Is this a Real Choice? Critical Exploration of the Social License to Operate in the Oil Extraction Context of the Ecuadorian Amazon

Abstract

The purpose of this research was to critically analyze the social license to operate (SLO) for an oil company operating in Block 10, an oil concession located in the Ecuadorian Amazon. The specific study area is an important biodiversity hotspot, inhabited by indigenous villages. A mixed-methods approach was used to support a deeper understanding of SLO, grounded in participants’ direct experience. Semi-structured interviews (N = 53) were conducted with village leaders and members, indigenous associations, State institutions, and oil company staff, while household surveys were conducted with village residents (N = 346). The qualitative data informed a modified version of Moffat and Zhang’s SLO model, which was tested through structural equation modelling (SEM) analyses. Compared to the reference model, our findings revealed a more crucial role of procedural fairness in building community trust, as well as acceptance and approval of the company. Procedural fairness was found to be central in mediating the relationship between trust and the effects of essential services provided by the company (medical assistance, education, house availability) and sources of livelihoods (i.e., fishing, hunting, harvesting, cultivating, and waterway quality). The main results suggested that the concept of SLO may not appropriately apply without taking into account a community’s autonomy to decline company operation. To enhance procedural fairness and respect for the right of community self-determination, companies may need to consider the following: Establishing a meaningful and transparent dialogue with the local community; engaging the community in decision-making processes; enhancing fair distribution of project benefits; and properly addressing community concerns, even in the form of protests. The respect of the free prior informed consent procedure is also needed, through the collaboration of both the State and companies. The reduction of community dependence on companies (e.g., through the presence of developmental alternatives to oil extraction) is another important requirement to support an authentic SLO in the study area.

Indigenous Territorial Autonomy and Self-Government in the Diverse Americas

“…The remaining 20% is distributed in royalties between the central government and local Amazonian government. In other words, from the entire stream of capital extracted, Pastaza failed to retain for itself any major taxes or royalties (Mendez et al, 1998;Korovkin, 2002b;Guzmán Gallegos, 2012;Diantini et al, 2020).…”

“…Both the State's apathy through the institutions involved in the oil sector, and the departure of the Arco company from the country in 1999, led to the suspension of the 1994 agreement; Agip Oil Ecuador (AOE), the new head operator of block 10, would abandon the commitment made by its predecessor and prioritize a vertical, focused and client-based relationship with the 17 communities of the area. In exchange for small donations for focused projects of road, productive, educational and health infrastructure, it conditioned the delivery of these projects to the formation of a new organization called AIEPRA (Association of Independent Pastaza Peoples) to the total exclusion of the OPIP and its associations (Ortiz-T., 1997;Diantini, 2020).…”

Sustainability Dimensions Assessment in Four Traditional Agricultural Systems in the Amazon

“…This contrasts with the common belief that indigenous populations are associated with a holistic management of their traditional systems (long fallows, according to Boserup, 1965), with collective responsibility, participation and, therefore, compatibility with resource conservation (Dufour, 1990;Schwartzman et al, 2000). However, several studies (Henrich, 1997;Zimmerman et al, 2001;Rudel et al, 2002;Godoy et al, 2005;Gray et al, 2008;Porro et al, 2014) indicate that indigenous peoples sometimes also engage in unsustainable practices (Food Agriculture Organization, 2005), driven by the presence of oil activity (Rivera-Parra et al, 2020), which has negative implications (Diantini et al, 2020). The Waorani stand in contrast to the Shuar's aja, which had the highest scores, thus complying with Boserup's assertion (Boserup, 1965) regarding systems with more sustainable levels of governance (Rudel et al, 2002).…”

“…First, the Waorani have recently become integrated into the markets (Sierra et al, 1999;Franzen and James, 2007;Lu, 2007), driven by certain factors: accessibility, monetary income, trade of agricultural products, and wild meat, and a cultural erosion of exchange (Donders and Barriocanal, 2020). Oil exploitation in the Amazon basin is an additional factor, whereby some Waorani are economically dependent on salaried jobs in the oil industry (Rivera-Parra et al, 2020), which has caused time constraints for interaction with traditional production systems (Diantini et al, 2020). The following factors have also been registered: water contamination (Balseiro-Romero et al, 2018;Maurice et al, 2019), the presence of heavy metals in the food chain (Adzigbli and Yuewen, 2018;Maletić et al, 2019), including crops (Veil et al, 2004;Barraza et al, 2018) health risks for indigenous people and migrant settlers (Barraza et al, 2017;Merchán-Rivera and Chiogna, 2017), a loss of biodiversity (Durango-Cordero et al, 2018) and acculturation processes (Swing et al, 2012).…”

Land Use and Land Cover Changes in the Diversity and Life Zone for Uncontacted Indigenous People: Deforestation Hotspots in the Yasuní Biosphere Reserve, Ecuadorian Amazon

“…It also comprises other indigenous people in voluntary isolation (Tagaeri and Taromenane), who live off shifting agriculture and services from the forest land [42,43]. Oil companies built the roads to lay pipelines and continue to find and extract more oil [44] in colonial and indigenous areas [45,46] and even in national parks [47], generating several oil spills in the process [48]. Government agencies, such as the Ministry of Environment (now the Ecuadorian Ministry of Environment, Water and Ecological Transition-MAATE, acronym in Spanish), are encouraged by certain Ecuadorian and international NGOs to set aside and monitor large areas of the Amazon for the conservation and protection of the region's extraordinarily rich ecological and cultural diversity [49].…”