“Ifwedon’t do it, aChinese corporation will – andthey’ll make
a horrible mess of things.”
That is a direct quote from a biologist working for an envi-
ronmental non-government organisation (NGO) in Cambodia.
The German Development Bank had come to the NGO with a
proposal to fund a paved road that would slice through the heart
of the one of the most important protected areas in the country.
They wanted the NGO to help them design the road in a way that
would limit its environmental impacts.
Virtually nobody in the NGO wanted to see the road go ahead.
Far too often, such roads open a Pandora’s Box of environmental
problems, such as promoting illegal deforestation, habitat frag-
mentation, poaching, ires and mining. There are few ways that
one can “design” their way around such basic problems.
But the alternative nightmare scenario for the NGO was that
if they didn’t help the German bank do it, someone far less envi-
ronmentally concerned would be more than happy to do so.
This, increasingly, seems to be the logic behind a lot of big
infrastructure and development projects. And it’s a scary propo-
sition because we are living in the most explosive era of infra-
structure expansion in human history.
For example, during their 2014 summit in Australia, the G20
nations argued for US$60–70 trillion in new infrastructure
investments by 2030. This would more than double the total
value of infrastructure globally. 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 this infrastructure tsunami
could easily dwarf climate change and many other human pres-
sures, 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 harbour the planet’s biologically richest and envi-
ronmentally most critical ecosystems.
Some of the biggest fans of major infrastructure projects are
the international development banks, such as the World Bank,
International Monetary Fund and the Asian, African and Inter-
American Development Banks. These big lenders are far from
perfect, but after years of criticism most of them have gradually
implemented measures designed to limit the environmental and
social impacts of their projects. Even these safeguards are often
inadequate, but at least they are a big improvement over past
practices.
But the playing ield for the big lenders is changing. The past
few years have seen the rise of other major investment banks,such as the recently founded Asian Infrastructure Investment
Bank (AIIB) in China, as well as the Brazilian Development
Bank (BNDES).
For many years, the BNDES has been heavily criticised for
funding scores of environmentally and socially harmful projects
such as massive 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 to
evaluate its projects.
When China opened up the AIIB to other countries, 30
nations initially joined as founding members. Among these were
many western economies, including the UK, Germany, France,
Italy, Norway, Australia and New Zealand. At the time, many
hoped that its broadened membership would encourage the AIIB
to moderate its hard-charging stance and instead foster envi-
ronmental and social safeguards more akin to those of the existing
major lenders.
But the exact opposite appears to be happening. Rather than
the AIIB raising its game, the World Bank recently announced
that it will effectively be weakening its environmental and social
safeguards. It is doing so, it says, in order to remain “competi-
tive” with other international lenders, most notably the AIIB.
What will this mean? The global economy has slowed for the
moment, but the infrastructure tsunami is still happening. If the
world economy rebounds to a degree, a feeding frenzy of projects
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 the Chinese government or its major corpo-
rations, which were attracted to nations with weak environ-
mental 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 might they have enough
determination and inluence to make a difference? With China,
India and Russia holding the biggest shares of the bank’s capi-
talisation, 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.
William Laurance is a Distinguished Research Professor and Australian Laureate at James Cook
University, and director of JCU’s Centre for Tropical Environmental and Sustainability Science.38 | MAY 2016
Mega-Banks Unleash an Infrastructure Tsunami
The rise of investment bank lending for infrastructure projects in developing countries is
driving a “feeding frenzy” of developments with lower environmental controls.conSCIENCE William Laurance