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Is environmental deregulation in Peru's best interest?

A law passed by the Peruvian government to decrease environmental regulation has been met by protest at home and abroad.

Last updated: 12 Aug 2014 15:31
Vladimir Gil Ramon

Vladimir Gil Ramon is a researcher at the Earth Institute Center for Environmental Conservation (EICES) at Columbia University, and a faculty member of the Environmental Development Masterís Program and the Social Science Department at the Catholic University of Peru (PUCP).
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In 2009, 33 people died in clashes between anti-mining protesters and police. [Reuters]

A Peruvian law curbing environmental safeguards to increase investments sparks conservation-development debates.   

"Do not despair," Peru's main pro-business newspaper anxiously editorialised four days after the government passed a new law relaxing environmental safeguards in an attempt to boost private investments, mostly in mining and hydrocarbons.

The nervous plea summarised the media campaign welcomed by mining companies demanding governmental measures because they believe the so-called "Peruvian Miracle" - a decade of extraordinary macroeconomic performance - is coming to an end.

Peru's spate of economic growth largely reflected the international demand for minerals, especially from China. The world's second largest copper producer, Peru holds13 percent of global copper reserves, and minerals comprise more than half of all Peruvian exports. 

Peruvian mediahas blamed governmental overregulation for the economic slowdown (a drop from 5.02 percent in 2013 to 2 percent in May-June 2014), instead of declining mineral prices and an increasing international mineral and hydrocarbon supply.

The business elite demanded state measures to promote investment, including environmental de-regulation, in order to maintain the economic growth pace. But is environmental de-regulation appropriate when many Peruvians have hardly felt this macroeconomic "marvel", particularly in the Andes where mining concessions concentrate, and environmental impacts are accumulated and felt everyday?

According to official figures, roughly one third of the country's population lives below the poverty line, and chronic infant malnutrition still affects between 20 and 30 percent of the population. Lima business and political elites have reaped the benefits of the national mining boom while other regions of the country - especially the rural and mining areas - face not only endemic poverty but also environmental damage, which further endangers local livelihoods. Now the government risks exacerbating the social divide even further by reducing environmental safeguards protecting communities from the effects of mining.

The new law

The new law aims to increase investment by limiting the capabilities of the six-year-old ministry of environment, among other measures. As a result, the environment ministry's Body for Assessment and Audit (OEFA) will not be able to penalise companies for breaching some environmental safeguards for three years, unless circumstances are exceptional. 

People & Power - Peru: Undermining Justice

Changes in eco zoning imply that the ministry of environment will no longer be able to create nature reserve zones, unless it obtains the approval of all ministries, including the ones with the legal mandate to promote extractive industries. The definition of the Acceptable Maximum Limits and Environmental Quality Standards of mining emissions will no longer be a technical decision made by the ministry of environment, but will require the authorisation of all ministries.

Needless to say, Manuel Pulgar-Vidal, the minister of environment voted against the bill. While it appeared that he was not entirely in agreement with the law's critics - recently declaring that his sector "does not feel that it has lost power" - he recognised that a group of companies have attempted to limit the environmental standards and "get rid of" the OEFA, fearing its efficacy.  

Over the last four years (2010-2013), fines applied by OEFA exceeded $70m, most of them given out to the mining companies.

By contrast, the predecessor to the OEFA, the ministry of energy and mining was highly ineffective in sanctioning environmental violations; for example, it  did not finish more than 80 percent of contamination claims.

Public reactions

As soon as the proposed law went public, about 30 Peruvian organisations and more than 100 international institutions, including the Peruvian Ombudsman, published letters criticising the regulation. The presentation of the letter by Peruvian organisations was followed by street protests in late June and early July led by human rights organisations. Public forumsand TV debates were also organised.  

The government's decision attracted the criticism of the international community, as Peru is scheduled to host more than 10,000 delegates for the 20th UN Convention of Climate Change Conference of the Partiesin December. The event is supposed to prepare binding environmental agreements to control global warming emissions in order to mitigate the worsening effects of global climate change. 

Organisations from Peru and abroad questioned the "moral standards" of the host government for sending a contradictory signal to industries involved in climate change, by lessening environmental safeguards to promote investments, in spite of the fact that protective environmental policies are known to improve the quality of investments. 

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The government's move also could potentially instigate another cycle of violence. Peru's own experience - as well as international evidence - shows that a weakened environmental institutional framework exacerbates violent resource-related conflict. Peru already has a history of grassroot resistance to extractive projects that threaten the environment. 

In 2009, during Alan Garcia's regime, 33 people died (23 policemen and 10 citizens) and 205 more were wounded  in the Peruvian Amazon town of Bagua during a violent confrontation between the police and indigenous protesters. The local communities were protesting a decree enacted to implement the US-Peru free trade agreement (TPA), allowing extractive industries - including forest, oil, and mining - to enter their territory without the appropriate consultation and consent of indigenous communities, based on the 169 ILO international convention

As a result, 53 members of these indigenous communities are on trial for the protests. There are no proceedings against policemen involved in the violence.

The situation in Peru has become even more complicated since in January when the government passed a law exempting the police from criminal responsibility for death or harm they would cause while on duty.

Lessons learned

Two decades ago, the alarms of the "Natural Resource Curse" went off. Economists Jeffrey Sachs and Andrew Warnerrevealed that many "countries with great natural resource wealth tend nevertheless to grow more slowly than resource-poor countries." Social scientist Terry L. Karl also documented "the paradox of plenty", in which superficial growth based on oil extraction actually weakens state institutions. 

It is clear that the GDP of a country does not take into account crucial dimensions of resource extraction, such as clean-up services or environmental degradation. A lake drained is not part of a mining company's costs, nor is it discounted from the GDP. This condition becomes even more delicate in countries like mega-biodiverse Peru, whose Amazonian territories contribute to carbon capture in the global climate change crisis. 

Yale University's Environmental Performance Index ranks Peru as 110 out of 175 countries. Although Peru's environmental institutions are relatively new and still fairly weak, they have improved over recent years to the point where they have worried the mining companies enough that pressure has been put on the government to rein them in.

The open letter penned by Peruvian organisations ends by calling for a "new vision" of governance. It advocates a "widespread and transparent debate about natural resource management," including affected communities and the environmental supervision of investments. To tackle the issue of environmental regulation, governments have the responsibility to adopt democratic, transparent and scientifically informed approaches, not only to prevent environmental disasters and promote safe businesses, but also to preclude potential conflict that could end in violent episodes.

Vladimir Gil Ramon is a researcher at the Earth Institute Center for Environmental Conservation (EICES) at Columbia University, and a faculty member of the Environmental Development Master's Program and the Social Science Department at the Catholic University of Peru (PUCP).

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The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

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