PERUPERUExperience with Experience with

Economic Economic Instruments in Mining Instruments in Mining

SectorSectorIng. MA. María Andrea Vásquez Castillo

ContentsContents

Environmental Effects of Mining – PeruEnvironmental Effects of Mining – Peru Policy Instruments of EM in MiningPolicy Instruments of EM in Mining Taxonomy of Policy InstrumentsTaxonomy of Policy Instruments Peruvian Mining LegislationPeruvian Mining Legislation Peruvian Instruments of EM in MiningPeruvian Instruments of EM in Mining Experiences with EI in other EconomiesExperiences with EI in other Economies Conclusions Conclusions ReferencesReferences

Environmental Effects of Mining Environmental Effects of Mining PeruPeru

PositivePositive Technological effectsTechnological effects

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

Regulatory effectsRegulatory effects Voluntary application Voluntary application

of environmental of environmental standards.standards.

Environmental Environmental improvement along improvement along with privatization with privatization processes.processes.

Figure: Antamina

NegativeNegative Scale effectsScale effects

Questions of local Questions of local sustainability and sustainability and local development local development unresolvedunresolved

Territorial effects Territorial effects and water rightsand water rights

Lack of monitoring Lack of monitoring and controland control

Environmental Effects of Mining Environmental Effects of Mining PeruPeru

Figure: Yanacocha

Map Map ofof

PrincipalPrincipalMineral Mineral

Production Production Units in Units in

PeruPeruSource: MINEM

Policy Instruments of EM in MiningPolicy Instruments of EM in Mining

Command and Control PoliciesCommand and Control Policies Technology Transfer, Information, Technology Transfer, Information,

and Education Policiesand Education Policies Economic and Financial PoliciesEconomic and Financial Policies Financial Assurances (Hybrid of Financial Assurances (Hybrid of

Economic Instrument)Economic Instrument)

Taxonomy of PI for EMTaxonomy of PI for EM

Source: Economic Comission for Latin America and the Caribbean - ECLAC

Mine Law1981

UT General Mining Law1992

Investment Promotion LawMining Sector

1991

Framework Law Growth of PrivateInvestment - Environment

1991

OSINERG Law1996

OSINERGMIN Law2007

UT General Mining LawEnvironment

1993

Envirn. RegulationMining Activities

1998

MCLAir Emissions

1996

MCL Liquid Effluent

1996

UT General Mining LawFines Scale

Modified 2000

Mine Closure Law2003 (Regulation 2005)

Abandoned Polluted Areas Law2004 (Regulation 2005)

Peruvian Peruvian Mining Mining

Legislation Legislation

Mine Law1981

UT General Mining Law1992

Investment Promotion LawMining Sector

1991

Framework Law Growth of PrivateInvestment - Environment

1991

OSINERG Law1996

OSINERGMIN Law2007

UT General Mining LawEnvironment

1993

Envirn. RegulationMining Activities

1998

MCLAir Emissions

1996

MCL Liquid Effluent

1996

UT General Mining LawFines Scale

Modified 2000

Mine Closure Law2003 (Regulation 2005)

Abandoned Polluted Areas Law2004 (Regulation 2005)

Peruvian Peruvian Intruments of Intruments of

EM in EM in MiningMining

Map of Non-Map of Non-Operative Operative

Mining UnitsMining Units

Peruvian Instruments of EM in Peruvian Instruments of EM in MiningMining

UT General Mining Law - Fine ScaleUT General Mining Law - Fine Scale Non-compliance charges of regulations Non-compliance charges of regulations

and standards limitsand standards limits Mine Closure LawMine Closure Law

Bonds performanceBonds performance Fiscal incentivesFiscal incentives

Abandoned Polluted Areas LawAbandoned Polluted Areas Law Subsidies and Financing of Env. projects Subsidies and Financing of Env. projects

Map of Map of Abandoned Abandoned

Polluted Polluted AreasAreas

Experience with EI in Experience with EI in other Economiesother Economies

Experience with Latin American Experience with Latin American countriescountries

Experience with OECD countriesExperience with OECD countries

OECD: ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Experience with EECCA countriesExperience with EECCA countries

EECCA: EASTERN EUROPE, CAUCASUS AND CENTRAL ASIA

Experience with ASIA countriesExperience with ASIA countries

Conclusions & RecommendationsConclusions & Recommendations

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

The audit is only through systems of command and The audit is only through systems of command and control.control.

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

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

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

Thank you for your Thank you for your attentionattention

ReferencesReferences Environmental Effects of FDI in the Mining Sector Environmental Effects of FDI in the Mining Sector

http://www.oecd.org/LongAbstract/0,3425,en_2649_34313_1833847_1_1_1_1,00.htmlhttp://www.oecd.org/LongAbstract/0,3425,en_2649_34313_1833847_1_1_1_1,00.html ; 21.01.08; 21.01.08 Energy and Mining Ministry of PeruEnergy and Mining Ministry of Peru DS-059-2005 Statements for Abandoned Polluted AreasDS-059-2005 Statements for Abandoned Polluted Areas DS 033-2005-EM Statements for Mining ClosuresDS 033-2005-EM Statements for Mining Closures DS 016-93-EM Unifying Text of General Mining LawDS 016-93-EM Unifying Text of General Mining Law Environmental Policy in Mining, Warhurst, A. , Noronha, L. (2000)Environmental Policy in Mining, Warhurst, A. , Noronha, L. (2000) CEPAL – Aplicación de instrumentos económicos en la gestión ambiental en America Latina y el CEPAL – Aplicación de instrumentos económicos en la gestión ambiental en America Latina y el

Caribe: desafios y factores condicionantes. Caribe: desafios y factores condicionantes. http://www.eclac.cl/dmaah/noticias/proyectos/1/7451/LCL1488.pdf; 20.01.08http://www.eclac.cl/dmaah/noticias/proyectos/1/7451/LCL1488.pdf; 20.01.08

www.economicinstruments.com www.economicinstruments.com Economic Instruments for Pollution Control and Natural Resources Management in OECD CountriesEconomic 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; http://www.oecd.org/LongAbstract/0,3425,en_2649_34295_2405107_1_1_1_37427,00.html; 20.01.0820.01.08

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

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

Cepal EI Peru Cepal EI Peru http://www.eclac.cl/dmaah/noticias/proyectos/1/7http://www.eclac.cl/dmaah/noticias/proyectos/1/7451/peru.pdf 451/peru.pdf