Environmental grievances along the Extractive Industries Value

Chain

Environment Programme

Dag Seierstad, UNEP

Mismanagement of oil exploitation sparks civil uprising in Ogoniland, Nigeria

Uprisings in Ogoniland began in 1990s over unfair revenue sharing and

environmental degradation. 13% goes to state but none reaching communities

Shell suspends operations in 1993 – loosing social license to operate.

Leaving all infrastructure in place and forgoing billions in revenues.

Oil theft and bunkering becomes widespread. 100,000 barrels per day are stolen.

Environmental contamination is chronic and severe. Infrastructure deteriorates.

Mediation process to resolve the Ogoniland conflict –UNEP provides technical support and facilitation

Natural resource exploitation fueled or financed (UNEP, 2009):

•40-60% of civil wars over past 60 years

•At least 18 violent conflicts since 1990

Attention to natural resources in peace agreements has increased dramatically (over last 25 year):

•1989-2004: More than 50% of agreements have NR provisions (51 of 94)

•2005-2014: All key agreements have NR provisions

Natural resources are important to conflict

Extractives are important across conflict cycle

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Contributingfactor

Conflictfinancing

Targeted duringconflict

In peaceagreement

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Role

Role of Natural Resources in Conflict(From 1990, Conflicts over 1,000 battle deaths)

Land

Extractive

Renewable

Water

Natural resources contribute to conflict

Drivers of conflict over natural resourcesCompetition over scarce resources

Unclear or overlapping rights and

laws

Major environmental

degradation

Lack of transparency and access to

decisions

Inequitable access,

ownership or benefits

Interact with other socio-economic,

political, security tensions and stresses

Violent

conflict

Conflict

de-escalation

and resolution

Poor dispute resolution capacity

Institutions

and

governance

StrongWeak

Trans-boundary impacts

Natural resources are never the only driver of conflict.

They always interact with other tensions and stress factors.

Three main risks from resource exploitation

Resource curse

and corruption

Violence and

conflict

Environmental

degradation / disasters

Mitigating these risks are

inter-related components of good resource governance

(is there a one-shot chance to get it right?)

Resource revenues are a key source of income for many post-conflict countries

Oil revenues represent more

than 98% of South Sudan’s

government budget.

On average,

50-80% of a

post-conflict

country’s

exports come

from natural

resources.

DR Congo:

Mineral reserves alone are estimated to be worth US 24 trillion.

More than half of the country is covered by resource concessions.

Hydroelectric potential could power more than half of Africa.

Levels of

Peace and

Conflict

Armed conflict

Crisis

Unstable Peace

Stable Peace(basic order)

Durable Peace(just order)

The different roles of natural resources across the conflict cycle

TIME

PREVENTION AND EARLY WARNING

Good resource

governance

Entry point

for dialogue

Economic incentive

for peacemaking

and confidence building

Employment

and livelihoods

Revenues and

basic services

Causing tensions

and grievances

Fueling and

financing conflict

Weapon of war Damaged by conflict

Incentive for

peace spoiling

Illegal exploitation

and trade

RISKS

OPPORTUNITIES

Land

(Farming, grazing,

settlements)

Extractive

Resources

(Oil/gas, minerals,

commercial timber, gems)

Renewable

Resources

(Water, wood,

fisheries, wildlife)

Conflict drivers are specific to each natural resource but difficult to disentangle

Conflict Drivers

Ownership

Wealth sharing

Negative impacts

Unmet expectations

Decision making

Resource curse

Conflict Drivers

Common property

Increasing scarcity

Natural variation

Lost access & damage

Poor governance

Conflict Drivers

Insecure land tenure

Lost access & damage

Marginalization

Loss of customary

practices

Overlapping claims

Early warning indicators in resource rich weak states High prices and volatility, more competition to secure

supplies, less trust and cooperation

Transnational organized crime and interactions between illicit and licit networks and rebel groups

Non-transparent natural resource management and revenue sharing

Supply chains without transparency and accountability

Absence of industry leaders, lack of compliance with regulations

National level institutions, laws and policies cannot keep pace with level of exploration and investment.

Lack of state control over territory

Lost “social license to operate”

Bad deals with multinationals

Peacebuilding and Natural Resources Linkages

Geo-mapping extractive industries in fragile states and emerging economies

Broadening and deepening the EI value chain to reduce grievances

Cold Deep Fragile

Exploration

and

Discovery

Construction

and

operations

Regulation

and

monitoring

of operation

Collection

of taxes and

royalties

Revenue

distribution

and

management

Implementation

of sustainable

development

policies and

site closure

Awards of

contract

and

licenses

• Access to

information

• Prior informed

consent

• Strategic IA

• Legal framework

and EI vision

• Public inclusion

• Decide to extract

• Competitive

bidding

• Transparent

terms

• Env./Social IA

• Benefits sharing

• Community

• awareness

• Up/downstream

economic linkages

• Local employment

content

• EIA/SIA monitoring

• Grievance

mechanisms

• Monitoring of

benefits sharing

• Sanctions

• Savings, debt

repayments,

infrastructure,

basic services

• Exchange rates

• Track and audit

expenditures

• Transparency

• Taxation

policies

• Track and

audit

• Economic

diversification

• Asset

transformation

• Site

rehabilitation

• Sustainable

practices

Strategic

framework

• PRSPs

• Green

Economy

• Natural

resource

legislation

• Governance

capacity

• Management

plans

• Deciding to

explore and

develop EI

sector

• Public debate

• Legitimate

process and

decisions

Natural resources – potential areas of priority with SDG 16 as entry point

1. Conflict early warning: Develop and use early warning systems for natural resource driven or financed conflicts and support conflict prevention initiatives with natural resources as entry points.

2. Peace agreements: Work to follow-up natural resources in peace agreements ,directly or indirectly as the basis for future reforms. All peace agreements globally in last 10 years include NRM provisions

3. Peacekeeping and environmental crime: Assess threat financing from environmental crime and ensure peacekeeping forces are mandated and equipped to monitor and interdict illicit resource exploitation.

4. Conflict-sensitize the EI value chain: Use SDG 16 to support an extractives sector with a legitimate strategic framework, inclusive processes, transparent and accountable systems with grievance mechanisms and benefits sharing

Natural resources – potential areas of priority with

SDG 16 as entry point

MAP-X

5. Capacity building for resource management: Countries with newly discovered oil, gas and minerals should be encouraged to build strong legal and institutional framework for natural resource governance before large concessions are issued. Once funds start flowing, it is difficult to make reforms.

6. Resource transparency: Make commitments and sign-up to international instruments that promote resource transparency, public participation, and accountability. EITI is a good example, MAP-X is a part of the future toolkit. Transparency contributes to trust building.

7. Development should not be anchored on high-value natural resources alone: Countries should not focus exclusively on extractives resources for development. Diversified approaches using all natural resources provide less vulnerability to commodity price booms and busts. Green economy approaches can be more economically stable and distribute benefits in a more equitable manner.

Levels of

Peace and

Conflict

Armed conflict

Crisis

Unstable Peace

Stable Peace(basic order)

Durable Peace(just order)

PREVENTION AND EARLY WARNING

www.unep.org/ecp

Knowledge platform and community of practice: www.environmentalpeacebuilding.org