This study evaluates the 2006 environmental clearance (EC) reforms in India. The EC process requires all major capital investment projects by the private sector or government to seek regulatory approval prior to beginning construction. It is the centrepiece of environmental regulation of development projects in India. This study had two objectives: first, to evaluate the impacts of the EC reform process that created the modern two-tracked clearance system for small versus large projects; and second, to provide proof of concept for the use of remote-sensing data to monitor mines’ environmental compliance.
The mineral mining sector generates about 2.5 per cent of India's annual economic output, which is substantial by global standards. Alarmingly, air, water, and soil pollution accounted for about 2.5 million premature deaths in India (Landrigan et al. 2017). To address these environmental problems, the Indian government instituted an EC process in 1994, which mandated that all mines larger than 5 hectares (ha) apply for clearance at the central government level. Before the 2006 reforms, mines covering more than 25 ha were required to hold a public hearing prior to approval. The 2006 reforms required mines of area between 5 and 25 ha to hold a public hearing as well. This study rigorously evaluates this historical discontinuity in clearance requirements to hold public hearings for mines.
The key evaluation question is what are the impacts of the expanded public hearing requirement on the costs and benefits of the clearance process, measured as air pollution, water pollution and the extent of vegetative coverage using remote-sensing data.
The study also seeks to provide a proof of concept for the use of remote-sensing data to monitor mines’ environmental compliance. The study shows how a wide set of publicly available administrative data on mines’ clearance applications could be matched with satellite data on pollution and vegetation coverage and complemented with regulators’ regular monitoring in a low-resource environment like India.
The 2006 EC reforms mandated that all major mining projects by either the private sector or the government seek regulatory approval prior to beginning extraction. Before the 2006 reforms, mines covering more than 25 hectares (ha) were required to hold a public hearing before approval. The 2006 reforms required mines of area between 5 and 25 ha to hold a public hearing as well.
Theory of change
It is assumed that the requirement for public hearings before receiving clearance would have a stringent project review component, and improve environmental performance at the mines. This increased transparency could improve mines’ compliance with legal requirements of the EC process. The information solicited under the reformed EC process may induce improvements in planning, design and environmental management at mines. Access to additional information about new and expansion mining projects during the EC approval process may enable greater scrutiny by the public and the media, since project proponents were required to hold a public hearing in the district where the mine would be established. This is expected to have positive impacts on air pollution, water pollution and extent of vegetative coverage around the mines.
The study utilizes a unique database of all mines that applied for environmental clearance in India from 2006 to 2016. The full data set comprises 934 mines. The database was obtained by scraping clearance records from an online application database published by the Ministry of Environment, Forest and Climate Change. It was supplemented with data on mine characteristics and application processes drawn from the clearance letters granted to these mining projects. This study exploits the sharp cut-off at mines of 25 ha and around the date of the EC notification in September 2006 to evaluate the impact of public hearings. The authors run a difference-in-difference comparing mines of areas below and above 25 ha that applied before and after the 2006 reform notification to estimate the impact of the expanded public hearing requirement on the costs and benefits of the clearance process. This subset includes 134 mines. The treatment group is defined to be mines of area less than 25 ha which began holding public hearings only after the 2006 notification, and the control group to be mines of area over 25 ha that were required to hold public hearings both before and after the notification.
Overall, the study finds no evidence to suggest that public hearings significantly altered either the costs of the clearance process, as measured by mine costs and the duration of the process, or its benefits, which we measure as the impacts of mines on air pollution, water pollution and forest cover. However, it should be noted that the analysis is limited in that it could only detect short-term impacts of the expansion of public hearings under the 2006 reforms.
The innovative data collection process may provide important insights for the role of data in monitoring mines for regulators in India and beyond. This study highlights the importance of better synthesizing publicly available data on mines. Within the Indian government, both the Indian Bureau of Mines and environment ministry regulate mining and publish records on mining leases and clearance applications, respectively, but their records are unlinked. Establishing a central mining database that links mines in both systems would enable more meaningful public scrutiny of mines throughout their lifetimes from EC and lease application to mine closure.