Tax havens driving deforestation and illegal fishing

More than two-thirds of investment linked to forest destruction in the Amazon between 2000 and 2011 came from companies based in countries where no tax is paid.


That is according to a new study by the Stockholm Resilience Centre, which also found that 70% of vessels involved in illegal and unregulated fishing have been registered in tax havens.

The researchers argue this loss of revenue is effectively subsiding resource degradation across the world, potentially driving a series of environmental disasters.

“The use of tax havens is not only a socio-political and economic challenge, but also an environmental one,” study lead author, Victor Galaz, said.

“However, financial secrecy hampers the ability to analyse how financial flows affect economic activities on the ground, and their environmental impacts.”

It was found that $18.4bn (£14.4bn) of the $26.9bn in foreign capital transferred to beef and soy sectors in the Amazon between October 2000 and August 2011 came from tax havens.

These two industries are heavily linked to deforestation in the area, with the Cayman Islands identified as the largest source of investment during that time, providing “legal efficiency, tax-minimisation and secrecy”.

The study also found that many of the tax havens used for registering vessels have limited monitoring and enforcement capacity, and do not penalise boats operating in violation of international law.

These countries allow companies to sail fishing vessels with dual identity – one of which is used for legal, and the other for illegal, activities.

This is despite oceans providing a vital source of protein and income for many millions of people worldwide, while the Amazon is critical to stabalising the Earth’ climate system.

The researchers said leading international organisations should assess the environmental costs of these “indirect subsidies”, and recognise the broad range of issues arising from tax avoidance.

“The lack of clearly established causal links between tax havens, and global environmental change, should not deter from further investigations,” they added. 


Image credit: iStock


Chris Seekings is a reporter for TRANSFORM

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