Incorporating Environmental Considerations into Investment Decision-Making: The Potential Role of Strategic Environmental Assessment in Foreign Direct Investment

Foreign direct investment (FDI) is one of the driving forces binding countries into closer economic interdependence. The rapid growth in FDI has generated both risks and opportunities for the environment. The environmental consequences of FDI are complex and are a mix of positive and negative impacts: On the one hand, FDI can generate new growth and new structural efficiencies, making larger investments in environmental protection possible. However, it may also lead to increased production and consumption of polluting goods, or to expanded industrial activity (and thus, to increased emissions). It makes sense for the developing countries to act early to limit the negative environmental impacts of incoming FDI and enhancing positive impacts of the same. Environmental impact assessment can definitely assist in this endeavor. Environmental impact assessment is a systematic procedure to examine how a particular activity has and will impact the environment. EIA could provide a tool for integrated policy development- whether at the local, national, or global level- where economic, environmental, and social development goals could be reconciled. However, environmental impact assessment is an effectiv