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Communities as Counterparties: Preliminary Review of Concessions and Conflict in Emerging and Frontier Market Concessions

By: Andrea Alforte, Joseph Angan, Jack Dentith, Karl Domondon, Lou Munden, Sophia Murday, Leonardo Pradela

This study published by the Rights and Resources Initiative (RRI) profiles one hundred individual land and natural resource-related conflicts between local communities and companies granted concessions for exploitative industries in the emerging markets of Brazil, Cambodia, Colombia, Indonesia, Liberia, Mozambique, Peru, and the Philippines.  A careful analysis of these cases determined that the most common sources of strife between communities and companies were poorly elaborated and negotiated arrangements regarding benefit-sharing and compensation and blatant violations by companies of even the least stringent state environmental regulations. Dysfunction, misunderstanding, and division within local communities also created the potential for conflict, since concessionaires were unable to negotiate with any representative or leading members of the community. For investors, conflict with communities inhabiting concession areas frequently results in significant operating losses and may even cause the abandonment of a project. Therefore, even if local communities possess no formal legal rights to the land and natural resources forming part of the concession, companies must treat these communities as crucial counterparties to avoid incurring damaging financial and reputational losses. Treating communities as counterparties means allocating more resources and time to negotiation, establishing close relationships with community representatives, ensuring the consent of communities prior to the commencement or expansion of operations, and adhering to environmental standards.

Keywords: emerging and frontier markets, concessions, land and natural resource-related conflicts, mining, environmental regulations, negotiations between companies and local communities.

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Uploaded on: Aug 14, 2015
Last Updated: Dec 04, 2015
Year Published: 2014
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