Why do EIAs take so Long and Cost so Much?

Some jurisdictions (notably, Canada) are attempting -- at least on face -- to streamline the environmental impact assessment (EIA) process for major resource development projects. Not only does the length of time required for such assessments need to be reduced, so does the complexity. I have witnessed substantial scientific "overkill" on several projects (particularly the fisheries- related components), often resulting in long, expensive, unproductive, and downright scientifically nonsensical navel-gazing exercises (a gravity flow fish sky-way directly over a large open pit mine and connecting two basins of a lake that was proposed by a senior biologist comes immediately to mind). That said, the current streamlining efforts are welcome news, but some questions remain to be answered regarding how we got to this point of overly lengthy and expensive EIAs?

The short answer is money. Nothing more, nothing less. The EIA process is less about science and the environment than it is about business for all those involved.

Generally, project proponents want the process to be as short as possible, and to cost as little as possible. These organizations/individuals are in the vast minority. The deck has been, and still is, stacked unreasonably against the proponents.

Some members of the public think that the majority of the significant players in an EIA are fundamentally most concerned about the environmental impacts of a project. This is naive, and not true. Unfortunately, based on my experience in EIAs, most major players are in it almost entirely for the direct monetary benefits. Let's look at some of the players:

1. Opponents: These are groups or individuals that are opposed to a project from its inception. Many of the groups are activist organizations (i.e., charities, other types of not-for-profits, and other non-governmental organizations, etc.). The individuals that represent these organizations are generally paid a salary to fight the project. This is no different than a pro-resource industry lobbyist, only that these individuals are anti-resource industry lobbyists, and they make their living by representing the interests of others. In some cases, the motives for opposition appear pure, but on closer examination, these groups often drum up public hysteria over certain types of projects (far too often with downright incorrect information, junk science, bad statistics, etc.), and then -- when the project is formally brought forward to the public -- the public is sufficiently worked up about the overhyped issues that the public donates money to said organizations, and these organizations go off to represent their donor "clients" in the assessment process.

The longer the assessment process, the greater the requirement there is for the activists to go back to their donors and ask for more money to support the organization's continued involvement in the process, and this leads to greater income and longer-term job security for the activists. In other words, there is a positive feedback loop for personal income acquisition by activists towards the drawing out of the assessment process. Other organizations and/or individuals oppose the project because they, or their associates, have business interests that would benefit from the project not moving forward. A good example of this aspect would be proxy groups for green energy players that oppose oil and gas development. Generally, the energy consumption pie is of a defined size, and if the public is deriving their energy from oil and gas, they are not deriving it from solar, wind, geothermal, biofuels, etc. Thus, there are clear winners and losers, and the battles for market share are intense and include the EIA process. It must be noted that some groups and/or individuals are opposed to projects because of a non-monetary related belief system, but in my experience, these opponents typically comprise a small minority.

2. Non-opposition based participants: In general, these are groups or individuals that are not opposed to a project as long as they can derive financial benefits from it. In other words, they are effectively engaged in a form of economic blackmail against the proponents, and have no real interests related to environmental issues. If these groups or individuals are given financial benefits, they will eventually agree that the project should go forward. The length of time these groups or individuals are active in the assessment process depends on their ability to reach what they see as a suitable financial arrangement with the proponent. If the negotiations with the proponent are not going as desired, these groups or individuals will drag out the process in the hopes that the proponent will see that paying these participants off is a reasonable cost of doing business when compared to the net present value of lost profits from the proposed enterprise being further delayed. Simple spreadsheets can be developed to perform quantitative risk analyses that assess the financial costs and risks from various participants in the process, and what the value is to the proponent of agreeing to their terms and when. Consequently, non-merit based participants can, and do, hijack EIAs with the sole purpose of demanding unnecessary and project unrelated financial compensation from the proponents in order to avoid their opportunistic opposition to the project in question.

3. Consultants: Many proponents employ consultants to conduct major portions of EIA. Often, the proponents lack the internal expertise to perform the assessment-related work, and the consultants give the aura of objective independence from the proponent. Given the size and scope of major resource development EIAs, relatively few consultants can undertake the work now required. Consequently, there is a relatively small pool of possible consultants to choose from. In addition, many consulting firms have staff sizes that oscillate widely as new projects are obtained and then completed. When one consulting firm obtains a large project at the expense of its "competitors," one often sees many of the staff from the "competitors" migrating to the successful firm. When this large project winds down, and another firm obtains a large project, these mobile staff members often move to the new firm, etc., as in a form of employment-based musical chairs. Hence, it is often perceived as unwise in the consulting sector to be "too competitive" with your "competitors," since you may need to apply for a job at your "competitors" if they land the next big project and you do not. There are, as such, many similarities between the retail fuel sector (i.e., gas prices) and the environmental consulting industry. Little positive feedback exists in this system for consultants to minimize costs or to achieve true free-market competition. The longer and more detailed the assessment, the more the consultant makes in profit.

One must also consider that environmental consultants often came up through the post-secondary system (and its generally anti-resource industry indoctrination requirements -- at least among many of the natural and environmental science disciplines, as well as a number of the social sciences and humanities), and as such, they have a number of personal and professional relationships with those in the academic and regulatory worlds (i.e., the number of environmental scientists is quite small). Thus, real or perceived conflicts of interest abound. Consultants may find that their former student-era friends/supervisors/employers (e.g., from undergraduate and/or graduate school), or even former colleagues, are on the regulatory and/or opposition side. There is also a significant amount of movement between working in the consulting, regulatory, and academic worlds -- hence, avoiding any "bridge burning" that may affect their future employment/income prospects is of primary concern for many consultants. As a result, it is not difficult to see how, over time, the massive creep in the size and complexity of EIAs has very directly benefited consultants. Consulting can be thought of as growing into a pseudo-parasitic industry, leaving the proponents largely defenceless (and the consultants still get paid if the project is not approved). Even when the proponents have in-house environmental assessment expertise, the individuals conducting the work also suffer from the same types of concerns regarding the alienation of possible future/past colleagues/employers in the consulting/academic/regulatory spheres.

4. Regulators: It is not difficult to understand how most regulatory representatives benefit from long and complex EIAs. Long and complex assessments justify the existence (immediate and continued) of the regulatory representatives, as well as an ever-increasing size and scope of their regulatory budgets and mandates. This, of course, brings favor in the government bureaucracy (i.e., empire-building) and ensures continued employment, perhaps even during times of fiscal restraint in other departments.

Overall, there are few -- if any -- feedbacks in the EIA process that would lead to efficient outcomes from the proponent's (and the public's) perspective. Unless the proponents are able to effectively lobby the government of the day to streamline the process and thereby reduce the massive waste that would otherwise exist in the process, the proponents are essentially held captive. But the concern is that changes in government often bring changes in EIA-related policies. Thus, while the current climate in some jurisdictions may reduce some of the burden that has been historically -- and unnecessarily -- placed on proponents, this may only be of short-term duration. What is needed is a more permanent fix to the EIA process that reduces the chance of "regulatory whiplash" between pro-resource industry and anti-resource industry administrations. This will be a real challenge. Environmental legislation can be altered by individual governments, so achieving longer-term (i.e., multi-decadal) stability for a more pro-resource industry assessment process will be a major and difficult challenge.

Regardless of whether such desirable pro-resource industry regulatory goals can be achieved, the general public should keep in mind that EIAs are not typically about the environment, and even less so about the natural sciences (I was shocked at the size and scope of the nebulous "socio-economic" components of environmental assessments when I was first introduced to the process). The processes are, and probably always have been, about pure financial interests among nearly all the parties. We all know that the proponents have a pure financial interest in seeing a project approved as quickly and cheaply as possible, but far too little attention has been paid to the numerous parties that achieve substantial pure financial benefits from either opposing a project outright, delaying it as long as practical and/or making it as complex as possible, or by engaging in the process as a form of effective economic blackmail.

Dr. Sierra Rayne writes regularly on environment, energy, and national security topics. He can be found on Twitter at @rayne_sierra.

 

Some jurisdictions (notably, Canada) are attempting -- at least on face -- to streamline the environmental impact assessment (EIA) process for major resource development projects. Not only does the length of time required for such assessments need to be reduced, so does the complexity. I have witnessed substantial scientific "overkill" on several projects (particularly the fisheries- related components), often resulting in long, expensive, unproductive, and downright scientifically nonsensical navel-gazing exercises (a gravity flow fish sky-way directly over a large open pit mine and connecting two basins of a lake that was proposed by a senior biologist comes immediately to mind). That said, the current streamlining efforts are welcome news, but some questions remain to be answered regarding how we got to this point of overly lengthy and expensive EIAs?

The short answer is money. Nothing more, nothing less. The EIA process is less about science and the environment than it is about business for all those involved.

Generally, project proponents want the process to be as short as possible, and to cost as little as possible. These organizations/individuals are in the vast minority. The deck has been, and still is, stacked unreasonably against the proponents.

Some members of the public think that the majority of the significant players in an EIA are fundamentally most concerned about the environmental impacts of a project. This is naive, and not true. Unfortunately, based on my experience in EIAs, most major players are in it almost entirely for the direct monetary benefits. Let's look at some of the players:

1. Opponents: These are groups or individuals that are opposed to a project from its inception. Many of the groups are activist organizations (i.e., charities, other types of not-for-profits, and other non-governmental organizations, etc.). The individuals that represent these organizations are generally paid a salary to fight the project. This is no different than a pro-resource industry lobbyist, only that these individuals are anti-resource industry lobbyists, and they make their living by representing the interests of others. In some cases, the motives for opposition appear pure, but on closer examination, these groups often drum up public hysteria over certain types of projects (far too often with downright incorrect information, junk science, bad statistics, etc.), and then -- when the project is formally brought forward to the public -- the public is sufficiently worked up about the overhyped issues that the public donates money to said organizations, and these organizations go off to represent their donor "clients" in the assessment process.

The longer the assessment process, the greater the requirement there is for the activists to go back to their donors and ask for more money to support the organization's continued involvement in the process, and this leads to greater income and longer-term job security for the activists. In other words, there is a positive feedback loop for personal income acquisition by activists towards the drawing out of the assessment process. Other organizations and/or individuals oppose the project because they, or their associates, have business interests that would benefit from the project not moving forward. A good example of this aspect would be proxy groups for green energy players that oppose oil and gas development. Generally, the energy consumption pie is of a defined size, and if the public is deriving their energy from oil and gas, they are not deriving it from solar, wind, geothermal, biofuels, etc. Thus, there are clear winners and losers, and the battles for market share are intense and include the EIA process. It must be noted that some groups and/or individuals are opposed to projects because of a non-monetary related belief system, but in my experience, these opponents typically comprise a small minority.

2. Non-opposition based participants: In general, these are groups or individuals that are not opposed to a project as long as they can derive financial benefits from it. In other words, they are effectively engaged in a form of economic blackmail against the proponents, and have no real interests related to environmental issues. If these groups or individuals are given financial benefits, they will eventually agree that the project should go forward. The length of time these groups or individuals are active in the assessment process depends on their ability to reach what they see as a suitable financial arrangement with the proponent. If the negotiations with the proponent are not going as desired, these groups or individuals will drag out the process in the hopes that the proponent will see that paying these participants off is a reasonable cost of doing business when compared to the net present value of lost profits from the proposed enterprise being further delayed. Simple spreadsheets can be developed to perform quantitative risk analyses that assess the financial costs and risks from various participants in the process, and what the value is to the proponent of agreeing to their terms and when. Consequently, non-merit based participants can, and do, hijack EIAs with the sole purpose of demanding unnecessary and project unrelated financial compensation from the proponents in order to avoid their opportunistic opposition to the project in question.

3. Consultants: Many proponents employ consultants to conduct major portions of EIA. Often, the proponents lack the internal expertise to perform the assessment-related work, and the consultants give the aura of objective independence from the proponent. Given the size and scope of major resource development EIAs, relatively few consultants can undertake the work now required. Consequently, there is a relatively small pool of possible consultants to choose from. In addition, many consulting firms have staff sizes that oscillate widely as new projects are obtained and then completed. When one consulting firm obtains a large project at the expense of its "competitors," one often sees many of the staff from the "competitors" migrating to the successful firm. When this large project winds down, and another firm obtains a large project, these mobile staff members often move to the new firm, etc., as in a form of employment-based musical chairs. Hence, it is often perceived as unwise in the consulting sector to be "too competitive" with your "competitors," since you may need to apply for a job at your "competitors" if they land the next big project and you do not. There are, as such, many similarities between the retail fuel sector (i.e., gas prices) and the environmental consulting industry. Little positive feedback exists in this system for consultants to minimize costs or to achieve true free-market competition. The longer and more detailed the assessment, the more the consultant makes in profit.

One must also consider that environmental consultants often came up through the post-secondary system (and its generally anti-resource industry indoctrination requirements -- at least among many of the natural and environmental science disciplines, as well as a number of the social sciences and humanities), and as such, they have a number of personal and professional relationships with those in the academic and regulatory worlds (i.e., the number of environmental scientists is quite small). Thus, real or perceived conflicts of interest abound. Consultants may find that their former student-era friends/supervisors/employers (e.g., from undergraduate and/or graduate school), or even former colleagues, are on the regulatory and/or opposition side. There is also a significant amount of movement between working in the consulting, regulatory, and academic worlds -- hence, avoiding any "bridge burning" that may affect their future employment/income prospects is of primary concern for many consultants. As a result, it is not difficult to see how, over time, the massive creep in the size and complexity of EIAs has very directly benefited consultants. Consulting can be thought of as growing into a pseudo-parasitic industry, leaving the proponents largely defenceless (and the consultants still get paid if the project is not approved). Even when the proponents have in-house environmental assessment expertise, the individuals conducting the work also suffer from the same types of concerns regarding the alienation of possible future/past colleagues/employers in the consulting/academic/regulatory spheres.

4. Regulators: It is not difficult to understand how most regulatory representatives benefit from long and complex EIAs. Long and complex assessments justify the existence (immediate and continued) of the regulatory representatives, as well as an ever-increasing size and scope of their regulatory budgets and mandates. This, of course, brings favor in the government bureaucracy (i.e., empire-building) and ensures continued employment, perhaps even during times of fiscal restraint in other departments.

Overall, there are few -- if any -- feedbacks in the EIA process that would lead to efficient outcomes from the proponent's (and the public's) perspective. Unless the proponents are able to effectively lobby the government of the day to streamline the process and thereby reduce the massive waste that would otherwise exist in the process, the proponents are essentially held captive. But the concern is that changes in government often bring changes in EIA-related policies. Thus, while the current climate in some jurisdictions may reduce some of the burden that has been historically -- and unnecessarily -- placed on proponents, this may only be of short-term duration. What is needed is a more permanent fix to the EIA process that reduces the chance of "regulatory whiplash" between pro-resource industry and anti-resource industry administrations. This will be a real challenge. Environmental legislation can be altered by individual governments, so achieving longer-term (i.e., multi-decadal) stability for a more pro-resource industry assessment process will be a major and difficult challenge.

Regardless of whether such desirable pro-resource industry regulatory goals can be achieved, the general public should keep in mind that EIAs are not typically about the environment, and even less so about the natural sciences (I was shocked at the size and scope of the nebulous "socio-economic" components of environmental assessments when I was first introduced to the process). The processes are, and probably always have been, about pure financial interests among nearly all the parties. We all know that the proponents have a pure financial interest in seeing a project approved as quickly and cheaply as possible, but far too little attention has been paid to the numerous parties that achieve substantial pure financial benefits from either opposing a project outright, delaying it as long as practical and/or making it as complex as possible, or by engaging in the process as a form of effective economic blackmail.

Dr. Sierra Rayne writes regularly on environment, energy, and national security topics. He can be found on Twitter at @rayne_sierra.

 

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