Extractivism

Extractivism is the process of extracting natural resources from the Earth to sell on the world market. It exists in an economy that depends primarily on the extraction or removal of natural resources that are considered valuable for exportation worldwide. Some examples of resources that are obtained through extraction include gold, diamonds, lumber and oil. This economic model has become popular in many Latin American countries but is becoming increasingly prominent in other regions as well.
Many factors are involved in the process of extractivism. These include but are not limited to community members, transnational corporations (TNCs) and the government. Trends have demonstrated that countries do not often extract their own resources; extraction is often led from abroad. These interactions have contributed to extractivism being rooted in the hegemonic order of global capitalism. Extractivism is controversial because it exists at the intersection where economic growth and environmental protection meet. This intersection is known as the green economy. Extractivism has evolved in the wake of neo-liberal economic transitions to become a potential avenue for development to occur. This development occurs through stabilizing growth rates and increasing direct foreign investment and reducing poverty.
However, while these economic benefits are substantial, extractivism as a development model is often critiqued for failing to deliver the improved living conditions it promises and failing to work collaboratively with already existing programs, therefore inflicting environmental, social and political consequences. These environmental concerns include; climate change, soil depletion, deforestation, loss of food sovereignty, declining biodiversity and contamination of freshwater. Social and political implications include violation of human rights, unsafe labour conditions, unequal wealth distribution and conflict. As a result of this, extractivism remains a prominent debate in policy related discourse because while it delivers high economic gains, it also raises social and environmental concerns. Case studies in Latin America demonstrate these policy gaps.
Background.
Definition.
Extractivism refers to the process of removing large quantities of raw or natural materials, particularly for export. Most extracted resources are exported abroad because there is a lack of demand for these raw materials in their country of origin.
History.
Extractivism, on a large scale, has been occurring for over 500 years. During the extended era while the West was colonizing Africa, Asia and the America’s, the extraction industry took off. At this time, colonizers exploited resources from their colonies to meet the demands of their home cities. The colonies typically specialized in the production and extraction of the raw materials while the colonizers manufactured the goods – the colonies were exporters and the colonizers were importers. Today, the industry remains largely unchanged in the shadows of decolonization. However, since then, extractivism has evolved in the wake of neo-liberal economic transitions to become a potential avenue for development to occur. This pattern has been termed “neo-extractivism”.
Neo-extractivism refers to a set of growth-oriented development paths. This transition to neo-liberal economies is rooted in a nation’s subordination to an emphasis on free trade. In contrast to older forms of extractivism, neo-extractivism regulates the allotment of resources and their revenue, pushes state-ownership of companies and raw materials, revises contracts, and raises export duties and taxes. Neo-extractivism has transformed the industry into a specific growth-oriented development path. This path involves three components. First, extracting the raw natural materials. Second, exporting these extracted raw materials. Third, using the revenue from these exports to improve living conditions for those in the countries where extraction occurs. Neo-extractivism has similarities to older forms of extractivism and exists in the realm of neo-colonialism.
Actors.
Transnational corporations (TNCs) are a primary actor in neo-extractivism. Originally, as TNCs began to explore raw material extraction in developing countries they were applauded for taking a risk to extract high-demand resources. TNCs were able to navigate their way into a position where they maintained large amounts of control over various extraction-based industries. This success is credited to the oftentimes weak governance structure of the resource dependent economies where extraction is taking place. Through complex arrangements and agreements, resources have slowly become denationalized. As a result of this, the government has taken a “hands-off” approach, awarding most of the control over resource enclaves and the social responsibility that accompanies them to TNCs. However, the government still plays an important role in leading development by determining which TNCs they allow to extract their resources and how thorough they are when it comes to enforcing certain standards of social responsibility.
Resources and techniques.
Some resources that are obtained through extraction include but are not limited to gold, diamonds, oil, lumber and food. This occurs through techniques such as mining, drilling and deforestation. Resources are typically extracted from developing countries as a raw material. This means that it has not been processed or has been processed only slightly. These materials then travel elsewhere to be turned into goods that are for sale on the world market. An example of this would be gold that is mined as a raw mineral and later in the supply chain manufactured into jewellery.
Impacts of extractivism.
Economic benefits.
Neo-extractivism is seen as an opportunity for successful development in many areas of the developing world. Demand for extracted resources on the global market has allowed this industry to expand. Since the year 2000, there has been a substantial rise in global demand and value for raw materials – this has contributed to steadily high prices. Neo-extractivism has therefore been seen as a tool for economically advancing developing countries that are rich in natural resources by participating in this market.
It is argued that the emergence of this industry in the neo-liberal context has allowed extractivism to contribute to stabilizing growth rates, increasing direct foreign investment, diversifying local economies, expanding the middle class and reducing poverty. This is done by using surplus revenue to invest in development projects such as expanding social programs and infrastructure. Overall, extraction based economies are seen as long-term development projects that guarantee a robust economic foundation. It has created a new hegemonic order that closely intertwines with the dominant capitalist system of the world. The green economy has emerged as an economic model in response to the arising tensions between the economy and the environment. Extractivism is one of the many issues that exist at this intersection between the economy and the environment.
Environmental consequences.
One of the main consequences of extractivism is the toll that it takes on the natural environment. Due to the scale extraction takes place on; several renewable resources are becoming non-renewable. This means that the environment is incapable of renewing its resources as quickly as the rate they are extracted at. It is often falsely assumed that technological advancements will enable resources to renew more effectively and as a result make raw material extraction more sustainable. The environment often must compensate for overproduction driven by the need to maximize profits. Global climate change, soil depletion, loss of biodiversity and contamination of fresh water are some of the environmental issues that extractivism contributes to. As well, extraction produces large amounts of waste such as toxic chemicals and heavy metals that are difficult to dispose of properly. To what degree humans have a right to take from the environment for developmental purposes is a topic that continues to be debated.
Social impacts.
In addition to the environmental consequences of extractivism, social impacts arise as well. Local communities are often opposed to extractivism occurring. This is because it often uproots the communities or cause environmental impacts that will affect their quality of life. Indigenous communities tend to be particularly susceptible to the social impacts of extractivism. Indigenous peoples rely on their environment to sustain their lifestyles as well as connect with the land in spiritual ways. Extractivist policies and practices heavily destroy the land as explained above. This changes game populations, migration patterns for animals, pollutes rivers and much more. Doing so, does not allow Indigenous populations to practice their culture and ways of life because the environment they depend on to hunt, fish etc. is drastically changed. In addition, this destruction hinders the practice of Indigenous culture and creation of knowledge making it more difficult for Indigenous individuals to pass down their traditions to future generations.
While employment opportunities are brought to local communities as a pillar of neo-extractivism projects, the conditions are often unsafe for workers. TNCs can take advantage of more lenient health and safety conditions in developing countries and pay inadequate wages in order to maximize their profits. As well, foreigners usually fill the highest paying managerial positions, leaving local community members to do the most labour intensive jobs. Frequently, the enclaves where extractivism occurs are distanced from government involvement, therefore allowing them to avoid being subjected to the enforcement of national laws to protect citizens. This can result in widespread human rights violations. It is argued that prolonged social transformation cannot thrive on export dependent extractivism alone therefore making neo-extractivism a potentially flawed development method on its own.
Political implications.
Due to the fact that the state is a prominent actor in the extractivism process it has several political implications. It pushes the state into a position where they are one of the central actors involved in development when recent decades have seen a shift to civil society organizations. As well, the relationship between the State providing the natural resources and the TNCs extracting them can be politically complex sometimes leading to corruption. Likewise, as a result of government involvement, this process as a development project becomes politicized. The increasing demand for raw materials also increases the likelihood of conflict breaking out over natural resources.
Extractivism near or on Indigenous land without the permission of Indigenous peoples begins to threaten the land based self-determination of Indigenous groups. Conflicts between Indigenous peoples, corporations and governments are occurring around the world. Because many of the extractivist practices take place where Indigenous communities are located, the conflicts are making these landscapes politicized and contested. The conflicts are driven because Indigenous lives are put in jeopardy when they are dispossessed, when they lose their livelihoods, when their water and land is polluted and the environment is commodified.
Case studies.
Peru: mega-mining in Cajamarca.
The instance of the mega-mining project in Cajamarca, Peru provides an illustrative example of the extractive dynamic of raw material in Latin America. In 2011, a TNC began a project called Yanacocha, installing a mega-mining project in Cajamarca. The government favoured this project and saw it as an opportunity for development therefore giving large amounts of control to the TNCs extractive procedures. Local community members (known as peasant populations) expressed their concern for the project given the threat of contamination to their main source of water. Leaders of Yanacocha promised the creation of 7,000 jobs and development projects that would work collaboratively with and be beneficial for the community. The TNC said they would fail to launch the project if they could not do so on socially and economically responsible terms. However, this guarantee failed to be actualized and violent conflict broke out as a result. The regional level and national level government had opposing opinions on the development project and tension was formed between the two parties as protests broke out injuring more than 20 people and killing 5. Unlike the national government, the regional government sided with the community protestors and rejected the Cajamarca mining project. In the end, the national government overrode the concerns of the community and pushed forward with the Yanacocha mega-mining project, leaving the task of social responsibility to the corporations.
Ecuador: oil exploitation in Yasuni National Park.
Many Amazonian communities in Ecuador are opposed to the national governments endorsement of oil extraction in Yasuni National Park. The Spanish corporation Repsol S.A. and American corporation Chevron-Texaco have both attempted to make investments to extract oil from the reserves in Yasuni. Various civil society organizations fought against the implementation of this project because of the parks valuable biodiversity and their concerns were answered. The Ecuadorian state worked collaboratively with these interest groups and launched a project where members of the international community could donate to a fund that was put in place to compensate for the lost income that an oil reserve would have generated. This totalled US$3.5 billion, equal to 50% of the revenue that would have been produced by the oil extraction project. Through this initiative, the wishes of the activists and community members were validated without compensating economic growth. Since then, the national government has taken these concerns even further, redesigning the constitution to give the state more autonomy over their natural and raw materials. In addition, an overall mandate of living well has been adopted for guiding neo-extractivism projects in the future.
These two case studies represent examples of both successful and impaired approaches to neo-extractivism in Latin America. They can be used to illustrate the inter-disciplinary complexities of extractivism by illustrating the economic, environmental, social and political layers to the topic. Increasingly, policy tools such as corporate social responsibility mechanisms and increased government involvement are being used to mitigate the negative implications of neo-extractivism and make it a more effective development model.
Canada: Logging and Grassy Narrows First Nation's road blockade.
Extractivism policies and procedures are present in Canada as well. Canada has many natural resources because of its large land mass and biodiversity. The forest sector in Canada contributed to 19.8 billion or 1.25 per cent of Canada’s GDP in 2013. The Boreal forest covers 28 per cent of Canada’s land and within that 70 per cent of Indigenous communities live in these areas. Logging efforts in the Boreal forest are encouraged to be economically efficient by clearcutting. Clearcutting means to remove all trees from an area at one time. This has led to loss of biodiversity, habitat fragmentation and reduction, soil erosion and carbon release contributing to climate change.
Asubpeeschoseewagong First Nation, also known as Grassy Narrows First Nation is located in northwestern Ontario near the town of Kenora. In 1873, the Anishinaabe people participated and negotiated in Treaty 3 with the Canadian government. The terms of this treaty are extremely contested by the Anishinaabe people and the Canadian government as both groups disagree on its interpretation and assumptions. The Canadian government at the time, wanted to expand farther into the West for more agricultural settlements. This treaty was seen as a way to secure and create a route through northwestern Ontario and further Canadian nation building. Anishinaabe leaders saw the treaty as a peace-and-friendship agreement. The Anishinaabe people wanted to share the land to ensure its survival but not surrender it according to oral histories and the unofficial versions of Treaty 3. The Canadian government contests this stating the Anishinaabe right to land was surrendered once the treaty was signed.
In December 2002, people of Grassy Narrows grew tired of seeing their environment being destroyed and Treaty 3 being violated in their eyes. They began Canada’s longest road blockade as a way to protest the clearcutting that was proposed near their community. In the past, the community has been affected by the flooding of ancestral burial grounds because of hydroelectric dams. Most notably, the community were affected by mercury contaminated water from a pulp and paper mill. Since the 1990s logging rates near the community had accelerated which caused community members to act. Working with non-Indigenous environmentalists and human rights advocates, they began media campaigns to draw attention to their protest. The site of resistance was on the Ontario Provincial Highway 671 near Slant Lake.
However, the blockade went against what the Grassy Narrow’s chief and council wanted. They wanted to stop the logging efforts by working within the federal system and use the Indian act. Anti-clearcutting activists and community members continued to support the road blockade for years. Many think it is a clear violation of treaty rights and the sovereignty of the Anishinaabe nation. In 2008, the Ontario government began negotiating a resolution to the conflict, which ended the license for logging companies. In 2014, the provincial government stated they would monitor logging companies to make sure they adhered to the new proposed rules. However, many in the community remain skeptical.