Risks to Global Biodiversity and Indigenous Lands from China’s Overseas Development Finance

China has become one of the world’s largest lenders in overseas development finance. Development projects, such as roads, railways and power plants, can often result in biodiversity loss and infringement on Indigenous lands, yet the risks implicit in China’s overseas development finance have until now been poorly understood.

In a new journal article published in Nature Ecology & Evolution, a team of researchers with the Boston University Global Development Policy Center and the Boston University Department of Earth and Environment examine the extent to which projects financed between 2008 and 2019 by China’s two major policy banks occur within and adjacent to areas where large-scale investment can present considerable risks to biodiversity and Indigenous communities. The policy banks, the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM), are the primary drivers of China’s overseas development finance.

This peer-reviewed research informs the underlying dataset behind the China’s Overseas Development Finance (CODF) Database, launched in December 2020 by the Boston University Global Development Policy Center.

The authors also compare the risks from Chinese development projects to those posed by similar projects financed by the World Bank, which has traditionally been the world’s largest source of development finance.

Main findings on the scale and distribution of Chinese financed development projects: 
  • The CODF dataset verified and mapped 859 international loans made by CDB and CHEXIM from 2008-2019, totaling $462 billion, which is just $5 billion short of the World Bank’s sovereign commitments made in the same period.
  • Although the finance provided spans 93 countries, 60 percent of the lending went to just ten countries: Venezuela, Pakistan, Russia, Brazil, Angola, Ecuador, Argentina, Indonesia, Iran and Turkmenistan.
  • 72 percent of China’s finance commitments occurred in the transport, extraction and energy sectors. Projects in these infrastructure sectors are often known to pose relatively high risks to ecosystems and local communities.
Main findings on the risks to global biodiversity and Indigenous peoples’ lands:
  • 63 percent of Chinese financed projects overlap with critical habitats, protected areas or Indigenous lands.
    • 50 percent of loans have project sites overlapping with critical habitats.
    • 30 percent of loans have project sites overlapping with designated protected areas.
    • 24 percent of loans have project sites overlapping with Indigenous lands.
  • Indigenous lands have the largest area at risk from China’s DFI loans.
    • The highest rate of overlap with Indigenous peoples’ lands is in three countries: Ethiopia, Laos and Argentina. More than 70 percent of China’s loans overlap with Indigenous peoples’ lands in each of those countries.
  • All of the projects in Benin, Bolivia and Mongolia have some overlap with critical habitats and protected areas.
  • High risks to biodiversity and Indigenous lands are primarily in South America, Central Africa and Southeast Asia.
  • Up to 24 percent of the world’s threatened birds, mammals, reptiles and amphibians are potentially impacted by the projects.
Main findings on the risk profile of Chinese projects compared to the World Bank:
  • On average, projects financed by China’s policy banks present greater risks to biodiversity than projects financed by the World Bank, particularly in the energy sector.
  • Except in the transport sector, the biodiversity risk associated with projects financed by China’s policy banks is significantly higher than the World Bank’s.
  • The overall risks to Indigenous peoples’ lands are also greater across China’s project sites, though variations exist across different sectors. Risks to Indigenous lands from China’s projects are higher in the extraction and transportation sectors compared to the World Bank but are lower in the agriculture sector. In the energy sector, the risks to Indigenous peoples’ land posed by projects financed by China’s policy banks and the World Bank are similar.

The authors note, “China has demonstrated a strong political will to address the social and environmental concerns over its overseas development finance, as evidenced in a series of recently released guidelines,” but caution that, “turning those guidelines into practice is far from straight-forward.”

The results from this study provide an important global outlook of socio-ecological risks that can inform policymakers and strategies and unlock the full potential of China’s overseas development finance for sustainable development worldwide.

To read about the data collection and verification process for the dataset, see the September 2021 journal article published in Nature’s Scientific Data.

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