PERU Experience with Economic Instruments in Mining Sector Ing. MA. María Andrea Vásquez Castillo

Contents Environmental Effects of Mining – Peru Policy Instruments of EM in Mining Taxonomy of Policy Instruments Peruvian Mining Legislation Peruvian Instruments of EM in Mining Experiences with EI in other Economies Conclusions References

Environmental Effects of Mining – Peru

Policy Instruments of EM in Mining

Taxonomy of Policy Instruments

Peruvian Mining Legislation

Peruvian Instruments of EM in Mining

Experiences with EI in other Economies

Conclusions

References

Environmental Effects of Mining Peru Positive Technological effects Significant change and investment in modern technology ( e.g. tailings and air pollution). Regulatory effects Voluntary application of environmental standards. Environmental improvement along with privatization processes. Figure: Antamina

Positive

Technological effects

Significant change and investment in modern technology ( e.g. tailings and air pollution).

Regulatory effects

Voluntary application of environmental standards.

Environmental improvement along with privatization processes.

Negative Scale effects Questions of local sustainability and local development unresolved Territorial effects and water rights Lack of monitoring and control Environmental Effects of Mining Peru Figure: Yanacocha

Negative

Scale effects

Questions of local sustainability and local development unresolved

Territorial effects and water rights

Lack of monitoring and control

Map of Principal Mineral Production Units in Peru Source: MINEM

Policy Instruments of EM in Mining Command and Control Policies Technology Transfer, Information, and Education Policies Economic and Financial Policies Financial Assurances (Hybrid of Economic Instrument)

Command and Control Policies

Technology Transfer, Information, and Education Policies

Economic and Financial Policies

Financial Assurances (Hybrid of Economic Instrument)

Taxonomy of PI for EM Source: Economic Comission for Latin America and the Caribbean - ECLAC

Peruvian Mining Legislation Mine Law 1981 UT General Mining Law 1992 Investment Promotion Law Mining Sector 1991 Framework Law Growth of Private Investment - Environment 1991 OSINERG Law 1996 OSINERGMIN Law 2007 UT General Mining Law Environment 1993 Envirn. Regulation Mining Activities 1998 MCL Air Emissions 1996 MCL Liquid Effluent 1996 UT General Mining Law Fines Scale Modified 2000 Mine Closure Law 2003 (Regulation 2005) Abandoned Polluted Areas Law 2004 (Regulation 2005)

Peruvian Intruments of EM in Mining Mine Law 1981 UT General Mining Law 1992 Investment Promotion Law Mining Sector 1991 Framework Law Growth of Private Investment - Environment 1991 OSINERG Law 1996 OSINERGMIN Law 2007 UT General Mining Law Environment 1993 Envirn. Regulation Mining Activities 1998 MCL Air Emissions 1996 MCL Liquid Effluent 1996 UT General Mining Law Fines Scale Modified 2000 Mine Closure Law 2003 (Regulation 2005) Abandoned Polluted Areas Law 2004 (Regulation 2005)

Map of Non-Operative Mining Units

Peruvian Instruments of EM in Mining UT General Mining Law - Fine Scale Non-compliance charges of regulations and standards limits Mine Closure Law Bonds performance Fiscal incentives Abandoned Polluted Areas Law Subsidies and Financing of Env. projects

UT General Mining Law - Fine Scale

Non-compliance charges of regulations and standards limits

Mine Closure Law

Bonds performance

Fiscal incentives

Abandoned Polluted Areas Law

Subsidies and Financing of Env. projects

Map of Abandoned Polluted Areas

Experience with EI in other Economies

Experience with Latin American countries

Experience with OECD countries OECD: ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Experience with EECCA countries EECCA: EASTERN EUROPE, CAUCASUS AND CENTRAL ASIA

Experience with ASIA countries

Conclusions & Recommendations Peru has very little experience with the use of economic instruments as a tool for environmental management. The audit is only through systems of command and control. The instruments are used to promote positive externalities and not to reduce the negatives. The government may charge fees for emissions or effluents based on volume and pollutant loads. This would place the companies "cleaner" in a competitive advantage with respect to companies that pollute more. The government of Peru can put pressure on the industry to prove that they are complying with environmental limits through independent monitoring and auditing the plants.

Peru has very little experience with the use of economic instruments as a tool for environmental management.

The audit is only through systems of command and control.

The instruments are used to promote positive externalities and not to reduce the negatives.

The government may charge fees for emissions or effluents based on volume and pollutant loads. This would place the companies "cleaner" in a competitive advantage with respect to companies that pollute more.

The government of Peru can put pressure on the industry to prove that they are complying with environmental limits through independent monitoring and auditing the plants.

Thank you for your attention

References Environmental Effects of FDI in the Mining Sector http://www.oecd.org/LongAbstract/0,3425,en_2649_34313_1833847_1_1_1_1,00.html ; 21.01.08 Energy and Mining Ministry of Peru DS-059-2005 Statements for Abandoned Polluted Areas DS 033-2005-EM Statements for Mining Closures DS 016-93-EM Unifying Text of General Mining Law Environmental Policy in Mining, Warhurst, A. , Noronha, L. (2000) CEPAL – Aplicación de instrumentos económicos en la gestión ambiental en America Latina y el Caribe: desafios y factores condicionantes. http://www.eclac.cl/dmaah/noticias/proyectos/1/7451/LCL1488.pdf ; 20.01.08 www.economicinstruments.com Economic Instruments for Pollution Control and Natural Resources Management in OECD Countries http://www.oecd.org/LongAbstract/0,3425,en_2649_34295_2405107_1_1_1_37427,00.html ; 20.01.08 The use of Economic Instruments in EECCA Countries http://www.oecd.org/dataoecd/37/18/26732337.pdf ; 20.01.08 Applying Economic Instruments in Developing Counries http ://www.crdi.ca/uploads/user-S/10536145810ACF2AE.pdf ; 20.01.08 Cepal EI Peru http://www.eclac.cl/dmaah/noticias/proyectos/1/7451/peru.pdf

Environmental Effects of FDI in the Mining Sector http://www.oecd.org/LongAbstract/0,3425,en_2649_34313_1833847_1_1_1_1,00.html ; 21.01.08

Energy and Mining Ministry of Peru

DS-059-2005 Statements for Abandoned Polluted Areas

DS 033-2005-EM Statements for Mining Closures

DS 016-93-EM Unifying Text of General Mining Law

Environmental Policy in Mining, Warhurst, A. , Noronha, L. (2000)

CEPAL – Aplicación de instrumentos económicos en la gestión ambiental en America Latina y el Caribe: desafios y factores condicionantes. http://www.eclac.cl/dmaah/noticias/proyectos/1/7451/LCL1488.pdf ; 20.01.08

www.economicinstruments.com

Economic Instruments for Pollution Control and Natural Resources Management in OECD Countries http://www.oecd.org/LongAbstract/0,3425,en_2649_34295_2405107_1_1_1_37427,00.html ; 20.01.08

The use of Economic Instruments in EECCA Countries http://www.oecd.org/dataoecd/37/18/26732337.pdf ; 20.01.08

Applying Economic Instruments in Developing Counries http ://www.crdi.ca/uploads/user-S/10536145810ACF2AE.pdf ; 20.01.08

Cepal EI Peru http://www.eclac.cl/dmaah/noticias/proyectos/1/7451/peru.pdf