Africa: China funds infrastructure projects around the world – Many could harm nature and indigenous communities
China is shaping the future of economic development through its Belt and Road Initiative, an ambitious multi-billion dollar international campaign to better connect to the rest of the world through trade and infrastructure. Through this venture, China is providing more than 100 countries with long-sought financing for roads, railways, power plants, ports and other infrastructure projects.
This colossal effort could generate broad economic growth for the countries concerned and the world economy. The World Bank estimates that the gross domestic product of the beneficiary countries could increase by up to 3.4% thanks to the financing of the Belt and Road.
But development often expands human movements and economic activity into new areas, which can foster Deforestation, illegal wildlife trafficking and the spread of invasive species. Past initiatives have also triggered conflicts in encroach on indigenous lands. These projects were often approved without recognition or consent local indigenous communities.
In a newly published study, our team of development economists and conservation scientists mapped the risks that China’s overseas development finance projects pose to indigenous lands, endangered species, protected areas and potential critical habitats for the conservation of global biodiversity. We found that over 60% of China’s development projects pose risks to wildlife or indigenous communities.
Various projects and risks
Our study examines 594 development projects funded by the China Development Bank and the Export-Import Bank of China. We have created a database to track the characteristics and locations of projects that these two “strategic banks” supported between 2008 and 2019. During this period, banks committed over US $ 462 billion in development finance in 93 countries, world Bank, the traditional world leader in development finance, hired at that time.
Almost half of all projects funded by these two banks are in potential areas critical habitats. These are areas that may be essential for conservation and require special protection considerations, according to the International Finance Corporation, a unit of the World Bank that promotes private investment in developing countries.
One in three projects is part of existing protected areas and almost one in four overlaps with lands owned or managed by indigenous peoples. In total, we calculate that China’s development finance portfolio could impact up to 24% of threatened amphibians, birds, mammals and reptiles.
The greatest risks are found in South America, Central Africa and Southeast Asia. All the projects that Chinese political banks are funding in Benin, Bolivia and Mongolia overlap with existing protected areas or potential critical habitats. Over 65% of Chinese development projects in Ethiopia, Laos and Argentina are located on indigenous lands.
On average, risks to Indigenous lands are greatest due to mining and transportation projects, such as mines, pipelines and roads. The biggest threats to nature are energy projects, especially dams and coal-fired power plants. For example, a cascade of seven hydroelectric dams along the Nam Ou River in Laos has displaced indigenous communities who depended on local ecosystems for their livelihoods.
How the World Bank is tackling these risks
China can be the world largest country-to-country development lender, but it is not the only source of financing for emerging economies. The World Bank, a international organization funded mainly by rich countries, was a main source development finance over the past 40 years – but its approach is very different from that of China.
In the twentieth century, critics assaulted the World Bank for the financing of projects which have caused environmental damage and social conflicts. But over the past 30 years he has adopted a series of environmental and social reforms which aim to direct loans towards more inclusive and sustainable development projects. This year again, the bank engaged align its loans with Paris Agreement on Climate Change by 2023.
China’s rapid economic growth since the 1980s has enabled it to one of the biggest polluters in the world. Today, its leaders strive to improve the environmental performance of their country.
Comparing the projects funded by the World Bank from 2008 to 2019 with our list of Chinese loans, we found that on average, Chinese projects pose a significantly higher risk to nature and indigenous lands, mainly in the area of energy.
The World Bank also has a worrying proportion of loans in high-risk areas. Notably, the roads, railways and other transportation projects it funded during this period pose risks to biodiversity almost equivalent to those posed by similar projects funded by China.
For example, in 2016, the World Bank funded a major road project across the Democratic Republic of the Congo, including the territory of indigenous peoples, exposing them to loss of property and livelihoods, as well as violence. . A formal intern investigation found that “serious damage” had occurred and asked the World Bank to manage future projects with more caution.
Making the financing of sustainable development
China has the opportunity with the Belt and Road Initiative to improve infrastructure networks around the world in a manner that is both sustainable and inclusive. Recently, he released the interministerial “Green development guidelines for overseas investment and cooperation“, a set of voluntary guidelines produced by Chinese experts from universities, governmental and non-governmental organizations and international experts, including two of us (Kevin Gallagher and Rebecca Ray). This report urges Chinese investors To meet the environmental standards of the host country, the standards are lower than those of China, the guidelines recommend using international environmental standards.
However, China has not adopted binding environmental performance requirements for projects it finances overseas. Nor has it ended support for high-risk projects like coal-fired power plants.
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Currently, China is preparing to host the 15th meeting of the Conference of the Parties to the Convention on Biological Diversity – the main global agreement that commits nations to protecting species and ecosystems around the world. The sessions will take place online in October 2021 and in person in Kunming in the first half of 2022. This event is a unique opportunity for China to address the social and environmental risks associated with its global development activities.
We think China would be wise to adopt new recommendations defined by its Ministry of Ecology and Environment, in collaboration with international experts, including two of us (Kevin Gallagher and Rebecca Ray), who would demand mandatory environmental management systems for projects supported by banks Chinese public authorities to prevent and mitigate risks. This would raise the bar for Western lenders, who also need to improve their standards, but fear of losing business to Chinese lenders.
By minimizing the negative impacts of the projects it finances, we believe that China could make the Belt and Road Initiative a win-win solution for itself, the host countries and the world economy.
Hongbo Yang, a former postdoctoral fellow at the Global Development Policy Center at Boston University, was the lead author of the study described in this article.
Blake Alexander Simmons, Postdoctoral Research Fellow, Boston university; Kevin P. Gallagher, professor of global development policy and director of the Global Development Policy Center, Boston university, and Rebecca Ray, Senior University Researcher in Global Development Policy, Boston university