Compensating the negative environmental impacts of mining with financial mechanisms in Brazil

Abstract

Royalties from Financial Compensation for Mineral Resources Exploitation (CFEM) aim to mitigate negative impacts on mining regions. Legislation does not specify how the resources should be applied. The objective of this study was to link CFEM distribution and environmental variables to the mining municipalities of Minas Gerais State, Brazil, and to verify if these resources help mitigating negative environmental impacts caused by mining activity. Area of Conservation Units (CU), category of CU and jurisdiction of CU of Minas Gerais mining municipalities and investment in environmental conservation were the environmental variables related to CFEM value. Land use maps of the municipalities between the years 2006 and 2016 were evaluated. Pearson's correlation coefficient was used for correlating the forest areas with the CFEM values received. More than half of the mining municipalities do not present CU, which shows that the mining activity does not stimulate the implementation of the CU. In addition, the implementation of the CU presents financial, human resources and land tenure barriers. However, these barriers cannot make invisible the positive externalities provided by the existence of well-managed MCU. Three major mining municipalities with Municipal Conservation Units (MCU) invested 4.02%, 1.82% and 1.88% of CFEM in environmental conservation, demonstrating an inadequate resources application. The land use maps and the correlation graphs show that there is no significant correlation between the receipt of CFEM and the increase in forest areas in the municipalities. CFEM does not help mitigate negative environmental impacts of mining. One of our suggestions is that the mining municipalities invest the CFEM resource obtained in maintaining existing CU and in creating and implementing new CU in their territories.