Weighing Benefits and Risks

Weighing the Risks and Benefits

The Issue

There is no standard guidance for how Indigenous Peoples might weigh the potential risks and benefits of entering into a benefit agreement in the LNG sector. Understanding, needs, capacities and benefits typically requires a case-by-case approach across an entire LNG project’s life-cycle and beyond.

Benefits: Binding agreements between proponents and communities offer opportunities to share in the economic benefits generated by resource extraction. For instance, they can offer communities access to an income stream in the form of royalties or other payments, as well as employment and procurement from Indigenous-owned enterprises. These revenues can assist in meeting a community’s short-term and often urgent needs for services such as housing, health and education, and to augment Indigenous incomes that are usually below national averages (O’Faircheallaigh, 2010, 69. See also (Findlay and Wuttunee, 2007; Mihesuah, 2003; United Nations Permanent Forum on Indigenous Issues, 2004; US DOE, 2017).

Agreements can also contribute to development by providing opportunities for communities to be involved proactively, and continuously, in managing the cultural, social, and environmental impacts of resource use (Innis and MacIntosh, in Mills and Sweeney, 2013). According to Cueva (2017) from an Indigenous standpoint, BAs enhance local development by increasing the level of participation of a historically disadvantaged population.

The negotiation of these agreements could also greatly reduce uncertainties for proponents, over the legality and the legitimacy of a project, considering the legal context surrounding resource development and Indigenous land rights in Canada (Papillon and Rodon 2017; Bradshaw and McElroy 2014; Rodon, Lemus-Lauzon and Schott, 2018, 9).


Risks: There is a very limited body of literature on potential risks to First Nations’ communities as a result of entering into BAs, particularly in the context of the LNG sector. The World Bank (2012) identifies several risks in the creation of formal BAs, though these are framed primarily from the perspective of proponents as follows:

  • Formal agreements can foster a counter-productive environment of mistrust and uncertainty if the parties lack commitment to/or understanding of the process and anticipated outcomes
  • Potential perceptions that a community or group has been misled or coerced into signing a deal, or that a “backroom deal” has been brokered with one or more parties to the detriment of others and may contribute to conflict at the community level.
  • Formal agreements, and the legal stipulations they often include, can lead to an interpretation of compliance that results in a minimalistic approach. When this outcome occurs, it may leave communities feeling like their counterparts across the negotiating table have not lived up to the spirit and intent of agreements.

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