Natural Resources and Violent Conflict - WaterWiki.net

312 john brayPolitical risk forecasting is an art rather than a science: there are toomany variables to make pinpoint predictions plausible. Scenario exerciseshelp companies to assess the range of possibilities and plan forthe unexpected. Royal Dutch Shell has been a leader in the scenariofield. 22Environmental impact assessments are now an accepted part of theplanning process, and they are often required by external lenders andinsurers. There is also a growing demand for social impact assessments.This is a relatively new field, and it suffers from some of thesame challenges as political risk analysis in that it does not lend itselfto readily quantifiable predictions. However, particularly in light ofthe debate about the “natural resource curse,” there is no doubt thatit is needed. The International Association of Oil and Gas Producersand the International Petroleum Industry Environmental ConservationAssociation have recently produced a joint report on the managementof social issues (IPIECA and OGP 2002).Conflict risk assessment is also emerging as a separate subfield.From an aid sector perspective, the U.K. Department for InternationalDevelopment has recently produced a handbook on the issue (U.K.Department for International Development n.d.). The UN GlobalCompact (2002) has prepared a business guide for conflict impactassessment and risk management. Both texts provide overviews of thequestions to ask rather than detailed manuals. 23 As with other aspectsof risk analysis, the key questions include not only what is happeningnow but also how the petroleum or mining project will create newrivalries, tensions, and—in the worst case—pretexts for violence.The management of the company’s relationship with local communitiesis critical: mistakes made at this point may never be repaired.The key requirements are to secure the “informed” consent of the peoplewho are most affected and to ensure compensation for those withland or customary rights to the area where the project will take place.Again, these issues are far from straightforward and are discussed ingreater detail in the next section.OperationsAt the operations stage, both the “winners” and the “losers” are readilyapparent. If all goes well, the project is producing revenue. Both thegovernment and the company are profiting accordingly. The main“losers” are local people whose natural environment has changed radicallyand for the most part irrevocably. The environmental impact ofthe project is highly visible. This is particularly true of open-cast minesbut also applies to oil and gas projects, especially on land. The flaring