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Guyana aims to strike the right balance

Article - May 20, 2015

The country has projected itself onto the world stage by pioneering its Low Carbon Development Strategy, which has been lauded as “the most progressive development strategy for a low-income country”

With the majority of Guyana’s tiny population of 747,844 living along its coast on the northeast corner of South America, approximately 83% of the inland of this beautifully unspoiled country remains covered by tropical rainforest. Considering that one of the major contributors to global warming is tropical deforestation, Guyana has a real chance to lead by example when it comes to combating climate change and environmental conservation – particularly now at a time when it is drawing significant attention from oil and mining companies eager to exploit its abundance of natural resources, both on and offshore.

Guyana has become one of the newest frontiers for oil and minerals in recent years. In 2000, the United States Geological Survey identified the Guyana-Suriname basin as having the second highest resource potential among unexplored oil basins in the world. The basin is estimated to hold recoverable reserves of 15 billion barrels of oil and gas reserves of 42 trillion cubic feet. Mining company First Bauxite Corp’s CEO, Hilbert Shields has commented that, “Guyana is poised from a mineral standpoint to take off.” It has vast mineral wealth, particularly in gold, diamonds and low-iron bauxite; and there are currently more than 25 North American companies hoping to tap into this wealth.

“The upward movement in global gold prices in recent years has done well for us. We’ve used this as an opportunity to propel our developmental agenda as a mining country, so that other minerals can be developed in a similar capacity,” says the Minister of Natural Resources and the Environment, Robert Persaud, a former agriculture minister who has been in his current post since late 2011.

“In doing so, we’ve been able to manage some stability at a macroeconomic level, as well as at the sub-sector level. We strive to generate more employment, more opportunities, and put the country in a position where we can withstand some of these external shocks. We have been successful in deploying our natural resources wealth as a cushion for those global effects.”

Guyana is taking advantage of its natural resources in order to spur economic development. As a government seeking to do the best by its people, it does however face the predicament that so many others have faced before it: balancing economic development through exploitation of natural resources with environmental conservation. It is a tricky balancing act that so many other countries have failed to pull off; but the minister believes that Guyana is striking the right balance.

“There’s a famous saying that conservation without money is not conversation.” says Mr. Persaud. “We have been able to have a healthy convergence of economics and the environment, whereby unlike other countries we have said that we would sustainably manage our natural resources, but also take care of people’s social and economic needs.”

The Low Carbon Development Strategy

The framework for Guyana’s green economy was laid out in 2009 under the Low Carbon Development Strategy (LCDS). Developed by the former president Dr. Bharrat Jagdeo, himself an avid environmentalist who is a leading member of several green groups at an international level and president and founding member of the Global Green Growth Institute, the LCDS is the result of over a year of consultation with the United Nations and international climate change initiatives. This comprehensive strategy sets out Guyana’s plan to create a new low-carbon economy by 2020, covering a range of priority areas, including the establishment of the International Center for Bio-Diversity Research, the development of the Amaila Falls Hydro Project, and the acceleration of the Amerindian land titling, demarcation and extension process. It also prioritizes areas not directly linked to the environment, such as the expansion of fiber-optic digital infrastructure and micro-
finance for small and medium enterprises.

“It is important to marry the exploitation of finite natural resources with the nucleation and growth of the country’s sustainable resources and industries, by injecting capital generated from natural resource exploitation into sustainable industries,” states Prof. Suresh Narine, Co-Chairman of CGX Resources, an oil and gas company that has been operating in the Guyana-
Suriname basin for 15 years.

“Sustainable agriculture, sustainable forestry, sustainable infrastructure and ICT, sustainable energy and all of those pillars of the economy are not moving far because of a lack of foreign direct investment and capital investment, which could benefit significantly from the responsible exploitation of natural resources. That is what the LCDS allows us to do.”

The LCDS provides a framework for further development of the green strategy beyond 2015, which, of course includes a strategy for exploitation of resources in a sustainable manner.

“The resources can be developed in a sustainable and healthy way, but at the same time do economic justice for the country. It is not only about economic justice and providing social justice to the population, but also ensuring and maintaining environmental justice,” says Minister Persaud.

“It must be emphasized that the LCDS allows for this convergence to an extent where we see expanded growth of the natural resources sector, but not at the expense of the environment. The growth in the natural resources sector has also allowed for some level of deforestation. We still have problems in terms of environmental issues, seen in a general sense and based on international monitoring.”

However, the minister adds that Guyana is one of the few countries around the world where its forests are independently monitored by international forces and that it is the first country in the world to develop a Monitoring Reporting and Verification System for forests at a national level. “We are the first to implement this in a voluntary way because we’re proud of our country.”

Guyana is collaborating with Norway—one of the world’s greenest countries which ranked 10th in Yale’s 2014 Environmental Performance Index—on maintaining its forests and advancing the LCDS. So far Norway has contributed US$150 million to the Guyana REDD+ Investment Fund, which has been used to bring forward the priorities of the green strategy, such as ecotourism development, the establishment of the Amerindian Development Fund, institutional strengthening, and LCDS outreach and communication. It has also supported the development of projects including the Cunha Canal Rehabilitation.

In October, the Norwegian Government announced that it planned to transfer a further US$80 million to the Inter-American Development Bank, to be used as Guyana’s equity contribution to the Amaila Falls Hydro Project.

On the announcement of the latest investment, Guyana’s President Donald Ramotar said, “Guyana is on the threshold of achieving what few countries in the world have achieved. International authorities have validated Guyana’s strong standards in maintaining our forest. We are now getting back on track with our work to build Amaila Falls and deliver cheap, reliable, clean energy for all Guyanese. We are creating new jobs in low carbon sectors across the country; and we are investing in critical infrastructure to help us cope with future floods as a result of climate change.”

Amaila is the flagship project of the LCDS. It will offer a steady source of clean, renewable energy that is expected to meet approximately 90% of Guyana’s energy needs, thus eliminating reliance on fossil fuels.

“The government has a clear vision to look at the development of hydropower and move steadfast in this direction. We’ve been inhibited by the political situation and are exploring ways we can get around it. We’re also talking to other partners where Guyana can become a net exporter of energy, given the resources we have,” explains Minister Persaud.

Getting companies on board

While Guyana’s green policies are admirable, too much environmental regulation can of course deter companies from investing in mineral exploitation. But this is another balance that the environment minister believes the government has struck right. It has tried to change the mindset of mining companies on adhering to environmental regulations – getting companies on board with its green agenda by convincing them that it makes sense economically.

“Every Guyanese, everyone who utilizes or develops natural resources must also be an environmentalist. We have succeeded in making this responsibility mainstream, so that it is no longer a requirement, but rather a normal way to conduct business,” he says.

“We expect stakeholders to move from feeling obligated to environmental regulations to self-enforcement. If I am going to be a good miner, a good forester, a good agriculturalist, I’m also expected to be an equally good environmentalist. At the end of the day, it’s about patrimony.”

Another way the government has successfully convinced mining companies to look at environmental regulation in a different way is by getting them to see that being environmentally responsible can be an opportunity, rather than a hindrance to investment. Minister Persaud cites an example from early 2012, when the mining community called for his resignation after he had banned the use of mercury in their procurement procedures. He recalls getting the mining companies to subscribe to his agenda by showing them that the use of non-mercury recovery techniques could increase gold recovery from 30% to 80%.

“We showed them the economics of doing things in an environmentally friendly way,” he explains. “They started to listen to the conversation. Thus, this is where it comes back to the corporate world with healthy convergence of economics and environment. We are trying to implement a change of attitude, from moving from a mindset of adhering to strict enforcement and compliance, to seeking and exploring ways in which we can converge economics with the environment.

“That is the only way to be sustainable. You can do it with a heavy-handed approach, which will last for a while, but if you do not attend to people’s needs, especially in a developing country such as ours, you will run the risk of this whole arrangement collapsing.”

Guyana has wealth of mineral and oil resources whose exploitation over the coming years could mean unprecedented growth and prosperity for its people. By getting the companies on board with the government’s green agenda, it can ensure that exploitation of these natural resources does not have to come at the sake of another: its natural beauty.

The government, the companies, and the Guyanese people themselves have, with the help of Norway, an opportunity to lead by example – putting Guyana at the forefront of the global battle against climate change. They can show others how this tricky balancing act can be done right, in order to ensure that one of world’s last remaining tropical rainforests is largely preserved.