Social and Economic Issues Associated with the Bowen Basin Coal Industry: Community Engagement to Reduce Conflict Over Mine Operations

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Social and Economic Issues Associated with the
Bowen Basin Coal Industry Community Engagement
to Reduce Conflict Over Mine Operations

• Galina Ivanova, John Rolfe and Stewart Lockie
• Central Queensland University, Australia

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Project objectives

• Assist coal mining companies to develop effective
  processes for engaging with their communities
• Assess the social and economic impacts that occur
  during the various phases of a coal mining
  operation at a variety of scales including the
  local and regional.
• Engage with stakeholders in such a way as to
  identify and address issues arising out of
  current impacts.
• Recommend social and economic techniques for
  engagement with communities
• The research reported in this paper has been
  funded by a grant from the Australian Coal
  Association Research Program (ACARP).

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Bowen Basin Area Map
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Open cut coal mining

• Source Excel Coal Ltd, 2004, Presentation to
  the Sydney Mining Club

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Underground coal mining

• Source Excel Coal Ltd, 2004, Presentation to the
  Sydney Mining Club

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Coal train

• Source Excel Coal Ltd, 2004, Presentation to the
  Sydney Mining Club

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Coal mining industry in Queensland

• 45 coal mines operating in Queensland during
  200304
• 34 were open-cut mines
• 11 were underground
• A number of new developments
• 85 of the states coal is produced from mines in
  the Bowen Basin

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Some social and economic trends in the Bowen Basin

• Commodity cycles
• 1990 contraction of the workforce in BB due to
  low returns from coal production
• 2004- price of coal increased that lead to
  major developments in BB
• 2005-10 7 per annum growth rate in the coal
  industry
• Operational changes
• Increase the use of contractors
• Increase of use of fly-in/fly-out operations
• Diverse shift work patterns (5/5, 7/7) choice
  of where to base family
• Social and demographic changes
• Some population loss due to increased efficiency
  in agriculture and services fewer people are
  employed in these sectors
• Movements form rural areas and small towns to
  larger centres
• Limited pool of specialists skills
• Limited training opportunities/graduates in some
  areas (mining engineering)
• Difficult to attract and retain employees

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Impacts of coal mining State level

• The impacts on the states economy and social
  capital are clear and substantial.
• Coal mining is a major industry for Queensland,
  and an important contributor to the economy
• 10 of Queensland Gross Product
• Infrastructure
• Large employer (gt16thous workers directly in
  2002, gt60thous in ft and pt jobs in provision
  goods and services to mines)
• High wages (1 billion in salaries in 2002, 200
  million to contractors, gt2 billion to other
  firms)
• Average weekly earnings in the mining sector
  1,424/week for a ft in 2001.
• Wage levels are approximately double weekly
  earnings in the retail trade and tourism
  industries

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Impacts of coal mining Regional and Local
level

• Three areas of local and regional impacts of
  mining
• Individual families and the decisions they make
  about whether to locate in local or regional
  centres,
• Local communities,
• Wider region (shiftwork patterns allow families
  to be located away from the local centre).
• Impacts that are experienced positively in one of
  these areas may be experienced negatively in
  another.

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Impacts of coal mining Regional and Local level

• The impacts are not so easily defined,
  particularly for a single mine
• Impact is not transparent
• Impact is hard to identify diversity in the
  operations and supply of labour to mines
• Different impact throughout the life cycle of
  mining operations
• Therefore, the role of the coal mining industry
  in regional communities can be poorly understood

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Impacts of coal mining Regional and Local
level

• The effects (whether real or perceived) of coal
  mining operations on nearby communities often are
  the focus for considerable conflict.
• Lack of active engagement between mine proponents
  or operators and relevant communities
• exacerbates that conflict
• limits opportunities to capture benefits and
  limit negative impacts (mine closures).

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International literature on best-practice in
impact assessment

• Where mining companies actively seek the views of
  the community and other stakeholders on proposed
  mine development, mine operation and mine
  closure, there is significant potential to reduce
  conflict and maximise the local capture of
  benefits from coal mining,
• Engagement of the community and government in
  planning over the length of a mining cycle can
  lead to more efficient provision of
  infrastructure in regions.

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The standard approach to the Socio-Economic
Impact Assessment

• Impact assessments as part of the Environmental
  Impact Assessment process which underlies the
  approval process for many new mines
• Weaknesses
• for major new projects, and subsequent changes or
  expansions of existing projects are not covered
• at the beginning of a project, and there are
  currently no mechanisms to conduct follow-up
  assessments
• no follow-up assessments to test the accuracy of
  predictions
• a number of influences (eg changes in
  demographics, technology, commodity prices and
  employment relations) that can impact on local
  and regional communities are not covered in an
  impact assessment process.

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Diversity of cases of the impact analysis
application

• Impacts of developing a new mine in a region,
• Impacts of an existing mine in a region,
• Impacts of expanding existing mines in a region,
• Impacts of closure of mines in a region,
• Impacts of policy or regulatory changes affecting
  mining output.

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Approaches of economic and social research

• There is a broad range of economic and social
  research techniques that potentially can be
  applied to issues of local and regional impacts
  resulting from coal mining activities.
• Social, economic and demographic overview
• Background information/modelling
• Economic approach to impact assessment
• Economic impact assessment,
• Economic evaluation,
• Behavioral models (e.g. for policy evaluation).
• Social science approach to impact assessment
• Predictions about social change,
• Facilitation of public involvement in
  decision-making.

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Tools of economic and social researchSocial,
economic and demographic overview

• Background information
• a situational analysis of the local and regional
  areas affected,
• a description of the project proposal,
• modelling about employment, population and other
  factors.

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Tools of economic and social research Economic
analysis

• Economic impact assessment
• Policy options may impact on different groups in
  society
• Economic impacts of expenditure into a regional
  economy
• Monetary values
• The direct impacts (the amount of expenditure
  injected) and
• The multiplier effect.
• Non-monetary values (stated and revealed
  preferences methods)
• Consumer surpluses analysis,
• Producer surpluses analysis.

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Tools of economic and social research Economic
analysis

• Economic impact assessment
• Economic assessment techniques
• guesses (i.e. expert opinions, credible and
  non-credible guesses),
• estimates (e.g. results transferred from other
  research),
• economic base multipliers, (Keynesian-type
  multipliers),
• more sophisticated methods (e.g. IO methods and
  GEM).
• Advantages of Input-Output analysis
• the impact assessment can be done simultaneously,
• more detailed and accurate than simpler
  estimation techniques,
• easy to use once the table is created,
• very powerful tool.

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Tools of economic and social research Economic
analysis

• Economic impact assessment
• Weaknesses of Input-Output analysis
• requires substantial data and effort to apply it
  properly,
• the smaller the region the more need for the
  local knowledge,
• the most accurate way of constructing an IO table
  for small region is by using a survey approach
  can be expensive,
• a sensitivity analysis to adjust results to a
  more realistic framework,
• the results should be treated with caution due to
  limitations of IO method, data used and
  assumptions made.

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Tools of economic and social research Economic
analysis

• Economic value analysis (net outcome)
• Cost-benefit analysis,
• Replacement cost analysis,
• Averted cost analysis,
• Cost efficiency analysis.

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Tools of economic and social research Economic
analysis

• Economic evaluation techniques
• Cost-benefit analysis
• the advantages inclusive, explicitly values the
  different impacts and outcomes, and provides a
  framework where very different outcomes may be
  assessed against each other.
• the disadvantages expensive and time consuming
  to do properly.

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Tools of economic and social research Economic
analysis

• Economic behavioral approach
• Policy evaluation, market design, public good.
• Methods
• Economic workshops,
• Economic experiments,
• Surveys,
• Market data analysis,
• Expert opinion based analysis.

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Tools of economic and social research Social
impact assessment

• Simple impact assessment
• Personal interviews with stakeholders and
  community,
• Workshops with stakeholders and community.
• Negotiated impact assessment
• Advisory groups,
• Workshops with stakeholders,
• Community forums,
• Citizen jury.

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Tools of economic and social research Social
impact assessment

• The SIA should be done at the stage of project
  design and used to maximise benefits rather than
  simply to compensate the losers following
  implementation
• Use appropriate mechanisms to involve different
  groups in the decision-making process
• Incorporates local knowledge
• Identify
• attitudes and perceptions towards proposed change
• subjective and cultural impacts
• Conflict may be minimised by
• considering as many interests as possible in
  decisions
• putting in place appropriate mitigation strategies

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Tools of economic and social research Social
impact assessment

• Guidelines provided by the Queensland Treasury
  (1997)
• Communities
• Effects on employment-- trade, private sector, or
  government
• Analysis of any disproportionate disadvantage to
  a particular sector
• Analysis of any appreciable community concerns
• Any changes in government policy
• Assessment (qualitative and quantitative) of
  social impactscomparison of costs and benefits
  and
• Extent of impact and acceptability of identified
  social issues on the projects and evaluation of
  key strategies

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Tools of economic and social research Decision
assessment frameworks

• There is no consistent mechanism by which results
  feed into a decision making framework.
• Social and economic impact assessment remains
  Limited and no resolution of disagreements
• Simple economic and social impact assessment data
  is fed back to communities and decision makers so
  that they have better information for subsequent
  evaluation and negotiation processes.
• More advanced stages of economic and social
  analysis but still not fully satisfactory
  economic evaluation techniques, negotiated social
  impact assessment
• communities may not be directly involved or
  understand the evaluation process, they may be
  reluctant to accept the results

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Table 1a Decision assessment frameworks
Data type Communities acceptance/usefulness Decision makers usefulness
Background data
- demographic data Useful but is not a direct help in evaluating options Useful but is not a direct help in evaluating options
- economic data Useful but is not a direct help in evaluating options Useful but is not a direct help in evaluating options
- social data Useful but is not a direct help in evaluating options Useful but is not a direct help in evaluating options
-environmental data Useful but is not a direct help in evaluating options Useful but is not a direct help in evaluating options
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Table 1b Decision assessment frameworks
Data type Communities acceptance/usefulness Decision makers usefulness
Economic
- impact assessment data (market and non-market) Useful in estimating actual impacts, but is difficult to perform at a community level and does not evaluate net impact Useful but is not a direct help in evaluating options decision makers still have to evaluate net impact. Can be difficult to do.
- value analysis data (market and non-market) More policy relevant but often not accepted by communities because of their limited involvement. More policy relevant. Lack of acceptance by communities can be a barrier to its use. Often costly and time consuming.
- behavioural models for policy evaluation More policy relevant and can be more accepted by communities if includes all the outcomes of the project More policy relevant but some methods that are more detailed can be expensive and time-consuming to perform.
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Table 1c Decision assessment frameworks
Data type Communities acceptance/usefulness Decision makers usefulness
Social
- simple impact assessment data Useful and welcomed by communities but communities still have to evaluate net impact Useful because it predicts where disagreements may exist but decision makers still have to evaluate net impact
- negotiated impact assessment Useful and welcomed by communities and leads to negotiated outcomes. However, results often dont include full consideration of economic aspects Useful because it represents negotiated positions and reduces conflict. However, problems if economic aspects not recognised or if negotiation positions become entrenched.
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Potential mechanisms for engagement purposes

• There are two key elements required in
  transforming impact assessment into a dynamic
  framework
• Individuals and communities need to be given
  choices over development options, and
• There need to be feedback loops so that choices
  can be performed or more informed basis.
• The challenge in transforming impact assessment
  through to a more dynamic setting is to develop
  assessment mechanisms that can simultaneously
  engage and evaluate policy impacts

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Approaches that might help to fill the gap

• Each of these options is reviewed/explored to
  some extent in the project
• Modelling techniques
• Input-output modelling estimation of impacts,
• Choice Modelling include info from IO to
  estimate tradeoffs,
• Experimental Economics test the behavioural
  aspects.
• Engagement processes
• Extended stakeholder analysis info loop
• Improvements to Environmental Impact Assessment
  processes
• Not only to large projects
• Over the life time of the project
• Not only at the planning stage of the project.

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Summary

• Mining activities create important economic and
  social impacts on regional communities.
• There is a range of economic and social
  mechanisms that can help the mining industry
  engage with communities.
• The challenge in the use of assessment processes
• Move from static assessment techniques to more
  dynamic ones that engage with communities,
• Combine appropriate social and economic
  approaches.