Does formalizing artisanal gold mining mitigate environmental impacts? Deforestation evidence from the Peruvian Amazon

We examine the relationship between formalization efforts and mining expansion patterns in Madre de Dios (hereafter MdD) in southeastern Peru. Biodiverse, carbon-heavy lowland forest predominates, ∼50% of which is under legal protection or within indigenous territories [19–22] (figure 1). Regional deforestation drivers include logging, smallscale agriculture, cattle ranching and mining [20]. In MdD, as elsewhere, the scale of ASM varies, but even small mining operations are typically equipped with hydraulic machinery. After they clear forest, they use water jets to transform the cleared land into a slurry, which they pump into a sieve and hopper. More capitalized operations do the same, but employ heavier machinery, including bulldozers, some worth >$100 000 [23]. At all scales, sieved ore is mixed with mercury to separate out the gold. Export firms, some criminal, buy the gold and also supply mercury and build roads to mining sites [3].

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Miners have panned the area's gold for generations [5]. ASM expanded during the 1980s and 1990s, driven by national socioeconomic crises and government campaigns. Our study begins in 2001 shortly before Peru passed the Law of Formalization and Promotion of Small and Artisanal Miners (table S1 (available online at stacks.iop.org/ERL/16/064052/mmedia)). This law established a protocol for issuing ASM concessions patterned after regulations for companies mining in the Andes [24] (table S1). Obtaining a concession (=full legal right to mine) involves several steps starting with the issuance of a provisional title (hereafter 'title') by which individual miners claim a specific area. Before any titled individuals start working, they must show there are no competing land claims, submit an environmental impact study, and obtain permission to cut forest [25, 26] (figure 2).

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In the early 2000s, Peru began decentralizing public agencies and promoting regional land-use planning to reduce resource conflicts at extractive frontiers [28]. In MdD, late in 2006, the Regional Office of Energy, Mining, and Hydrocarbon (DREMH) became responsible for encouraging ASM and granting concessions [29]. After 2008, illegal mining expanded quickly (∼18% yr⁻¹) as gold prices skyrocketed [30]. Simultaneously, the construction of the Interoceanic Highway (2006–2011) facilitated the influx of >30 000 migrants seeking gold and allowed heavy mining machinery to enter [31, 32] (table S1). By 2010, ASM had cleared >40 000 ha of forest [19]. Dangerous mercury levels were recorded in residents living downstream from mining [33]. In 2010, the government of President Alan García (2006–2011), responding to the outcry from international environmentalists, decreed gold mining in MdD an issue of national concern (DU N° 012–2010) (table S1) [23]. This decree, which became permanent law in 2012, restricted all mining in MdD to a 545 811 ha 'corridor', defined by the regional land use zoning exercise [34]. The corridor contained much of the area where titles had already been issued—titled miners therein were allowed to continue the formalization process but mining was no longer permitted outside the corridor ⁶ . Everything outside the corridor was designated as a mining exclusion zone. The decree also prohibited all mining along and within waterbodies, such as palm wetlands, lakes, rivers, streams and their floodplains, including within the corridor.

The newly elected government of President Ollanta Humala promised to continue formalization efforts, approving the National Plan for the Formalization of Artisanal Mining (2011) that added further steps to the protocol for gaining a concession (table S1). By 2011, ∼17 000 kg of gold/year were extracted from MdD, 99% classified as 'ASM' [30, 34]. The 2011 Plan formally codified a local norm, namely, that miners who had initiated the formalization process were considered informal, and those who did not were illegal (and targeted by police). By 2014, >5000 miners in MdD initiated the formalization process, yet no individual was able to complete the process and earn the legal right to mine (figure 2) [26]. Mining conflicts grew more violent as national and local governments organized military and police interventions to stop illegal mining and destroy prohibited equipment [35]. Miners protested forcefully and their political power grew. All formalization paperwork stopped for four years beginning in 2014 when a mining leader was elected Governor of MdD on an anti-regulatory platform [23]. In sum, at MdD, as elsewhere, the formalization process has been incomplete and conflictive [5, 12, 26], and shaped by major economic and sociopolitical factors, including change in presidential administrations (see Timeline in table S1, and for deeper historical analysis, see [5, 23, 26, 36]).

To map mining expansion, we classified annual Landsat imagery (table S2) and conducted post-classification map comparisons. Images were preprocessed to ensure comparability across sensors and enhanced using spectral indices that increased separability of mining areas [37] (figure S1). We employed random forest (RF) tree-based classifiers (Vers. 4.6–14 [38, 39],) and individually trained classifiers to identify mining areas, forests, agricultural and herbaceous areas, water bodies, riverbanks, and other bare areas for each image year. We used high-resolution imagery and our on-site experience for classifier training and model accuracy assessment. The final RF models had out-of-bag errors yielding accuracy estimates from 0.94 to 0.99. Post-processing of the classified maps included masking clouds, alluvial banks, oxbow lakes, impervious surfaces, and areas of non-forests in the year 2000 [19, 30]. We also conducted manual adjustments to reclassify water ponds inside mining areas and remove image classification errors [40] (S1).

Our unit of analysis was a 25 ha hexagonal cell (figure S1). Descriptive statistics were calculated across the 20 850 km² study area (figure 1), which encompasses the majority of deforestation from mining activities [19, 40]. To limit our impact analysis to areas where gold-mining could reasonably have occurred, we use a restricted sample selected through a nearest-neighbor matching procedure, with hexagons inside the corridor matched to hexagons outside the corridor within the same district and geology and with similar distance to navigable rivers [41, 42] (S1). Data sources for all variables are summarized in table S2.

Our outcome variable—mining related deforestation—was calculated from the area attributed to the mining class ⁷ in each hexagon in each year ⁸ . Because of the patchy distribution of mining, we performed analyses with two versions of the mining outcome variable: (a) a binary indicating presence of any mining in hexagon i during year j, and (b) the log-transformed area of mining within hexagon i in year j, only for instances where mining occurs. Thus, we model both the distribution of mining sites across the region (probability of mining) and the extent of clearing in established sites (intensity of mining). We also calculate the inverse hyperbolic sine of mined area for comparison (tables S5 and S6). We used linear probability models ⁹ for binary outcomes and semi-elasticity models for area. Standard errors were clustered (5 km² resolution) to mitigate spatial autocorrelation.

2.2.1. Title-focused models

2.2.2. Corridor-focused models

We spoke with 47 key informants in MdD and Lima in 2013, 2014, and 2020 (table S3). NAB also spent five days at a small-scale mine where she convened two focus groups. Interviews were semi-structured with questions on: (a) the respondent's experience with formalization, (b) their perception of zoning effectiveness, and (c) their ideas on the cause and pattern of mining expansion during our study.

Overall, the probability of mining in a given site increased from about 7.5% in cells without title to 10.1% after the titling process was initiated, and this difference is statistically significant (table S5). However, the relationship between mining and titling varied considerably during our study, shifting from titles being associated with lower probabilities of mining-related deforestation in the early 2000s, to higher probabilities in titled areas after ∼2009 (figure 4). The probability of mining rose in the years following the initiation of title relative to a baseline of 5 years beforehand, but mining was also significantly elevated as early as two years before the titling process was initiated (figure S3). The size of mining clearings did not change significantly in relation to the titling process (table S5).

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When the 545 811 ha corridor was established, much of the area was already titled (67%–82% ¹¹ (table S4)). After its declaration in 2010, mining was no longer permitted outside the corridor, and the probability of mining there did decrease significantly (by about six percentage points) relative to the probability inside the corridor (figure 5, table 1—Model 1A). However, mining area detected outside the corridor expanded by ∼10 000 ha after 2010, and much of this was concentrated in a few sites (e.g. La Pampa, Kotsimba) (figure 1, table S4). Because of these sites, the proportion of annual mined area that occurred outside the corridor grew larger, from ∼22% to >35%, even though the probability of mining occurring in any given place grew more slowly outside the corridor after its declaration (figure 5, table S4). When the corridor was declared, mining outside of it became more concentrated into a few specific areas. In protected area buffer zones and territories of native communities ¹² , mining probability rose and clearing sizes expanded by >40%, while elsewhere outside the corridor, mining probability fell and clearing sizes decreased by 27% (table 1—Model 2B). After 2010, mining probability also significantly increased (by about four percentage points) on land within 0.5 km of navigable rivers, contrary to zoning intentions (table 1—Model 1B).

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Our respondents (table S3) pointed to four reasons formalization did not mitigate the environmental damage of ASM: (a) provisional titling functionally granted rights to operate without responsibilities to meet environmental criteria, (b) some miners used titles to displace others and access credit to buy more powerful equipment, (c) the people actually mining in an area were often not titleholders, and (d) enforcement was erratic and difficult, partly because Andean derived regulations were a bad match for the Amazonian ecosystems.

No individual attained full legal rights to mine during our study (table S1). Agency and NGO staff criticized individuals for mining with only provisional titles.

People here (MdD) are wrong-headed, we give them a provisional title and they start to work. This is bad. Miners can't work until the environmental study is approved. [RESP#1]

In turn, miners complained that the process was overly burdensome, if not impossible.

It's all a lie. The government's Supreme Decree (2010) is not about formalization, it's about making mining disappear. (RESP#2)

Miners who initiated the titling process waited months for paperwork, although allegedly, those paying bribes were titled faster. Given delays and fees (RESP#3, table S7), miners felt they deserved to begin extracting gold. In fact, a mining official (RESP#4) confided that this was to be expected.

Several respondents reported that titles allowed miners to obtain loans for expensive mining equipment (table S7). No respondent mentioned miners using loans to buy cleaner technology, such as shaker tables, a mercury-free means of separating gold. After militaristic interdictions ramped up in ∼2011, individuals increasingly sought formalization to be deemed 'in the process of formalization' or simply 'informal' (vs. 'illegal') (Legislative Decree 1105) and thus avoid police action including equipment destruction. In essence, allowing those with only provisional titles to mine represents a compromise between environmental and mining interests. It also shows the political might of the mining sector.

Being the holder of (a provisional title)—is like an affidavit—you can mine while completing your environmental compliance. (Informal) miners were given a special allowance so as not to paralyze all mining in MdD given that no one has all the requirements in force. (RESP#5).

Another motivation for entering the titling process was to secure claims vis-à-vis other miners and other land users especially as improved road access and rising prices precipitated a gold rush. Provisional titles were issued largely without regard for overlapping claims—miners are technically obliged to resolve these conflicts before they start mining, but titles empowered some miners in land disputes.

Mining and Agriculture agencies have each managed their own cadaster. They (DREMH) never verify coordinates but just give permission to the miner no matter the surface claim. Having a (title) gives the miner a bit of power. (He says) 'I have in hand the permit. You only own the surface.' Some (farmers) can negotiate but the miner has more money (...) the farmer has to give way (RESP#6).

In addition to potential direct profits from gold, land rents are also in play. Many individuals with titles earn money by charging 'guest' (invitados) miners 'royalties' (regalías) for access. According to respondents, guest miners are commonplace, including within indigenous reserves, and are unconcerned with regulations (RESP#6; table S7).

In the Mining corridor there are 1900 (provisional title holders) and 5000 miners have declared commitment to formalize, but the rest, where are they? There are >30 000 miners in MdD. (RESP#7)

My dad's friend has 40 (provisional) titles but doesn't even own a motor. He lives off the royalties of guest miners. (RESP#6).

Guest miners are the biggest forest destroyers. They say 'if I'm paying you [the title holder] you can't demand I deal with the state'. They (guests) don't care if the title owner has the right to use mercury or cut forest. They don't care about water. And these guests invite others w/o permission of title holder. (RESP#8)

Speaking to mining's expansion outside the corridor, respondents described certain places, like La Pampa (figure 1, table S7), as beyond the law. They also told us that when designated, the corridor was already near-full of mining and that 'the mafia' controlled particularly gold-rich sites. Most respondents believed significant gold deposits lay outside the corridor. Furthermore, respondents agreed that enforcement was subject to ambiguity and political manipulation.

Every time there's an interdiction, miners get tipped off and hide their motors (and resume work after). Miners in La Pampa (figure 1) contributed to the president's campaign so there was no enforcement there (RESP#9).

The Minister of the Environment (under Pres. García) put a tough hand on illegal miners. The miners reacted to the military pressure by withdrawing (from illegal sites). But there was a change of government and the new government backed off (reduced the military pressure). Then the miners came back even stronger (RESP#10).

Some also explained that within the corridor and beyond, the waterway rules were hard to interpret given the serpentine, ever-changing courses of streams.

There is no map of exclusion zones (waterways and wetlands) within the corridor. Here mining is prioritized and enforcement is absent. It is presumed that all types of mining are permitted in the corridor (RESP#11).

Our spatial analysis shows that formalization was associated with changes in mining deforestation patterns, but not always as intended. In the early 2000s, there was actually less mining in titled areas compared to elsewhere. As gold prices rose, the corridor was declared in 2010, and enforcement increased (table S1), the probability of new mining became higher in titled areas and inside the corridor. Although this shift was as hoped, there are several caveats to interpreting it as a land-sparing effect. First, the proportion of mining-related deforestation across the study area increased outside the corridor due to the expansion of a few major mining sites in protected area buffer zones and certain indigenous communities (figure 1). The scatter-shot mining more commonly associated with smaller scale independent actors may have been curbed, but controlling mining at gold-rich accessible sites with more capitalized actors proved extremely difficult. Second, from our results, it is not clear whether the corridor 'soaked up' new mining that would have started elsewhere, or prompted miners already present to open new areas because they worried less about government interdictions. This ambiguity is important because improved access and high gold prices continue to bring more miners to MdD. Finally, we see suggestions that formalization often follows the miners rather than prescribing where mining should occur, as when titles are sought for areas where mining has already begun or when the corridor is declared atop of a region that is mostly already titled.

More broadly, our work cautions against assumptions underlying land-sparing ideas, namely presupposing there are 'open' spaces to devote to ASM. Even in remote parts of MdD, overlapping and contested claims are commonplace and the legal capacity to resolve land conflicts is limited. Recommendations to create ASM zones and 'confine it' [2] sound reasonable, but our work and others [13, 39, 45] show this is difficult as gold prices soar and access improves, especially if alluvial deposits are scattered over the landscape. Limiting roads (and thus heavy machinery) into gold-rich intact forests may be more important than declaring ASM zones [36]. The regulators and miners we interviewed agreed that it is difficult to apply and enforce regulations derived from hard-rock mining in the Andes to Amazonian ecosystems. For example, prohibitions about mining near waterways are hard to enforce when river courses regularly shift and the water table lies near the surface. Ultimately, the extent to which zoning can confine mining depends largely on enforcement [13], which during our study was inconsistently applied at MdD due to physical challenges, political shifts and alleged corruption [46].

A prominent global report predicts that providing miners legal rights, technical support and bank loans will improve social and environmental outcomes [2]. We found no evidence that granting titles gave miners a sense of security that encouraged better adherence with environmental regulations. Our respondents explained that provisional titles actually came to function as a 'de facto' permit to mine without mitigating environmental damage or reconciling competing land claims, an outcome also documented in Colombia [47]. Some miners even used provisional titles to intimidate and displace farmers or forest stewards, as elsewhere [14] but see [48]. Others profited from speculating in titles. In the Philippines, high gold prices also made the permitting process more difficult and conflictive [45]. Although most miners at MdD want more secure working conditions [5, 26], the issuance of provisional titles did not slow the 'rush' mindset. Thus we caution against assuming that because more secure ownership tends to favor forests in the context of smallscale agriculture [8], the relationship will hold for alluvial mining, a non-regenerative activity. That said, we did not study mercury use, a key concern. Formalization purportedly reduced mercury contamination at a Colombian site, but it is not clear how [16]. In MdD some newly titled miners did obtain loans for new machinery, but this was to accelerate mining (table S7), not to avoid mercury use. An analysis of mercury use and abatement technology is beyond the scope of our paper, but Peru's recent commitment to comply with the Minamata Accord on Mercury Use is promising [49].

The prevalence of 'guest' miners in MdD highlights a challenge to the hope that formalization would increase the visibility and accountability of miners. Instead, a rent market has developed with commercial patronage agreements between title holders and temporary miners (some highly capitalized) who were even farther removed from regulatory reach. Provisional titles allowed the government to extract rents from the claimants and allowed title holders to extract rents from guests, but the redistribution of profits did not necessarily improve environmental outcomes. Similar complex and highly unequal arrangements have been reported elsewhere [11, 45]. Legibility and accountability issues are even more complex in indigenous territories. In the worst case, formalization campaigns help outsiders mine gold against the communities' interest [50]. However, indigenous leaders also reported more consensual and profitable arrangements in some territories. The complexity and heterogeneity of guest mining and patronage arrangements make it difficult to discern between invasion and invitation.

When it comes to legibility, too often formalization models paint a simple picture of the state imposing its regulations on passive miners. The MdD case shows that informal miners may collectively have considerable political power. Contrary to examples of local citizens risking their lives to fight corporate mines in the Andes [24], in MdD local citizens protested restrictions on mining and some lost their lives doing so (table S1). On the other hand, a stalwart local management committee in one part of MdD (Tambopata) has called out the worst polluters and worked to forge new models for managing mining [51]. Last, in MdD as in the Andes, adherence to regulations may be weakened by divisions within the government about prioritizing mining or the environment [24]. This power struggle partly explains why formalization rules were 'bent' to accommodate miners. Here, as is often the case, there is no clean boundary between, nor consistency within state and local agendas.

Remote sensing is a powerful tool for mapping the loss of biodiverse, carbon-heavy forests to ASM, and our measurements match a similar study at MdD [19]. However, our approach has limitations, including those associated with the challenges of detecting illicit activities leading to land degradation [52]. We were unable to test effectiveness of rules against mining along waterways because we could not reliably discern mining on riverbanks from natural erosional processes, particularly for small operations typical of illegal mining [30]. In fact, we generally miss very small clearings by excluding potentially spurious bare patches, thus our estimates of mining area represent a lower bound. Also, our remote sensing-based analysis did not allow us to measure the effect of formalization on mercury, an urgent problem. It will also be important to evaluate formalization efforts in which full rather than provisional titles are achieved, though ASM formalization is seldom fully implemented in remote tropical regions [13] often because of the same obstacles documented at MdD (e.g. contradictory land rights, weak agencies) [5, 12, 18, 26]. Finally, our ability to draw causal inference is limited because formalization did not occur in a randomized way. Titling and zoning unfolded concurrent with changes in political administration, enforcement pressure, and conservation interventions [5, 23].

Attempts to govern ASM in MdD continued to unfold after the hiatus in formalization interventions from 2014 to 2018. A major enforcement effort (Operation Mercury) was launched in 2019 and deforestation in the Tambopata Buffer zone slowed substantially for a period [53]. Formalization efforts began anew in MdD in 2019 and 243 miners (out of thousands) completed the entire process and acquired legal concessions [54]. Since then, gold prices have remained high during the COVID-19 pandemic and there are reports of miners taking advantage of the government's diverted attention [55].

Our findings offer precautionary lessons about the ability of formalization to deliver environmental benefits. Ultimately, alluvial mining is largely incompatible with conserving tropical forests. Perhaps for this reason, and because of the millions of poor people involved, articles on how to reform ASM formalization focus on measures to improve equity and protect workers but say little about how such measures will protect forests or wetlands. Our findings suggest that formalization may have a concentrating effect on mining, but certain issues can attenuate environmental benefits. Some are familiar—e.g. enforcement is necessary and corruption is likely. We also raise less familiar concerns. ASM in the fluid and shifting Amazon ecosystem is much more difficult to spatially delineate than hard-rock mining in upland regions. The vision of 'settled' miners stewarding their concessions over the long term is far afield from MdD conditions. Title holders are not necessarily the miners, and mining in titled areas does not signify compliance with environmental regulations. Finally, clarity in land rights is an unmet precondition for a functional titling process, and there is seldom 'open land' for mining. For formalization to work as intended, the rules and process will need to be crafted in a way that attends to regional context and (conflicting) local and national agendas [48]. This accords with calls for innovation in mining institutions, ideally before extraction begins [24]. The explosive growth in ASM (sixfold increase in the global number of artisanal miners over 5 years) makes this difficult and urgent [56]. Against this challenge, we join others in calling for more explicit and context-specific attention to the mechanisms by which formalization will improve environmental outcomes.