9 July 2010
This month's edition of the BICECA Monthly Bulletin features a summary of the event entitled "Oil and Mining Booms and Sustainable Development: Lessons from Peru for Development Planning & Revenue Management at the National and subnational level" (Washington, DC, June 16, 2010).
For many countries that depend on the extraction of natural resources as a basis for their development, too often, the social and environmental risks are more real than the positive benefits. The purpose of the public event organized by Oxfam America, World Resources Institute and Bank Information Center was to awaken interest, provide information and stimulate discussion on the current model of Peru, which is led by extractive industries and infrastructure projects related to this industry. This event also addressed the issue of how the IFIs and donor governments can support the Peruvian State and sub-national governments to strengthen the ability to reduce negative impacts and increase benefits to those most affected. Supporting the right to know the costs and benefits of the extractive model in Peru, the event entitled Oil and Mining Booms and Sustainable Development: Lessons from Peru for Development Planning & Revenue Management at the National and subnational Level was held at Johns Hopkins University, on Wednesday, June 16, 2010.
Click here to download a podcast of the June 16th event.
Click here to downoad a copy of the report, "People, Power and Pipelines: Lessons from Peru in the governance of gas production revenues." by Isabel Munilla.
See also Oxfam America press release, 'Can Peru overcome the ‘resource curse’? (June 16, 2010)
Click here to download a copy of the report,"Peruvian Amazon in 2021: Infrastructure and the Exploitation of Natural Resources: What is happening and what does it mean for the future?” by Marc Dourojeanni; Alberto Barandiarán y Diego Dourojeanni (2009)
Overview
As Peru develops its wealth of natural resources, it faces the challenge of managing and mitigating associated risks of extractive industry development while ensuring that the economic benefits of these activities are channeled to poverty alleviation. These development challenges are particularly acute within the Peruvian Amazon, where the lure of natural resource extraction has triggered an associated boom in large infrastructure projects. Both the central and subnational governments have roles to play in ensuring the properly planned and fairly distributed generation of benefits from extractive industry and related projects, preventing negative social and environmental consequences of these projects, effectively managing revenues generated, and ensuring transparency and civil society engagement in both land use planning and revenue monitoring. Public international financial institutions (IFIs) like the World Bank and Inter-American Development Bank have multi-year strategies that emphasize lending, grants and technical assistance to the Peruvian government to support public private sector investments in extractive industries, governance, decentralization, public expenditure reforms, infrastructure and environmental management in Peru.
Despite these investments, Peru continues to face challenges in reconciling the prevailing natural resource development model with persistent poverty, inequality and social conflict. With the approaching Presidential elections in Peru, the IFIs have an opportunity to use their influence as lenders and investors to support government agencies in implementing effective planning reforms and transparent revenue distribution schemes that benefit local communities in project affected areas and ensure environmental sustainability.
The event comprised two panels, the first of which looked closely at the challenges faced by Peru’s national government. Participants examined the panorama of large scale investments in transport, energy, extractives, and agriculture underway in the Peruvian Amazon that call for a new policy framework, land use planning measures and stakeholder engagement by the central government to guarantee effective, sustainable and equitably shared results for Peru. Marc Dourojeanni – Peruvian forestry expert and lead author of the recent report “Infrastructure and the Exploitation of Natural Resources: What is happening and what does it mean for the future?” – presented his views on this issue. Juan Carlos Belausteguigoitia, lead economist for the World Bank Group in Latin America reflect on the effectiveness of Bank support to Peru in transforming windfall commodity revenue into opportunities for sustainable development in the future. Robert Goodland, former advisor to the World Bank and expert on Amazon sustainability challenges outlined principles for a new, more targeted approach by the IFIs in Peru on the basis of the risks posed by unplanned investments .
The second panel highlighted the challenges faced by local governments as they attempt to increase their revenue management capacity in order to accommodate massive inflows of extractive industry revenues – focusing on the case of the Camisea gas mega-project in the Peruvian Amazon. Isabel Munilla and Epifanio Baca presented findings and recommendations from the report People, Power and Pipelines and Power: Lessons from Peru in the Governance of Gas Production Revenues. The report suggested ways in which IFIs can improve the role they play in the extractives sector by giving greater support to subnational governments in managing extractive industry risks and revenues, drawing lessons from recent experiences in Peru. Ximena Herbas, of the Social and Environmental Safeguard Unit within the Inter-American Development Bank – one of the financiers of the Camisea project – commented on these recommendations, drawing on the IDB's experience in the Camisea and Peru LNG cases to consider the applicability of the report’s recommendations within the wider regional context.
In an audience of more than 100 people, including representatives of the World Bank, IFC, IDB and USAID, the event highlighted the challenges of Peruvian development model led by a boom in the extractive industries. The two studies highlighted four major concerns: 1) development processes that lack the necessary development knowledge and information and so often proceed without adequate involvement of affected population, 2) a poor state planning at national and sub-national 3) the lack of and poor sequencing of institutional capacity strengthening, 4) IFI ambivalence a situation of growing competition for development finance that reflects a tendency toward downward harmonization of minimum social and environmental standards and necessary safeguards in the financing of new projects.
The World Bank (WB) and Inter American Development Bank (IDB), both channel between $ 800 - $ 1,000 million in annual financing for development in Peru and serve as a source of technical advice and political support for the formulation of policies and plans already underway or envisaged for the future. In this period before the change of government in April 2011, the multilateral banks are preparing a diagnosis of the health of the Peruvian economy that will inform the design of a five year strategy with the next government. A cornerstone of this analysis is the World Bank Country Environmental Analysis, which will be updated in 2010. This IFI planning process is an important opportunity to influence the agenda, investment priorities, and the tone for political reforms at the national and subnational level. From Peru's participation in new programs to access carbon finance through World Bank sponsored Forest Carbon Partnership Facility (FCPF) or Forest Investment Program and manage the risks of climate change and its membership in the new Extractive Industries Transparency Initiative (EITI by its acronym in English), the WB Environmental Development Policy Loans or the IDB Sustainable Energy Policy Loans (NUMES) and Climate Change Support PBLs to advance priority sector reforms, or by managing cross-border infrastructure governance in the Andean-Amazonian region, the IFIs are consistent in their accompaniment of Peru through its range of investments and incentives.
With these two studies, civil society organizations have underscored gaps and opportunities in past IFI investment in Peru that should be the focus of any future strategy. The
The complete newsletter with pictures and footnotes in PDF format (Spanish):
We would also like to bring attention to other projects that BICECA has been supporting and conducting and take this opportunity to encourage you to visit our website and browse our newest articles and publications:
Visite our homepage in english for updates and also refer to the specific pages and projects below.
BIC Foreign Carbon Partnership Facility Campaign page
World Bank Forest Carbon Partnership Facility (FCPF)
World Bank Forest Investment Program (FIP)
BICECA Sustainable Transport Page (forthcoming)
BIC World Bank Energy Strategy Campaign page
World Bank Extractive Industries Transparency Iniative (EITI)
Publish What You Pay Coalition
Oxfam America 'Right to Know, Right to Decide' Campaign
BICECA is "Building Informed Civic Engagement for the Conservation in the Andes-Amazon" - A project of the Bank Information Center (BIC) with support from the Gordon and Betty Moore Foundation.
Through this newsletter, the project BICECA Bank Information Center, seeks to bring relevant news and the latest information about particular aspects of projects and policies related to the project of the Initiative for the Integration of Regional Infrastructure in South America (IIRSA). This publication is intended for diverse civil society organizations, indigenous groups, students, academics and other persons or entities that follow the policies and projects of international financial institutions in relation to IIRSA.
This newsletter is published by civil society to civil society and its contributors are from various sources and nations. The authors are mostly researchers studying and working on issues of integration IIRSA Initiative.
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