Danilo C. Israel Adelwisa Sandalo and Aida Torres
“The Environmental Impact of Macroeconomic Policies on the Mining and Quarrying Sector in Palawan Province”, Impact of Macroeconomic Adjustment Policies on the Environment (IMAPE) Project funded by the International Development Research Center (IDRC) of Canada pp.1-34,
In retrospect, the following conclusions were generated by the study about the environmental impact of macroeconomic policies in the mining and quarrying sector of Palawan. First, there was a divergence of opinion between mining and quarrying firms on one side and the households on the other side on the environmental effects of mining and quarrying activities. The firms argued that the problems were less serious than thought to be and that they have been doing significant efforts to address them. In contrast, the households asserted that the problems were daunting and that more have to be done by the firms to address them.
The ocular inspection done by the study team showed that the environmental problems caused by mining and quarrying remain significant. In mining, there was some technical evidence that shows that the pollution levels caused by the firm involved met government standards. For quarrying, no technical studies on the environmental problems were conducted and evidence was therefore wanting.
The direct impact of specific macroeconomic policies on the mining and quarrying sector were mixed. Financial liberalization may have a minimal direct economic impact as most of the firms and households did not use the banking system to source their investment and operational financial needs. Foreign exchange liberalization had a positive economic impact on the mining firm as devaluation improved its foreign exchange earnings. However, it also negatively affected mining and quarrying firms by raising their cost of production and the households by increasing their cost of living. On one hand, the trade impact of foreign exchange liberalization on quarrying was insignificant since all the firms cater only to the domestic market. On the other hand, trade liberalization positively impacted the mining firm by lowering the cost of some of its production inputs. Investment promotion benefited the mining firm through the availed tax-based incentives and could have helped motivate the firm investors to think of getting into nickel processing. However, it may have no significant impact on quarrying firms and households, in general, as they did not receive any form of financial investment from the government. The tight fiscal policy may have a negative direct impact in quarrying as illegal firms proliferated in the face of weak monitoring and enforcement. Overall, the macroeconomic policies may have brought little respite to the mining and quarrying firms as most reported declining or stagnant operations and to the households whose economic plight has worsened much in recent years.
The environmental impacts of macroeconomic policies on the mining and quarrying sector in Palawan also appear mixed. Since liberalization did not influence the investment and production of firms, it also did not influence the rate of mineral extraction and investment into environment related activities. Foreign exchange liberalization may have a direct positive effect on the environment by causing some contraction in the activities of quarrying firms and a negative effect by forcing quarrying households to depend more on wood for their fuel needs. It may also have made both quarrying firms and households less willing to spend more for environmental protection and management. Trade liberalization may have little significant impact on the environment since the willingness to spend for environmental improvement among the firms and households are unaffected by it. For their part, investment promotion may have an important environmental role to play if it helps lead to an environmentally safe nickel processing facility in the future. Because of poor monitoring and enforcement, tight fiscal policy may have negatively affected the environment by promoting the proliferation of illegal quarrying activities and violation of environmental rules and regulations by quarrying households.
It is pointed out that the abovementioned conclusions should not be taken as evidence of the ineffectiveness of macroeconomic policies in promoting economic growth in the mining and quarrying sector. The mining and quarrying sector in Palawan may not be representative of other areas where firms and households are more affected by the economic changes that policies bring about. The country has also experienced various economic and political crises in recent years and these caused economic downtown in general and among the mining and quarrying firms and households, regardless of the soundness of its macroeconomic policies. Thirdly, because of time and resource limitation, this study only attempts to look into the individual direct effects of policies and disregard the other various indirect effects and overall effects. A more detailed and comprehensive study could have led to conclusions different from what is herein generated.
Based on the above conclusions and interviews with key informants, several recommendations are put forward for the more environmental friendly development of the mining and quarrying industry in Palawan. For the mining and quarrying sector in general, much remains to be done to improve the environmental conditions in the mining and quarrying sites. On the part of the national and local governments, improved efforts on monitoring and enforcement are necessary to make the firms and households do their obligatory part for environmental protection and management. In recent years, the budgets of national agencies doing the work on monitoring and enforcement have decreased. The annual budget of the DENR has been falling since 1997, particularly that for operations (Table 37). Except for 1998, the budget of the MGB Region IV overall and for operations has likewise decreased (Table 38). At the local level, the budgets of environmental agencies in the province have been fluctuating (Table 39). In contrast, as evident in this study, the environmental challenges are mounting and need urgent attention. The increased provision of government funds and their judicious use for environmental monitoring and enforcement is much welcome to attain better protection and management in the mining and quarrying sector of Palawan.
In order to effectively monitor the environmental conditions in the mining and quarry sites, pertinent government agencies have to do the following: a) establish a data base of the reserves in all river beds and mining claims including the condition of the adjacent forest area and watershed; b) produce a control map of concession areas using GIS; and c) periodically update the data on each concession area, e.g., volume allowed and actual extraction, period of operation, water quality of the river, condition of the river bank and watershed, activities in the surrounding area that may affect the river and other parameters. The mining and quarrying firms may do part of these activities in collaboration with the agencies. At present, these activities are hardly being done particularly in the quarrying sub-sector so at the least, the PCSD should start very soon its planned efforts for water quality monitoring in a few o the intensely quarried rivers.
The negative effects of devaluation and economic crisis on the plight of households in the mining and quarrying sector should be given particular attention by the government. Rural upland households are among the poorest of the poor and the unwelcome impacts of policies bear on them much more than in other sectors. The intensifying resource extraction that poverty forces on households reinforces this argument. The national government should plan and implement some effectively safety nets and poverty alleviating projects to mitigate the negative impact of macroeconomic policies on mining and quarrying households and in so doing reduce the pressure on the environment.
The government should also ensure that the environmental problems created by mining and quarrying in Palawan be fully addressed to the satisfaction of the residents in the area. Part of the profits of mining and quarrying firms comes from the institutionalized gross under-payment of the mineral resources they exploit and the health and property damages they impose on the population. The government should find a way to raise the extraction fees in mining and quarrying and ensure that any damages they cause to people and property be paid to the fullest extent. The lack of this type of compensatory mechanism is especially lacking in quarrying.
To improve on the mining situation in particular, the local and national governments should strictly screen mining applicants in Palawan, including the nickel processing project proposed by RTNMC. The screening, however, should be in a fair and judicious manner so that worthwhile mining projects that fit into the SEP can be accommodated. It is to the best interest of the country that the natural environment of Palawan is well protected but not too zealously so that viable economic development projects and activities that can provide employment and incomes to the population without significantly harming the natural environment are not unnecessarily sacrificed.
In quarrying, the environmental problems can be minimized if monitoring and enforcement is made more efficient through the involvement of local communities. At present, some residents adjacent to the quarry areas have been vigilant in monitoring the activities of the operators. For instance, they check the volume of aggregates taken out to ensure that it does not exceed the allowable limit. They also ensure that the extraction methods employed do not cause undue harm to the environment, particularly the riverbed and the surrounding area. This type of participation of local communities in monitoring and enforcement should be promoted institutionalised by the LGUs for effective monitoring and enforcement at the ground level.
Illegal quarrying operations are a major source of environmental problems in Palawan. The problem is difficult to address because it is multi-faceted with different actors on both sides of the fence who can be significant gainers or losers in the event of a change. One thing is certain and that is that illegal quarrying has to be contained if the environment is to be protected. An obvious approach to curtail the practice is to impose higher fines and penalties to violators. Key informants mentioned that currently, those who are caught violating the terms and conditions of their permits are rarely brought to court. Another reason for the proliferation of illegal operations is the difficulty in securing a permit, particularly related to the length of time one has to get it. Key informants mentioned that there is a lot of duplication in the processes used by local and national agencies for processing applications. A thorough study should be done to reduce this duplication. For instance, key informants mentioned that a way of shortening the processing of permit applications is to streamline the requirements of the LGUs, DENR and PCSD. Still another reason for the existence of illegal operations is the high investment needed in securing the permit, both in terms of the legitimate and illegitimate costs involved. The so-called “grease money” in particular has become an integral part of the whole application process that discourages permit applicants. If this cost is reduced, then quarrying proponents may be encouraged to apply for a permit. Reducing the incidence of corruption, which is endemic in society in general, is clearly better said than done. For a start, key informants proposed that the government, together with the business sector and civil society, institute a values formation program not just for the mining and quarrying sector but the entire population. This program should fit well with the moral recovery pronouncements of the newly installed national administration