This week, leaders from around the world gather in Madrid to take stock of their progress in mitigating climate change at the 25th annual Conference of Parties (COP25) of the United Nations Framework Convention on Climate Change.
Chile was originally scheduled to host COP25, but President Sebastián Piñera canceled the conference amid the wave of unrest that has swept through the South American country, as well as some of its neighbors. The protests have shed light on South America’s general discomfort toward inequality and how governments have failed to deliver their promises, but it is unfortunate to see the world’s environmental focus shift away from the region, especially in a year of historic deforestation.
Planning for a greener future while the present burns
Environmental management can seem like a low priority during widespread social conflict. But in fact they are intimately connected. For rural peasants and indigenous communities, environmental concerns are livelihoods concerns. Thus, it is unsurprising that regional protests have embraced these causes.
Who can forget the now-famous photo of Chilean protestors hoisting a Mapuche flag over Plaza Italia? The Mapuches, indigenous people of Chile and Argentina, are known for their struggle to defend their land, and their flag has been used as a symbol in the current protests against social inequality.
In Bolivia, former President Evo Morales lost significant support on the left—just before the recent contested election—in part because he relaxed controls on fires for land clearing that ultimately led to the unleashing of historic fires in the Bolivian Amazon. And although not as surprising, Brazil’s President Jair Bolsonaro declared the Amazon belongs to Brazil and called the description of the Amazon as heritage to humanity a “fallacy,” while his government is simultaneously hampering land-titling efforts for indigenous communities. The Brazilians he has in mind as the Amazon’s rightful caretakers do not seem to include those who have traditionally inhabited it, but rather those who are clearing it to export record levels of beef and soy to China.
Public accountability is key to environmental sustainability in the region. But as the protests show, from high-profile corruption cases coming to light, to excluding communities from enacting their rights to accessing communal land, governments are failing to deliver transparency and public accountability in Latin America.
Historically, Latin American environmental activists achieved early victories by targeting the international development finance institutions (DFIs) backing big infrastructure projects, rather than simply focusing on their own national governments. In response, throughout the late 1980s and 1990s, the World Bank and the Inter-American Development Bank (IDB) adopted standards for stringent environmental reviews, prior consultation with affected indigenous groups, and complaint mechanisms.
More recently, regional governments (across the ideological spectrum) have adopted similar protections. But a side effect of this set of reforms has resulted in fragmented and ambiguous governance for DFI-financed projects, as my colleagues and I explore in our recently published book, Development Banks and Sustainability in the Andean Amazon.
The mixed record of DFIs in the Andean Amazon
In our recently released book Development Banks and Sustainability in the Andean Amazon, Boston University researchers and our peers across South America capture the findings of an intense investigation that looked into fragmented governance for DFI-financed projects in four neighboring countries: Brazil, Ecuador, Peru and Bolivia. The team probes the extent to which environmental standards and accountability mechanisms have been effectively implemented in the region’s current infrastructure boom.
The research, which combines eight in-depth case studies with a statistical analysis of regional deforestation across a period of 15 years, finds three key takeaways to increase environmental accountability in the region:
- Even though regional deforestation was generally declining from 2000 to 2015, deforestation was much higher in international DFI-supported infrastructure projects. Across Ecuador, Peru, and Bolivia, territory allocated for these projects registered an average of four times as much tree cover loss as the rest of the national territories. This shows that even with the incorporation of DFI reforms and protocols by national governments, the puzzle of green infrastructure hasn’t been solved yet. The only policy reform shown to have an impact on projects’ related to deforestation is the introduction of formal prior consultation processes with indigenous communities affected by those projects. Again, public accountability is key.
- Our case studies highlight three main policy areas of particular importance to increasing environmental accountability: environmental planning must be comprehensive, stakeholder engagement must be meaningful, and the entire DFI project management process must incorporate transparency. The 2005 case of CVIS (“interoceánica”) highway, financed by Peru’s Development Bank of Latin America (CAF) and that cuts through the southern Madre de Dios forest, shows all three of these issues in stark relief. The project was financed in segments, allowing planners to overlook the overall impact of opening a new section of the Amazon basin to new development, that in turn led to informal gold mining and illicit logging and resulting in widespread destruction.
With Peru not yet having enacted its prior consultation guarantee, and CAF having no such formal processes set in place, no authority was held accountable to local communities and to safeguard the local forests and groundwater—since then contaminated with heavy metals from informal mining. The project’s transparency record is so inadequate that it has become embroiled in the region-wide lava jato corruption scandal. Former President Alejandro Toledo pushed the highway through Congress as a high priority infrastructure project, exempting it from upstream planning requirements and awarding the contract quickly to Odebrecht, the Brazilian contractor at the center of the lava jato storm. He is now suspected of having received $35 million in bribes in the process.
- Neither national governments nor DFIs can afford to ignore environmental risks. In all of our case studies, we found that it was never sufficient for either DFIs or governments to exclusively and separately oversee infrastructure projects. For sustainable and inclusive outcomes, both parties need to be involved. In our case studies where the national governments had already enacted strict standards of their own, they still sought financing through DFIs without implementing them, and often missed crucial upstream planning steps, leading to long-term consequences. For example, after the IDB hesitated to support Ecuador’s Coca-Codo Sinclair megadam, the country turned to China’s ExImBank to finance the project in 2010, a decision that ignored risks to the neighboring protected forests and indigenous communities.
The opposite problem is just as pervasive: where banks with strict standards financed projects in countries that hadn’t adopted them yet (such as the IDB-financed Montero-Yapacaní highway in Bolivia) problems arose when governments struggled to implement processes imposed from external financing institutions. In this case, the IDB oversaw the meticulous transfer of tree-dwelling animals out of the 50 trees expected to be cut for the construction. However, once the project was underway, uncontrolled land clearing ensued: seven hectares of forest were cut down, far beyond the planned 50 trees.
The findings described above are particularly important now that the region has a new, powerful source of finance: China. For the last several years, China has lent more to Latin America and the Caribbean than either the World Bank or the IDB. However, the lending portfolios of China’s main DFIs—the China Development Bank (CDB) and China ExImBank—are the least “green” of all DFIs active in Latin America and the Caribbean (as defined by the International Development Finance Club, an umbrella organization of DFIs including the CDB). Since CDB and ExImBank do not propose projects themselves, this imbalance suggests that governments are “shopping” for easy approval, avoiding traditional multilateral development banks (MDBs) and their cumbersome safeguards. By avoiding these safeguards, China may be attracting disproportionately high-risk projects. But even the World Bank and IDB have adopted new safeguards that rely more heavily on national governments in the name of capacity-building and institutional buy-in, so the era of deferring to DFI oversight has passed.
Greening the infrastructure agenda
Unfortunately, while the infrastructure boom is set to continue—particularly in Colombia, Ecuador, Peru, and Bolivia—national governments haven’t shown that they’re serious about upholding their own environmental standards. In fact, infrastructure-linked environmental and social risks may be accelerating.
Compared to projects financed and implemented from 2005 to 2015, new and ongoing projects are more likely to be situated in the Amazon basin, and more likely to be financed by DFIs with deferential approaches to environmental and social risk management, like China.
Continuing the current pattern of circumventing environmental standards to accelerate flashy infrastructure projects can only lead to continued environmental degradation and accompanying social conflict. Current political agendas may be focused on the immediate need to respond to ongoing protests, but any serious attempt to address the underlying issues behind these conflicts will have to include facing the unmet promises of protecting fragile ecosystems and the communities that depend on them.
Rebecca Ray is a researcher at the Boston University Global Development Policy Center and the lead author of Development Banks and Sustainability in the Andean Amazon. She holds a PhD in economics from the University of Massachusetts-Amherst.