The Lithium struggle: A tragedy of the commons in Northwest Argentina?

Resources are finite and managing them is a challenge. It happens in the best families and in the worst economies. Some resources are known as “commons”, because there is a rival but not excludable access to them. This, thay may sound intrincate, turns easier to grasp with an example from our daily lives. During the lockdowns we lived a free-for-all in each household for the access to a common good: bandwidth: “Kids, let’s pause Youtube that mom has a meeting”; “I turn off my camera because I have connectivity issues”; “We catch-up later that kids have a virtual class” Implications of non-cooperative behaviors are evident in the domestic arena as well. John Nash took this problem to another level and theorized—now famous thanks to a memorable scene of the film— on how cooperation could be a constructive principle of the social and economic bond: we are talking about game theory . But, how can this be applied to the extraction of   lithium in our northwest provinces, where there are copious resources, but an emerging competition as well? Elinor Ostrom, who took game theory to analyze situations of shared use of natural resources, can give us some clues.

Let’s take a small step back and recall why lithium is so required today. One of the vectors to mitigate climate change is reducing transport carbon emissions: electric vehicles appear to tackle them requiring such a critical input in lithium ion batteries. It is estimated that the resource demand will increase between 10 and 40 times to reach the current climate objectives by 2040. Although Argentina has been one of the few global producers for almost a quarter of a century, an increase in demand —and, therefore, in the price— has resulted  in a revolution in recent years in the Puna region, shared by the Provinces of Jujuy, Salta and Catamarca. The progress towards the construction stage of a series of projects brings a novelty: the convergence of more than one producer extracting brine from the same salt flat, eventually affecting the resource of other producers or, in the worst case, the fresh water bodies near the salt flat. A looming conflict of interest to consider.

So how can Ostrom’s ideas help untie this knot? She dedicated her life to Commons situations research trying to answer a key question: what is the best way to limit the use of resources while ensuring their long-term economic sustainability at the same time? The scoreboard was not on her side because the tragedy of the commons paradigm was the mainstream theory when she published her findings: “By pursuing their interests and maximizing personal use of the common resource, individuals inevitably lead to the depletion of the good” In her most emblematic book, Governing the Commons (1990), Ostrom challenged this notion, analyzing worldwide case studies: from community management of fishery resources to communal ownership of forests or canal systems and irrigation. Trained in political economy, she came across game theory in 1988 and found it very useful for understanding some of the coordination problems she had begun to study three decades earlier. The analysis of economic governance and the “commons” led her to be, in 2009, at her 76, the first woman awarded with the Nobel Prize in Economics.

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Elinor Ostrom

The concept of common goods refers to a resource (renewable or not) with rivalry access but not exclusion, making it desirable to achieve certain “ground rules” for common usage. Why can lithium in brines be understood as a common good? There are very few economically exploited mineral resources in motion. When envisaging a mineral deposit, we imagine a static resource waiting to be found after thousands or millions of years of quiescence: lithium in brines is one of the few exceptions. Brines are fluids where lithium is dissolved among dozens of other elements. This singularity – to produce from a dynamic resource where the physical limits are not clearly defined –  has effects at social, environmental and economic levels.

Now, does an undergoing project  mean that each producer can pump lithium-enriched brine without restrictions within the limits of their concession? No, absolutely not. Each one must obtain a pumping quota authorization from the provincial authority in accordance with the Environmental Impact Assessment (EIA) previously done for that project, which must be under the basin recharge rate. In the case of lithium, it is essential to understand the concept of cumulative impact as an incremental or combined effect on pre-existing or neighboring activities. However, assessing it accurately requires identifying different  thresholds, which in many cases may not be known until the impact effectively occurs. The risk is that of an affectation that is either irreversible or costly in terms of recovery. To avoid it, it is essential to strengthen mitigation and monitoring: the rate of extraction must not affect the water balance of the salt flat and, in addition, the concessionaire must update its EIA every 2 years, an opportunity to adjust the quota if any impact is verified.

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Brine concentrate harvesting. Cauchari-Olaroz, Jujuy @LithiumAmericas

This is, of course, the description of an ideal situation, but (there is always a but)… what happens if we have a salt flat whose extension trespasses the limits of a Province, with 2 control authority bodies and with three producers? Welcome to the Salar del Hombre Muerto. This salt flat is located on the limits of Catamarca and Salta and is the one with the best geological conditions to produce lithium in our country. Since 1998, a North American company (Livent) has been operating on a Catamarcan concession that occupies approximately a third of the salt flat. A South Korean company (Posco) and an Australian-Japanese company (Allkem) are currently building their operations on the remaining thirds. Since 1943, an unresolved border conflict between the two provinces has also been underlying the Salar, mainly over Posco’s belongings. Brine, like other fluids, knows no political limits. Additionally, Livent’s actions to date have been far from being especially cooperative. An implosive combo.

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Testing pumping well, Salar del Hombre Muerto, Catamarca @Posco

Is it possible to be optimistic about the Salar del Hombre Muerto and other potential cases of “conflicting lithium”? Ostrom gives us hope : after years of analyzing these situations, she found that in most cases, the users of the common good develop sophisticated decision-making mechanisms and rules to manage conflicts of interest with satisfactory results. Public-private cooperation is pivotal, but also public-public (interprovincial and Province-Nation). The Californian political scientist did not believe in unequivocal State or Market solutions, but rather in the action of the Institutions and respect for the rules established between the actors involved.

The effectiveness of these agreements largely depends on their multi-scale organization. The creation of the Lithium Region is a good step towards cooperation, but it needs to be provided with capabilities and financial resources. South-South cooperation also needs to be intensified: this experience was already lived on the other side of the Andes range in the Salar de Atacama, where 4 producers (2 copper and 2 lithium), who extracted water and brine, are working on a model of Governance together with the Chilean Superintendence of the Environment. Jujuy, in the Cauchari-Olaroz basin, is also taking its first steps. A key aspect will be the availability of hydrogeological models (representation of groundwater conditions and their relationships with surface water bodies and atmospheric contributions such as rain or snowfall, for example), ideally reaching a common model between users of each basin, as well as an early warning system (and in real time) for monitoring the water balance. However, not everything is technical information: a condition for the possibility of any institutional arrangement is the understanding of local conditions and community involvement, for which instances of public participation are key.

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September 2022, Fiambalá y Medianitos, Catamarca

All in all, if someone decides to break the rules and ignore the cumulative  and synergistic effects, they will be harming, on the one hand, their own business and the source of employment and incomes for the territories where they operate; and on the other hand, it will be damaging the environment in which the activity is carried on. Its collective nature demands a new approach. As Nash and Ostrom explain, the non-cooperative behavior ends up in a greater collective loss. Shall we make from cooperation an emblem for a virtuous development of this sector and a just energy transition. Sustainability is economic, social and environmental, or it is not.

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