Introducing the IAN Tenure Risk Toolkits

The risk posed to investors by disputes with local populations is widespread, materially significant and growing, according to new analysis by TMP Systems of over 260 case studies of tenure risk.

Our review of 262 agriculture, energy and mining sector disputes found that conflicts with local populations had a materially significant impact on investors in 67% of these cases. An overwhelming 82% of disputes had occurred since 2000.

The analysis was released by TMP Systems alongside two free and open source toolkits.

The tools draw on geospatial data and improvements in communications technology to help investors quickly assess and manage tenure risk, enhancing environmental, social and governance (ESG) diligence efforts.

They have been developed alongside the Rights & Resources Initiative (RRI) with funding from the UK’s Department for International Development (DFID).

TMP Systems partner Ben Bowie, said: “Compensation or the lack thereof was rarely a primary driver of dispute. Rather, population displacement in the agriculture and energy sectors and environmental degradation in the mining sector were the core causes of dispute.”

Speaking at the Bern Conference on community resource rights, he added: “Investors need better information on the key impacts of projects they finance. It is, after all, easier to avoid a dispute than to resolve one. We see the material impact of tenure risk on real asset investments becoming increasingly pronounced.”

The release of the two tools – IAN: Risk and IAN: Diligence, which can be found here - coincides with that of a new report by RRI which highlights that local communities and Indigenous Peoples are estimated to hold as much as 65% of the world’s land area under customary systems; yet many governments formally recognize their rights to only a fraction of those lands.

Bowie said: “It is clear from our research that these tools are needed: engagement with local populations can help investors to better identify and manage environmental, social and governance (ESG) risks. We believe these tools can help investors efficiently allocate human resources to address the most likely sources of dispute – we hope to see their adoption and adaption by the investment community.”

Their release follows TMP Systems’ and the RRI’s analysis last year spanning almost 73,000 commercial natural resource developments in eight emerging/frontier market economies, that found that over 93-99% of those developments were inhabited by local communities or Indigenous Peoples.

Not taking these inhabitants into account can cause social conflicts, which heighten financial risks for emerging market investors ranging from EM-specific funds through to sovereign wealth funds and banks; commodities-driven corporations or insurers who guarantee the performance of those assets.

“The assumption that land without clear ownership is uninhabited is a dangerous recipe for any kind of natural resources-based development,” said Andy White, Coordinator of RRI,

 “In fact, almost none of the world’s land is uninhabited today. Often, local and indigenous communities have been stewards of the land in question for centuries–certainly long before national governments came into the picture. Instead of being pushed aside, these communities need to be treated as key counterparties in any decisions that affect their land and livelihood.”

Treating local communities as actual partners in economic development can lead to far-reaching impacts on a project’s sustainability and financial health, as well as positively affect key development indicators such as poverty and hunger.

“Industrial or infrastructural development is inherently tied with the economic rights of local inhabitants,” highlighted White. “Equitable economic growth is impossible without taking those rights into account.”

The Toolkits

IAN: Risk brings together 25 existing publicly available datasets from three different categories into an open-source database that anyone will be able to download, explore and improve. It includes high resolution geospatial data from NASA’s SEDAC and the European Space Agency’s GlobCover. The three categories, viewable via an interactive map, encompass:

1: Subnational data about social conditions, specifically:

·         Demographics (population count/density per 30-seconds cell)

·         Conflict (incidents of civil unrest and political violence, time series of displacement)

·         Welfare (access to sanitation, child mortality, displacement)

 2. Subnational data about environmental issues, such as:

·         Land use (anthropogenic land use, soil health)

·         Climate (temperature, forecasted climate impacts)

·         Water (baseline water stress, watershed boundaries)

3. Mostly national-level data on governance, such as corruption perceptions or regulatory quality.

IAN: Diligence provides accessible, step-by-step guidance for companies and investors to use when assessing and negotiating tenure risk issues. Its core is a set of over 90 questions, organized according to stages in the project lifecycle that are designed to provide investors with the information they need to make good decisions on tenure risk management.

TMP and RRI have completed three LDTs for investor adoption, on agriculture, mining and energy. LDTs on infrastructure and forestry will follow by the end of the calendar year.

For Editors

TMP Systems is a UK-based consultancy working in asset management, climate and ecosystems and economic development. Among the company’s offerings, TMP Systems deploys economic and technological systems to improve the efficiency and impact of aid and philanthropic spending. TMP has worked extensively in both the public and private sectors, with partners ranging from equity funds to governments, NGOs and the United Nations.

TMP Systems partner Ben Bowie was previously an independent consultant for a range of institutions including the ODI, the European Commission and companies in the extractive industries. Ben lives in London and received his MSc from SOAS and his BA from Cambridge. For further enquiries or to arrange an interview with Ben or another of our partners, please contact ed.targett@tmpsystems.net.

 

 

 

The Rocket Science of Public vs. Private

SpaceX's ongoing attempts to land a reusable rocket booster back on to its platform barge in the Atlantic have triggered much discussion about the virtues and value of public versus private ownership of such big projects.

In our work on climate finance and economic development, similar debates can often be heard and as our Chief Engineer Willie Munden – who also happens to be my father – spent several decades working at NASA, I figured he might have something interesting to say about the ongoing attempts. 

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Me: So, what do you think about SpaceX? Is it a good idea for us to be privatizing our efforts to reach space? Or are we better off with the public?

Willie: If Space X can be successful at this space flight rocket launch industrialization, than we will be all the better for it. It will allow many things to be done in space that are presently cost-prohibitive; the launch of more science instruments into low earth and geosynchronous orbit for earth climate missions, fundamental space science missions, communications satellites and the like.

The private, commercial space flight rocket programs are the “industrialization” of space flight launches for satellites, instruments, space station supply and finally manned space flight. This is being done to reduce the cost of payload and human launch costs by making the rocket build programs more like an assembly line and less like the current small-batch, highly quality assured manufacturing approach. 

NASA, ESA and the Russian/Soviet, Chinese and Indian space programs have had more than a few mission failures similar to the recent SpaceX problem. And the potential cost reduction is significant, in that past rocket launch costs could be up to 50% of the total mission cost.

Politics and project ownership aside we must always look at each project in a systematic way with attention to all the details of each requirement for the project. If you get the science wrong the mission will fail due to the harsh space flight environment and flight dynamics, or the design will fail to deliver data and information that is fundamental to the programs’ goals and requirements.

In my experience from NASA, space engineering is fundamentally best when science is driving the program and mission selection process. I suspect this is true of all organizations that are science and engineering based. What actually happens at NASA is that politics get added in to the mission selection, design, development, testing and deployment process which increase both mission risks and costs.

One example of this is the selection of where to produce the Solid Rocket Boosters (SRBs) for the now decommissioned Space Shuttle. The engineering best practices said to build the SRBs in one large piece, not in sections, for each SRB. The politicians, from states other than Florida, didn’t like this; basically because they wanted some of the Space Shuttle money spent elsewhere.

So the SRBs were designed and built in Utah and the SRB designers were forced to make the design in sections, which contributed to increased testing, transport and probably contributed significantly to the eventual SRB explosion on Challenger.

Me: What are the biggest challenges of engineering for space?

Willie: One is the thermal environment. There is no atmosphere in space therefore no thermal convection, leaving only conduction and radiation as ways to transport heat and keep components in proper temperature operating ranges.

Putting a fan next to something to cool it is of zero use, since there is no fluid (atmosphere) to convey the heat. All the thermal energy generated by the satellites’ electronics, pumps, mechanical friction must be dissipated by conductive and radiative means.

All space craft in low earth orbits (300-1000 km) are thermally influenced by Earth’s and our Sun’s warm and hot radiation and simultaneously by deep, black space’s extremely cold radiation. A single spacecraft can see thermal gradients of over 100 degrees Celsius from the deep space side to the Sun side of the space craft.

To combat this harsh thermal environment designers use multilayer insulation, louvres, radiators, heat pipes, thermal coatings and even heaters on the cold side to properly control the temperature of each component during the mission life cycle.

The second issue is the electromagnetic (EM) radiation environment. Unlike long wavelength thermal radiation, high energy and very short wavelength EM radiation particles pass right through basically all usable space flight shielding. Therefore they can directly impact the junctions of transistors causing permanent damage to the integrated circuit and likely mission failure or degradation.

To mitigate this problem designers have developed very specialized space flight electronic components that have completely different construction and quality assurance testing methods from our commercial electronic components we use on Earth for our computers, TVs and the like. These space flight qualified components are much more costly to design and manufacturer than commercial components but are very EM radiation tolerant where the commercial components are not.

The third issue is the zero gravity of outer space. This is the environmental factor that most people think of when they think about outer space but in fact zero-G is the least problematic of the three space environmental factors listed here for most space flight components.

 

 

Greek Lessons

The Greek crisis revolves around a big and contentious set of decisions being taken by a small set of people to fix a calamity. Seeing how that happens for Greece is a great window into understanding what might happen for far more consequential decisions in the future - and there's no more consequential decision on the horizon that what to do about carbon emissions.