ECONOMICS

EXPERT REPORT ON THE FRIEDA RIVER LIMITED – SEPIK DEVELOPMENT PROJECT ENVIRONMENTAL IMPACT STATEMENT (EIS)

Summary: Economics

Neil Perry, Senior Research lecturer in Corporate Social Responsibility and Sustainability School of Business, Western Sydney University

  • A cost benefit analysis has not been performed in accordance with standard practices, therefore, the project has not been determined to be welfare enhancing for the country of PNG.

    • Project benefits have been incorrectly defined and attributed to the project while the negative impacts have not been valued.

      – Gross Domestic Product (GDP) increases and employment growth are not accurate benefits of the project.
      + GDP increases are mostly delivered to the foreign company in the form of profits, not the people of PNG.
        + The benefit derived from employment in a new project is the extra wages workers receive in their new employment relative to their previous employment or value of their non-market activities (e.g. if not previously employed)
          + In terms of people who are currently not employed in the cash economy, the benefit is the extra utility they gain.
          • Actual benefits to be calculated are:

          a) Local taxes, fees and royalties paid by the foreign company and its foreign workers; noting that taxes paid by local workers are not benefits as they represent transfers from one PNG citizen to another.

          b) The consumer and producer surplus of the excess electrical power from the hydroelectric plant delivered outside the mine project over a relevant time period, usually not more than 50 years.

            • The ‘risks’ that have been outlined in chapter 9 and appendix 13 of the EIS are actually ‘impacts’ and the costs of these impacts should be valued and used to determine whether the benefits of the project outweigh the costs.

              • These project costs are:

              1. The value of alternative uses of the land including subsistence agriculture and forestry that will no longer occur.
                • All spill over costs including:

                a) The net impact on members of the displaced villages. b) The livelihood impact on downstream villages and those affected by the noise and vibrations. c) The loss of biodiversity and ecosystem services experienced by the residents of PNG. d) The net cost of the likely forestry activity that will occur along new roads, including an assessment of the impact on local livelihoods. e) The cost of carbon emissions and the loss of carbon sinks from the land-use change and mine may also be considered depending on the global environmental agenda of the country.

                  • The economic assessment does not consider alternative uses of the land that may generate substantial income through scientific exploration, bioprospecting, or eco-tourism.

                    • From a corporate social responsibility perspective, PanAust should be meeting at least the minimum environmental impact assessment requirements of their home country, where cost benefit analysis has become standard practice.

                      EXPERT REPORTS ON THE FRIEDA RIVER LIMITED - SEPIK DEVELOPMENT PROJECT ENVIRONMENTAL IMPACT STATEMENT (EIS)

                      Summaries and Full Expert Reviews

                      EIS HIGH LEVEL SUMMARY

                      Frieda River Limited - Sepik Development Project
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                      01. AQUATIC ECOLOGY

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                      02. ECONOMICS

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                      03. MANAGEMENT PLANS

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                      04. GENERAL IMPACTS

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                      05. GEOLOGICAL & SOCIAL

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                      06. GROUNDWATER

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                      07. HEALTH

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                      08. SOCIAL IMPACTS

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                      09. SURFACE WATER

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                      10. BIODIVERSITY

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                      OTHER SUBMISSIONS

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                      “FRIEDA RIVER IS A MINING PROJECT THE LIKES OF WHICH PNG HAS NEVER SEEN – IT IS THE SIZE OF THE REST OF THE PNG MINING INDUSTRY COMBINED … THE CHALLENGES OF MANAGING TAILINGS, WASTE ROCK AND WATER POLLUTION ARE IMMENSE, AND THE COMMON AND OFTEN SYSTEMIC FAILURES AT PNG MINES TO DATE DO NOT BODE WELL FOR CLAIMS THAT FRIEDA RIVER CAN BE DEVELOPED RESPONSIBLY …”

                      Gavin Mudd, Associate Professor at RMIT University

                      SAVE THE SEPIK CAMPAIGN

                      LIFE ON THE SEPIK

                      The Sepik region is one of the most culturally and biodiverse areas on the planet

                      FRIEDA RIVER MINE

                      One of the largest known copper and gold deposits in the world

                      WORLD HERITAGE

                      Nominating the Sepik regions rich cultural heritage for World Heritage listing

                      TAKE ACTION

                      Take Action and Solidarity to call for the Rejection of the Frieda River mine

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