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Social Evaluation Study for the Milne Bay Community-Based Coastal and Marine Conservation Program png/99/G41 Jeff Kinch April 2001 unops contract for Services Ref


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In the last three years there have been significant increases in the prices of most major commodities in demand. This is linked to the recent devaluation of the kina over the past year which means that the price of exported goods has increased since the 1996 Real Domestic Factor Index was measured. This has further reduced community access to exported foodstuffs and other necessities. The inflation rate has risen to 20% in the year 2000 mostly reflecting the decrease in the exchange rate and the associated added costs to imported goods. The below table shows that over the 20-month period from January 1998 to September 2000 prices for vegetable oil, tinned mackerel, tinned meat, rice, and sugar rose 81%, 50%, 48%, 52%, 100%, and 55% respectively. These prices are of course much higher than the average represented in the PNG CPI. Higher prices reflected not only the increased cost of the goods in kina, but the increased costs of the transportation required to deliver the goods to the trade stores. Thus outer island communities who are more dependent on trade goods must raise their level of commerical fishing effort to pay for price increases in trade store items that reflect the effects of currency devaluation and inflation.


Table 52: Tradestore Price List (CBMMCAs 2 and 3): January 1998 to October 2000 (Source: Kinch, 1999; Field Notes)

Article

Unit of Measure

Price

28/01/98


Brooker Is

Tradestore


20/07/99


Brooker Is

Tradestore


21/08/99


Bwagaioa

Supermarket



18/10/00

Panaeati Is Tradestore



Washing Powder

200gr

1.30

1.50

2.10

2.00

D Cell Battery (1)




0.80

1.40

1.50

2.00

Vegetable Oil

500ml

1.60

2.95

2.90

2.90

Tinfish Mackerel

425gr

2.40

2.95

3.00

3.60

Tinned Meat

340 grs

2.70

3.90

4.10

4.00

Rice

1000 grs

1.10

1.85

1.95

2.20

Sugar

1000 grs

2.00

2.50

3.00

3.10

Instant Noodles

85 grs

0.70

0.85

0.70

0.80

Twisties

25 grs

0.40

0.50

0.40

0.60



Business Groups within Zone 1
Misima Associations

The major business group with links to the Deboyne Islands (CBMMCA 2) and to a lesser extent to Brooker (CBMMCA 3) was the Misima Towoho Siun Association (MTSA), the original signatory to the MML 1990 Memoranda of Agreement (MOA). The MTSA was later found not to be a registered association and was replaced by the Misima Resource Owners Associations (MROA). After complaints, an investigation by the Auditor's General Office recommended that the Fraud Squad be called in to investigate MROA's financial dealings, and later, the courts ordered its winding up. Interim Advisory Committees and Trusts currently have responsibility for managing funds, and were established as part of the mining compensatory payments currently worth about K15 million. The great majority of people’s support in the Misiman communities is now Emel Ltd. and its associated Kalopu Trust (Misima Mines Limited, 2000). The Kalopu Trust is being established to manage some K5.5 million on behalf of the landowners (Jackson, 2000). Resolution of who is to take responsibility for these funds and importantly how they are to be managed is vital.


The Deboyne Islands Development Association

A new association, called the Deboyne Islands Development Association (DIDA), was recently started by interested community members at Panaeati and Panapompom (CBMMCA 2). The DIDA has also entered into negotiation with Calvados Chain (CBMMCA 3), Sudest and Rossel (Zone 2) communities with the goal of a collective organisation. The DIDA has been two years in formulation. Three consultation meetings with the community were held ending with a last one to establish the Association. An Executive Committee was elected and a Constitution has now been drawn up. The DIDA has applied lessons learned from MML-affected landowner associations mentioned above and their divisive nature.


The DIDA's stated Program Goal is to address concerns for proper management of the various renewable resources of the islands (Losane, 2000). Their motives are similar to the recently Woodlark Island Fishermen's Association to protect the over-exploitation of the island's high valued and priced sea resource - beche-de-mer (see Jaymes, 200b).
Subsequent objectives of the DIDA are to encourage community participation in the up-keep and maintenance of community assets, to restore deteriorating status of essential infrastructural services and to encourage income generation activities to enable inputs and essential social services. This will be done by the expansion of their economic base by rehabilitating existing activities and diversifying industry.
Strategies to accomplish the above objectives include the rationalisation and organisation of human and natural resources in conjunction with the objectives and priorities of the plan, formulation of natural resource management plans, maintenance of existing economic sector industries and facilities and negotiations for funding by sources from NGOs.
They plan: (i) to carry out a resource survey of the area and to compile a long-term Sustainable Development Plan for the islands; (ii) to prevent corruptive practices, injustices and exploitation of the local people and to encourage respect, understanding and social and economic harmony amongst the peoples of the islands; (iii) to negotiate with relevant outside organisations, appropriate means of development assistance for the people of the area; (iv) to promote cultural activities of the islands, and to encourage participation of appropriate marketing outlets; (v) to co-ordinate outlet for the many marketable commodities of the islands; (vi) to promote good social interaction among the many organisations of the area and those of others; (vii) to promote by educational means, those discussions that are relevant for elements of further developments of the area; (viii) to encourage development participation by all people of the area, and to restrict by available means intrusion by foreigners or outside parties; (ix) to see that in terms of foreign investments, highest percentage of ownership remains with the local people; and (x) to encourage use of local expertise in the areas where consultants are required and at reasonable costs affordable by the people.
Problems of Business Development

Milne Bay culture has not traditionally supported entrepreneurs. Society within the CBMMCAs is based around distributing wealth in an endless cycle of feasting and obligation, and so the accumulation of wealth is alien to the communities in Zone 1. Gifts or loans bestow prestige upon the giver or lender and create obligations for the recipient or borrower, who is obliged to reciprocate on an appropriate occasion in the future. This system supports community harmony because it favours distribution amongst the community/clans rather than accumulation for oneself or one’s family. The likely effect this has on someone in business is that relatives are given rather than sold goods and services and that any profits made are shared with relatives rather than accumulated for the sake of the business. These beliefs and practices are at odds with the concepts of Western style business and have contributed to poor success rates for both individual and cooperative businesses (see Byford, 2000; Brooks, 1996).


Introduction of the cash economy has created conflict and social tension over the means, modes and distribution of production. There may be a need for the MBP to increase business management capacity as part of the long-term goal of sustainability. There is a general low level of business education and awareness, unavailability of marketing information and outlets, business advice and assistance. Small business training, such as bookkeeping and pricing could be done in the appropriate local languages. People need sound buisness acumen as they increasingly particpate in the market economy, and particulary if they are to particpate in eco-tourism or alternative fishing enterprises. Responsible business makes for responsible consumers and responsible resource users.
Recommendation:
16. Produce awareness materials on sound business practices for communities to encourage improved management.
Tourism

Tourism is not a major player in the economy of MBP compared to that of the fishing and logging industries, despite the fact that the government of PNG designated the province a 'Priority Tourism Zone' in 1996. The main tourism activity currently impacting or providing a minimal income for communities is in CBMMCA 1.


Likely social impacts related to increased tourism are increases in crime, prostitution and other unsavoury activities. Culturally, it may lead to a revival of traditional activites, but most evidence suggests that traditional activities actually get diluted to fit the tourist experience. The service industry will create employment but tourism requires excellent marketing and detailed attention to the organisation of the tourist experience (from spotless cutlery to being met at the airport on time). The history of retailing activity in Milne Bay very strongly suggests that these would have to be provided by outsiders (see Jackson, 2000).
CBMMCA 1

Approximately 1,000 dive tourists visited Milne Bay Province in 2000 aboard the three live-aboard vessels based in Alotau who use dive sites around Nuakata and East Cape and further afield around the D'Entrecasteaux. Milne Bay's reputation for pristine coral reefs and abundant marine wildlife, as well as the 'last frontier' reputation that PNG enjoys among the dive community draw them (see Halstead, 1996). There is currently a move by communities to push for a fee from these dive operations (see Mitchell et al, 2001). Villagers are concerned over the damage done by dive boat anchorages and people feel they get no benefit from the industry. In 1990, the villages at East Cape expressed an interest in building a resort centre (Hunting-Fishtech, 1990).


Recommendation:
17. Continue to facilitate rates of payment between resource owners in CBMMCA 1 and Zone 3 and dive operators.
CBMMCA 2

Yachts are regular visitors to the Louisiade Archipelago with between 70-100 yachts entering Bwagaioa to clear customs each year (Kinch, 1999). A favourite anchorage for these yachts is the Deboyne Lagoon, which averages about 15 yachts a year. A small ecotourist resort at Nivani that would respect the environment, yet provide business opportunities for the people, has been suggested by the Panapompom community. This would possibly be a success especially with yachtsman, divers and film crews. People trade foodstuffs, claypots and ornamental shells in exchange for old sails, fishhooks, tobacco, and sugar and sewing needles. In 2000 a small cruise vessel the 'Clipper Odyssey' visited Kwairowa.


CBMMCA 3

The most organised tourist activities in all of the CBMMCAs, besides dive operators, concerned the company Pacific Adventures. This company organised tours along the Kokoda Trail and the Southern Highlands, white water rafting and caving in the Central and Southern Highlands, canoe trips up the Sepik River, walks and climbs up Mt. Wilhelm and sailing adventures out of Misima. Between 1982 and 1988, they offered sailing expeditions for the adventure tourist targeting mostly Australians, Americans and Germans with a tour length of 10 days. Brooker canoes were notified that a tour was being prepared by Milne Bay Radio and were told to wait at Bwagaioa for the arrival of the guests. The itinerary was from Bwagaioa to Brooker to Nivani to Panapompom to Panaeati to Bwagabwaga to Alhoga and back to Bwagaioa. Approximately five trips a year were run and group size ranged from 2 to 12 people utilising between 1 to 3 canoes depending on group size. Canoes were paid between kina 200-400 per trip. Spinoffs from these trips were the sale of local produce and handicrafts such as clay pots to visitors. It finally folded due to rising violence, law and order problems and increased prices in hotel accommodation in other parts of PNG.


Other tourism ideas that have been proposed for CBMMCA 3 occurred in 1976, when Brooker came under the spotlight of the Department of Environment and Conservation and the Provincial Government. Consultations were conducted with the appropriate Brooker people about creating Wildlife Management Areas and the possibility of small-scale ecotourism resorts (Bourne, 1976a). It was suggested a small tourist resort could be built either on Jomard or at Enivala. Jomard it was believed had the required remote appeal, had three wrecks on the reef with good fishing, abundant birdlife and turtles for the naturalist types, and was on a major shipping lane. Disadvantages were described as having a very poor anchorage, it was 9 hours by boat from Bwagaioa, diving possibly not good owing to ‘drop-off’ conditions and sharks, there were no coconuts, there was no ‘village’ situation for tourists and was fairly exposed.
The other island of Enivala was also another place with appeal. Advantages were good anchorage, a fair collection of wildlife, it had coconuts, there were safe swimming beaches and reasonable diving areas, and other islands were close enough to explore, probably good fishing on the drop-off, and was on the shipping lane. It was also thought the island was big enough for an airstrip. Disadvantages associated with Enivala were that it was eight hours from Misima, there was no ‘village’ situation for tourists and was also fairly exposed (Bourne, 1976a). All people contacted at the time had expressed enthusiasm for a tourist industry in the area. Enivala is used regularly by Brooker people as a way station when moving westward to the rich diving grounds of Nabaina and Nagobi.
Yachts are also regular visitors to Brooker areas. A favourite anchorage is located at Panasial and yachts actual calling at Brooker average about five a year.
Other Tourism Activities

Cruise liners were regular visitors to Samarai and Alotau where people from the Engineers (CBMMCA 2) and Ware (CBMMCA 3) may come to perform traditional dances, sell handicrafts such as mats and baskets, and cooked local food. In November 2000, it was reported in the local newspaper (Eastern Star, 2000a) that major cruise ships would no longer be calling into Milne Bay as a result of mergers of participating shipping companies, competition from other ports in PNG and the wider Pacific with better facilities, and the increasing law and order problem in PNG generally.


There are future plans for a museum, waterfront development, duty-free status and an underwater observatory. A Massim Cultural Centre has been mooted for Alotau (see Mitchell et al, 2001).
Misima Mines Limited

Misima Mines Limited is a Papua New Guinea registered company and is subject to Papua New Guinea laws and commenced operations in June 1989. The mine is an 'open cut' type and mining is a truck and shovel operation. Approximately 90,000 tonnes of rock are moved each day, with 15,000 tonnes as mill feed, while the rest goes to the low grade stock piles or the waste dumps. Production is around 220,000 ounces of gold and 700,000 ounces of silver a year. Active mining will cease in April 2001 and milling of stockpiled low-grade ore will then continue until mid to late 2004, after which the mine will close completely. It is uncertain as to what staffing will be maintained after closure, but the numbers will be very small, limited to environmental staff and possibly some community development staff.


Effects of MML Closure

The economy of Misima is at present dominated by MML, which provides money to the local people by way of wages, compensation, royalties and business opportunities. The mine currently employs 626 (589 males and 37 females) Misimans, about 50 other PNG Nationals and 100 expatriates. Forty-one people are currently employed from the outer islands of the Louisiade Archipelago (14 from CBMMCA 2 and nil from CBMMCA 3). Total wages for the Louisiade LLG area estimated to be around K9 million a year (Jackson, 2000). From 1989 to 2000 MML paid out a total of K33,318,700 in royalties. Of this K8,721,000 went to the National Government and K15,163,000 went to Provincial Government, whilst the remaining amount went to various landowner funds (Callister, pers. comm).


Jackson (2000) explores private and public incomes before, during, and after mining. He estimates that in terms of the current kina, pre-mining per capita income was K384 (in 2000 equivalent). This has jumped to about K770 during today's mining period, but will decline to K200 or less within twelve months of closure. This is a decline of 80% and means that cash wise the people within the MML impact area will be worse off post-mining than they were pre-mining.
Agricultural activity on Misima is almost down to nil as the mine has diverted people’s interest from cash crops to fast money, like royalties, and people can get more money from working at the mine than from cash crops. Jackson (2000) puts this in perspective when he estimates that in today's kina value, cash cropping in 1984 was worth K 800,000 compared to today's annual cash cropping income which is a mere K25,000. Furthermore, given Misima's isolation, apart from government wages and private remittances, cash cropping is seen by Jackson as one of the only dependable and sustainable options for filling the huge economic vacuum, which will be left behind once MML leaves. One problem expressed at community meetings at the Deboyne Islands (CBMMCA 2) and Brooker (CBMMCA 3) was the fear that their will be an invasion of Misimans who have become used to cash and the associated material benefits. The fear is that people from Misima will come down and poach marine resources to fill the void left by the MML closure. This should be factored into the MBP as disputes will arise and intensified pressure on marine resources will occur in the next couple of years.
A major issue facing the Misima District is the loss of revenue to Local and District governments and their inability to continue to provide services and to maintain vital facilities, which the mining company currently maintains. In 2004-05, K6 million per annum will be lost in wages and revenue to local government will fall. There will be a loss of infrastructural development throughout Zones 1 and 2. Over the last 10 years MML has spent over 16 and a half million kina on capital works and infrastructural improvements. Maintenance of permanent buildings and other developments will increasingly fall back on to the communities who will have no option but to harvest more marine resources or allow things to fall into disrepair.
There is also concern that after the mine closes there could be a shortage of police and that the local village court and conflict resolution system might fall into disarray. All TCS and Special Service Grants will cease in 2005. The Louisiade LLG will only have money to pay for public servant wages. At present, from non-mine sources of indirect income, the Louisiade LLG has less than K200,000 annually over and above its salary commitments (Jackson, 2000). Conflicts of interests between different groups as well as different Wards, about expenditure priorities are at present highly likely. This again raises the issue of support for local government capacity and district government capacity to have sufficient resources in order to maintain law and order. There will inevitably be emigration from Misima as the mine closes, and with less income and demand for services, the prices of local goods will rise substantially. Communities need to carefully examine alternative revenue generating activities and to ensure food security.
Table 53: Yearly Value Breakup of MML Tax Credit Scheme Projects by LLG (Source: MML)

Year

LLG

Total in Kina

Louisiade

Yeleamba

Murua

Bwanabwana

Other

1992

590,704

292,917

-

-

184,824

1,068,445

1993

935,307

-

-

-

109,354

1,044,661

1994

1,374,252

78,081

78,081

-

24,774

1,555,188

1995

711,272

-

-

-

-

711,272

1996

808,886

104,130

-

-

-

913,016

1997

8,839

480,769

-

-

-

489,608

1998

4,255,320

210,000

239,000

-

1,449,835

6,154,155

1999

1,280,145

-

-

-

564,300

1,844,445

2000

1,565,370

210,000

204,000

116,000

683,000

2,778,370

Total

11,530,095

1,375,897

521,081

116,000

3,016,087

16,559,160

%

70

8

3

1

18



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