Tax havens could undermine environmental conservation

Industries that are linked to environmental degradation make substantial use of the secrecy provided by tax havens, reveals a Perspective published in Nature Ecology & Evolution this week. Victor Galaz and colleagues say that the environmental impacts of these opaque jurisdictions should be considered alongside their economic and social implications.

Using data from Interpol and regional fisheries organizations, the authors show that 70% of known vessels implicated in illegal, unreported or unregulated fishing are, or have been, flagged under a tax-haven jurisdiction. The authors explore how fishing vessels are part of complex ownership webs to evade regulations on catch size and fishing location.

In a second case study, Galaz and colleagues use historical data from 2000-2011 from the Central Bank of Brazil, to show that around 70% of foreign capital flowing to the Brazilian soy and beef sector is channelled through tax havens. These sectors are known to be associated with deforestation in the Amazon.

The authors suggest that tax havens are likely to be used to support other environmentally destructive activities - such as illegal logging, wildlife trade and resource extraction. They call for urgent assessment of to what extent these financial pipelines allow economic activities to circumvent environmental regulation and accountability, and whether the resulting loss of tax revenue undermines conservation attempts.