Webinar Summary – The ‘China Boom’ in the Amazon Basin: Social and Environmental Regulation amid a Commodity Supercycle

By Yudong (Nathan) Liu

On Tuesday, October 11, 2022, the Boston University Global Development Policy (GDP) Center hosted a webinar discussion with Paulo Esteves, Coordinator of the Socio-Environmental Platform and the Global South Unit for Mediation at the BRICS Policy Center of the Pontifícia Universidade Católica do Rio de Janeiro and Rebecca Ray, Senior Academic Researcher at Boston University Global Development Policy Center.

Esteves and Ray presented a new working paper coauthored with Kevin P. Gallagher, Yaxiong Ma and Maria Elena Rodriguez. The paper analyzed the commodity boom and slump in Latin America over the last two decades, focusing on the socio-environmental regulatory responses of four Amazon basin countries (Bolivia, Brazil, Ecuador and Peru) during and after the “China boom” in commodity production during the first decade of this century.

The study sought to answer three research questions. The first was whether these countries shifted their socio-environmental protections in line with commodity export prices. To answer this question, the authors traced socio-environmental reforms that affected environmental licensing, forests and protected areas and Indigenous or traditional communities. Reforms were classified as either baseline, strengthening or relaxing protections. The authors found that the countries strengthened protections as commodity prices rose throughout the 2000s and then relaxed them as prices slumped after 2011.

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In all, relaxing socio-environmental protections did not substantially increase investment or expedite project progress. The high-risk 2014 projects often were associated with mass protests, which may have discouraged future investment. Cases of other Chinese projects in Latin America show that Chinese investors are generally not concerned with short term regulatory costs and are more concerned with the long-term stability of potential projects. The authors’ closing conclusion was that host countries have the policy space to instead adopt socio-environmental protections that are based on their sustainable development goals and the demands of their own citizens.

During the question and answer section, Ray and Esteves fielded questions from the attendees. Both authors explained how their paper tied in with “resource nationalism” literature which studied the strategies countries employ to ensure resource exploitation maximizes benefits to their economies and populations. The decisions to strengthen or relax socio-environmental protections is part of each country’s strategy and elections can be thought of as a referendum on popular support for these strategies.

On the implications for future environmental and foreign investment regulations for the countries studied, Ray and Esteves emphasized that these countries have opportunities to turn from purely extractive to more service-oriented economies that aren’t wholly dependent on export prices for their health. They noted that this trend could be seen both in the positions taken by the slate of candidates for the Inter-American Development Bank as well as in the 2022 Brazilian presidential election. Another attendee asked whether the research looked at the titling of Indigenous lands.

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Yudong (Nathan) Liu is a Research Assistant with the Global China Initiative and a Candidate for Juris Doctor at Boston University School of Law.

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