If you care about the environment and human rights, there's good reasons to be very, very nervous.
The last few years have seen the rise of major investment banks, such as the recently founded Asian Infrastructure Investment Bank (AIIB) as well as the Brazilian Development Bank (BNDES), which though founded in the 1950s has grown dramatically in recent decades.
Some had hoped these 'new' banks would promote sustainable and socially equitable development, but it now seems they could end up doing precisely the opposite.
The new banks, along with the traditional big lenders such as the World Bank, International Monetary Fund, and Asian, African, and Inter-American Development Banks, are very fond of funding infrastructure -- roads, dams, gas lines, mining projects, and the like.
That’s important because we are living in the most explosive era of infrastructure expansion in human history. During their 2014 summit, the G20 nations argued for US$60-70 trillion in new infrastructure investments by 2030 -- which would more than double the total value of infrastructure globally. And the mega-banks are playing a key role in promoting this tidal wave of new investments.
For instance, the next few decades are expected to see some 25 million kilometres of new paved roads, thousands of additional hydroelectric dams, and hundreds of thousands of new mining, oil and gas projects.
The environmental impacts of the modern infrastructure tsunami could easily dwarf climate change and many other human pressures, as thousands of projects penetrate into the world’s last surviving wild areas. Roughly nine-tenths of the new projects are occurring in developing nations, often in the tropics or subtropics, which harbor the planet’s biologically richest and environmentally most critical ecosystems.
In these contexts, new infrastructures such as roads can open a Pandora’s box of environmental problems, such as promoting widespread deforestation, habitat fragmentation, poaching, fires, illegal mining, and land speculation.
For instance, recent research in the Brazilian Amazon by ALERT director Bill Laurance and colleagues showed that 95 percent of all deforestation occurs within 5.5 kilometers of a legal or illegal road.
In Brazil, 12 new dams planned for the Tapajós River (and their associated road networks) are expected to increase Amazon deforestation by nearly 1 million hectares. Across the Amazon, over 330 dams are now planned or under construction.
In the Congo Basin, an avalanche of new logging roads has opened up vast areas of rainforest to poachers armed with lethal modern technologies such as rifles and cable snares. As a result, in the last decade two-thirds of all Forest Elephants have been slaughtered for their valuable ivory tusks.
Fears of fast-tracking
Brazil’s BNDES has been heavily criticized for funding scores of environmentally and socially harmful projects such as mega-dams in the Amazon. Fears were raised that China’s AIIB would behave similarly, especially when it announced that it would be using ‘streamlined’ procedures for evaluating its projects.
Such fast-tracking procedures would differ from those used by other major lenders such as the World Bank, which after years of criticism have gradually implemented measures designed to limit the environmental and social impacts of its projects.
Even these safeguards are often inadequate -- as ALERT's Bill Laurance, Thomas Lovejoy, and others argued in a recent article -- but at least they are a big improvement over past practices.
When China opened up its AIIB to other countries, 30 nations initially joined as founding members. Among these were many western economies, including the UK, Germany, France, Italy, Norway, and Australia.
At the time, many hoped that its broadened membership would encourage the AIIB to moderate its hard-charging stance -- fostering environmental and social safeguards more akin to those of the existing major lenders.
Race to the bottom
But in fact the exact opposite appears to be happening. Rather than the AIIB raising its game, the World Bank has recently announced that it will be weakening its environmental and social safeguards. It is doing so, it says, in order to remain ‘competitive’ with other international lenders -- most notably the AIIB.
What will this mean? The global economy has slowed for the moment, giving environmental planners perhaps ten seconds of breathing space -- but make no mistake, the infrastructure tsunami is still happening. If the global economy rebounds to a degree, the feeding frenzy-like pace of projects seen in recent years could easily return.
This could be bad news for the global environment and socially disempowered peoples. For instance, a 2009 analysis found that many developing nations had become ‘pollution havens’ for projects funded by China or Chinese investors, who were attracted to nations with weak environmental controls. Notably, other advanced (OECD) economies showed no such tendency.
With the AIIB essentially forcing the World Bank to lower its standards, will other major lenders follow suit? Will there simply be a ‘race to the bottom’ among big lenders in order to remain competitive?
Are the western nations that have joined the AIIB going to stand idly by and watch this happen? Or do they have enough influence and determination to make a difference? With China, India, and Russia holding the biggest shares of the bank’s capitalization, it’ll be an uphill battle.
Time will soon tell. Right now, for the environment and human rights, the signs are all pointing in the wrong direction.