Why the IFC's Free, Prior, and Informed Consent Policy Doesn't Matter (Yet) to Indigenous Communities Affected by Development Projects

Abstract:     
On May, 12, 2011, the board of the International Finance Corporation (IFC) voted to amend the IFC’s Policy and Performance Standards on Social and Environmental Sustainability to require that Free, Prior, and Informed Consent (FPIC) be obtained when a project: (1) impacts lands and natural resources subject to traditional ownership or under customary use; (2) involves the relocation of indigenous peoples from lands and natural resources subject to traditional ownership or under customary use; or (3) significantly impacts on cultural resources (i) that are critical to the identity and/or cultural, ceremonial, or spiritual aspects of indigenous peoples’ lives, or (ii) the project proposes to use the cultural resources, knowledge, innovations, or practices of indigenous peoples for commercial purposes. This marks a watershed moment in international development history. After decades of wrangling and negotiations among non-governmental organizations, host countries, private industry, and development banks, there now appears to be a growing consensus that when a development project affects indigenous peoples, the project must obtain the FPIC of such affected indigenous peoples.

Utilizing a case study of wind development in rural Oaxaca, Mexico, this article responds to these recent developments and argues that, despite all of the good news, FPIC may not be a panacea. In particular, this article argues that FPIC’s limitations stem from a narrow interpretation of consent. Under this narrow interpretation, consent lacks teeth and the ability to affect in any meaningful way the social and environmental risks that often accompany large projects. These risks are consistently passed on to third parties, and include the risk of displacement, environmental devastation, and diminishment of quality of life. Under the narrow interpretation that is likely to be adopted by the IFC, FPIC may be merely another linguistic turn in the long history of engagement between the developer and the developed.

Rather than accept this narrow construction of FPIC, this article suggests a broader interpretation that links community engagement to a project’s contractual infrastructure. Under this approach, FPIC would allow affected indigenous communities to negotiate, ex ante, to mitigate the harm of development. The details of this negotiation would be memorialized in an “Environmental and Social Risk Agreement.” By tying certain environmental and social outcomes to potential loan defaults, for example, an FPIC-based agreement of this nature could empower communities to reject or redistribute the social and environmental risks that often accompany development. Moreover, the economic risks that often accompany unpopular projects might be curtailed, resulting in a win-win scenario for all of the parties involved in the project.

Number of Pages in PDF File: 40

Keywords: development, indigenous communities, free prior and informed consent, FPIC, International Finance Corporation, IFC

Accepted Paper Series