Land Acquisition and Resettlement - Mining and the Environment: From Ore to Metal - page 596

the other: social experts agree that effective compensation for land and lost assets plus
measures to restore livelihoods are essential components of a resettlement scheme.

What Compensation Scheme can Create Sustainable Value?

Monetary compensation is still the most common form of compensation; it is based on but
not restricted to the present land value paid in cash. While almost universally, landowners
prefer and in fact, often insist on cash compensation, there are two inherent and inter-
related problems associated with cash compensation.
First, if the project is located in a remote area as many mines are, land valuations are
generally low. Payment for land based on such valuations will be insufi cient to last for
long or to sustain future livelihoods. When the money is spent, compensated community
members may descend into poverty, especially when the surrendered land was the main
source of livelihood.
Second, even if larger compensation payments have been made, compensated land-
owners often lack the knowledge and experience to use received payments wisely or to
re-invest so as to achieve sustainable value. It follows that the preferred arrangement for
land compensation schemes involves compensation of 'land for land', often with an addi-
tional payment or assistance to cover relocation and establishment costs.
Clearly 'land for land' compensation, if carried out appropriately offers a continu-
ation of existing livelihoods, although in some cases adjustments or modii cations may be
required due to changed circumstances. But fair compensation alone is no guarantee of
successful resettlement. Assistance in livelihood restoration is equally important.

Landowners prefer and in
fact, often insist on cash
compensation.

What Constitutes Livelihood Restoration?

Livelihood restoration is the most difi cult and critical aspect of resettlement programmes.
It is also the most misunderstood and overlooked aspect. Livelihood restoration may take
many forms, including project employment for affected people; equity sharing with host
communities; distribution of royalties to the community (royalties are one way of compen-
sating for lost benei ts from ancestral lands that are communally held, not held by individ-
uals, see Case 14.1 ); and sustainable community development programmes (as discussed in
Chapter Fifteen). An innovative approach involving ownership of mining equipment has
been successfully used at the Lihir Gold Project in Papua New Guinea ( Case 14.2 ).
Training and education also offer opportunities for new livelihoods, and so does direct
employment on the mining project as well as secondary employment through other busi-
nesses and enterprises spawned by the project. Capacity building to enable local people
to benei t from small enterprise and local procurement opportunities, may be an impor-
tant component of livelihood restoration programmes. Similarly, arrangements in which
local enterprises receive access to i nance, can be highly benei cial. At the community
level, as mentioned above, equity, royalty streams and other revenue stream approaches
are commonly used to provide a range of benei ts including livelihood restoration and
support.
Each component of land compensation and livelihood restoration is rational, but each
also involves challenges. Land for land compensation appears to provide an equitable solu-
tion that overcomes many of the problems of cash compensation. However, this approach
has its own problems as it is not always possible to identify and purchase land of equiva-
lent utility. And what of the vendors; do they also require land for land compensation?

Royalties are one way of
compensating for lost benefi ts
from ancestral lands that are
communally held, not held by
individuals.