Mexico sees significant rise in energy-related social conflicts, Baker Institute experts say

The number of energy-related social conflicts in Mexico has risen significantly over the last several years, according to experts in the Mexico Center and Center for Energy Studies at Rice’s Baker Institute for Public Policy and at the university’s Puentes Consortium.

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The experts – Ivonne Cruz, Adrian Duhalt and Pamela Lizette Cruz – outline their insights in a new report, “Social Conflicts and Infrastructure Projects in Mexico.” The authors review the reasons for these conflicts and the social impact assessments that should be required for companies developing energy and infrastructure projects in Mexico.

“On many levels, infrastructure projects shape the lives of local communities,” the authors wrote. “During the life cycle of these projects, conflict and opposition frequently arise, thereby creating significant challenges, including delays, legal trials and direct costs to investment. Mexico is no exception to this pattern.”

The extent of local opposition to infrastructure projects in recent years, as in the case of natural gas pipelines, hydroelectric projects and wind parks planned in the Yucatán Peninsula, is telling, the authors wrote. It reveals how Mexican policymakers and firms have miscalculated the value of effectively engaging local actors and social movements before launching major infrastructure projects, the authors said. It also shows the cost of neglecting social impact assessments, the authors wrote. “Even when an infrastructure project can easily lead to economic gains, assessing the project’s social impact has to become an inherent part of the development process in a country as diverse, unequal and complex as Mexico,” they wrote.

Energy reform in 2013-14 opened the hydrocarbon and electricity value chains to private participation and unleashed a wave of investment projects, many of which have faced substantial local opposition, the authors said. “To be sure, the reform prompted a paradigm shift for energy projects because it considered both sustainability and human rights together with economic development,” they wrote. “However, it failed to effectively implement a regulatory framework that incorporated social consultation processes in the formulation of energy projects.”

As of 2017, the number of conflicts involving indigenous communities, for example, amounted to 335, although they were not exclusively connected to infrastructure projects, the authors said. (Conflicts are also related to land rights, housing projects, environmental hazards, human rights, and security and justice.)

The number of social conflicts caused by infrastructure initiatives illustrates the need to toughen the laws that govern such projects, the authors said. “Hence, for any social consultation process to become effective and fair, the current administration should approve pending laws,” they wrote. “Failing to do so may be self-defeating to (newly elected) Mexican President Andrés Manuel López Obrador, principally in the areas of protecting energy security and the rights of indigenous communities, which could subsequently impact economic growth.”

The protocols used to measure social impact should be reviewed to determine whether they apply not only to energy-related projects, but also to infrastructure works, real estate developments and public services, the authors said.

“Clearly defining and institutionalizing these evaluations will delineate standardized, sector-specific guidelines that identify who leads these evaluations and the responsibilities of each party,” they wrote. “As of today, the protocols are not clear. For example, while some consulting firms have demonstrated proficiency in conducting successful social assessments and consultations as subcontracted entities of private firms, the Mexican secretary of energy has also established a set of protocols that are not yet standardized with those used by independent consulting groups. This is causing mistrust and unpredictability for all parties involved, especially the affected local and indigenous communities.”

So it’s important for companies to develop best practices to serve as effective community partners and maintain what business scholars call a “social license to operate.”

“Social licensing practices and protocols should further be overseen by a federal entity able to carry out social impact assessments throughout their development, and these practices and protocols should be available to interested parties (private companies, state agencies, community leaders, local governments and so forth),” they wrote.

Finally, the authors said it is imperative to look beyond the visible reasons and analyze the underlying structural causes of social conflict. “Infrastructure projects are often developed in societal and territorial peripheries that may be affected by ‘structural violence’ related to poverty, inequality and a lack of opportunities or effective forums for dialogue and participation,” the authors wrote. “Within this environment, infrastructure projects can reignite existing social conflicts by exerting greater pressure on pre-existing tensions and the results cannot be positive under these circumstances. Mistakes committed in the past are crucial lessons learned where Mexico’s rule of law and respect of human rights have huge space to improve.”