The effects created by a project before

The
Case of Lithium and its Environmental and Social Impact

 

Part A

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Introduction

Chile possesses Silicon Valley fortune,
Lithium (Washington post, 2016), that has been growing in demand for the last
few years and is estimated to continue to grow from about 230,000 tons of
lithium carbonate in 2017 to 400,000 tons in 2025 (Statista, 2017). This
increase in demand has been primarily brought about by technological
advancements.

There are three fundamental challenges
arising from lithium mining:

1)     
To obtain 1 ton of lithium requires at
least 500,000 gallons of water (Washington post, 2016), by 2025, there may not
be water left, given the current state and rate at which lithium is being
extracted.

2)     
At the moment the mining industry in
Chile only employs 3% of the local workforce (Chile mining report, 2016).

3)     
Illegal mining accounts for 80% of mines
(Chile mining report, 2016).

 The diagram below illustrates a timeline
of the three solutions that should be implemented by both the company and the
Government to tackle the issues above:Environmental
Impact Assessment (EIA) as a tool

This
tool has been selected to achieve only solution
1, as this solution is the most practical and immediate one. The other
solutions cannot be achieved instantly and can only be accomplished in the
future; hence EIA is used to determine the first step in executing solution 1.
An EIA will provide the necessary tools required to identify and measure
effects of lithium mining as well as determining what to make improvements on
with regard to the new system, so as to not only reduce the adverse effects,
but shape the mining/extraction industry to one that suits the situation in
Chile.EIA is a means of determining the environmental,
social and economic effects created by a project before making a decision about
proceeding with it (UNEP, 2004). The implementation process has 6 stages:In
the following text, the important
stages will be critically evaluated in terms of its effectiveness in achieving
solution 1. These stages are; 1, 2, 3 and 6. Stage 4 has been excluded because
it is merged with stages 2, 3 and 6 and Stage 5 is excluded because it is not
an active stage and is simply a decision made by the public whether to proceed/not
proceed with the new system. We assume for this analysis that the public has
decided to proceed with the new system to deduce the effectiveness of Stage 6.Stage 1This stage requires the company to make an
assessment of what the current effects of lithium mining are in Chile.  The stage helps to identify the problems so
that the new system can solve them.  This
can be done using a Life cycle assessment (LCA), to determine the amount of
resources used, and the associated environmental impact of lithium extraction. Consider
the life-cycle of lithium extraction: From
the above life-cycle, we can identify the key problematic areas- indicated by 3
red circles. The company can now ensure that the new system has methods of
reducing the environmental impact in these areas.  A report by Deloitte (2012) highlights some of
the benefits of conducting a LCA. These include; cost savings that arise due to
the increase in operational efficiency in companies. By quantifying the amount
of water and waste generated, companies can identify areas of greatest impact
and thereby reduce the risk of fines from the Government as well as future
regulatory costs. Moreover, as Chile becomes a hot spot for companies to invest
in, they can jointly make efforts to reduce the impact on the environment by
investing in innovation into new systems that boost sustainability as well as cost
efficiencies. LCA
can also be used as a platform to increase compliance with Government
regulations and therefore increase the likelihood of contract extensions. Furthermore,
LCA is generally good at spotting some of the overall inefficiencies in a
process. For example, in the life-cycle above, Boron is disposed of in
landfills. Instead, it can be recycled, which will reduce the costs of
disposing as well as avoid waste dumping penalties. This ‘cradle to grave’
approach can establish environmental parameters with regard to energy use,
material use, emissions, eco-toxicity and compliance with environmental laws,
which will create an overall positive effect on the environment. However,
Michalski (2015) says that the LCA might fail to quantify the impacts to the
society and the economy. The LCA above may take into account water pollution,
but what about the effects on the local agricultural industry, or the quality of
life for employees; these are ignored by the LCA.  He goes on to say that the dynamics of the environment
are also often disregarded by the LCA, assuming that the environment is at a ‘steady-state’.
For example, what if an increase in climate change further reduces the water
available in Chile, the LCA won’t consider this because it looks at the process
as a never-changing and steady one, but this is not the case, especially where
the activity involves using raw materials from the natural environment.  Moreover, the proposed new system may solve
some of the environmental issues, but at what cost? It is unsure whether there
are negative effects that can be brought about by new technology. There is no
information with regard to the sensitivity of the receiving environment.  The new system may definitely increase the
efficiency of the lithium extraction process thereby giving the company a
competitive advantage, but may also result in further environmental
degradation. If the motivation for the company is to win
future contracts, which is the case here, Wright et al (2013) say that
financial-based concerns may create bias and the company may not devote the
necessary resources to determine the exact impact due to dismissive attitudes.  One such instance was an EIA conducted on
mining activities in Greenland. The report featured a reference to deer when in
reality there were no deer present in that area (Wright et al, 2013). This
provides evidence that even though a company might agree to conduct an LCA,
there is no actual motivation for them to devote the right resources and
oversee an accurate assessment. Stage 2This
stage includes the Chilean locals’ opinions and values while creating the new
system. Huxham (1996) in his book points out that collaboration involves
creating mutual benefits for all parties involved and that it is probably the
only way to solve problems within a society. Collaboration can be seen as a
moral stance by a company to tackle
issues such as environmental degradation, by allowing those directly harmed by
the activity to be involved centrally in decisions made to address harms.
Marzuki (2009) highlights the importance of public participation: Citizens have
a say in decisions that have an impact on their lives because they are more
knowledgeable about what is best for their
society. By getting involved, they have the opportunity to influence the
decision of a firm, as well as come up with new and innovative ideas that can
lead to sustainable development. The
idea of collaborative advantage coincides with that of a comparative advantage
because of its ability to create a ‘mutual understanding’, thereby achieving a
common purpose. These sorts of collaborative initiatives can lead to the
company being able to secure resources in the form of raw materials and land in
exchange for involving local views to protect the environment, thus being
mutually beneficial to all. The importance of public participation is further
stressed by Faircheallaigh (2010) who concludes that involving the public
provides access to information on the impacted population that enhances
environmental strategies.However,
eventually, the goal of the company is to make profit and whilst they may
engage in collaborative approaches, and should ideally address issues, many of
the companies do not implement new procedures. Companies almost always fail to
operationalise change especially if their initial goals have been accomplished
(Porter and Kramer, 2011). Furthermore, individuals in the community have
different perspectives, some are egoistic and others have personal agendas. It
is difficult to come up with one solution that everyone is happy with. If
increased collaboration by the company means that the locals are going to fight
and engage in civil wars, this disrupts the company’s operations and so they may
opt not to carry on with collaborative methods. Any benefits arising from an
EIA will be completely cancelled out if the community is not united.Stage 3This
stage involves conducting an assessment of the efficiency of the new system in
reducing negative environmental effects. Ortolano and Shepherd (2012) say that
conducting impact assessments on proposed projects can help to identify areas
that should be dropped if they are causing environmental damage as well as
providing opportunities for redesigning projects so as to reduce negative
effects. It also allows companies to focus on areas that could pose problems
and ‘repair’ these areas. For example, in the current life cycle of lithium
extraction, water is used in the purification process, turning it into
industrial waste which is dumped without treatment. Stage 1 highlights the impacts:
water pollution and waste. Since this has been identified as a potential
impact, Stage 3 focuses on reducing/removing this impact by conducting an
assessment on how efficiently the new system treats and recycles water. Additionally,
the effectiveness of an impact assessment is pressed upon through the existence
of procedural, professional and instrumental controls (Hirji and Ortolano,
1991). A Procedural control is the rules and regulations that are put in place
by the Chilean Government to ensure that impact assessments are conducted
appropriately. Professional controls occur where the firm itself believe in
having a responsibility in reducing the environmental harms their operations
create. Instrumental controls include rewards and punishments to obtain the
desired output, such as penalties (Hirji and Ortolano, 1991). These controls
ensure that impact assessments are effective.  However,
Lawrence (2003) highlights that the voluntary nature of impact assessments
allows for poor integration into the decision-making process. Moreover, whilst
in the beginning the company may have a full plan of action in place, they fail
to conduct post-project management, thereby reducing the benefits of conducting
the impact assessment in the first place. In order to battle this, impact
assessment must be included at a policy level and not just at the project level
(Ortolano and Shepherd, 2012).  Furthermore,
it does not ensure that projects with significant adverse effects will be
stopped. If an impact assessment is conducted on a control set up of the new
system and results indicate that the new system may be causing more harm to the
environment, the company may not stop its project because it has already
invested a lot of money. In
Hirji and Ortolano’s experiment (1991, see above) on the effectiveness of
controls in impact assessments in Kenya, procedural, professional and
instrumental controls were absent in some of the impact assessments suggesting
that the EIA can be ineffective in reducing environmental impacts of an
operation if controls fail.Stage 6The
last stage of EIA is allowing the Chileans to support and provide feedback once
the new system has been implemented. This stage is very important because it
can eliminate hurdles such as post-project management. This stage once again
emphasises on the importance of public participation, but after implementation.
Yee (2010) highlights 4 significant steps for public participation which
include preliminary planning and design, stakeholder engagement plan,
implementation, and feedback. The last two steps are crucial. Participation
during implementation ensures that the process is being monitored and the
desired effects are being observed. This also ensures that unexpected
results/negative results can be contained. The
feedback stage is significant because public report directly to the company
about how they think the new system is working. This can even be done using
surveys and focus groups to collect data on evaluating the overall activity. Alternatively,
it could be done through environmental auditing. The feedback stage can act as
an ‘eye-opener’ for all parties involved in the new project and can ensure that
the goal of having the new system (to bring about environmental and social
benefits) has been/is being met, and more importantly, will continue to be met.  An experiment into the importance of EIA
follows up by Wessels et al (2015) indicated that follow-ups created value in the
identification and prioritisation of environmental issues. However,
the Company can state that it followed all the rules and made a new system with
good intentions and that negative results are not ‘in their hands’. How much
the company will care once it has implemented a project is debatable, worsened
by the fact that public and regulators don’t want to participate either. Morrison-Saunders
et al (2012) said that follow-ups were only conducted in 60 out of 800 EIA
projects in Netherlands. Similar results have also been identified in Nigeria,
where only about 30% of EIA projects were monitored after approval (Morrison-Saunders
et al, 2012). According to them, it is possible that staffing capacity,
budgets, knowledge, and resources to communicate, can all act as hindrances to
the follow up procedures. If
the public is not knowledgeable about the new systems, their input will not be
valid and if the public is knowledgeable, but do not want to participate in
follow-ups, there is no point in creating a new system because the role of the
public should act as an incentive for companies to step up their games.
Companies will care only as much as the people themselves care. Even though
monitoring is considered to be an integral part of EIA, its ineffective implementation
resulted in a ‘ticking the boxes’ scenario in Australia, despite the fact that
there are legislative procedures in place (Ahammed, 2007).Conclusion In
light of the above analysis on the efficiency of an EIA, it is important to note
that the EIA is a systematic and effective tool that can be used as the first
step for the company to implement solution 1. This can be done through coherent
stages involving LCA, public participation, impact assessment and follow-ups.

Nevertheless,
it is also paramount that the company takes in to account some of the
weaknesses of the system and work towards mitigating/removing these: ensure
that the LCA covers all ranges of impacts from environmental to social and
economic so that it can be beneficial to all, and understand the uncertainty
involved in the model, consider having quality controls in place to ensure
effectiveness of impact assessments, the public has a say and their feedback
should go in to the betterment of processes. In conclusion, if the weaknesses
mentioned here, and above are considered during the EIA, it will be a very
useful tool in identifying and controlling the negative effects of lithium
extraction on the environment.