The environmental effects of regional economic cooperation: Evidence from the Belt and Road Initiative

Abstract

China’s Belt and Road Initiative is a significant regional economic cooperation. This paper uses the Belt and Road Initiative (BRI) as a quasi-natural experiment to investigate the impact of regional economic cooperation on environmental quality. Using difference-in-differences (DID) and a series of robustness checks, we find that regional economic cooperation like BRI deteriorates environmental quality in countries along the Belt and Road. The main reason is that the improving effects on environmental quality in the BRI countries are smaller than in the non-BRI countries after the BRI. The ecological impacts of the BRI exist differences in different countries. The results show that the BRI improves environmental quality in South Asia, and Europe and Central Asia. However, the BRI negatively affects environmental quality in East Asia and Pacific, developing and non-OECD countries. We found that, unlike the BRI, the Green BRI improves environmental quality in countries along the Belt and Road. We also discuss the mechanism of the BRI on environmental quality from foreign direct investment (FDI).

Status and Prospect of Ecological Environment in the Belt and Road Initiative Regions

“…Infrastructure project implementation, such as the construction of roads, railway, pipelines and seaports, has affected several terrestrial and marine biodiversity hotspots, wilderness areas and other key protected areas, contributing to biodiversity loss and vegetation loss, due to habitat degradation, fragmentation and illegal activities such as poaching and logging [ 29 , 31 , 93 , 94 ]. Meanwhile, the BRI may drive water and soil pollution, as well as climate change, due to the Chinese investments in some energy exploitation projects and construction and maintenance of transportation infrastructures [ 89 , 90 , 95 ]. It may also accelerate the overexploitation of natural resources, such as water, energy and mineral resources in BRI participating countries, bringing eco-environmental challenges [ 96 ].…”

The Green Effects of China’s Direct Investment in Belt and Road Initiative Countries: Mechanisms and Empirical Testing

“…Currently, the discussion of green development in BRI countries under the Belt and Road Initiative focuses more on assessing the level of green development [12,13], while the role played by China's outward foreign direct investment (OFDI) has received less attention. Although a few studies have explored the green effect of China's Belt and Road Initiative from the perspective of policy evaluation [14], the literature has mostly provided empirical evidence to explore the green effects of the Belt and Road Initiative in China from the home country perspective, including the macroregional aspect [15], the industry development [16], and the micro-firm level [17]. Some of the literature discusses the green development of BRI countries from the perspective of host countries, but only focuses on the greenness of the Belt and Road Initiative in the energy sector [18], or discusses the promotion of green construction in the Belt and Road Initiative based on the influence of institutional distance [19] and national cooperation modes [20].…”