Mining giant Rio Tinto Face Environmental, Human Rights Complaint in Papua New Guinea

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Contamination of rivers and streams by mine waste in the vicinity of the Panguna copper mine in the Autonomous Region of Bougainville, Papua New Guinea. Credit: Catherine Wilson

CANBERRA, Australia, Jan 4 2021 (IPS) – Local communities in the vicinity of the abandoned Panguna copper mine, have taken decisive action to hold the global mining multinational, Rio Tinto, accountable for alleged environmental and human rights violations during the mine’s operations between 1972 and 1989.


The mine operated in the mountains of central Bougainville in Papua New Guinea until 1989.

The complaint by 156 residents was lodged with the Australian Government in September by Australia’s Human Rights Law Centre and subsequently accepted in November, paving the way for a non-judicial mediation process.

“We and the communities we are working with have now entered into a formal conciliation process with Rio Tinto facilitated by the Australian OECD National Contact Point and talks with the company will begin very shortly,” Keren Adams, Legal Director at the Human Rights Law Centre in Melbourne told IPS.

Rio Tinto was the majority owner of the Panguna mine through its operating company, Bougainville Copper Ltd, with a 53.8 percent stake. However, 17 years after it began production in 1972, anger among indigenous landowners about contaminated rivers and streams, the devastation of customary land and inequity in distributing the extractive venture’s profits and benefits triggered an armed rebellion in 1989. After the mine’s power supply was destroyed by sabotage, Rio Tinto fled Bougainville Island and the site became derelict during the decade long civil war which followed.

The mine area, which is still controlled by the tribal Mekamui Government of Unity, comprising former rebel leaders, hasn’t been decommissioned and the environmental legacy of its former operations never addressed.

Now, according to the complaint, “copper pollution from the mine pit and tailings continues to flow into local rivers … The Jaba-Kawerong river valley downstream of the mine resembles a moonscape with vast mounds of grey tailings waste and rock stretching almost 40 km downstream to the coast. Levees constructed at the time of the mine’s operation are now collapsing, threatening nearby villages.”

Gutted mine machinery and infrastructure are scattered across the site of the Panguna mine in the mountains of Central Bougainville, an autonomous region in Papua New Guinea. Credit: Catherine Wilson/IPS

There are further claims that contamination of waterways and land is causing long-term health problems amongst the indigenous population, such as skin diseases, diarrhoea, respiratory illnesses, and pregnancy complications.

Helen Hakena, Director of the Leitana Nehan Women’s Development Agency in Bougainville’s main town of Buka, fully supports the action taken by her fellow islanders.

“It is long overdue. It is going to be very important because it was the big issue which caused the Bougainville conflict. It will lay to rest the grievances which caused so much suffering for our people,” Hakena told IPS.

The Bougainville civil war, triggered by the uprising at the mine, led to a death toll of 15,000-20,000 people.

The people of Bougainville believe that Rio Tinto has breached the OECD Guidelines for Multinational Enterprises by failing both to take action to mitigate foreseeable environmental, health and safety-related impacts at the mine and respect the human rights of the communities affected by its extractive activities. The Human Rights Law Centre claims that “the mine pollution continues to infringe nearly all the economic, social and cultural rights of these indigenous communities, including their rights to food, water, health, housing and an adequate standard of living.”

“While we do not wholly accept the claims in the complaint, we are aware of deteriorating mining infrastructure at the site and surrounding areas and acknowledge that there are environmental and human rights considerations,” Rio Tinto responded in a public statement.

“Accepting the AusNCP’s ‘good offices’ shows that we take this complaint seriously and remain ready to enter into discussions with the communities that have filed the complaint, along with other relevant communities around the Panguna mine site, and other relevant parties, such as Bougainville Copper Ltd, the Autonomous Bougainville Government and PNG Government,” the statement continued.

In 2016, Rio Tinto divested its interest in Bougainville Copper Ltd, the operating company, and its shares were acquired by the PNG and Bougainville governments. Simultaneously, the corporate giant announced that it rejected corporate responsibility for any environmental impacts or damage.

Panguna mine’s copper and gold await political settlement before extraction can resume. Credit: Catherine Wilson/IPS

Mineral exploration in Bougainville in the 1960s, followed by the construction of the Panguna open-cut copper mine, occurred when the island region was under Australian administration. It would subsequently become a massive source of internal revenue Papua New Guinea, which was granted Independence in 1975. During its lifetime, the Panguna mine generated about US$2 billion in revenue and accounted for 44 percent of the nation’s exports.

The mining agreement negotiated between the Australian Government and Conzinc Rio Tinto Australia in the 1960s didn’t include any significant environmental regulations or liability of the company for rehabilitation of areas affected by mining.

There has been no definitive environmental assessment of the Panguna site since it was forced to shut down. However, about 300,000 tonnes of ore and water were excavated at the mine every day. In 1989, an independent report by Applied Geology Associates in New Zealand noted that significant amounts of copper and other heavy metals were leaching from the mine and waste rock dumps and flowing into the Kawerong River. Today, the water in some rivers and streams in the mine area is a luminescent blue, a sign of copper contamination.

Bougainville residents’ action comes at the end of a challenging year for Rio Tinto. It is still reeling from revelations earlier this year that its operations destroyed historically significant Aboriginal sacred sites, estimated to be 46,000 years old, in the vicinity of its iron ore mine in the Pilbara region of Western Australia. The company’s CEO, Jean-Sebastien Jacques, has subsequently resigned.

Nevertheless, Adams is optimistic about the corporate giant’s willingness to engage with Bougainville and PNG stakeholders.

“In the first instance, we hope that this non-judicial process will help to facilitate discussions to explore whether Rio Tinto will make these commitments to address the impacts of its operations. If not, then the communities will be asking the Australian OECD National Contact Point to investigate the complaint and make findings about whether Rio Tinto has breached its human rights and environmental obligations,” the Human Rights Law Centre’s Legal Director said. A full investigation, if required, could take up to a year.

Ultimately, the islanders are seeking specific outcomes. These include Rio Tinto’s serious engagement with them to identify solutions to the urgent environmental and human rights issues; funding for an independent environmental and human rights impact assessment of the mine; and contributions to a substantial independently managed fund to enable long term rehabilitation programs.

Otherwise, Australia’s Human Rights Law Centre predicts that “given the limited resources of the PNG and Bougainville governments, it is almost inevitable that if no action is taken by Rio Tinto, the environmental damage currently being caused by the tailings waste will continue and worsen.”

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Energy Cooperatives Swim Against the Tide in Mexico

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Energy

Onergia, one of the two energy cooperatives operating in Mexico today, installs photovoltaic systems, such as this one at the Tosepan Titataniske Union of Cooperatives in the municipality of Cuetzalan, in the southern state of Puebla. CREDIT: Courtesy of Onergia

Onergia, one of the two energy cooperatives operating in Mexico today, installs photovoltaic systems, such as this one at the Tosepan Titataniske Union of Cooperatives in the municipality of Cuetzalan, in the southern state of Puebla. CREDIT: Courtesy of Onergia

MEXICO CITY, Aug 31 2020 (IPS) – A Mexican solar energy cooperative, Onergia, seeks to promote decent employment, apply technological knowledge and promote alternatives that are less polluting than fossil fuels, in one of the alternative initiatives with which Mexico is seeking to move towards an energy transition.


“We organised ourselves in a cooperative for an energy transition that will rethink the forms of production, distribution and consumption to build a healthier and fairer world,” Onergia founding partner and project director Antonio Castillo told IPS. “In this sector, it has been more difficult; we have to invest in training and go against the logic of the market.”

The eight-member cooperative, created in 2017, has so far installed some 50 photovoltaic systems, mainly in the south-central state of Puebla.

“A public policy is needed that would allow us to move towards the transition. Getting people to adopt alternatives depends on public policy. It is fundamental for people to have the freedom to choose how to consume. It is our job to organise as consumers.” —
Antonio Castillo

Castillo explained by phone that the cooperative works with middle- and upper-class households that can finance the cost of the installation as well as with local communities keen on reducing their energy bill, offering more services and expanding access to energy.

In the case of local communities, the provision of solar energy is part of broader social projects in which the beneficiary organisations’ savings and loan cooperatives design the financial structure to carry out the work. A basic household system can cost more than 2,200 dollars and a larger one, over 22,000.

“The communities are motivated to adopt renewable energy as a strategy to defend the land against threats from mining or hydroelectric companies,” said Castillo. “They don’t need to be large-scale energy generators, because they already have the local supply covered. The objective is to provide the communities with alternatives.”

Onergia, a non-profit organisation, promotes distributed or decentralised generation.

In Mexico, energy cooperatives are a rarity. In fact, there are only two, due to legal, technical and financial barriers, even though the laws governing cooperatives recognise their potential role in energy among other diverse sectors. The other, Cooperativa LF del Centro, provides services in several states but is not a generator of electricity.

The Electricity Industry Law, in effect since 2014, allows the deployment of local projects smaller than one megawatt, but practically excludes them from the electricity auctions that the government had been organising since 2016 and that the administration of leftwing President Andrés Manuel López Obrador put a stop to after he took office in December 2018.

Since then, López Obrador has opted to fortify the state monopolies of the Federal Electricity Commission (CFE) and the Petróleos Mexicanos (Pemex) oil giant, which translates into favouring fossil fuels over renewable sources.

The National Electric System Development Programme 2018-2032 projects that fossil fuels will represent 67 percent of the energy mix in 2022; wind energy, 10 percent; hydroelectric, nine percent; solar, four percent; nuclear, three percent, and geothermal and bioenergy, four percent.

In 2032, the energy outlook will not vary much, as fossil fuels will account for 60 percent; wind, nuclear and geothermal energy will rise to 13, eight and three percent, respectively; hydroelectric power will drop to eight percent; while solar and bioenergy will remain the same.

In Mexico, rural communities are guaranteeing their electricity supply by using clean sources, thus furthering the energy transition to micro and mini-scale generation. The photo shows the "Laatzi-Duu" ecotourism site (the name means "standing plain" in the Zapotec indigenous language) which is self-sufficient thanks to a solar panel installed on its roof, in the municipality of San Juan Evangelista Analco in the southern state of Oaxaca. CREDIT: Emilio Godoy/IPS

In Mexico, rural communities are guaranteeing their electricity supply by using clean sources, thus furthering the energy transition to micro and mini-scale generation. The photo shows the “Laatzi-Duu” ecotourism site (the name means “standing plain” in the Zapotec indigenous language) which is self-sufficient thanks to a solar panel installed on its roof, in the municipality of San Juan Evangelista Analco in the southern state of Oaxaca. CREDIT: Emilio Godoy/IPS

The government cancelled the call for long-term electric auctions that allowed private companies to build wind and solar plants and sell the energy to CFE. But these tenders privileged private Mexican and foreign capital and large-scale generation.

In a dialogue with IPS, independent researcher Carlos Tornel questioned the predominant energy design promoted by the 2013 reform that opened up the hydrocarbon and electricity markets to private capital, and the form of energy production based on passive consumers.

“We don’t have an effective legal framework to promote that kind of energy transition,” said the expert via WhatsApp from the northeast English city of Durham. “A free market model was pursued, which allowed the entry of megaprojects through auctions and allowed access to those who could offer a very low cost of generation, which could only be obtained on a large scale.”

With that strategy, he added, “small projects were left out. And the government did not put in place economic incentives to foment cooperative schemes.”

“We need a more active model focused on the collective good,” added Tornel, who is earning a PhD in Human Geography at Durham University in the UK.

Mexico, the second largest economy in Latin America with a population of 129 million, depends heavily on hydrocarbons and will continue to do so in the medium term if it does not accelerate the energy transition.

In the first quarter of 2019, gross generation totaled 80,225 gigawatt hours (Gwh), up from 78,167 in the same period last year. Gas-fired combined cycle plants (with two consecutive cycles, conventional turbine and steam) contributed 40,094, conventional thermoelectric 9,306, and coal-fired 6,265.

Hydroelectric power plants contributed 5,137 Gwh; wind fields 4,285; nuclear power plants 2,382; and solar stations 1,037.

The Energy Transition Law of 2015 stipulates that clean energy must meet 30 percent of demand by 2021 and 35 percent by 2024. By including hydropower and nuclear energy, the country will have no problem reaching these goals.

Residents of the small rural community of Amatlán, in the municipality of Zoquiapan in the state of Puebla, oversee the operation of photovoltaic panels installed by the Mexican cooperative Onergia. This type of cooperative can help rural communities in Mexico access clean energy, particularly solar power. CREDIT: Courtesy of Onergia

Residents of the small rural community of Amatlán, in the municipality of Zoquiapan in the state of Puebla, oversee the operation of photovoltaic panels installed by the Mexican cooperative Onergia. This type of cooperative can help rural communities in Mexico access clean energy, particularly solar power. CREDIT: Courtesy of Onergia

By early August, the government’s Energy Regulatory Commission (CRE) had granted 310 permits for solar generation, small-scale production and self-supply, totaling almost 22,000 Mw.

The 2017 report Renewable Energy Auctions and Participatory Citizen Projects, produced by the international non-governmental Renewable Energy Policy Network for the 21st Century (REN21), cites, with respect to Mexico, the obligation for investors to form self-sufficient companies, which complicates attempts to develop local ventures.

Onergia’s Castillo stressed the need for a clear and stable regulatory framework.

“A public policy is needed that would allow us to move towards the transition,” he said. “Getting people to adopt alternatives depends on public policy. It is fundamental for people to have the freedom to choose how to consume. It is our job to organise as consumers.”

Affected by the coronavirus pandemic, Onergia is reviewing the way it works and its financial needs to generate its own power supply. It also works with the Renewable Energies Institute of the National Autonomous University of Mexico in the design and installation of solar power systems.

In March, the government’s National Council for Science and Technology launched a strategic national programme on energy transition that will promote sustainable rural energy projects and community solar energy, to be implemented starting in 2021.

In addition, the energy ministry is set to announce the Special Energy Transition Programme 2019-2024.

But to protect the CFE, the CRE is blocking approval of the development of collective distributed generation schemes, which would allow citizens to sell surplus energy to other consumers, and the installation of storage systems in solar parks.

Tornel criticised the lack of real promotion of renewable sources.

“The Mexican government has been inconsistent in its handling of this issue,” he maintained. “They talk about guaranteeing energy security through hydrocarbons. There is no plan for an energy transition based on renewables or on supporting community projects. We have no indication that they support renewable, and that’s very worrying.”

The REN21 report recommends reserving a quota for participatory citizen projects and facilitating access to energy purchase agreements, which ensures the efficiency of tenders and the effectiveness of guaranteed tariffs for these undertakings.

In addition, it proposes the establishment of an authority for citizen projects, capacity building, promotion of community energy and specific national energy targets for these initiatives.

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Semiarid Regions of Latin America Cooperate to Adapt to Climate

Civil Society, Combating Desertification and Drought, Development & Aid, Economy & Trade, Editors’ Choice, Environment, Featured, Food & Agriculture, Green Economy, Headlines, Integration and Development Brazilian-style, Latin America & the Caribbean, Projects, Regional Categories, South-South, TerraViva United Nations, Water & Sanitation

Combating Desertification and Drought

A rural settlement in the state of Pernambuco, in Brazil's semiarid ecoregion. Tanks that collect rainwater from rooftops for drinking water and household usage have changed life in this parched land, where 1.1 million 16,000-litre tanks have been installed so far. CREDIT: Mario Osava/IPS

A rural settlement in the state of Pernambuco, in Brazil’s semiarid ecoregion. Tanks that collect rainwater from rooftops for drinking water and household usage have changed life in this parched land, where 1.1 million 16,000-litre tanks have been installed so far. CREDIT: Mario Osava/IPS

RIO DE JANEIRO, Aug 27 2020 (IPS) – After centuries of poverty, marginalisation from national development policies and a lack of support for positive local practices and projects, the semiarid regions of Latin America are preparing to forge their own agricultural paths by sharing knowledge, in a new and unprecedented initiative.


In Brazil’s semiarid Northeast, the Gran Chaco Americano, which is shared by Argentina, Bolivia and Paraguay, and the Central American Dry Corridor (CADC), successful local practices will be identified, evaluated and documented to support the design of policies that promote climate change-resilient agriculture in the three ecoregions.

This is the objective of DAKI-Semiárido Vivo, an initiative financed by the United Nations International Fund for Agricultural Development (IFAD) and implemented by the Brazilian Semiarid Articulation (ASA), the Argentinean Foundation for Development in Justice and Peace (Fundapaz) and the National Development Foundation (Funde) of El Salvador.

DAKI stands for Dryland Adaptation Knowledge Initiative.

The project, launched on Aug. 18 in a special webinar where some of its creators were speakers, will last four years and involve 2,000 people, including public officials, rural extension agents, researchers and small farmers. Indirectly, 6,000 people will benefit from the training.

“The aim is to incorporate public officials from this field with the intention to influence the government’s actions,” said Antonio Barbosa, coordinator of DAKI-Semiárido Vivo and one of the leaders of the Brazilian organisation ASA.

The idea is to promote programmes that could benefit the three semiarid regions, which are home to at least 37 million people – more than the total populations of Chile, Ecuador and Peru combined.

The residents of semiarid regions, especially those who live in rural areas, face water scarcity aggravated by climate change, which affects their food security and quality of life.

Zulema Burneo, International Land Coalition coordinator for Latin America and the Caribbean and moderator of the webinar that launched the project, stressed that the initiative was aimed at “amplifying and strengthening” isolated efforts and a few longstanding collectives working on practices to improve life in semiarid areas.

Abel Manto, an inventor of technologies that he uses on his small farm in the state of Bahia, in Brazil's semiarid ecoregion, holds up a watermelon while standing among the bean crop he is growing on top of an underground dam. The soil is on a waterproof plastic tarp that keeps near the surface the water that is retained by an underground dam. CREDIT: Mario Osava/IPS

Abel Manto, an inventor of technologies that he uses on his small farm in the state of Bahia, in Brazil’s semiarid ecoregion, holds up a watermelon while standing among the bean crop he is growing on top of an underground dam. The soil is on a waterproof plastic tarp that keeps near the surface the water that is retained by an underground dam. CREDIT: Mario Osava/IPS

The practices that represent the best knowledge of living in the drylands will be selected not so much for their technical aspects, but for the results achieved in terms of economic, ecological and social development, Barbosa explained to IPS in a telephone interview from the northeastern Brazilian city of Recife, where the headquarters of ASA are located.

After the process of systematisation of the best practices in each region is completed, harnessing traditional knowledge through exchanges between technicians and farmers, the next step will be “to build a methodology and the pedagogical content to be used in the training,” he said.

One result will be a platform for distance learning. The Federal Rural University of Pernambuco, also in Recife, will help with this.

Decentralised family or community water supply infrastructure, developed and disseminated by ASA, a network of 3,000 social organisations scattered throughout the Brazilian Northeast, is a key experience in this process.

In the 1.03 million square kilometres of drylands where 22 million Brazilians live, 38 percent in rural areas according to the 2010 census, 1.1 million rainwater harvesting tanks have been built so far for human consumption.

An estimated 350,000 more are needed to bring water to the entire rural population in the semiarid Northeast, said Barbosa.

But the most important aspect for agricultural development involves eight “technologies” for obtaining and storing water for crops and livestock. ASA, created in 1999, has helped install this infrastructure on 205,000 farms for this purpose and estimates that another 800 peasant families still need it.

There are farms that are too small to install the infrastructure, or that have other limitations, said Barbosa, who coordinates ASA’s One Land and Two Waters and native seed programmes.

The “calçadão” technique, where water runs down a sloping concrete terrace or even a road into a tank that has a capacity to hold 52,000 litres, is the most widely used system for irrigating vegetables.

A group of peasant farmers from El Salvador stand in front of one of the two rainwater tanks built in their village, La Colmena, in the municipality of Candelaria de la Frontera. The pond is part of a climate change adaptation project in the Central American Dry Corridor. Central American farmers like these and others from Brazil's semiarid Northeast have exchanged experiences on solutions for living with lengthy droughts. CREDIT: Edgardo Ayala/IPS

A group of peasant farmers from El Salvador stand in front of one of the two rainwater tanks built in their village, La Colmena, in the municipality of Candelaria de la Frontera. The pond is part of a climate change adaptation project in the Central American Dry Corridor. Central American farmers like these and others from Brazil’s semiarid Northeast have exchanged experiences on solutions for living with lengthy droughts. CREDIT: Edgardo Ayala/IPS

And in Argentina’s Chaco region, 16,000-litre drinking water tanks are mushrooming.

But tanks for intensive and small farming irrigation are not suitable for the dry Chaco, where livestock is raised on large estates of hundreds of hectares, said Gabriel Seghezzo, executive director of Fundapaz, in an interview by phone with IPS from the city of Salta, capital of the province of the same name, one of those that make up Argentina’s Gran Chaco region.

“Here we need dams in the natural shallows and very deep wells; we have a serious water problem,” he said. “The groundwater is generally of poor quality, very salty or very deep.”

First, peasants and indigenous people face the problem of formalising ownership of their land, due to the lack of land titles. Then comes the challenge of access to water, both for household consumption and agricultural production.

“In some cases there is the possibility of diverting rivers. The Bermejo River overflows up to 60 km from its bed,” he said.

Currently there is an intense local drought, which seems to indicate a deterioration of the climate, urgently requiring adaptation and mitigation responses.

Reforestation and silvopastoral systems are good alternatives, in an area where deforestation is “the main conflict, due to the pressure of the advance of soy and corn monoculture and corporate cattle farming,” he said.

Mariano Barraza of the Wichí indigenous community (L) and Enzo Romero, a technician from the Fundapaz organisation, stand next to the tank built to store rainwater in an indigenous community in the province of Salta, in the Chaco ecoregion of northern Argentina, where there are six months of drought every year. CREDIT: Daniel Gutman/IPS

Mariano Barraza of the Wichí indigenous community (L) and Enzo Romero, a technician from the Fundapaz organisation, stand next to the tank built to store rainwater in an indigenous community in the province of Salta, in the Chaco ecoregion of northern Argentina, where there are six months of drought every year. CREDIT: Daniel Gutman/IPS

More forests would be beneficial for the water, reducing evaporation that is intense due to the heat and hot wind, he added.

Of the “technologies” developed in Brazil, one of the most useful for other semiarid regions is the “underground dam,” Claus Reiner, manager of IFAD programmes in Brazil, told IPS by phone from Brasilia.

The underground dam keeps the surrounding soil moist. It requires a certain amount of work to dig a long, deep trench along the drainage route of rainwater, where a plastic tarp is placed vertically, causing the water to pool during rainy periods. A location is chosen where the natural layer makes the dam impermeable from below.

This principle is important for the Central American Dry Corridor, where “the great challenge is how to infiltrate rainwater into the soil, in addition to collecting it for irrigation and human consumption,” said Ismael Merlos of El Salvador, founder of Funde and director of its Territorial Development Area.

The CADC, which cuts north to south through Guatemala, Honduras and El Salvador, is defined not as semiarid, but as a sub-humid region, because it rains slightly more there, although in an increasingly irregular manner.

Some solutions are not viable because “75 percent of the farming areas in the Corridor are sloping land, unprotected by organic material, which makes the water run off more quickly into the rivers,” Merlos told IPS by phone from San Salvador.

“In addition, the large irrigation systems that we’re familiar with are not accessible for the poor because of their high cost and the expensive energy for the extraction and pumping of water, from declining sources,” he said.

The most viable alternative, he added, is making better use of rainwater, by building tanks, or through techniques to retain moisture in the soil, such as reforestation and leaving straw and other harvest waste on the ground rather than burning it as peasant farmers continue to do.

“Harmful weather events, which four decades ago occurred one to three times a year, now happen 10 or more times a year, and their effects are more severe in the Dry Zone,” Merlos pointed out.

Funde is a Salvadoran centre for development research and policy formulation that together with Fundapaz, four Brazilian organisations forming part of the ASA network and seven other Latin American groups had been cooperating since 2013, when they created the Latin American Semiarid Platform.

The Platform paved the way for the DAKI-Semiárido Vivo which, using 78 percent of its two million dollar budget, opened up new horizons for synergy among Latin America’s semiarid ecoregions. To this end, said Burneo, it should create a virtuous alliance of “good practices and public policies.”

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Crisis Hits Oil Industry and Energy Transition Alike

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Energy

Mexico's state-run oil giant Pemex faces a difficult outlook due to the fall in international oil prices and the crisis resulting from the coronavirus pandemic, which threatens its production and finances, in a situation analysed during the 29th La Jolla Energy Conference, organised online by the Institute of the Americas. CREDIT: Emilio Godoy/IPS

Mexico’s state-run oil giant Pemex faces a difficult outlook due to the fall in international oil prices and the crisis resulting from the coronavirus pandemic, which threatens its production and finances, in a situation analysed during the 29th La Jolla Energy Conference, organised online by the Institute of the Americas. CREDIT: Emilio Godoy/IPS

MEXICO CITY, May 22 2020 (IPS) – While it attempts to cushion the effects of the coronavirus pandemic, the Latin American and Caribbean region also faces concerns about the future of the energy transition and state-owned oil companies.


These questions were discussed at the 29th La Jolla Energy Conference, organised by the Institute of the Americas. It was held online May 18-22, rather than bringing together more than 50 speakers at the institute’s headquarters in the coastal district of San Diego, in the U.S. state of California, in the midst of the COVID-19 pandemic.

Alfonso Blanco of Uruguay, executive secretary of the Latin American Energy Organisation (OLADE), said during a session on global trends and the regional energy industry that the changes seen during the pandemic will spread after the crisis and will be long-lasting.

“There will be structural transformations and we are convinced that most consumer behaviors will change after the pandemic. Demand will vary due to changes in the main areas of transportation and other energy areas. The effects on fossil fuel consumption will be strong and there will be a greater impact on renewable energies,” he said.

OLADE, a 27-member regional intergovernmental organisation for energy coordination, estimates that electricity demand has fallen by 29 percent in Bolivia compared to 2019, as a result of the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), which causes COVID-19, and by 26 percent in Argentina, 22 percent in Brazil and 11 percent in Chile.

“There will be structural transformations and we are convinced that most consumer behaviors will change after the pandemic. Demand will vary due to changes in the main areas of transportation and other energy areas. The effects on fossil fuel consumption will be strong and there will be a greater impact on renewable energies.” — Alfonso Blanco

Likewise, final energy demand plummeted 14 percent in Brazil compared to 2019, 11 percent in both the Andean and Southern Cone regions, nine percent in Mexico, seven percent in Central America and five percent in the Caribbean.

As countries went into lockdown to curb the spread of COVID-19, electricity consumption by businesses and factories declined, due to the suspension of activities.

Leonardo Sempertegui, legal advisor to the Organisation of Petroleum Exporting Countries (OPEC), said the pandemic may be a wake-up call for countries lagging behind in the energy transition.

“This may be the new normal. The structure and governance of the energy architecture to cope with the next phase are changing dramatically. Energy poverty and the energy transition cannot be solved regardless of who controls a resource; these challenges cannot wait,” he said in the same session.

In Latin America, nations like Argentina, Bolivia, the Dominican Republic, Ecuador, Honduras and Uruguay have made progress in the energy transition since 2015, while Brazil has slid backwards and countries like Mexico are stuck in the same place, according to the World Economic Forum’s Energy Transition Index, released May 13.

As the region heads into the fourth month of the pandemic, countries are assessing their electricity markets, which have been shaken by the crisis.

Nations like Argentina, Chile, Colombia and Peru have resorted to long-term electricity auctions, which have generated low prices for renewables, while Mexico suspended such schemes in 2019.

In Argentina, as Andrés Chambouleyron, a non-resident fellow at the Institute of the Americas, explained, industrial consumption fell by 50 percent and electricity distributors have not been able to obtain sufficient revenues to cover fixed costs or electricity purchases.

The government has thus provided financing to Cammesa – the electricity wholesale market administration company – to pay the generators, since it is bound by contracts to buy the energy.

“There will be a permanent change in electricity consumption in Argentina. We have cheaper gas than before; the models say that you have to use more gas because it is cheaper than other sources. We won’t see much change in Argentina’s energy mix, and that could extend to all of Latin America,” said Chambouleyron, who warned of breach of and renegotiation of contracts for energy purchases.

Low oil prices threaten to slow down the energy transition in Latin America, although renewable energies already compete with the costs of fossil fuels, agreed experts at the 29th La Jolla Energy Conference, organised online by the Institute of the Americas. The photo shows solar panels on a house in Ajijic, in the western Mexican state of Jalisco. CREDIT: Emilio Godoy/IPS

Low oil prices threaten to slow down the energy transition in Latin America, although renewable energies already compete with the costs of fossil fuels, agreed experts at the 29th La Jolla Energy Conference, organised online by the Institute of the Americas. The photo shows solar panels on a house in Ajijic, in the western Mexican state of Jalisco. CREDIT: Emilio Godoy/IPS

While renewables are already competing in price with conventional sources, low oil and gas prices undermine their expansion, a predicament that alternative energy sources have been facing in recent years.

In addition, the rise in the cost of international credit and the fluctuations of the dollar against local currencies may make generation more expensive.

In another session on the outlook for state-owned oil companies, Marta Jara, former president of Uruguay’s public oil company ANCAP, said the current crisis could accelerate the transition, but called it a “major challenge”.

“The temptation is to be opportunistic and forget the roadmap of the energy transition. We must invest in sustainable energy systems, decarbonise transport. It is important to secure funding and create jobs. I hope the crisis opens the door to be more innovative,” she said.

Viable or not?

The plunge in fossil fuel prices is damaging the finances of the region’s oil producing countries, such as Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Peru and Venezuela, and state companies in the sector are facing problems with regard to planning and operations.

But it benefits net importers, like the countries of Central America or Chile, whose oil bills have shrunk, while for consumers in both oil producing and importing countries the cost of electricity could go down.

“The most competitive will be the countries with lower oil extraction costs. Some projects will not be economically viable. We will see greater economic problems than in 2019,” predicted Lisa Viscidi, director of the Energy, Climate Change and Extractive Industries Programme at the non-governmental Inter-American Dialogue, during a panel on the situation in several Caribbean nations.

The pandemic and a rise in Saudi production announced on Mar. 10 led to a collapse in oil prices and the consequent risk of bankruptcies in the industry. State-owned oil companies have fared better than others so far in the crisis.

In another session on the outlook for state-owned oil companies, John Padilla, managing director of the private consulting firm IPD Latin America, stated that “it will take time to get out of this situation, with effects for the region, and the need for great efficiency.

“Most nations have been exporters, efficiency will be the key. What has not been done is to cultivate domestic and regional markets, state enterprises are not going to play the same role as they always have,” he said.

Public companies such as Brazil’s Petrobras and Colombia’s Ecopetrol entered the crisis in a better position than Mexico’s Pemex, Venezuela’s PDVSA and Argentina’s YPF, according to experts.

“These are difficult times, even for the best prepared. We can hope that if the country and its company are in trouble, if governments need money, they can get more out of the companies,” said Francisco Monaldi, interim director of the Baker Institute for Public Policy’s Latin America Initiative at the private Rice University in the U.S. state of Texas.

In his view, “Mexico is in better fiscal conditions, it should not be a problem. But Pemex can drag Mexico down. If the government doesn’t change direction, it could become a serious problem,” he said as an example.

Although Pemex will increase its investment in 2020, the oil company reported losses of 20 billion dollars in the first quarter of this year. Due to the crisis, Petrobras limited its investment to 3.5 billion dollars and its daily production to 200,000 barrels, and postponed the sale of eight refineries.

For Lucas Aristizábal, a senior director in Fitch Ratings’ Latin American corporates group, some state-owned oil companies are viable and others are not.

“In 2021, the financial contribution of oil will be lower for governments. If they want the companies to play a key role, they will put more pressure on their financial structure. The current situation illustrates the economics of these corporations,” he said during the forum.

Pemex and YPF were already losing money per barrel in 2019, while Petrobras has more balanced production costs.

On the oil horizon, and in the midst of the COVID-19 crisis, Guyana has become the rising star, although there is still political uncertainty, as the result of the Mar. 2 presidential elections is still unclear.

“It’s hard to predict what will happen. There is a risk of U.S. sanctions that would not affect investment in the sector, but would pose a political risk to the country,” said Thomas Singh, in the Department of Economics at the public University of Guyana.

The country expects to extract 600,000 barrels per day by 2024 and take in revenues of five billion dollars, with reserves exceeding five billion barrels.

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Mexico’s Development Banks Fuel the Fossil Energy Trade

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Energy

Demonstrators demand clarification of the murder of land rights activist Samir Flores and the shutdown of a thermoelectric plant in the state of Morelos, in central Mexico, in a February 2019 protest on Mexico City's emblematic Paseo Reforma. CREDIT: Emilio Godoy/IPS

Demonstrators demand clarification of the murder of land rights activist Samir Flores and the shutdown of a thermoelectric plant in the state of Morelos, in central Mexico, in a February 2019 protest on Mexico City’s emblematic Paseo Reforma. CREDIT: Emilio Godoy/IPS

MEXICO CITY, May 20 2020 (IPS) – Since 2012, Teresa Castellanos has fought the construction of a gas-fired power plant in Huexca, in the central Mexican state of Morelos, adjacent to the country’s capital.


“We don’t want the power plant to operate, because it will cause irreparable damage, polluting the water and air. This project was imposed on us; we have to defend the water and the land. This is not an industrial zone,” the activist, coordinator of the Huexca Resistance Committee, told IPS.

During the tests, the constant noise of the turbines also altered the life of this small community of just over 1,000 people, mostly farmers, near the Cuautla River, within the rural municipality of Yecapixtla.

“Development banks must have safeguards and principles for sustainable investment. National regulations are needed, which define climate finance and green finance, what principles govern them, what are the climate risks. The trend should be to increasingly finance green projects and less and less hydrocarbons.” — Liliana Estrada

The Central Combined Cycle Plant, located in Huexca and with a capacity of 620 megawatts based on gas and steam, is part of the Morelos Integral Project (PIM), developed by the state Federal Electricity Commission (CFE). It also consists of an aqueduct and a gas pipeline that crosses the states of Morelos, Puebla and Tlaxcala.

The People’s Front in Defence of Land and Water of Morelos, Puebla and Tlaxcala and its ally, the Permanent Assembly of the People of Morelos, have managed to get several court orders that have blocked the operation of the plant, the 12-km aqueduct and the 171-km gas pipeline since 2015.

Castellanos, who has won an international and a national award for her activism, has been involved in the battle against the plant from the very start, which has earned her persecution and threats.

The opposition to the power plant by local communities that depend on planting corn, beans, squash and tomatoes and raising cattle and pigs, focuses on the lack of consultation, the threat to their agricultural activity, due to the extraction of water from the rivers, and the discharge of liquid waste.

In February 2019, a public consultation that did not meet international standards supported the completion of the project.

A few days earlier, activist Samir Flores had been murdered, a crime that remains unsolved – just one more instance of violence against environmentalists in Mexico. Despite Flores’ murder, the government of leftist President Andrés Manuel López Obrador went ahead with the referendum and upheld the result.

Public funds have fuelled the conflict, as the state-owned National Bank of Public Works and Services (Banobras) lent some 55 million dollars for the pipeline.

As in the case of other projects, development banks have become a financial pillar for the oil industry in Latin America’s second-largest nation, population 130 million.

The National Bank of Foreign Trade (Bancomext), Banobras and Nacional Financiera (Nafin) have funneled millions of dollars into building pipelines and oil and gas facilities in recent years, even though the climate change crisis makes it necessary to abandon such investments.

They have also financed renewable energy projects, but in much smaller amounts than fossil fuels.

The construction and operation of the Central Combined Cycle Plant, of the state Federal Electricity Commission, financed with public funds, unleashed a conflict with residents of Huexca, a small community in the central Mexican state of Morelos, which has brought the operation of the thermoelectric plant to a halt. CREDIT: Emilio Godoy/IPS

The construction and operation of the Central Combined Cycle Plant, of the state Federal Electricity Commission, financed with public funds, unleashed a conflict with residents of Huexca, a small community in the central Mexican state of Morelos, which has brought the operation of the thermoelectric plant to a halt. CREDIT: Emilio Godoy/IPS

Energy reform pillar

The energy reform that then conservative president Enrique Peña Nieto (2012-2018) enacted in 2013 opened the sector to private capital, broke the monopoly of the state-owned Petroleos Mexicanos (Pemex) oil giant and CFE, and made Mexico an attractive market for international investment in the sector.

To support this transformation, the state development banks also opened their coffers.´

Since 2012, Banobras, which finances infrastructure and public works and services, has lent at least 721 million dollars for the construction of gas pipelines, 10.2 billion dollars for oil and gas projects, 251 million dollars for electrical cogeneration, from steam generated in hydrocarbon plants, and eight million dollars for the construction of a thermoelectric plant that will burn fuel oil in the northwestern state of Baja California Sur.

Bancomext, which provides financing to exporters, importers and nine strategic sectors, has delivered some 500,000 dollars to oil companies in the eastern state of Tamaulipas and another 446 million dollars in Mexico City. It has also provided 65.4 million dollars to gas initiatives in the northern state of Nuevo Leon and 626.7 million dollars in Mexico City.

In addition, it has contributed 1.5 billion dollars for the supply of gas through pipelines to the final consumer; 324 million dollars for the extraction of oil and gas; 216 million dollars for the construction of public works for oil and gas; 126 million dollars for the manufacture of products derived from oil and coal; nearly seven million dollars for oil refining; 0.65 million dollars for the commercialisation of fuels; 0.25 million dollars for the drilling and maintenance of hydrocarbon wells; as well as 0.25 million dollars for oil platform maintenance and services.

In February, Bancomext granted a loan of 7.1 million dollars to Grupo Diarqco, in what it presented as the first credit to a private Mexican company in the industry, to exploit an oil field in the southeastern state of Tabasco.

Nafin, which grants credits and guarantees to public and private projects, created in 2014 the Energy Impulse Programme for these initiatives, endowed with more than a billion dollars.

It also manages, along with the economy ministry, the Public Trust to Promote the Development of Energy Industry National Suppliers and Contractors, designed for the industrial promotion of local production chains and direct investment in the energy industry, which this year has a fund of some 41 million dollars.

Missing: social and environmental safeguards

As in the case of the Morelos Integral Project, the gas pipelines have been a source of conflict with local communities, arising from the lack of socio-environmental safeguards and standards to guarantee that a project and its financing will respect the human rights of potentially affected communities.

Nafin and Banobras lack such safeguards, while Bacomext has had an “Environmental and Social Risk Management System Guide” since 2017, with no evidence of whether and how it has been applied to energy projects financed since then.

Since 2003, three platforms of international standards have emerged, to which Mexico’s development banks have not adhered, on human rights; social and environmental assessments and impacts; the application of safeguards; stakeholder participation; complaint resolution; and transparency.

The planet needs 80 percent of the global hydrocarbon reserves to stay underground in order for the temperature increase to remain at 1.5 degrees Celsius, as set out in the Paris Agreement on climate change.

The treaty, signed by 196 countries and territories in 2015, will enter into force at year-end and is considered indispensable to avoid irreversible climate disasters and human catastrophes.

Liliana Estrada, a researcher with the Climate Finance Group of Latin America and the Caribbean, told IPS that most investment in energy still goes to fossil fuels.

“After the reform, they have to enter into strategic projects and follow the guidelines of the government; they cannot go against these strategic lines. The gas and gas pipelines became strategic,” with the boost to the megaprojects of the López Obrador administration, said the representative of this coalition of non-governmental organisations and academics.

These credits are part of the fossil fuel subsidies that Mexico has pledged, to several international bodies, to eliminate.

The Mexican energy industry has also attracted international private banks, which have lent 55.95 billion dollars to 12 corporations, according to “Banking on Climate Change: Fossil Fuel Finance Report 2020”, released in March by six international environmental organisations.

The CFE received some 5.4 billion dollars from 12 banks between 2016 and 2019, and Pemex received 48.3 billion dollars from 20 foreign banks.

Based on Huexca’s experience, Castellanos demanded that these investments be stopped.

“If it’s our company, as the government says, then we can close it down. We have to defend the space in which we live, because we only have one planet and it belongs to all of us, it belongs to every living being, and it is our obligation to contribute something to this planet, because we are only here for a short while, we are guests of the earth”, she said.

Estrada called for sustainable financing regulations and questioned the lack of government leadership in this regard.

“Development banks must have safeguards and principles for sustainable investment,” she said. “National regulations are needed, which define climate finance and green finance, what principles govern them, what are the climate risks. The trend should be to increasingly finance green projects and less and less hydrocarbons.”

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Coronavirus Hasn´t Slowed Down Ecological Women Farmers in Peru’s Andes Highlands

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Women & Economy

Quechua indigenous farmers from the town of Huasao, in the Andes highlands of Peru, cut insect repellent plants in front of Juana Gallegos' house, while others prepare the biol mixture, a liquid organic fertiliser that they use on their vegetable crops. CREDIT: Mariela Jara/IPS

Quechua indigenous farmers from the town of Huasao, in the Andes highlands of Peru, cut insect repellent plants in front of Juana Gallegos’ house, while others prepare the biol mixture, a liquid organic fertiliser that they use on their vegetable crops. CREDIT: Mariela Jara/IPS

HUASAO, Peru, May 6 2020 (IPS) – It’s eight o’clock in the morning and Pascuala Ninantay is carrying two large containers of water in her wheelbarrow to prepare with neighbouring women farmers 200 litres of organic fertiliser, which will then be distributed to fertilise their crops, in this town in the Andes highlands of Peru.


“We grow healthy, nutritious food without chemicals,” she tells IPS, describing the sustainable agriculture she practices in Huasao, a town of about 1,500 people in Quispicanchi province, 3,300 metres above sea level, in the department of Cuzco in south-central Peru.

It will take them four hours to prepare the “biol”, a liquid fertiliser composed of natural inputs contributed by the local farmers as part of a collective work tradition of the Quechua indigenous people, to which most of the inhabitants of Huasao and neighbouring highlands villages in the area belong.

“Between all of us we bring the different ingredients, but we were short on water so I went to the spring to fill my ‘galoneras’ (multi-gallon containers),” explains Ninantay.

The women, gathered at the home of Juana Gallegos, work in community. While some gather insect repellent plants like nettles and muña (Minthostachys mollis, an Andes highlands plant), others prepare the huge plastic drum where they will make the mixture that includes ash and fresh cattle dung.

They keep working until the container is filled with 200 litres of the fertiliser which, after two months of fermentation in the sealed drum, will be distributed among them equally.

Making organic fertiliser is one of the agro-ecological practices that Ninantay and 15 of her neighbours have adopted to produce food that is both beneficial to health and adapted to climate change.

They are just a few of the almost 700,000 women who, according to official figures, are engaged in agricultural activities in Peru, and who play a key role in the food security and sovereignty of their communities, despite the fact that they do so under unequal conditions because they have less access to land, water management and credit than men.

That is the view of Elena Villanueva, a sociologist with the Flora Tristán Centre for Peruvian Women, a non-governmental organisation that for the past two years has been promoting women’s rights and technical training among small-scale women farmers in Huasao and six other areas of the region, with support from two institutions in Spain’s Basque Country: the Basque Development Cooperation agency and the non-governmental Mugen Gainetik.

“During this time we have seen how much power the 80 women we have supported have gained as a result of their awareness of their rights and their use of agro-ecological techniques. In a context of marked machismo (sexism), they are gaining recognition for their work, which was previously invisible,” she told IPS.

A group of women farmers are ready to head out to the plots they farm on the community lands outside of Huasao, a rural town in Peru's Andes highlands department of Cuzco. They are wearing masks to prevent the spread of COVID-19, because they depend on their production for food and income from the sale of the surplus, to cover their household expenses. CREDIT: Nayda Quispe/IPS

A group of women farmers are ready to head out to the plots they farm on the community lands outside of Huasao, a rural town in Peru’s Andes highlands department of Cuzco. They are wearing masks to prevent the spread of COVID-19, because they depend on their production for food and income from the sale of the surplus, to cover their household expenses. CREDIT: Nayda Quispe/IPS

This group of women farmers is convinced of the need for nutritious food that does not harm people’s health or nature, and they are happy to do their small part to make that happen.

“We want to have a variety of food constantly available, but taking care of our soil, water, plants, trees and air,” says Ninantay.

“We no longer use chemicals,” says Gallegos. “Thanks to the training we have received, we understood how the soil and our crops had become so dependent on those substances, we thought that only by using them would we have a good yield. But no, with our own fertilisers we grow lettuce, tomatoes, chard, artichokes, radishes and all our big, beautiful, tasty vegetables. Everything is organic.”

Once they were producing their fresh produce using agro-ecological techniques, the women decided to also begin growing their staple crops of potatoes and corn organically. “I see that the plants are happier and the leaves are greener now that I fertilise them naturally,” says Ninantay.

Villanueva says these decisions on what to plant and how to do it contribute to new forms of agricultural production that meet the food needs of the women and their families while also contributing to the sustainable development of their communities.

“With agro-ecology they enrich their knowledge about the resistance of crops to climate change, they carry out integrated management of pests and diseases, and they have tools to improve their production planning,” she explains.

And even more important, “this process raises their self-esteem and strengthens their sense of being productive citizens because they are aware that they are taking care of biodiversity, diversifying their crops and increasing their yields,” she adds.

Thanks to this, these peasant women are obtaining surpluses that they now market.

Three times a week, Ninantay and the other women set up their stall in Huasao’s main square where they sell their products to the local population and to tourists who come in search of local healers, famous for their fortune telling and cures, which draw on traditional rituals and ceremonies.

The agro-ecological women farmers set up their stall three times a week in the main square of the rural municipality of Huasao to sell lettuce, tomatoes, Chinese onions, radish and other fresh produce. They are now marketing their wares in compliance with the health regulations put in place in response to the coronavirus pandemic, for which they have received training from the municipal authorities. CREDIT: Nayda Quispe/IPS

The agro-ecological women farmers set up their stall three times a week in the main square of the rural municipality of Huasao to sell lettuce, tomatoes, Chinese onions, radish and other fresh produce. They are now marketing their wares in compliance with the health regulations put in place in response to the coronavirus pandemic, for which they have received training from the municipal authorities. CREDIT: Nayda Quispe/IPS

Coronavirus alters local dynamics

However, the measures implemented by the central government on Mar. 15 to curb the spread of the COVID-19 pandemic have reduced trade, by not allowing outsiders to visit Huasao, known locally as “the village of the witchdoctors” because of its healers.

But the work in the fields has not stopped; on the contrary, the women are working harder than ever.

“We used to have the income of my husband who worked in the city, but because of the state of emergency he can no longer leave,” says Ninantay. “My fellow women farmers are in the same boat, so we continue to harvest and sell in the square and what we earn goes to buying medicines, masks, bleach and other things for the home.”

Initially, she says, the husbands didn’t want their wives to participate in the project and stay overnight away from home to attend the training workshops. But after they saw the money they were saving on food and the income the women were earning, “they now recognise that our work is important.”

Their husbands, like most Huasao men, do not work in the fields. They work in construction or services in the city of Cuzco, about 20 km away, or migrate seasonally to mining regions in search of a better income.

So the community lands, where each family has usufruct rights on three-hectare plots, were left in the hands of women, even though the title is usually held by the men. With the opportunity offered by the Flora Tristán project, they have increased their harvests and are no longer merely subsistence farmers but earn an income as well.

Despite the pandemic, the women obtained permission from the authorities and received training on the care and prevention measures to be followed in order to market their products under conditions that are safe for them and their customers.

Their stall at the open-air market in the town’s main square is already known for offering healthy food, and on Mondays, Tuesdays and Thursdays they run out of vegetables and other products they offer. They also sell their wares in other fairs and markets.

Their stall in the municipal market is also seen as an alternative to return to more natural foods in the face of the increasing change in eating patterns in rural areas.

“Many people don’t want to eat quinoa or ‘oca’ (Oxalis tuberosa, an Andean tuber), they prefer noodles or rice,” says Ninantay. “Children fill up on sweets and junk food and they are not getting good nutrition, and that’s not right. We have to educate people about healthy eating if we want strong new generations.”

She stresses the importance of people understanding that nature, “Mother Earth”, must be respected.

“We have to recover the wisdom of our ancestors, of our grandmothers, to take care of everything that we need to live,” she warns. “If we do not do this, our grandchildren and their children will not have water to drink, seeds to plant, or food to eat.”

Flora Tristán’s Villanueva announced that the 80 women farmers in the programme would participate in initiatives for the recovery of agricultural and water harvesting practices based on forestation and infiltration ditches, using native trees known as chachacomas (Escallonia resinosa) and queñuas (Polylepis).

The women hope that their experience and knowledge will be extended on a large scale, because although they share with their families, neighbours and relatives what they are learning, they believe that the authorities should help expand these practices.

“We would like not only Huasao, but all of Cuzco to be an agro-ecological region, so that we can help nature and guarantee healthy food for the families of the countryside and the city,” says Gallegos, convinced that if they could do it, everyone can.

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