Development Banks Threaten to Unleash an Infrastructure Tsunami on the Environment - by Bill Laurance, James Cook University

We are living in the most explosive era of infrastructure expansion in human history.  The G20 nations, when they met in Australia in 2014, argued for between US$60 trillion and US$70 trillion in new infrastructure investments by 2030, which would more than double the global total value of infrastructure.

Some of the key players in this worldwide infrastructure boom are huge investors such as the World Bank.  The past few years and decades have seen the rise of major new investment banks, such as the recently founded Asian Infrastructure Investment Bank (AIIB), and the dramatic growth of funds such as the Brazilian Development Bank (BNDES).

The new banks, along with traditional big lenders such as the World Bank, the International Monetary Fund, and the Asian, African, and Inter-American Development Banks, are very fond of funding big infrastructure such as roads, dams, gas lines, mining projects, and so on.

Some people had hoped that these banks would promote sustainable and socially equitable development, but it now seems that they could end up doing precisely the opposite.

The infrastructure tsunami
The next few decades are expected to see some 25 million km of new paved roads, thousands more 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 90% of the new projects are 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, by promoting widespread deforestation, habitat fragmentation, poaching, fires, illegal mining and land speculation.

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Race to the bottom?
... Rather than the AIIB raising its game, the World Bank recently concluded a review of its environmental standards — a move that has been criticized as weakening its environmental and social safeguards.

It is doing so, it says, in order to keep up with “new and varied development demands”.  This is widely seen as a response to increasing competition with other investors such as the AIIB.

What will this mean?  The global economy has slowed for the moment, giving environmental planners a tiny window of breathing space.  But make no mistake, the infrastructure tsunami is still happening.  If the global economy rebounds to a degree, the feeding frenzy 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.

Will other major lenders follow suit?  Will there simply be a “race to the bottom” among big lenders in order to remain competitive?  Only time will tell.

The other key question revolves around the role of western nations that are parties to the AIIB, such as the EU members and Australia.  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.

Right now, for the environment and human rights, the signs are all pointing in the wrong direction.

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