Land acquisition and resettlement

One of the well known and criticised impacts of mines is that of land acquisition and involuntary resettlement. Mines, like other large development projects (particularly dams) often involve the assumption of large tracts of land.

Resettlement (whether it is involuntary or not) is an issue that affects millions worldwide. For example, in India alone, more than twenty million people were displaced between 1950-1980, while between 40-45 million were resettled in China between 1950 and 2000 (Cernea 2003, 6). While the majority of these displacements were a result of hydro-power generation projects, extractive projects have certainly been a contributor. Further, some commentators suggest that resettlement as a result of mining will expand in the future, due to the growth in open-cast mining based on the exploitation of larger tonnage, lower grade deposits.

Resettlement – problematic outcomes

Based on past studies, it would be easy to assume that resettlement is inherently linked to further impoverishment. Evidence has found the resettlement is associated with the following fundamental and recurrent risks:

    • Landlessness
    • Joblessness
    • Homelessness
    • Marginalisation
    • Increased morbidity and mortality
    • Educational losses
    • Food insecurity
    • Loss of common property

(Cernea 1997, 2000, 2003 16).

Many commentators on these outcomes may argue that these outcomes are of governmental concern and responsibility. However, despite the truth in this, ensuring that appropriate resettlement practice is adhered to is increasingly becoming a concern and indeed a responsibility of the private sector.

The reasons for this are twofold:

  • The private sector is often in a position where the acting government has ineffective systems in place in relation to resettlement. This inadequacy ranges right from the beginning of the process, with ineffective (or non-existent) land titling and property ownership systems through to the ‘end game’ of resettlement.
  • As a result of governmental inadequacy, companies often assume a quasi-governmental role, in essence becoming the agent of land tenure change. Consequentially, the company then inherits the responsibilities associated with resettlement in the eyes of local and international stakeholders. Further, this responsibility in enhanced through the concept of CSR, whereby companies are considered responsible for the social outcomes of projects.

Indeed, issues surrounding land resettlement have at times assumed a key role in company-community conflict in the mining sector. The now (in)famous company-community conflict at Minera Yanacocha South America (MYSA) remains a case in point.

The Minera Yanacocha South America (MYSA) is the largest gold producer in South America and was the first foreign-owned mine in Peru (Newmont Mining Corporation 2011). MYSA has been the subject of an intense amount of conflict and criticism over the majority of the mine’s life, despite the vast amount of wealth it has generated for the region and the government.

Amongst other issues, resettlement and land acquisition have been a driving force of the conflict from the onset (Bebbington et al. 2008, 19). The early land acquisition process is widely acknowledged as flawed: MYSA virtually acted as the agent of land tenure change, rushing communities through the process and resorting to expropriation and evictions in instances of community resistance (Bury 2005, 231–232). These practices (which have since been changed)[1] resulted in several lawsuits and were responsible for a number of the early eruptions of violence (Bury 2002, 12–13). The complaints around resettlement also argue that land holders have not been able to replace their previous land, due to a reduction in land availability and the resultant inflation of land values in the region (Bury 2002, 12–13)[2].

The complaints noted above point to a recurring issue noted in the literature on resettlement: that cash based compensation at its best does not genuinely compensate land holders and at its worst results in increased impoverishment (Cernea 2003; Maldonado 2009). Indeed as Cernea notes:

Evidence demonstrates irrefutably that the purchasing power of cash compensation typically ends up being less than necessary to repurchase the assets lost (even if compensation is paid at replacement costs).

The transaction costs, production time wasted, start-up costs etc all eat at compensation value. Further, various cultural pressures and immediate needs often divert compensation proceeds away from asset replacement. Land markets are limited, prices go up, worth of compensation goes down.

At the end of the day, the need to resettle populations for infrastructure, hydro, and mining project is not going to diminish. However, ineffective and flawed resettlement practices and the resultant (and costly) company-community conflicts need not.

Got ideas on best practice for resettlement? Comment and share your thoughts.

Bebbington, Anthony, Denise Humphreys Bebbington, Jeffrey Bury, Jeannet Lingan, Juan Pablo Muñoz, and Martin Scurrah. 2008. ‘Mining and Social Movements: Struggles Over Livelihood and Rural Territorial Development in the Andes’. World Development 36 (12). World Development: 2888–2905.

Bury, Jeff. 2002. ‘Livelihoods, Mining and Peasant Protests in the Peruvian Andes’. Journal of Latin American Geography 1: 1–19.

Bury, Jeffrey. 2005. ‘Mining Mountains: Neoliberalism, Land Tenure, Livelihoods, and the New Peruvian Mining Industry in Cajamarca’. Environment and Planning A 37 (2): 221 – 239. doi:10.1068/a371.

Cernea, M M. 2003. ‘For a New Economics of Resettlement: a Sociological Critique of the Compensation Principle’. International Social Science Journal 55 (175): 1–2. doi:10.1111/1468-2451.5501019_3.

Downing, Theodore. 2002. Avoiding New Poverty: Mining-Induced Displacement and Resettlement. Mining, Minerals and Sustainable Development & The International Institute for Environment and Development.

Environmentally and Socially Sustainable Development Department – Latin America and Caribbean Region. 2006. Republic of Peru – Wealth and Sustainability: The Environmental and Social Dimensions of the Mining Sector in Peru. The World Bank.

Maldonado, Julie Koppel. 2009. ‘Putting a Price-Tag on Humanity: Development-Forced Displaced Communities’ Fight for More Than Just Compensation’. Hydro Nepal Journal of Water Energy and Environment 4 (4): 18–20. doi:10.3126/hn.v4i0.1817.

Newmont Mining Corporation. 2011. ‘The South America Region’. Newmont Mining.

Quiroz-Onate, Diego. 2008. ‘Newmont Mining Corporation: Embedding Human Rights Through the Five Star Management Program’. United Kingdom: The Robert Gordon University.

Whellams, Melissa. 2007. ‘The Role of CSR in Development: a Case Study Involving the Mining Industry in South America’. Masters, Nova Scotia: Saint Mary’s University.

[1] MYSA established an ‘Original Landowners Program’ in 2001 that was designed to assist resettled families (Whellams 2007, 57).

[2] It should also be noted that land acquisition in Peru is complicated by a complex and often poor legal framework; land is often owned communally in rural areas and despite the introduction of titling for these areas decades ago, many communities do not currently have the titles to their land (Environmentally and Socially Sustainable Development Department – Latin America and Caribbean Region 2006, 106)

Linked literature: financial returns of stakeholder engagement

It used to be the case that the value of a gold mine was based on three variables: the amount of gold in the ground, the cost of extraction, and the world price of gold. Today, I can show you two mines identical on these three variables that differ in their valuation by an order of magnitude.

Why? Because one has local support and the other doesn‘t.

In this article, the authors take a valuation approach to ascertaining the impact of stakeholder engagement on the value of mining companies. The authors posit that stakeholder engagement (and lack thereof) can be empirically related to company value. For those of us for whom algebra is a long forgotten art, some of the methodology may be a little esoteric; however, this emphasis also provides strength to the CSR business case, which has often been criticised for focusing on qualitative rather than quantitative data.

Check out: Spinning Gold: The Financial Returns to External Stakeholder Engagement

H/T to Peter Bruce

Image credit: Uncle Kick-Kick

CSR – examples of corporations doing brave and awesome things

Credit: Linnikin

Corporate social responsibility (CSR) is often criticised for being a ‘greenwash’ publicity stunt that is all about corporate image and less about social responsibility. However, there certainly are examples of companies taking on issues that are not ‘image safe’ but are socially important. Richard Branson’s advocacy over the last year is a brilliant case in point. Branson has recently come out as a champion for employing ex-offenders. Better yet, he is not only advocating for other companies to do so, Virgin has been employing ex-offenders for the last two years. Branson argues that ‘everyone deserves a second chance,’ noting in a Guardian interview that:

‘For people coming out of prison it’s a vicious circle. If they can’t get a job, the only thing they can do is reoffend. From society’s point of view that can be very painful.’

This comes after Branson joined the board of the Global Commission on Drug Policy, which earlier this year released a report that recommended drug decriminalisation, declaring that:

“the global war on drugs has failed, with devastating consequences for individuals and societies around the world.”

Branson’s copped flack for both causes, but he may be paving the way for a new wave of CSR – one that takes on the tough issues. Regardless of whether or not you agree with the causes, Branson certainly appears to and is championing them without regard to their ability to produce another CSR ‘glossy’.

Do you think that Branson’s advocacy is a different take on CSR or more of the same?