Despite “Greener Economy,” Extractive Industries’ Effects on Global Development, Stability Bigger Than Ever
Despite the appearance of a new, “greener” economy, extractive industries – mining, oil, and natural gas – are now responsible for “moving more earth each year, just for mining and quarrying, than the global hydrological cycle,” writes the Transatlantic Academy’s Stacy VanDeveer in a recent paper, Still Digging: Extractive Industries, Resource Curses, and Transnational Governance in the Anthropocene. The costs of this activity are high and extend well beyond the wallet, he explains.
It is impossible to comprehend modern societies without understanding the influence of extractive industries and the commodities they produce, VanDeveer writes. Organized into seven sections, Still Digging first gives an overview of the environmental, humanitarian, and security challenges caused by extractive industries before taking a closer look at the connection between oil and gas and human rights violations and the high ecological and human costs of mining. The final two sections go into a discussion about the “resource curse,” possible solutions to it, and existing state and non-state efforts to improve governance.
Meet the New Resource Economy…
“Those little graphics of the hydrological cycle in children’s basic science textbooks, that most of us saw in school, explaining how the natural systems move water and earth around the planet to form and reshape the environments in which we live, are now outdated,” writes VanDeveer. Humanity now plays a much bigger role in the Earth’s systems, prompting some scientists to dub the current era the Anthropocene, or “age of man.”
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On the surface, we’ve entered a period of high-tech innovations that appear more sustainable. Yet, VanDeveer points out that “our ‘old’ consumer driven, manufacturing economy and our ‘new’ high technology, ‘green economy’ both demand ever-more.” Resources that are used more extensively now, like coltan, lithium, and rare earth minerals, are still mined and processed using highly destructive and energy-intensive methods.
What’s more, these resources are vulnerable to the same kinds of boom-and-bust cycles that have characterized high-value commodities in the past, like oil and coal, and have contributed to social and political instability. This instability, coupled with the humanitarian, environmental, and governance challenges posed by the creep of mining into previous undeveloped areas, contributes to the association between violent conflict and high-value commodity markets. VanDeveer highlights a long list of sample extractive industry-related conflicts and tensions since 2010, including competition over the estimated $1 trillion worth of unexplored mineral deposits in Afghanistan; labor unrest in South Africa’s mining sector that resulted in more than 40 deaths; and the Deepwater Horizon oil spill in the Gulf of Mexico which resulted in criminal charges for British Petroleum.
Everyday Disasters and Ungovernable Spaces
VanDeveer also explores specifically how oil and gas intersect with politics, arguing that “oil politics among states is often quite national security-oriented – or realist-based – in nature”:
This does not mean war over oil is common. It means that war between states, and within them, is a serious risk, in part because states associate oil access with national security. States have indeed used raw and overwhelming force to secure access to oil and other valuable commodities. But quite often they choose to cooperate and trade instead.
VanDeveer points out that while the environmental costs of oil and gas are immediately apparent in large-scale disasters (e.g., Deepwater Horizon, Exxon Valdez, etc.), “the everyday environmental ‘externalities’ of oil and gas – the slow violence they mete out on millions of people and environments year after year – are far worse.” For example, he points out that “the normal, everyday conduct of the oil industry and the region’s inhabitants” results in more oil spillage in the Niger River Delta every year than the entire Exxon Valdez accident.
The ecological and human costs of mining are also high, writes VanDeveer. Global price competition, economies of scale dynamics, and high regulatory standards in OECD countries have “driven a growing share of global mining operations to the developing world,” where state and civil society institutions often lack the capacity to adequately regulate industry practices. This can lead to irrevocable destruction of land and ecosystems on which nearby communities depend, corruption, and a host of adverse health effects.
The mining industry is also enormous – “larger than the GDP of over 150 countries, and these sums do not include the (certainly much larger) economic value of the thousands of products requiring mined materials in their production,” writes VanDeveer. Governing these large mining firms is tricky as “many mining concessions are owned by a complex and dynamic set of international and domestic companies and individuals with operations tasked to a contractor or some subset of the owners. Clear lines of authority over operations, management, mine security, and other on-the-ground practices are frequently difficult to discern.”
The maelstrom of conflict and insecurity that has developed around coltan and other minerals in the eastern Democratic Republic of Congo “illustrates the dangers of boom-and-bust commodity price cycles,” he writes, “as well as accompanying unregulated, ungoverned mining interests and the scramble by well-armed state and non-state actors over resources.”
Addressing the Resource Curse
VanDeveer follows this broad look at the current state of the extractive industries with a closer look at both sides of the debate on the “resource curse.” As he defines it, the curse “refers to the correlation between a country’s high level of dependence on high-value resource exports and the likelihood that the country will exhibit subpar economic performance over time and have undemocratic, corrupt, and/or ineffective governing institutions.”
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He uses petro-states as an example, pointing out that in 2000, “18 of the world’s top 20 oil-exporting nations were run by non-democratic regimes.” This lines up somewhat with research by Wilson Center Fellow Jeff Colgan, who found that states where oil exports account for more than 10 percent of GDP are more than twice as likely to engage in inter-state conflict than non-petrostates, and those with relatively recent, post-revolutionary governments have an even higher propensity for aggression.
However, some disagree with the resource curse framing, arguing instead that ownership structures of extractive industries (whether state-owned industry, private, etc.) and policy failures are more relevant to whether or not a country experiences political or economic instability than the presence of valuable resources themselves.
What does all of this mean for a “greening” economy? VanDeveer suggests that these dynamics are not likely to go away and that the resource curse may continue to play out with a new set of commodities.
Perhaps the value of the resource curse debate is that it pushes us to look not just at the role of valuable resources in a “cursed” country, but more importantly, its governing institutions. As VanDeveer points out, state and civil society capacity are critical to producing “human and economic development and good governance.” The presence of valuable natural resources merely exacerbates and highlights weaknesses.
Surviving and Thriving in the Anthropocene
“We humans are not likely to stop extracting resources from the earth anytime soon,” VanDeveer writes. “However, it is possible to substantially reduce the environmental externalities and humanitarian side effects of extractive industries.”
To do so requires understanding that many of the same governance challenges that applied to “old” strategic minerals and energy sources will continue to apply to the new. VanDeveer emphasizes how initiatives like the Natural Resources Charter, Kimberley Process, Extractive Industries Transparency Initiative, and the U.S. Dodd-Frank Act have been somewhat successful at promoting more effective governance and offer many lessons for future efforts.
Ultimately, however, in the Anthropocene, it will not be enough even to improve the industry’s record on worker safety, environmental clean-up, and poverty alleviation, he writes. In order to “produce additional wealth and human progress without continuously accelerating material consumption,” the extractive industries must be pushed to “internalize all of the environmental and human costs of their operations.”
Sources: Transatlantic Academy.
Photo Credit: “Bingham Canyon Mine,” courtesy of flickr user arbyreed.