the right to occupy and access land for extractive purposes. Within moments the community's purpose for this meeting became clear: between January and March of 2009, three oil spills contaminated the rivers the community depends upon for food and drinking water. During the month of August, a fourth spill occurred.
Each spill resulted from an oil pipeline Maple Gas built in 2008 as part of a new project funded by the International Finance Corporation (IFC). Representatives from Maple Gas said their impacts were unusually large due to the extraordinarily heavy rainfall during this time period. They also state that the contamination of the rivers was caused by rainwaters that washed the oil residues into the river. However, community members firmly maintain, as well they should, that regardless of rainfall levels they have a right to secure drinking water supplies and sources for fish, their dietary staple.
Oil is a dirty business a fact that has become common knowledge. Exposé after exposé has documented the stories of environmental contamination; yet, those of us living in the developed world continue to demand this crucial natural resource for our energy needs. Current proposals and incentives for green tech solutions are promising and necessary; however, it is unrealistic to think that discontinuing the oil business is a viable solution in the short-term. What is necessary, then, is not a simple vilification of the oil industry, but a proactive policy approach for improving outcomes for the environment and communities impacted by extractive activities.
In many ways, community leadership provides the most pragmatic project-level solutions for the problems they face. The Shipibo communities considered here receive basic lease payments from Maple Gas for each year that the company occupies their land for extraction; however, payments amount to no more than $6,000 USD per year. Meanwhile, local governments face major development concerns: schools; health clinics and health staff; communities without electric power; transportation needs and a lack of water and sanitation infrastructure. While both Canaan and Nuevo Sucre have purchased electric generators with their annual payments, the absence of any state support leaves the communities bearing the burdens of endless development needs. And while the company is correct that it is under no obligation to act on behalf of the Peruvian state, it has forgotten that no amount of annual lease payment can purchase a pristine river system that will provide these communities with drinking water and fish. What the communities would like to see is an obligation on the part of Maple Gas to install elevated water tanks with purification systems so that communities will never find themselves with the necessity of drinking contaminated water and eating fish al petróleo.
At the macro-level, however, social and environmental safeguard requirements for companies in the extractive industries must be strengthened particularly in terms of enforcement and scope. In keeping with the "bottom-line" philosophy of most corporations, safeguard standards for the extractive industries are typically elaborated and enforced by creditors, theoretically tying the accessibility of funds to a company's social and environmental performance.
This particular study began with the impetus of providing analysis of IFC's social and environmental performance standards for the ongoing review process. The IFC, the World Bank's commercial lending arm, is only one major funder of extractive industry companies around the world; however, the current performance standards have also been adopted by the Equator Banks, a designation that increases their gravity within the industry.
Following my visits to Loreto, I reviewed the IFC's performance standards looking for some sign that food and water insecurities caused by environmental contamination had been contemplated as a form of economic displacement. As one might imagine from the tone of this account, the IFC has yet to fully recognize these problems as facets of land acquisition and displacement, areas requiring concrete action plans and compensation payments, and standards regarding environmental contamination require documentation of appropriate mitigation measures and technologies only in the pre-project approval phase.
Across the board, enforcement of standards by creditors is spotty once a project is underway, pointing to a primary need for accountability to be built into the procedures outlined by these standards. The experiences of these Amazonian communities therefore point to two specific policy needs: improved rigor in monitoring and accountability and an effort to create standards that respond to the culture-specific needs of isolated traditional communities simply not considered in current policy. Until then, communities who pursue traditional lifestyles and economies with strong ties to the natural environment will continue to suffer the consequences of inequitable approaches to economic development that exclude them from enjoying a piece of the pie on their own terms. Injustice takes many forms, and neglect is one of them. Accountability through inclusive and comprehensive policy that takes fairness to all parties involved into consideration is necessary.