Anabel Marín (Cenit/CONICET)Pablo Burkolter (Cenit)ARGENTINA

INTRODUCTION

An historical problem and an historicalsolution in LAC

• Heavily specialised in NRs

• NRs are problematic: concentration, lowinclusion, environmental damage, poorinstitutions…

• A common view in LAC: induce structural changetowards manufacturing, NOT VERY SUCCESSFULL

▫ Still % of NR exports over total 70 in average in LAC

How can we tranform them in a more sustainable direction?

REGION% NR EXPORTS/ 

TotalGDP (1970‐2008) 

Latin America 70 1.64

NR Producers(developed)

59 2.29

Asian developingcountries

30 4.77

Developed economies 24 2

It is realistic?

How do industries get transformed?

• Industries get transformed and re‐structured through the development and growth of alternatives/niches, 

▫ which propose technologies and organisational practices that departure from the conventional ones.

• The dominant ways to exploit NRs are the ones more widely spread that privilege from the mainstream

• The alternatives are practices that departure from these highly institutionalised ways of solving problems, promising better outputs

▫ They are less diffused and have less support but promise todeliver better outputs

• Better social outputs (social inclusion, in the process of decision making and in the benefits)

• Better environmental outputs: (a) danger of exhausting non‐renewable resources, (b) destruction of ecosystems, and (c) the threat of serious pollution of air, soil

• Better economic outputs: dependency on the resources (e.g. through diversification)

We consider alternatives those that promiseimprovements regarding three types of outputs:

Our proposal

Three types of niches or alternatives:

• The more radical ones or (1) path‐breaking, aim to transform the industry radically to take it in a different direction of change – or pathway. 

• The less radical ones, or (2) path‐repairing, offers partial solutions to some of the problems of the dominant regime, but do not challenge its main logic of development; 

• A third option, (3) path‐creating, new developments closely related but different to the dominant one, augmenting the density of links among different industrial sectors.

Our proposal

We want to understand:

The possibilities of each type of alternative to survive, expand, and eventually transform or replace problematic NR industries

• 1) Distances and interactions with the dominant system

• 2) Diffusion through the creation of support

• 3) Outputs 

• 4) Barriers that block that the alternative does not become more widespread? 

Specific questions

METHODOLOGY

Identifying and studying alternative waysto exploit NRs

THREE KEY NR SECTORS IN LAC

• Agriculture in Argentina

• The Brazilian Amazon

• Copper Mining in Chile

We define alternatives as ventures that address some or all of the problems of the dominant

1. We characterise the dominant practices and its problems.

2. We conducted thirteen case studies of alternatives:

Three path‐breaking, six path‐repairing, and four path‐creating

FIELDWORK: STEPS

ANALYSIS

Dominant System: General FeaturesAgriculture Argentina Mining Chile Amazon Brazil

Extensive production of industrial crops.

Copper extraction Road‐logging‐livestock‐crops

Intensive use of NRs and inputs: water, energy, land‐intensive...

Product: Commodities (crops, wood and copper)

Externally oriented

Capital intensity and regulatory requirements are complex imposing a high barrier for entry

High share of illegal activity, low barriers to entry

Innovation in suppliers, mainly oriented to improve efficiency (throgh machineries, seeds..)

Control over key parts of the processes is highly concentrated, typically in foreign hands (e.g. Monsanto)

Dominant System: economic challenges

Agriculture Argentina Mining Chile Amazon Brazil

(a) Concentration:

• Economic (87.688 small and medium farms disappeared between 1992‐2002), 

• Of activities (soybean at the expense of other production) 

• Of knowledge (in few MNCs, such as GM seeds and herbicides 

(a) Concentration 

• Economic: (94%) large conglomerates

• Of activities (macro): 56,4% of otal exports (2010), 22,8% GDP and 20% tax revenues.

• Reduction in ore grades

• Of knowledge (in few MNC)

(b) Isolation: an enclave economy

(a) Illegality

(b) Prices: Increases in land prices

Dominant System: social challenges

Agriculture Argentina Mining Chile Amazon Brazil

(b) Employment losses and shifts within the rural economy: soya  farms employ only two workers every 1000 hectares; 

(c) Little involvement of farmers in decisions because of contractors and concentration

(c) Low employment generation: Large scale mining is not labor intensive, 

(d) Low inclusion: in  decision‐making process because of concentration.

(c) Illegality and precariousness of jobs:one third of workers are direct or indirectly connected to the illegal activities associated with wood sector.

Dominant System: environmental challenges

Agriculture Argentina Mining Chile Amazon Brazil

(d) Environmental damage:

Deforestation, high water/energy consumption, soil degradation, lost of biodiversity, etc. 

‐> Loss of resilience, due to  genetic uniformity 

(e) Health risks, from increasing use of herbicides and GM seeds.

(e) Three types of pollution: 

• Air pollution (high electricity needs) 

• Water pollution and depletion (30% consumption in some regions). 

• Soil pollution: industrial waste, tailings basins. 

(f) Emergence of conflicts

(d) DEFORESTATION:• Lost of about 19% of its forest cover by 2011. 

• Between 1988 and 2011 reached 392,021 square Km – an area larger than Austria and Italy combined.

(d) High levels of air pollution: due to deforestation. 

Overview of Alternatives: Argentina

Path‐breaking Path‐repairing Path‐creating

StudiedVenture

Two ventures: organic/agroecological

A large cooperative that produces, trade and manufactures crops in the country side

A knowledge intensive initiative connected to agriculture

BriefDescription

•Honey and cotton:

• Coopsol: 150 small producers from Santiago del Estero

• ACL: 50 small cotton producers from Chaco

•Certified (organic, fairtrade).

Agricultores FederadosArgentinos (AFA): 

•33,000 small, medium and large producers from Pampas

• 60% crops, 40% industrial (oils, biodiesel, machineries) 

Don Mario: 

• Development and production of soy seeds. 

•Innovation: based on classical breeding (non transgenic) 

Path‐breaking Path‐repairing Path‐creating

StudiedVenture

Cosmetic company based on organic inputs

Three cases of Sustainable Forest Management (SFM)

Supplier of natural and organic certified inputs forcosmetics, health and nutrition

BriefDescription

Chamma da Amazônia:

• Small from Belém. 

• Strong interactionwith public efforts.

•Strong productdifferentiation

E.g. Mamirauáfrom Manaus:

• Training and Community SFM

•Licensing 

•Environmental Control Plans;

Beraca Sabará: 

• Large from Sao Paulo

• Main asset: eco‐relationship with local communities

Overview of Alternatives: Brazil

Overview of Alternatives: Chile

Path‐repairing Path‐creating

Studiedventure

Two resource saving initiatives Two knowledge intensive solutions

BriefDescription

Paduel: a medium size companies 

• “Thickened” tailings technologies.

• Use sea water in the productive process.

•Laboratory of Geomechanics for Mining (University of Chile JV Codelco): mathematical solutions to deal with the problem of rock blastings. 

• Aguamarina: applications of microorganisms and biotechnology for mining. 

III. EVALUATING THE ALTERNATIVES: OUTCOMES

Improving Outcomes

Path‐breaking

Economic: Less concentration of:Production: Diversification of the agricultural production. Economic: Tests models better suited to small farmers.Of knowledge: dispersed between farmers.

Others: food security, quality of food….

Social: Increases inclusion through:Employment in the country side. Participation: Models that encourage and rely on higher local participation

Environmental: Reduces long term damage by:Exhaustion of the resourcesDestruction of the ecosystems: Respects and recreates biodiversityPollution: by limiting the uses of herbicides

Enhancing Sustainability by breaking: Argentina

Improving Outcomes

Path‐creating

Economic: Less concentration of:Production: diversification towards knowledge intensive activitiesOf knowledge: to improve seeds across domestic firms.

Economic: creating opportunities for domestic firms in seeds

Others: Seed varieties adapted to local ecological conditions; opportunities for organic production.

Social: POTENTIAL! Increases inclusion through:Demonstration effects: possible to improve seeds using non GM technologies; using free available knowledge…..OPPORTUNITIES FOR SMALL SCALE BUSINESS

Environmental: Less potential environmental damage by:Reducing dependency on the resources

Enhancing Sustainability by creating: Argentina

Enhancing Sustainability by repairing: Argentina

Improving Outcomes

Path‐repairing

Economic: Less concentration of:Production: due to manufacturing in the country side (40%). Economic: Increasing business opportunities for small scale farming.Of knowledge: though technical assistance, education and training for farmers.

Social: Increases inclusion through:Employment in the country side: Corporative Social Balance; promote access to small and medium‐size producers.Increasing participation in decisions making: Co‐operative model

Environmental: through long term objetives: Co‐operative model, Corporative Social Balance

Enhancing Sustainability: Brazil

Improving Outcomes

Path‐creatingand path‐breaking

Economic: increase value of biodiversity; opens up a space to innovation and to new markets.

Social: increases inclusion through:Production models that benefit the local communities;Opportunities to improve living standards.

Environmental: sustainable exploitation of Amazonian biodiversity.

Path‐repairing

Economic and social: strong chain of production with potential economic and social improvements for the local population.

Environmental: sustainable forest management can reduce deforestation and GHG emissions.

Enhancing Sustainability: Chile

Improving Outcomes

Laboratory of Geomechanics for 

mining

Productive: Can help increase extraction speed and avoid accidents that paralyze operations.

Economic: Training of people in applied research. Might contribute to diversification, produce marketable products, and demonstration effects

Social: Increased safety in the operation of underground mines.

Thickened tailings

Productive: Increased water efficiency. 

Economic: Has a path‐creating dimension.

Social: No risk of liquefaction‐related accidents, reduced pollution, reduced water demand from mining companies.

Environmental: Reduced use of fresh water, reduced dust emissions, surface used, and risk of underground water pollution.

Enhancing Sustainability: ChileImproving Outcomes

Seawater in the productive process

Productive: Possible to exploit deposits where fresh water is not available.

Economic: Has a path‐creating dimension.

Social: No competition for fresh water resources between communities and mining companies.

Environmental: No negative impact on fresh water sources.

Aguamarina

Productive: Increased production levels and reduced processing times.

Economic: potential for diversification and lateral migration. Training of people in applied research.

Social: Affirmative action employment policies. Indirect benefits through reduced pollution from mining companies.

Environmental: environmentally friendly products. Some reduce different forms of pollution.

IV. EVALUATING THE ALTERNATIVES: BARRIERS TO GROWTH

1. Capabilities: channel technical developments into restricted subsets of possible directions

2. Economic: economic benefits gained from investment in in the dominant system

3. Vested interests: sunk investments in existing activities: 

4. Politics and power: Incumbent businesses, regulators and others enjoy important positions in the current system. 

5. Infrastructure: roads, machineries, transport equipment, etc..

6. Institutions: Government regulations and subsidies, professional associations, and market rules. 

We have classified barriers in six types

CLASSICAL

• Lack of specialized knowledge: forest management, certification, genomics

• Synergies and complementarities between dominant diffused technologies. Eg. GM crops+glyphosate+ZT technologies.

LESS CLASSICAL: knowledge uniformity, lack of diversity about:

• Alternative technologies e.g. AGRICULTURE: agronomists loosing knowledge about plant selection; MINING: no capital goods available for small scale mining  

• Local environments (e.g. Amazon, Chaco): RISK of losing local communities’knowledge. Lack of models, understanding, trust, etc.

CHALLENGE: HOW TO CODIFY AND DIFFUSE BEST PRACTICES  FROM ALTERNATIVES?

Capabilities

CLASSICAL

• Sunk costs and investments in setting up (e.g. see water)

• Difficulties to evaluate and fund alternatives (not elegible for loans)

• Huge dependency on commodity exports, 8 and 20% tax in Arg and Chile

LESS CLASSICAL

• Lack of incentives due to disconnection with local demands (exports)

• Lack of local demand (low willingness to pay premium for quality)

• Problems to create incentives within local communities (e.g. Amazonia)

Availability of resources (machineries, land) for alternatives due to contaminationand prices.

CHALLENGE: HOW TO CREATE THE INCENTIVES?

Economics

Of companies:  sunk costs. Difficult for incumbents to try new things (mining). 

Of governments: collects resources, have control.

Of academics: with interests in the dominant system can influence national budget in their favour, in detriment of new knowledge or nascent firms

Of landowners: over land ownership in local communities.

Of large MNCs which want to diffuse their own technologies, e.g. GM

CHALLENGE: HOW TO AVOID PATH‐DEPENDENCY AND LOCK IN SITUATIONS?

Vested Interests

CLASSICAL

Influencing regulations: Land owners and large companies, eg. Monsanto, Syngenta, Dow and Bayer have a place in Conabia (Arg. for GM approvals). 

Influencing farmers: Business associations run by large farmers and large companies influence farmers practices, etc. Eg.: extension systems run by MNCsand large companies instead of public institutions.

LESS CLASSICAL

Difficulties tomanage conflicting interests, e.g. illegal production in the Amazon, soya vs. apiculture, conventional cotton vs. agroecological

CHALLENGE: HOW TO REPRESENT THE INTERESTS OF SMALL PRODUCERS AND OF THE POOR?

Politics and Power

Lack of appropriablity of existing equipment to deal with demands in thealternatives. E.g. deal with different tailings in large scales; with sea water use.

Transportation costs: difficult access to remote communities, e.g. producers of organic honey and organic inputs for cosmetics.

Contamination (1): of machinery can only be used in organic if clean… but they are mostly contaminated.

Contamination (2): of the environment (loss of biodiversity, deforestation, possible negative health effects, and water scarcity) damages honey, organic cotton. E.g. Herbicides kill most of the flora form that feed bees.

CHALLENGE: HOW TO PRESERVE CLEAN, NON CONTAMINATED SPACES AND INFRASTRUCTURE?

Infrastructure

Certification: usually performed by foreign companies, very expensive. Need forintermediate systems, more flexibility and participation of locals. E.g. to certify co‐operatives.

IPR systems not prepared to protect alternatives. E.g. (1) UPOV 78) weakly protects seed varieties obtained by classical breeding (e.g. breeders’ exception); patents protect new genetic constructs.

Regulations: complex, expensive… Not accessible for small business. eg. biotechevents, use of local knowledge.

Public funding schemes able to evaluate alternatives, that priorice longer termover short term objectives.

CHALLENGE: FULFILL INTERNATIONAL REGULATIONS AND PROTECT LOCAL NEEDSINCORPORATE LONG TERM OBJECTIVES

Institutions

Conclusions• In process…

• NRs: Not a curse, high potential to transform in sustainabledirections via alternatives

• But: Important barriers in the supply/demand side andinstitutions. ROLE FOR POLICIES

• Differences across activities: related to technology, institutions, history, main actors.

▫ In Mining no available path‐breaking, all innovationscoming from incumbents, WHY?

▫ Importance to understand the drivers…• DANGER: Can Chile be seen as the future?

Conclusions

Important issues: • Virtuous feedbacks between social and environmental otucomes: 

▫ E.g. co‐operative models increases inclusion through local participation, and incorporate long term objectives

• Local ownership matters to incorporporate sustainability goals.

• Future research:▫ What is the best practice, and how this wins and diffuses▫ Drivers, dynamics, different roles of path‐breaking and path‐repairing in transformations, etc.

Conclusions

For further information:

• Webpage: nrpathways.wix.com/home

• Email: a.i.marin@fund‐cenit.org

Thank you!