An Economist’s Perspective on the Pros and Cons and Best Practices of Public Review

1. An Economist’s Perspective on the Pros and Cons and Best Practices of Public Review A presentation to the 2012 Conference and Annual General Meeting of the Professional Engineers and Geoscientists of Newfoundland and Labrador Wade Locke Department of Economics Memorial University June 8, 2012 Gander, NL

2. Outline • Introduction • Questions asked • An economist’s reflection • Conclusion

3. Introduction • I am an economist at MUN • I have been involved in economic analysis of high profile development projects for over 30 years. These include, for example, • Voisey’sBay, White Rose, Hebron, Lower Churchill, iron ore mining (Alderon’sKami project, New Millennium’s LabMag, KeMeg and DSO projects, Rio Tinto’s IOC project, AccerMital’sBaffinland Iron Mines in Nunavut), and public presentations through the Harris Centre, NOIA, Board of Trade, Rotary, professional associations, annual conferences, and academic conferences. • I want to thank you for allowing me to come and share my ideas on this important topic • I have about 5 minutes for the presentation, but the discussion should be more interesting

4. Questions Asked of the Panel (1) • Where applicable, please give a short summary of what you see as the purpose of various public review processes of which you may have been part. What do you see as the goals of those processes and how well were these goals met? Were the goals appropriate to meet society’s in doing due diligence for the project? Please comment on other public review processes that you have observed in operation. (the purpose and effect) • What we the strengths an weaknesses of each of the public review processes noted in item 1? What worked and what didn’t work? What would constitute “best practices| in your opinion? (strengths & weaknesses) • There are projects that specialists (engineers, geoscientists, economists, scientists, financial experts, lawyers, etc) are required to develop and provide comment on, How should these specialists communicate their work, both to the panel members and to the public? How can they communicate better? (communication)

5. Questions Asked of the Panel (2) • How do Review panel members give appropriate weight to the input of various specialists and the public? Are Review panel members qualified to make such trade-offs? (weight and qualification) • When we see the public review material, the associated projects are largely designed and moving toward construction. Should part of the process be getting input at earlier stages, so that alternative as well as the planning and design stages can be betters impacted by public input? (earlier review) • How should the results and/or conclusions of the public review processes be communicated so that complex matters are explained to the public in a manner they can understand? (explanation of review findings)

6. An Economist’s Reflections (1) • (the purpose and effect) • Provide input for public and ensure that environment and social interest are taken into account for optimal development of large resource project • (strengths & weaknesses) • Sometimes the process gets hijacked by groups with their own agendas, which delays projects and makes it too expensive for good, but smaller, projects to proceed. So the strengths are public input and the weaknesses are public input. • (communication) • It has to be pitched honestly and at a level that the intelligent layman can understand, should they invest the effort. Otherwise, it defeats the purpose of public input

7. An Economist’s Reflections (2) • (weight and qualification) • Sometimes undue weight is given to opinions that are based on emotion and lack a factual or scientific basis, but that is the cost you pay for having public input in major decisions in an attempt to ensure that the development is in the best interest of society as a whole • (earlier review) • I don’t think so. Too costly and not productive in the evaluation process. We will never get anywhere if efforts are not focused. • (explanation of review findings) • The review’s final reports and the media’s follow-up should be sufficient — that is, if the reports are well done and the media are competent. There does not need to be a proactive approach to securing buy in. It is either a good project and that is clear from the review or it is not. • If you start with transparency and explain what you are doing, especially to mitigate undesirable risks, then a well written report at the end should be sufficient

8. Conclusion • These reviews are important for ensuring that the public interest is given due weight in decisions that may have external impacts or that may be optimized for the developer’s interest, rather than the interest of society as a whole • They sometimes get out of hand and vested interest groups, with other agendas, hijack the process for their own ends Moreover, this may not promote the optimal contribution to social well being • This can translate in to some smaller projects not starting because of the burden and cost of the review, or other projects being delayed or significantly modified • While this may make some of us feel smarter and give us some utility from having changed or delayed something, it, however, may not be in our long term interest. Thank you